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Friday, 07 December 12
A NEW PHASE FOR AUSTRALIAN RESOURCES - A FITCH STREET INTERVIEW
 This week Matt Jamieson spoke with Andrew Colquhoun in Fitch's Asian sovereign rating team, and Vicky Melbourne, Fitch's commodity analyst based in Sydney, about the outlook for the Australian resources sector. Andrew and Vicky commented that Australia's resources sector is likely to enter a new phase based on sustainable volume growth, and that a high AUD/USD exchange rate is likely to persist with potentially negative implications for the non-resource economy. In this context Australia's large miners are likely to benefit from ongoing growth in commodity exports to China, notwithstanding lower commodity prices. Matt is Head of APAC Research in Fitch's Corporate Ratings Group.
Matt: Back in August 2012, Australia's Resources and Energy Minister made a comment to the effect that Australia's resources boom is over. Does Fitch agree with this view?
Vicky: No, we wouldn't subscribe to such a simplified view. Rather we believe the sector is entering a new and, perhaps, more sustainable growth phase focused on volumes, as opposed to the previous period of growth and investment based on high commodity prices. At the same time we believe that commodity prices are unlikely to return to previous high levels, and with mining cost inflation remaining stubbornly high, this may force the exit or consolidation of those miners with high-cost structures. This will result in a lower level of investment growth in the mining sector over the medium-to long-term, and related industries will be negatively impacted.
However, at least for the short-term, absolute investment levels are still growing. According to the Australian Bureau of Statistics's September capex survey, nominal spend in mining for 2012-13 is expected to increase 17.1% to AUD109bn which is only 3.5% lower than their estimate at the start of the year.
Matt: What will be impact of lower commodity prices and lower investment over the medium-to long-term on the Australian mining sector, and particularly for the larger players rated by Fitch?
Vicky: For the larger and more cost-efficient players, such as BHP Billiton Limited/Plc (BHP; 'A+'/Stable) and Rio Tinto Limited/Plc ( 'A-'/Stable), what they may lose in price, they are likely to make up for in terms of volume, particularly given their expansion over the past two to three years. Although these large miners have announced some curtailment to their expansion in light of China's slowdown, the potential for volume growth remains. Their free cash flow generation is also likely to increase as a result of a containment in operating costs and lower capex. Fortescue Metals Group Limited (Fortescue; 'BB+'/Negative), on the other hand, will benefit from a step-change in production volume and from becoming a lower cost iron ore producer from 2013 as its new Solomon Hub comes on line.
Matt: To what extent will the Australian economy be negatively impacted by the miners' likely reduction in investments and capital expenditure?
Vicky: Not substantially. At present, there are 87 mining industry projects committed and/or underway worth AUD268bn, with the majority of these in liquefied natural gas, and the balance in iron ore and coal. This represents a significant pipeline of investments despite the capex reductions announced by several entities. The bulk of this spending will peak in 2014 because of long lead times on projects, which means they will continue to provide a meaningful contribution to the Australian economy for at least two more years.
The main reduction in planned investments is related to uncommitted/not yet approved projects such as BHP's Olympic Dam, which now look unattractive given the current stage of the commodity cycle and the greater focus on capital allocations.
Matt: Andrew, what's your perspective on this? With China's economic growth slowing, does it not follow that Australia's resources sector is likely to face weakening demand?
Andrew: To the contrary, we think demand for Australia's resources from China will remain robust, although it is unlikely to grow as strongly in the next 10 years as it did in the previous decade. The chance of a Chinese "hard landing" in the near term appears to be diminishing and is certainly not Fitch's base case. Fitch still expects China to grow in the 7%-8% range over the next two to three years, albeit slower than the 9%-10% level achieved over 2009 to 2011. Importantly the size of China's economy is now around 40% greater than it was in 2008.
Under new leadership China will face the challenge of rebalancing its economy away from investment towards consumption. Even if the rate of China's growth in investment is not as strong as was the case historically, nonetheless a significant amount of investment still remains to occur. Its urbanisation rate is well below that of advanced countries, meaning that there is still a substantial amount of buildings and infrastructure to be built.
Matt: So Fitch actually expects demand for Australian resources to continue growing over the next two to three years?
Andrew: Yes. Chinese demand for key commodities including iron ore and coal will continue to grow in an absolute sense over the next two to three years, supported by government programmes to expand infrastructure and social housing construction. So while there may be fluctuations in China's demand for Australian resources in the short term, demand should continue growing over the long term.
Moreover, there is the rest of emerging Asia to consider. For example India took 6% of Australia's exports in 2011, well below China's 27% but up from 2% in 2001, and India is at an earlier stage of development than China.
Matt: Despite a lot of negative news on China's slowdown, and declines in commodity prices, the AUD/USD exchange rate has not significantly depreciated. What's behind this?
Andrew: It is partly a function of the continued strength in Australia's terms of trade due to still high commodity prices, and partly owing to the AUD gaining "reserve currency" status to some extent as global investors seek to diversify out of USD and EUR assets. The Australian sovereign is rated 'AAA' and the AUD is now the world's fifth-most traded currency.
Matt: These factors suggest that the AUD effective exchange rate could remain high even if commodity prices weaken, particularly if overall demand for Australia's resources remains strong. How will the rest of Australia's economy be able to cope?
Andrew: It will be a big challenge, but non-resource sectors will have to remain competitive by strengthening productivity to compete globally. The alternative, if companies cannot increase their productivity, is higher unemployment. The most likely outcome is probably a bit of both, depending on the particular industry and on government structural policies.
Matt: Vicky, a final question then. In light of Andrew's comments, outside of the resources industry what corporate sectors in Australia are most at risk to a higher effective exchange rate?
Vicky: The impact on the non-resource economy is significant, particularly on Australia's tourism industry, both local and inbound, on the country's export-reliant agriculture sector, and on its retail and manufacturing sectors. A higher cost base attributed to the strong AUD continues to negatively impact Australia's auto sector - and that is despite government subsidies. The Australian Industry Group's measure of manufacturing activity showed a ninth straight month of contraction in November as firms complained of soft demand, higher energy costs and a strong Australian dollar. Moreover, with most key industries under pressure, the negative spillover facing Australia's small-and-medium sized enterprises is significant.
Australia's retail sector and discretionary spending feed off the tourism industry, particularly in states like Queensland. The retail sector is already struggling from the proliferation of online shopping, and hence additional pressure due to a high exchange rate only compounds their difficulties. A high exchange rate also makes it more attractive for the larger supermarkets to source their own-brand foods and products from overseas as opposed to local producers, as they look to deliver on their "everyday low prices" campaigns. Finally, a weak retail sector has a knock-on effect on the commercial property sector.
Vicky Melbourne - Head of Industrials - South-East Asia & Australasia
Andrew Colquhoun - Head of APAC Sovereign Ratings, Hong Kong
Matt Jamieson - Head of APAC Research - Corporate Ratings Group, Seoul
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Thursday, 13 December 12
HANDY : WCI-CHINA RATES AROUND $ 6000 AND ECI-CHINA AROUND $ 4000 - FEARNLEYS
Handy
Atlantic market remained unchanged. Rates from USG to Feast were around USD 18k and Black Sea to Feast about USD 10k. USG-Skaw-Passero rates ...
Wednesday, 12 December 12
69.23 PERCENT OF END-USERS ARE BELIEVE, COAL PRICES ARE IN UPWARD TREND
COALspot.com - The Indonesian government’s declared coal reference price for December’ 12 has gained US cents 31 per MT M-o- ...
Wednesday, 12 December 12
CAPESIZE FREIGHT RATES TO RANGE BETWEEN $9,000 - 16,000/DAY IN THE COMING WEEKS SAYS BIMCO - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
In its regular update on the dry bulk market, BIMCO forecasted yesterday, that Capesize time-charter rates are expected to stay elevated in the foll ...
Tuesday, 11 December 12
NEWCASTLE PORT IN AUSTRALIA HAS LOADED 2,720,205 MT OF COAL W/E 10 DECEMBER 2012
COALspot.com - Newcastle port in Australia has loaded 2,720,205 MT of thermal and coking coal for week ended 0700 hours 10 December 2012, Newc ...
Sunday, 09 December 12
COAL SWAPS HAVE LOST DIRECTION DUE TO LACK OF ASIAN INTEREST
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average Q1’ 2013 delivery gained 2.43 percent M-M but lost WoW by 0.54 percent and 0.62 ...
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Showing 4466 to 4470 news of total 6871 |
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- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- Central Java Power - Indonesia
- Eastern Energy - Thailand
- Meralco Power Generation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- Romanian Commodities Exchange
- Asmin Koalindo Tuhup - Indonesia
- Straits Asia Resources Limited - Singapore
- Energy Link Ltd, New Zealand
- Cement Manufacturers Association - India
- Larsen & Toubro Limited - India
- Independent Power Producers Association of India
- Indian Oil Corporation Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Anglo American - United Kingdom
- Heidelberg Cement - Germany
- Kalimantan Lumbung Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Intertek Mineral Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mjunction Services Limited - India
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- Semirara Mining and Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Tamil Nadu electricity Board
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Trasteel International SA, Italy
- SN Aboitiz Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- The University of Queensland
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Bhushan Steel Limited - India
- PTC India Limited - India
- Siam City Cement PLC, Thailand
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- IEA Clean Coal Centre - UK
- Globalindo Alam Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- London Commodity Brokers - England
- Kideco Jaya Agung - Indonesia
- Ministry of Mines - Canada
- Holcim Trading Pte Ltd - Singapore
- The Treasury - Australian Government
- Kaltim Prima Coal - Indonesia
- Interocean Group of Companies - India
- Port Waratah Coal Services - Australia
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Orica Mining Services - Indonesia
- Carbofer General Trading SA - India
- Lanco Infratech Ltd - India
- ASAPP Information Group - India
- Toyota Tsusho Corporation, Japan
- Kepco SPC Power Corporation, Philippines
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- Jindal Steel & Power Ltd - India
- Oldendorff Carriers - Singapore
- Sarangani Energy Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Parliament of New Zealand
- Gujarat Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Sinarmas Energy and Mining - Indonesia
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- Sindya Power Generating Company Private Ltd
- Coastal Gujarat Power Limited - India
- Vizag Seaport Private Limited - India
- TeaM Sual Corporation - Philippines
- Energy Development Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Sical Logistics Limited - India
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- Bhatia International Limited - India
- Latin American Coal - Colombia
- GMR Energy Limited - India
- Aboitiz Power Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Commonwealth Bank - Australia
- AsiaOL BioFuels Corp., Philippines
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- Wood Mackenzie - Singapore
- Merrill Lynch Commodities Europe
- Tata Chemicals Ltd - India
- Manunggal Multi Energi - Indonesia
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- OPG Power Generation Pvt Ltd - India
- Electricity Authority, New Zealand
- Altura Mining Limited, Indonesia
- Medco Energi Mining Internasional
- The State Trading Corporation of India Ltd
- Planning Commission, India
- McConnell Dowell - Australia
- Thiess Contractors Indonesia
- Ceylon Electricity Board - Sri Lanka
- Metalloyd Limited - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Central Electricity Authority - India
- Maheswari Brothers Coal Limited - India
- Malabar Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Ministry of Transport, Egypt
- TNB Fuel Sdn Bhd - Malaysia
- GAC Shipping (India) Pvt Ltd
- Sojitz Corporation - Japan
- Electricity Generating Authority of Thailand
- San Jose City I Power Corp, Philippines
- PowerSource Philippines DevCo
- White Energy Company Limited
- New Zealand Coal & Carbon
- SMC Global Power, Philippines
- IHS Mccloskey Coal Group - USA
- Edison Trading Spa - Italy
- Makarim & Taira - Indonesia
- Orica Australia Pty. Ltd.
- Marubeni Corporation - India
- Kobexindo Tractors - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- Mintek Dendrill Indonesia
- Iligan Light & Power Inc, Philippines
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Posco Energy - South Korea
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
- CNBM International Corporation - China
- Economic Council, Georgia
- South Luzon Thermal Energy Corporation
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- Chamber of Mines of South Africa
- Jaiprakash Power Ventures ltd
- Samtan Co., Ltd - South Korea
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Vedanta Resources Plc - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bangladesh Power Developement Board
- Barasentosa Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Bharathi Cement Corporation - India
- Savvy Resources Ltd - HongKong
- Global Business Power Corporation, Philippines
- Aditya Birla Group - India
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- MS Steel International - UAE
- Australian Coal Association
- GN Power Mariveles Coal Plant, Philippines
- Mercuria Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- Dalmia Cement Bharat India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Madhucon Powers Ltd - India
- CIMB Investment Bank - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maharashtra Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- Mercator Lines Limited - India
- Alfred C Toepfer International GmbH - Germany
- Chettinad Cement Corporation Ltd - India
- Indian Energy Exchange, India
- Rashtriya Ispat Nigam Limited - India
- Xindia Steels Limited - India
- Singapore Mercantile Exchange
- Bhoruka Overseas - Indonesia
- Pendopo Energi Batubara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Simpson Spence & Young - Indonesia
- Petron Corporation, Philippines
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