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Tuesday, 16 July 13
TAKE - OR - PAY CONTRACTS CONTINUE TO INCENTIVISE AUSTRALIAN COAL PRODUCERS DESPITE POTENTIAL NEGATIVE CASH MARGINS - WOOD MACKENZIE
 Australia's coal production has continued to grow, despite lower coal prices in 2013. Global investors and suppliers are therefore questioning whether more production will be shut down. Wood Mackenzie estimates that in 2013, only 4 million tonnes (mt) of coal production in Australia is at risk of closure even though 32mt of coal will be produced at negative margins, including sustaining capital. The decision to continue production instead of shutting it down can mainly be attributed to transport and port contracts in Australia, otherwise known as 'take-or-pay' contracts.
Take-or-pay contracts are fixed cost contracts that result in most producers paying for capacity regardless of tonnes shipped. Stronger growth in exports relative to new capacity build will reduce the average cost per tonne that miners pay for not fully utilising contracted capacity.
Mr. Viktor Tanevski, Coal Cost Analyst at Wood Mackenzie, says, "There have only been two mine closures so far in 2013 compared to seven in 2012. Despite the low coal price environment and current margin squeeze, take-or-pay contracts are incentivising coal producers to increase rather than reduce production, even if additional production is generating negative cash margins. This is because the fixed cost of infrastructure capacity makes the cost of shutting down even more expensive than the cost of maintaining production."
"We estimate that only 4mt, or just over 1% of Australia's coal exports in 2013, is at risk of closure based on Hard Coking Coal (HCC) price of US$171/t and thermal coal price of US$92/t. This is not a significant volume of output; however the amount at risk increases significantly under a lower price scenario.
Wood Mackenzie analyses that if average prices fall to US$122/t for HCC and US$77/t for thermal coal in 2013, then 45mt or 13% of Australia's coal exports in 2013 will be at risk of closure. At that price, a total of 204mt of production will be suffering negative margins.
In summary, Mr. Tanevski says, "Our expectation is that there will not be a significant dent in Australia's production this year. However, if prices do fall below expectations, the risk of closure for mines producing at negative margins will increase, reducing output."
Editor's notes:
Wood Mackenzie is the most comprehensive source of knowledge about the world's energy and metals industries. We analyse and advise on every stage along the value chain - from discovery to delivery, and beyond - to provide clients with the commercial insight that makes them stronger. For more information visit Wood Mackenzie.
Views expressed herein are personal views of the author and not that of COALspot.com and subject to COALspot.com's disclaimer clause. We welcome article submissions from experts in the areas of coal, mining, shipping, etc. To submit your articles please click here.
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Thursday, 22 August 13
PANAMAX : PERIOD MARKET IS STILL BEING LED BY STRONGER SENTIMENT IN THE FFA'S - FEARNRESEARCH
Handy
This week started slowly as expected. Indo biz now rate APS around 7k +60k to china and around 8k+80k to India. However, there are some ships ...
Wednesday, 21 August 13
DRY BULK SHIPPING - POSITIVE WINDOW FOR CAPESIZE OWNERS - PETER SAND
By: Peter Sand, Chief Shipping Analyst, BIMCO
Demand:
“Expect the unexpected from the dry bulk market” was what we wrote last time ar ...
Wednesday, 21 August 13
RATES FOR CAPES MOVED DECISIVELY NORTH THIS WEEK - INTERMODAL
COALspot.com - Right when the BDI seemed ready for another dive below the 1000 points level, the Dry Bulk market made significant comeback this week ...
Tuesday, 20 August 13
AUSTRALIA NEWCASTLE COAL EXPORTS FALL 19.15 PERCENT ON WEEK
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port fell 19.15 per cent week on week to 2.39 million mt f ...
Tuesday, 20 August 13
CAPESIZE RATES MORE SENSITIVE TO DEMAND - COMMODORE RESEARCH & CONSULTANCY
COALspot.com : Approximately 71.50 million tons of iron ore is now stockpiled at Chinese ports, 900,000 tons (-1%) less than a week ago, Commodore R ...
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- Latin American Coal - Colombia
- Agrawal Coal Company - India
- Indian Oil Corporation Limited
- Essar Steel Hazira Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- SMG Consultants - Indonesia
- Chettinad Cement Corporation Ltd - India
- London Commodity Brokers - England
- The Treasury - Australian Government
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- OPG Power Generation Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- ASAPP Information Group - India
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- Planning Commission, India
- Altura Mining Limited, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- Standard Chartered Bank - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- India Bulls Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- ICICI Bank Limited - India
- Coalindo Energy - Indonesia
- Semirara Mining Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Coal and Oil Company - UAE
- GMR Energy Limited - India
- Iligan Light & Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- Mercator Lines Limited - India
- Georgia Ports Authority, United States
- Kaltim Prima Coal - Indonesia
- Singapore Mercantile Exchange
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Antam Resourcindo - Indonesia
- Binh Thuan Hamico - Vietnam
- Chamber of Mines of South Africa
- VISA Power Limited - India
- Australian Coal Association
- Sarangani Energy Corporation, Philippines
- Star Paper Mills Limited - India
- Independent Power Producers Association of India
- Ministry of Finance - Indonesia
- Leighton Contractors Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- Bhushan Steel Limited - India
- Indika Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- Bangladesh Power Developement Board
- SN Aboitiz Power Inc, Philippines
- Anglo American - United Kingdom
- Indonesian Coal Mining Association
- Savvy Resources Ltd - HongKong
- PTC India Limited - India
- Baramulti Group, Indonesia
- Bulk Trading Sa - Switzerland
- Orica Mining Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- MS Steel International - UAE
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Central Java Power - Indonesia
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Gujarat Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Trasteel International SA, Italy
- Merrill Lynch Commodities Europe
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- PowerSource Philippines DevCo
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petron Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Maheswari Brothers Coal Limited - India
- Samtan Co., Ltd - South Korea
- CIMB Investment Bank - Malaysia
- Indo Tambangraya Megah - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Makmur.PT - Indonesia
- Economic Council, Georgia
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Aditya Birla Group - India
- Kapuas Tunggal Persada - Indonesia
- Simpson Spence & Young - Indonesia
- LBH Netherlands Bv - Netherlands
- Xindia Steels Limited - India
- Manunggal Multi Energi - Indonesia
- CNBM International Corporation - China
- Cement Manufacturers Association - India
- International Coal Ventures Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Jindal Steel & Power Ltd - India
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- The University of Queensland
- Neyveli Lignite Corporation Ltd, - India
- Marubeni Corporation - India
- Intertek Mineral Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- Mintek Dendrill Indonesia
- Deloitte Consulting - India
- White Energy Company Limited
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Jaiprakash Power Ventures ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Goldman Sachs - Singapore
- Timah Investasi Mineral - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Parliament of New Zealand
- Directorate Of Revenue Intelligence - India
- Semirara Mining and Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- New Zealand Coal & Carbon
- Salva Resources Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Uttam Galva Steels Limited - India
- Therma Luzon, Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Tata Chemicals Ltd - India
- Minerals Council of Australia
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Attock Cement Pakistan Limited
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- Sakthi Sugars Limited - India
- Parry Sugars Refinery, India
- Ministry of Mines - Canada
- Pendopo Energi Batubara - Indonesia
- Bharathi Cement Corporation - India
- Kepco SPC Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Wood Mackenzie - Singapore
- Romanian Commodities Exchange
- McConnell Dowell - Australia
- Orica Australia Pty. Ltd.
- Meenaskhi Energy Private Limited - India
- Global Coal Blending Company Limited - Australia
- Larsen & Toubro Limited - India
- Medco Energi Mining Internasional
- Ambuja Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indogreen Group - Indonesia
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- Edison Trading Spa - Italy
- Power Finance Corporation Ltd., India
- Videocon Industries ltd - India
- Sindya Power Generating Company Private Ltd
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Toyota Tsusho Corporation, Japan
- Ministry of Transport, Egypt
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- Interocean Group of Companies - India
- Formosa Plastics Group - Taiwan
- Bhatia International Limited - India
- IEA Clean Coal Centre - UK
- Eastern Coal Council - USA
- Eastern Energy - Thailand
- Riau Bara Harum - Indonesia
- Grasim Industreis Ltd - India
- Tamil Nadu electricity Board
- Billiton Holdings Pty Ltd - Australia
- Dalmia Cement Bharat India
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Vedanta Resources Plc - India
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- Vizag Seaport Private Limited - India
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