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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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Monday, 07 May 12
INDONESIAN HBA FALL AGAIN IN MAY 2012
COALspot.com - Indonesian HBA fall again to lowest level since January 2011 in May 2012. The monthly coal reference price for coal sales in Ma ...
Sunday, 06 May 12
INDONESIAN SUB-BITUMINOUS COAL & CFR SOUTH CHINA SWAPS SLIGHTLY DROP THIS WEEK
COALspot.com - Indonesian sub-bituminous coal swaps and CFR South China coal contracts for June deliveries slightly dropped this week.
According ...
Sunday, 06 May 12
S7 & S8 ROUTES LIKELY TO BE FIRM NEXT WEEK VISTAAR SINGAPORE
COALspot.com - The BDI remained flat this week and was up just by 1 point closing at 1,157 points.
The cape size index was up by 5.14 pct closing ...
Sunday, 06 May 12
EXPORT DUTY ON MINERAL FINALLY TO BECOME EFFECTIVE NEXT WEEK
COALspot.com - Mineral ore exporters of Indonesia ( only IUP holders) are required to obtain recommendation letter from the energy and mineral ...
Friday, 04 May 12
DEMOLITION KEY FOR DRY BULK MARKET RECOVERY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The overflow of newbuilding vessels which “spilled over” into 2012 from 2011 brought the dry bulk market to a near collapse level at the ...
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- Global Green Power PLC Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- Wood Mackenzie - Singapore
- Eastern Energy - Thailand
- India Bulls Power Limited - India
- Renaissance Capital - South Africa
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Xindia Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Parliament of New Zealand
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Videocon Industries ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Star Paper Mills Limited - India
- Intertek Mineral Services - Indonesia
- Agrawal Coal Company - India
- Cigading International Bulk Terminal - Indonesia
- Petron Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- Meralco Power Generation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Goldman Sachs - Singapore
- Meenaskhi Energy Private Limited - India
- GMR Energy Limited - India
- South Luzon Thermal Energy Corporation
- Siam City Cement - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhushan Steel Limited - India
- Rio Tinto Coal - Australia
- Aditya Birla Group - India
- Rashtriya Ispat Nigam Limited - India
- Larsen & Toubro Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Kalimantan Lumbung Energi - Indonesia
- Australian Coal Association
- Sical Logistics Limited - India
- Energy Link Ltd, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Tamil Nadu electricity Board
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- Economic Council, Georgia
- Chettinad Cement Corporation Ltd - India
- Sarangani Energy Corporation, Philippines
- Global Business Power Corporation, Philippines
- The Treasury - Australian Government
- Riau Bara Harum - Indonesia
- Iligan Light & Power Inc, Philippines
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- IEA Clean Coal Centre - UK
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Sinarmas Energy and Mining - Indonesia
- Latin American Coal - Colombia
- Banpu Public Company Limited - Thailand
- Therma Luzon, Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Africa Commodities Group - South Africa
- Deloitte Consulting - India
- Coal and Oil Company - UAE
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Romanian Commodities Exchange
- Minerals Council of Australia
- Bangladesh Power Developement Board
- OPG Power Generation Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Kobexindo Tractors - Indoneisa
- Manunggal Multi Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- London Commodity Brokers - England
- Malabar Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Orica Mining Services - Indonesia
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- Madhucon Powers Ltd - India
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- Bayan Resources Tbk. - Indonesia
- White Energy Company Limited
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Wilmar Investment Holdings
- VISA Power Limited - India
- Indian Energy Exchange, India
- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- Simpson Spence & Young - Indonesia
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- Sakthi Sugars Limited - India
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Aboitiz Power Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Borneo Indobara - Indonesia
- Attock Cement Pakistan Limited
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Dalmia Cement Bharat India
- Tata Chemicals Ltd - India
- Globalindo Alam Lestari - Indonesia
- McConnell Dowell - Australia
- Billiton Holdings Pty Ltd - Australia
- ASAPP Information Group - India
- Cement Manufacturers Association - India
- Krishnapatnam Port Company Ltd. - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- The State Trading Corporation of India Ltd
- Ceylon Electricity Board - Sri Lanka
- Vedanta Resources Plc - India
- PNOC Exploration Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Jindal Steel & Power Ltd - India
- Planning Commission, India
- Timah Investasi Mineral - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Global Coal Blending Company Limited - Australia
- Medco Energi Mining Internasional
- Semirara Mining Corp, Philippines
- Ministry of Transport, Egypt
- Georgia Ports Authority, United States
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Bhatia International Limited - India
- Marubeni Corporation - India
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Power Finance Corporation Ltd., India
- Coastal Gujarat Power Limited - India
- Independent Power Producers Association of India
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- PTC India Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pendopo Energi Batubara - Indonesia
- Mintek Dendrill Indonesia
- Port Waratah Coal Services - Australia
- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- Metalloyd Limited - United Kingdom
- The University of Queensland
- GAC Shipping (India) Pvt Ltd
- GVK Power & Infra Limited - India
- Lanco Infratech Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Indonesian Coal Mining Association
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- Jaiprakash Power Ventures ltd
- Kartika Selabumi Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Sidhee Cement - India
- Grasim Industreis Ltd - India
- Standard Chartered Bank - UAE
- Semirara Mining and Power Corporation, Philippines
- Eastern Coal Council - USA
- Baramulti Group, Indonesia
- Oldendorff Carriers - Singapore
- Thai Mozambique Logistica
- Kepco SPC Power Corporation, Philippines
- SMG Consultants - Indonesia
- CNBM International Corporation - China
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- Kumho Petrochemical, South Korea
- Central Java Power - Indonesia
- Interocean Group of Companies - India
- Miang Besar Coal Terminal - Indonesia
- Ministry of Mines - Canada
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