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Wednesday, 13 June 12
LOW COAL PRICES COULD CHANGE SUPPLY SIDE DYNAMICS - FITCH RATINGS
 Fitch Ratings believes that the weakness seen in thermal coal prices in recent months should reverse once demand from major importers recovers, although there is a risk low prices may persist into 2013, changing the industry's supply side dynamics.
The price of thermal coal (5,500 kcal coal at Newcastle Australia on a free-on-board basis) reached a two-year low of USD87 per metric ton in early June 2012, down from USD142/mt in January 2011. Major reasons for this decline include China's economic slowdown and high coal inventory levels, increased production and exports from Indonesia and Australia, and increased exports by US coal producers due to cheap natural gas displacing coal used in US power generation.
Fitch believes that prices can recover from current lows once demand from key importers - China and India - improves, and the supply side adjusts to reflect the price environment. India depends on coal as its major energy source and is increasingly relying on imported coal as it struggles to increase domestic production. Likewise in China, thermal coal fired power represents more than 70% of the country's energy needs; Fitch believes thermal coal demand from China will lift again post sufficient policy easing by the government, and continue rising over the medium-to-long term in line with the country's strong GDP growth outlook, albeit lower than previous years.
The weak pricing environment is exposing the business risks of high-cost coal producers, as coal prices fall near or below the marginal cost of production. Many Australian producers have high cash costs of production; such operators will be significantly affected if prices remain low for an extended period. At the same time, sustained low coal prices can shift buyers from low-rank coal to higher-grade coals and thus negatively affect both demand and realized prices for low-rank coal.
Fitch notes that many large coal producers have contracts in place with both volumes and prices fixed, typically for a period of one year; such contracts can account for a meaningful share of their total revenues - for example around 65% for Adaro Indonesia ('BB+'/Stable) and around 45% PT Indika Energy ('B+'/Positive). These operators would be insulated from a temporary weakening of coal prices to some extent. However, should low prices persist through 2012 and into 2013, it will negatively affect the prices they negotiate for 2013; such negotiations typically take place in Q4 and Q1 of each calendar year.
Should the current low price environment persist into 2013, Fitch expects high-cost producers in Australia and the US to undertake production cuts, and review expansion projects under consideration. Fitch also believes that production expansion plans by low-cost producing countries like Indonesia may be curtailed. Such actions would limit coal production levels (or growth) and help address oversupply.
In rating companies producing commodities, like coal, Fitch takes a through-the-cycle approach to its ratings; this factors in a reasonable level of rating headroom to accommodate weakening of coal prices. Cash cost of production and cash margins over an industry cycle are given a heavy emphasis and factored into the ratings. Hence, Fitch does not expect any immediate negative rating actions on its rated coal producers in the Asia-Pacific region.
Source: Fitch Ratings
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Saturday, 12 May 12
THE SHIPPING MARKET IS UNLIKELY TO SEE A REBOUND ANYTIME SOON - VISTAAR SINGAPORE
COALspot.com - The BDI softened this week and it was down by 1.64 pct closing at 1,138 points.
The cape index was up by 2.41 pct closing at 1,61 ...
Friday, 11 May 12
POLITICAL CHANGES COULD LEAD TO TEMPORARY HALT IN SHIPPING INVESTMENTS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The potential of changes of political leadership in many of the world’s leading economies could very well lead to significant shifts in the di ...
Thursday, 10 May 12
DRY BULK ERRATIC ON LACK OF DIRECTION - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept up its erratic behavior as it went down again during yesterday’s session, on a lack of direct guidance in terms o ...
Wednesday, 09 May 12
COAL INDIA SIGNS FSAS WITH 13 POWER UNITS SO FAR - PTI
Press Trust of India has reported that, coal India has so far entered into fuel supply pacts with 13 power units, including Reliance Power's Rosa P ...
Tuesday, 08 May 12
DRY BULK MARKET LOOKING FOR NEW DIRECTION THIS WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the BDI (Baltic Dry Index) the main benchmark of the dry bulk shipping industry not traded at the start of this week, traders, charterers and s ...
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- Petron Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Medco Energi Mining Internasional
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Energy Development Corp, Philippines
- Thai Mozambique Logistica
- Standard Chartered Bank - UAE
- Banpu Public Company Limited - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Bhoruka Overseas - Indonesia
- Kepco SPC Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Baramulti Group, Indonesia
- Indian Energy Exchange, India
- Intertek Mineral Services - Indonesia
- Deloitte Consulting - India
- Metalloyd Limited - United Kingdom
- Dalmia Cement Bharat India
- Australian Coal Association
- Pipit Mutiara Jaya. PT, Indonesia
- Renaissance Capital - South Africa
- Riau Bara Harum - Indonesia
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Mintek Dendrill Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bharathi Cement Corporation - India
- White Energy Company Limited
- Thiess Contractors Indonesia
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Electricity Authority, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- Posco Energy - South Korea
- AsiaOL BioFuels Corp., Philippines
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- Siam City Cement - Thailand
- Xindia Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Heidelberg Cement - Germany
- PetroVietnam Power Coal Import and Supply Company
- Jorong Barutama Greston.PT - Indonesia
- Planning Commission, India
- Essar Steel Hazira Ltd - India
- Indian Oil Corporation Limited
- Parry Sugars Refinery, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rio Tinto Coal - Australia
- CNBM International Corporation - China
- Semirara Mining and Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- South Luzon Thermal Energy Corporation
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- Carbofer General Trading SA - India
- Neyveli Lignite Corporation Ltd, - India
- OPG Power Generation Pvt Ltd - India
- Trasteel International SA, Italy
- Bahari Cakrawala Sebuku - Indonesia
- IEA Clean Coal Centre - UK
- Kartika Selabumi Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Mercator Lines Limited - India
- Goldman Sachs - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- IHS Mccloskey Coal Group - USA
- New Zealand Coal & Carbon
- TNB Fuel Sdn Bhd - Malaysia
- Larsen & Toubro Limited - India
- Tata Chemicals Ltd - India
- Minerals Council of Australia
- Kumho Petrochemical, South Korea
- Videocon Industries ltd - India
- Straits Asia Resources Limited - Singapore
- Grasim Industreis Ltd - India
- Formosa Plastics Group - Taiwan
- Lanco Infratech Ltd - India
- Simpson Spence & Young - Indonesia
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Bhushan Steel Limited - India
- Salva Resources Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Sojitz Corporation - Japan
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- Agrawal Coal Company - India
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Kideco Jaya Agung - Indonesia
- Borneo Indobara - Indonesia
- Bangladesh Power Developement Board
- The University of Queensland
- Coal and Oil Company - UAE
- San Jose City I Power Corp, Philippines
- Indogreen Group - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Central Java Power - Indonesia
- SMC Global Power, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Sakthi Sugars Limited - India
- Commonwealth Bank - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pendopo Energi Batubara - Indonesia
- Orica Australia Pty. Ltd.
- GMR Energy Limited - India
- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Cement Manufacturers Association - India
- McConnell Dowell - Australia
- Chamber of Mines of South Africa
- Savvy Resources Ltd - HongKong
- Leighton Contractors Pty Ltd - Australia
- Eastern Energy - Thailand
- Economic Council, Georgia
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Malabar Cements Ltd - India
- Port Waratah Coal Services - Australia
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
- Oldendorff Carriers - Singapore
- Sindya Power Generating Company Private Ltd
- Ministry of Finance - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- GN Power Mariveles Coal Plant, Philippines
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- Merrill Lynch Commodities Europe
- Kobexindo Tractors - Indoneisa
- Orica Mining Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Energy Link Ltd, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Generating Authority of Thailand
- The State Trading Corporation of India Ltd
- Cigading International Bulk Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- Latin American Coal - Colombia
- Mercuria Energy - Indonesia
- SMG Consultants - Indonesia
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- Eastern Coal Council - USA
- Indika Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- Jaiprakash Power Ventures ltd
- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
- Sical Logistics Limited - India
- Manunggal Multi Energi - Indonesia
- MS Steel International - UAE
- Ceylon Electricity Board - Sri Lanka
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- India Bulls Power Limited - India
- CIMB Investment Bank - Malaysia
- Gujarat Sidhee Cement - India
- TeaM Sual Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- Toyota Tsusho Corporation, Japan
- ASAPP Information Group - India
- Mjunction Services Limited - India
- VISA Power Limited - India
- Aboitiz Power Corporation - Philippines
- Bhatia International Limited - India
- Power Finance Corporation Ltd., India
- Singapore Mercantile Exchange
- Coastal Gujarat Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Maheswari Brothers Coal Limited - India
- Aditya Birla Group - India
- Romanian Commodities Exchange
- PowerSource Philippines DevCo
- Global Green Power PLC Corporation, Philippines
- Coalindo Energy - Indonesia
- Wilmar Investment Holdings
- ICICI Bank Limited - India
- Attock Cement Pakistan Limited
- Directorate Of Revenue Intelligence - India
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- Globalindo Alam Lestari - Indonesia
- PTC India Limited - India
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