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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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Tuesday, 28 January 14
DRY BULK SHIP OWNERS RETREAT TO OLD 'HABITS', REFUSING TO DEMOLISH OLD VESSELS, THREATENING MARKET RECOVERY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
If one thing is clear as we reflect on the 2013 shipping markets, it's that ship owners took advantage of low prices, in order to acquire newer ton ...
Monday, 27 January 14
MERCATOR SINGAPORE REPORTS 52% INCREASE IN EBITDA FOR Q3 FY 2014 AS COMPARED TO PREVIOUS QUARTER
COALspot.com: Mercator Lines (Singapore) Limited, a leading Indian-owned international dry bulk shipping company that operates a fleet of fourteen d ...
Monday, 27 January 14
13TH CLEAN COAL FORUM 2014
COALspot.com: (Press Release) - Produced by CDMC Events, The 13th Clean Coal Forum 2014 will be held on June 12 &13 2014 in Beijing, China. We a ...
Monday, 27 January 14
Q3 & Q4 API 8 CFR SOUTH CHINA COAL SWAPS CONTINUE TO REMAIN WEAK
COALspot.com: API 8 CFR South China Coal swaps for average Q1 14 delivery lost 4.45 percent month on month and closed at US$ 79.05 per mt as on Frid ...
Monday, 27 January 14
Q3 2014 SUB-BIT INDONESIA COAL SWAP LOST GROUND, ENDS AT $60 PMT
COALspot.com – Sub-Bit Indonesia coal swap (FOB) for average Q1’ 14 delivery lost 2.29% pmt month on month on Friday 24 January 2014. Th ...
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- Tata Chemicals Ltd - India
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- Independent Power Producers Association of India
- Malabar Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Agrawal Coal Company - India
- Altura Mining Limited, Indonesia
- London Commodity Brokers - England
- Chettinad Cement Corporation Ltd - India
- IHS Mccloskey Coal Group - USA
- Sical Logistics Limited - India
- Toyota Tsusho Corporation, Japan
- Goldman Sachs - Singapore
- Semirara Mining Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Indonesian Coal Mining Association
- Karaikal Port Pvt Ltd - India
- IEA Clean Coal Centre - UK
- White Energy Company Limited
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- Bangladesh Power Developement Board
- Indian Energy Exchange, India
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
- Jorong Barutama Greston.PT - Indonesia
- Ambuja Cements Ltd - India
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- Indika Energy - Indonesia
- VISA Power Limited - India
- Bhoruka Overseas - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Jindal Steel & Power Ltd - India
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Energy Development Corp, Philippines
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- PowerSource Philippines DevCo
- Samtan Co., Ltd - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Vizag Seaport Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Coal Association
- GVK Power & Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Deloitte Consulting - India
- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- Petron Corporation, Philippines
- Planning Commission, India
- The Treasury - Australian Government
- Coastal Gujarat Power Limited - India
- Binh Thuan Hamico - Vietnam
- Electricity Generating Authority of Thailand
- Cigading International Bulk Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Larsen & Toubro Limited - India
- Aboitiz Power Corporation - Philippines
- Mercuria Energy - Indonesia
- Star Paper Mills Limited - India
- PTC India Limited - India
- Singapore Mercantile Exchange
- Semirara Mining and Power Corporation, Philippines
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- Latin American Coal - Colombia
- Sree Jayajothi Cements Limited - India
- Jaiprakash Power Ventures ltd
- Energy Link Ltd, New Zealand
- Siam City Cement PLC, Thailand
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- Salva Resources Pvt Ltd - India
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Global Coal Blending Company Limited - Australia
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- Cement Manufacturers Association - India
- Vedanta Resources Plc - India
- Grasim Industreis Ltd - India
- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- Parliament of New Zealand
- Wilmar Investment Holdings
- Sinarmas Energy and Mining - Indonesia
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- Videocon Industries ltd - India
- TeaM Sual Corporation - Philippines
- Bhushan Steel Limited - India
- Madhucon Powers Ltd - India
- Romanian Commodities Exchange
- Power Finance Corporation Ltd., India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Baiduri Energy - Indonesia
- SMC Global Power, Philippines
- LBH Netherlands Bv - Netherlands
- New Zealand Coal & Carbon
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- Orica Mining Services - Indonesia
- Marubeni Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Gujarat Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- Medco Energi Mining Internasional
- Wood Mackenzie - Singapore
- Globalindo Alam Lestari - Indonesia
- Commonwealth Bank - Australia
- CNBM International Corporation - China
- Edison Trading Spa - Italy
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Kapuas Tunggal Persada - Indonesia
- Mercator Lines Limited - India
- Trasteel International SA, Italy
- Economic Council, Georgia
- PNOC Exploration Corporation - Philippines
- Attock Cement Pakistan Limited
- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- The State Trading Corporation of India Ltd
- Kaltim Prima Coal - Indonesia
- Dalmia Cement Bharat India
- Africa Commodities Group - South Africa
- Lanco Infratech Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- GMR Energy Limited - India
- Baramulti Group, Indonesia
- Minerals Council of Australia
- San Jose City I Power Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Anglo American - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- Bukit Makmur.PT - Indonesia
- Thiess Contractors Indonesia
- Posco Energy - South Korea
- Miang Besar Coal Terminal - Indonesia
- Chamber of Mines of South Africa
- Timah Investasi Mineral - Indoneisa
- Ministry of Transport, Egypt
- Interocean Group of Companies - India
- Pendopo Energi Batubara - Indonesia
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Siam City Cement - Thailand
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petrochimia International Co. Ltd.- Taiwan
- MS Steel International - UAE
- Central Java Power - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Thai Mozambique Logistica
- The University of Queensland
- Kepco SPC Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- Iligan Light & Power Inc, Philippines
- Xindia Steels Limited - India
- Renaissance Capital - South Africa
- Simpson Spence & Young - Indonesia
- Indian Oil Corporation Limited
- Directorate Of Revenue Intelligence - India
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Tamil Nadu electricity Board
- Intertek Mineral Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Orica Australia Pty. Ltd.
- Maheswari Brothers Coal Limited - India
- Price Waterhouse Coopers - Russia
- Global Green Power PLC Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Kobexindo Tractors - Indoneisa
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- Oldendorff Carriers - Singapore
- Central Electricity Authority - India
- Rio Tinto Coal - Australia
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