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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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Thursday, 03 May 12
DRY BULK MARKET REMAINS INACTIVE, POSTING MILD DECREASE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept retreating this week, although at a very low pace, on the back of a lull in demand. The industry's benchmark, th ...
Thursday, 03 May 12
MINERS DEMAND LEGAL CERTAINTY ON PRE-BAN INTERIM POLICY - THE JAKARTA POST
The Jakarta Post reported that, Mining companies represented by the Indonesian Mining Association (IMA) welcomed the government’s plan to impo ...
Thursday, 03 May 12
HANDY EAST COAST INDIA - CHINA AROUND USD 7000 - FEARNLEYS AS
Handy - Stable demand in the Atlantic offered good rates for the tonnage.
USG/Cont was worth USD 17500 and more. Baltic and Black Sea appeared to ...
Wednesday, 02 May 12
CHINA BLACKOUTS HIGHLIGHT PRICING POLICY WEAKNESS - FITCH
Fitch reported that, the likelihood of further electricity blackouts in China this summer underlines Fitch's view of the basic problem f ...
Tuesday, 01 May 12
VIETNAM FEARS IT MAY NOT SEEK COAL SUPPLIES - TBKTSG / VIETNAMNET BRIDGE
TBKTSG / VietNamNet Bridge reported that, with five coal-run thermopower plants under construction, PetroVietnam alone would need 18 million tons of ...
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- Indonesian Coal Mining Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Sakthi Sugars Limited - India
- GVK Power & Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Electricity Authority, New Zealand
- Attock Cement Pakistan Limited
- Bharathi Cement Corporation - India
- Coalindo Energy - Indonesia
- PTC India Limited - India
- Global Coal Blending Company Limited - Australia
- Coastal Gujarat Power Limited - India
- Dalmia Cement Bharat India
- VISA Power Limited - India
- Formosa Plastics Group - Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Electricity Generating Authority of Thailand
- Timah Investasi Mineral - Indoneisa
- Binh Thuan Hamico - Vietnam
- SN Aboitiz Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Parliament of New Zealand
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- McConnell Dowell - Australia
- CIMB Investment Bank - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Posco Energy - South Korea
- Barasentosa Lestari - Indonesia
- SMC Global Power, Philippines
- Indika Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- The University of Queensland
- Altura Mining Limited, Indonesia
- Kobexindo Tractors - Indoneisa
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Cement Manufacturers Association - India
- Gujarat Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- CNBM International Corporation - China
- Thiess Contractors Indonesia
- India Bulls Power Limited - India
- Vedanta Resources Plc - India
- Makarim & Taira - Indonesia
- Medco Energi Mining Internasional
- Anglo American - United Kingdom
- Petron Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ceylon Electricity Board - Sri Lanka
- Alfred C Toepfer International GmbH - Germany
- Holcim Trading Pte Ltd - Singapore
- Ministry of Finance - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Xindia Steels Limited - India
- New Zealand Coal & Carbon
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- London Commodity Brokers - England
- Savvy Resources Ltd - HongKong
- Siam City Cement - Thailand
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- Rio Tinto Coal - Australia
- Port Waratah Coal Services - Australia
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- European Bulk Services B.V. - Netherlands
- Sarangani Energy Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Malabar Cements Ltd - India
- Standard Chartered Bank - UAE
- Chettinad Cement Corporation Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- SMG Consultants - Indonesia
- Minerals Council of Australia
- Wood Mackenzie - Singapore
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chamber of Mines of South Africa
- Essar Steel Hazira Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Uttam Galva Steels Limited - India
- Latin American Coal - Colombia
- Cigading International Bulk Terminal - Indonesia
- Singapore Mercantile Exchange
- Karaikal Port Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Therma Luzon, Inc, Philippines
- Borneo Indobara - Indonesia
- Iligan Light & Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Antam Resourcindo - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- Wilmar Investment Holdings
- AsiaOL BioFuels Corp., Philippines
- Ministry of Mines - Canada
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- Globalindo Alam Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Bukit Makmur.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Indogreen Group - Indonesia
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- OPG Power Generation Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- Global Business Power Corporation, Philippines
- Australian Coal Association
- Goldman Sachs - Singapore
- Deloitte Consulting - India
- Thai Mozambique Logistica
- Kepco SPC Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- ICICI Bank Limited - India
- Simpson Spence & Young - Indonesia
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Directorate Of Revenue Intelligence - India
- Tata Chemicals Ltd - India
- Energy Link Ltd, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Mercator Lines Limited - India
- Heidelberg Cement - Germany
- Samtan Co., Ltd - South Korea
- Madhucon Powers Ltd - India
- Videocon Industries ltd - India
- PNOC Exploration Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Planning Commission, India
- Mjunction Services Limited - India
- Trasteel International SA, Italy
- GAC Shipping (India) Pvt Ltd
- Central Electricity Authority - India
- Orica Australia Pty. Ltd.
- Riau Bara Harum - Indonesia
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- Romanian Commodities Exchange
- Manunggal Multi Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Siam City Cement PLC, Thailand
- Marubeni Corporation - India
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- The Treasury - Australian Government
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Baiduri Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- LBH Netherlands Bv - Netherlands
- Sojitz Corporation - Japan
- Maheswari Brothers Coal Limited - India
- Kalimantan Lumbung Energi - Indonesia
- ASAPP Information Group - India
- MS Steel International - UAE
- Bayan Resources Tbk. - Indonesia
- Indian Energy Exchange, India
- Indian Oil Corporation Limited
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
- Parry Sugars Refinery, India
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- White Energy Company Limited
- Mercuria Energy - Indonesia
- Edison Trading Spa - Italy
- Bulk Trading Sa - Switzerland
- Orica Mining Services - Indonesia
- The State Trading Corporation of India Ltd
- Kumho Petrochemical, South Korea
- Vizag Seaport Private Limited - India
- Gujarat Sidhee Cement - India
- Independent Power Producers Association of India
- Eastern Coal Council - USA
- IEA Clean Coal Centre - UK
- Economic Council, Georgia
- Agrawal Coal Company - India
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