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Thursday, 30 January 14
JPU SETTLEMENT PRICE AS A BENCHMARK WILL DECLINE IN IMPORTANCE BUT REMAIN RELEVANT, SAYS WOOD MACKENZIE
 JPU price will remain above spot, trending closer to spot till 2015 then increasing to 2035.
Japanese Power Utilities (JPU) are approaching a crucial negotiation period with Australian coal producers in March, when large volumes are contracted annually. Wood Mackenzie says market players can expect JPU prices to remain above market prices for the foreseeable future. As for price trends, JPUs will have to pay high premiums till 2015, before dipping from 2016 to 2020. Post-2020 to the longer term, premium over spot prices will trend upwards again. This is a result of a move away from JPU-type coal in key demand markets, which also acts to reduce the significance of JPU price as a benchmark, although not negating it altogether.
In the next few years the JPU premium over market price will remain high, settling below US$7 per tonne ($/t) by 2015. Mr Prakash Sharma, Asia Pacific Coal Market Analyst for Wood Mackenzie says, "Although global oversupply persists in the overall seaborne thermal coal market, for the highly specific JPU-type coal supply, the market will be progressively tight as other customers increase their consumption of this type of coal.”
In the medium term from 2016 to 2020, Wood Mackenzie forecasts a period where the JPU premium will decline to as low as US$3.80/t over market price as additional JPU-type supply is set to come online and producers seek to gain market share by competitively pricing their product. However, growth in demand for lower quality coal in key markets is impacting producers' product mix strategies; thus reducing the availability of JPU-type coal. This combined with a longer-term decline in JPU-type supply capacity is projected to support the premium over spot prices.
Mr Rory Simington, Coal Supply Research Analyst for Wood Mackenzie elaborates, "Fast growing demand markets of China, India and South Korea, to some degree are turning away from higher priced JPU-type low ash coal towards a more inexpensive higher ash product available on the spot market. Producers who have experienced low prices throughout 2013, and have had their margins squeezed, have reduced production costs by switching much of their incremental production towards this higher ash 5,500kcal/kg NAR market. This leaves the supply growth picture for JPU-type coal fairly flat."
Japanese power plants cannot absorb a higher ash product due to their ash disposal concerns and have only used relatively small amounts of low-ash sub-bituminous coal from Indonesia. Therefore JPUs will likely still demand predominantly JPU-type coal. However, Japan's role in the Asia Pacific coal market place will diminish as its proportion of the thermal market declines from 31% to only ten percent by 2035. Consequently, this reduces the significance of JPU price as a benchmark.
Mr Sharma says, "With the fairly flat supply growth outlook for JPU-type coal, a tighter market will result for Japanese procurement. JPUs are acutely aware of this development. Since Japan is completely reliant on coal imports, JPUs are willing to pay a premium over spot prices to lock-in the price for twelve months rather than risk supply availability by switching to index-linked pricing. This is crucial as we believe nuclear capacity in Japan will not return to pre-Fukushima levels. As such, other fuels including coal will need to play a larger role."
"Even if headlines suggest Japan is increasing imports from North America to reduce reliance on Australian producers, the negotiations are still of great importance to Japan as we do not foresee North American supply satisfying their requirements to the same extent Australian producers can." North America currently supplies two percent of Japan's thermal coal requirements. By 2025, Wood Mackenzie estimates North America will still only make up less than ten percent of Japan's thermal coal requirements.
For the longer term past 2020, Wood Mackenzie forecasts premia rising steadily again as the availability of JPU-type coal continues to decline. The margin between JPU settlement price and cost of JPU-type coal production will support the development of new projects. Therefore, JPUs will have to recognise the need to offer higher premiums in order to incentivise new supply. The steadily rising premium will reach US$5.50/t by 2027 and US$10/t in 2035 as higher cost coal projects are developed.
In summary, Mr Sharma says, "Japan recognises the need to secure supply and price stability. Therefore, JPUs favour contracts to the spot market, even at a premium. This will keep JPU pricing relevant albeit playing a diminishing role as a benchmark due to the growing market proportion of higher-ash coal in the region. In the longer term post-2020, this need will translate to JPUs having to pay higher premiums so as to incentivise Australian producers to maintain supply capacity. Hence, the JPU benchmark may lose the status of price-setter but will not likely become a price-taker even if it means that the premium will persist."
Wood Mackenzie's Editor’s notes:
JPU-type coal refers to the coal type imported by Japanese Power Utilities which is prime quality bituminous thermal coal (6322kcal/kg GAR) from Australia under term contracts.
Market prices refers to New FOB Newcastle Market Price @6000kcal/kg NAR. It is used interchangeably with the term 'spot price' in this news release.
About Wood Mackenzie
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: www.woodmac.com
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Monday, 10 February 14
Q1 2015, API 8 CFR SOUTH CHINA COAL SWAP CLOSED AROUND $ 2 HIGHER THAN Q2 14 PRICE
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 delivery lost 2.61 percent month on month and closed at US$ 77.28 per mt as on Frid ...
Monday, 10 February 14
SUPRAMAX STILL AT AROUND US$ 5K + BB 50K DELIVERY KALIMANTAN FOR A TRIP TO INDIA - CAPT. REDDY
COALspot.com: The BDI was down by 1.71 pct and closed at 1091 points week ended 7 February 2014. The BDI seemed to reach the bottom as the cape inde ...
Saturday, 08 February 14
U.S PRODUCED 84.5 MMMST OF COAL IN JANUARY; 2.05% UP MONTH ON MONTH, EIA SAYS
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.8 million short tons (mmst) of coal in ...
Friday, 07 February 14
DRY BULK MARKET ON ' REVERSE' MODE DUE TO CHINESE HOLIDAYS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept its uninspiring mood throughout yet another week, with the Baltic Dry Index (BDI) hovering slightly above the 1,000-poi ...
Thursday, 06 February 14
INDONESIA'S BAN ON THE EXPORT OF RAW MINERAL ORES COMES INTO FORCE - INCE & CO
COALspot.com: On 12 January 2014, the ban on the export of unprocessed mineral ores came into effect in Indonesia. This ban enforces the Mining Law ...
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- Australian Coal Association
- Altura Mining Limited, Indonesia
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- Indonesian Coal Mining Association
- GMR Energy Limited - India
- GVK Power & Infra Limited - India
- PowerSource Philippines DevCo
- Straits Asia Resources Limited - Singapore
- Toyota Tsusho Corporation, Japan
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- PNOC Exploration Corporation - Philippines
- Sakthi Sugars Limited - India
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Mintek Dendrill Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Pendopo Energi Batubara - Indonesia
- Ministry of Finance - Indonesia
- Renaissance Capital - South Africa
- New Zealand Coal & Carbon
- Dalmia Cement Bharat India
- Gujarat Mineral Development Corp Ltd - India
- Standard Chartered Bank - UAE
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Mines - Canada
- Goldman Sachs - Singapore
- Thiess Contractors Indonesia
- Meenaskhi Energy Private Limited - India
- Essar Steel Hazira Ltd - India
- Antam Resourcindo - Indonesia
- IHS Mccloskey Coal Group - USA
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- VISA Power Limited - India
- ICICI Bank Limited - India
- Kartika Selabumi Mining - Indonesia
- Merrill Lynch Commodities Europe
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Australia Pty. Ltd.
- Kideco Jaya Agung - Indonesia
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- Therma Luzon, Inc, Philippines
- Uttam Galva Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- Sinarmas Energy and Mining - Indonesia
- SMG Consultants - Indonesia
- Globalindo Alam Lestari - Indonesia
- Baramulti Group, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- The State Trading Corporation of India Ltd
- Rashtriya Ispat Nigam Limited - India
- Energy Development Corp, Philippines
- India Bulls Power Limited - India
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- Edison Trading Spa - Italy
- The Treasury - Australian Government
- Maheswari Brothers Coal Limited - India
- Leighton Contractors Pty Ltd - Australia
- Grasim Industreis Ltd - India
- European Bulk Services B.V. - Netherlands
- Georgia Ports Authority, United States
- Lanco Infratech Ltd - India
- Salva Resources Pvt Ltd - India
- Anglo American - United Kingdom
- Bulk Trading Sa - Switzerland
- SN Aboitiz Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- ASAPP Information Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- White Energy Company Limited
- Sarangani Energy Corporation, Philippines
- Commonwealth Bank - Australia
- Chamber of Mines of South Africa
- OPG Power Generation Pvt Ltd - India
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Central Java Power - Indonesia
- Indogreen Group - Indonesia
- Mercator Lines Limited - India
- Riau Bara Harum - Indonesia
- Bhoruka Overseas - Indonesia
- CNBM International Corporation - China
- Indian Energy Exchange, India
- Ambuja Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Attock Cement Pakistan Limited
- Borneo Indobara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Indian Oil Corporation Limited
- Cement Manufacturers Association - India
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Gujarat Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- PTC India Limited - India
- Central Electricity Authority - India
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- Global Coal Blending Company Limited - Australia
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Tata Chemicals Ltd - India
- Eastern Coal Council - USA
- Vizag Seaport Private Limited - India
- Savvy Resources Ltd - HongKong
- International Coal Ventures Pvt Ltd - India
- Wood Mackenzie - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Iligan Light & Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Heidelberg Cement - Germany
- Price Waterhouse Coopers - Russia
- Vijayanagar Sugar Pvt Ltd - India
- Marubeni Corporation - India
- Eastern Energy - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Bangladesh Power Developement Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Trasteel International SA, Italy
- Siam City Cement PLC, Thailand
- Xindia Steels Limited - India
- Medco Energi Mining Internasional
- Ministry of Transport, Egypt
- Kalimantan Lumbung Energi - Indonesia
- Sical Logistics Limited - India
- Siam City Cement - Thailand
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- Indo Tambangraya Megah - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Krishnapatnam Port Company Ltd. - India
- Binh Thuan Hamico - Vietnam
- Africa Commodities Group - South Africa
- CIMB Investment Bank - Malaysia
- Chettinad Cement Corporation Ltd - India
- Malabar Cements Ltd - India
- Australian Commodity Traders Exchange
- Singapore Mercantile Exchange
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
- Global Business Power Corporation, Philippines
- Bhushan Steel Limited - India
- Jaiprakash Power Ventures ltd
- Gujarat Sidhee Cement - India
- Formosa Plastics Group - Taiwan
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Parry Sugars Refinery, India
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- Minerals Council of Australia
- Metalloyd Limited - United Kingdom
- TeaM Sual Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Tamil Nadu electricity Board
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Manunggal Multi Energi - Indonesia
- Port Waratah Coal Services - Australia
- Ceylon Electricity Board - Sri Lanka
- Indika Energy - Indonesia
- Rio Tinto Coal - Australia
- Directorate General of MIneral and Coal - Indonesia
- San Jose City I Power Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Bayan Resources Tbk. - Indonesia
- Bhatia International Limited - India
- Electricity Authority, New Zealand
- SMC Global Power, Philippines
- Kumho Petrochemical, South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Samtan Co., Ltd - South Korea
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
- Aboitiz Power Corporation - Philippines
- Bharathi Cement Corporation - India
- Kepco SPC Power Corporation, Philippines
- Star Paper Mills Limited - India
- Mjunction Services Limited - India
- Coal and Oil Company - UAE
- Timah Investasi Mineral - Indoneisa
- Aditya Birla Group - India
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- Thai Mozambique Logistica
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Energy Link Ltd, New Zealand
- Latin American Coal - Colombia
- MS Steel International - UAE
- Jindal Steel & Power Ltd - India
- Electricity Generating Authority of Thailand
- Kapuas Tunggal Persada - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Wilmar Investment Holdings
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Parliament of New Zealand
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