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Tuesday, 30 December 14
INDIA INC TO BENEFIT AS IMPORTED COAL PRICES SET TO FALL - RAHUL PRITHIANI
The Hindu: India‘s coal import volumes are set to rise by over 30 per cent over the next two years to 214 million tonnes in 2015-16, as domestic supply falls short of surging demand.
However, globally, the situation is just the reverse. Severe oversupply with few takers will drag down prices of both thermal and coking coal by about 25 per cent. This will slash fuel costs and support the profitability of India Inc. Lower prices will also cap India’s coal import bill, unlike a 17 per cent annual growth witnessed over the last five years.
Supply soars
Miners in major coal exporting countries like Indonesia and Australia have significantly ramped up investments over the past five years, anticipating steady off take from major importers such as India and China. For example, coal mining investments in Australia are estimated to have doubled to about $50 billion over 2009 to 2013 from about $25 billion over 2003 to 2008. Moreover, domestic coal supply in China is also likely to increase as its railway capacity for hauling coal expands by nearly one-third to three billion tonne by 2020. This will ease transportation bottlenecks in that country.
Thus, while coal supplies will grow, there are likely to be few takers.
Even as miners stack up supplies, off take by major consumers including China, the U.S. and Europe is set to post a muted rise. Weak GDP growth, a gradual shift to cleaner fuels and rising energy efficiencies will curb demand.
The most telling fact is that China, the world’s largest importer of coal, has placed import curbs, will further restrict demand. Over the last three months, it has banned imports of low-grade coal, while imposing import duties on both thermal (six per cent) and coking coal (three per cent). Global economic weakness and China’s measures to move away from an investment-led growth model will also halve the growth in coking coal importsover the next five years.
Thus, oversupply in the global coal market, along with weakening currencies in exporting countries, is expected to drag down thermal and coking coal prices by 25 per cent approximately over the next two years to $65 per tonne and $115 per tonne by 2015, respectively.
Advantage India
For India, which has scarce domestic energy resources, the above changing dynamics certainly bode well. India’s coal import volumes are expected to rise by 33 per cent over the next two years, as domestic production lags demand. In such a scenario, falling global coal prices will help India Inc.
In the power sector, projects running on imported coal — including that of Tata Power, Adani Power and Essar Power — will benefit the most from sliding coal prices. These projects have incurred huge losses since 2012-13 when Indonesian coal prices almost doubled following a change in regulations. However, with imported coal prices plummeting, returns of such projects are expected to improve. As per our analysis, for a project operating on imported coal, even a one per cent fall in fuel costs will drive up equity returns by 25 basis points.
Even power projects based on domestic coal will benefit, as they can increase blending of imported coal and boost utilisation rates. In particular, plant-load factors (PLFs) of post-2009 power projects, which languished at just 51 per cent in 2013-14, will improve gradually.
Similarly, input costs for cement and metal manufacturers will decline, supporting their profitability. For cement players, reliance on imported coal has gradually risen — reaching 30-35 per cent of total coal consumption in 2013-14, as the power sector was prioritised for domestic coal supply. As demand growth slowed and operating costs rose, the industry’s operating margins fell to 15 per cent in 2013-14 from 28 per cent in 2009-10. Therefore, falling imported coal prices, will reduce cost pressures for the sector through lower fuel costs, which will decline by 3-4 per cent in 2014-15. In particular, cement plants, which have higher reliance on coal imports, will witness a much sharper reduction in fuel costs, as imported coal prices are set to fall by 15-17 per cent in 2014-15.
The decline in global coking coal prices is good news even for steelmakers beset by muted demand and global overcapacity. With good-quality domestic supply being scarce, Indian steelmakers import nearly 70 per cent of their coking coal requirements and coal accounts for 30 per cent of their manufacturing costs. Thus, a sharp decline in global coking coal prices will drag down operating costs by 6-8 per cent in 2014-15 and thereby support profitability.
There are also some macroeconomic advantages. Most importantly, despite the rise in coal import (volumes), the value (or the import bill) will only rise marginally at a CAGR of one per cent over the next two years. This contrasts sharply vis-à-vis the past 5 years, when the bill had risen at a 17 per cent CAGR to Rs.888 billion (approximately US$ 13,950,428,156).
The author is Director, CRISIL.
Source: The Hindu
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Saturday, 03 January 15
U.S WEEKLY COAL PRODUCTION FELL 11.2% TO 17.6 MMST WEEK OVER WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.6 million short tons (mmst) of coal ...
Thursday, 01 January 15
FOB RICHARDS BAY COAL SWAPS CLOSED AT $63.47 PMT ON 26 DEC, SGX DATA SHOWS
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 lost month on month and week over week.
The Q1 swap has lost US$ 3.37 (-4. ...
Wednesday, 31 December 14
COASTAL ENERGEN (C&O) COMMENCES 1ST UNIT OF 1200 MW POWER PLANT IN INDIA
COALspot.com: Coastal Energen, part of the Coal & Oil Group, announced last week the commissioning and commencement of power production at the ...
Wednesday, 31 December 14
SUB-BIT INDONESIA COAL Q2' 15 DELIVERY SWAP CLOSED 1.03% LOWER COMPARED TO AVERAGE Q1' 15 DELIVERY PRICE - SGX
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month and gained week over week.
The Q1 swap has lost US$ 1.35 (-2 ...
Tuesday, 30 December 14
SHIP PRICES KEEP ON FALLING, SALES COME EARLY FOR SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Ship prices keep on falling on the back of low freight rates. According to the latest report from shipbroker Allied Shipbroking, January sales seem ...
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- Indian Oil Corporation Limited
- Jorong Barutama Greston.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Orica Australia Pty. Ltd.
- Cement Manufacturers Association - India
- Kapuas Tunggal Persada - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Parry Sugars Refinery, India
- Gujarat Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- White Energy Company Limited
- GN Power Mariveles Coal Plant, Philippines
- Australian Commodity Traders Exchange
- The University of Queensland
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- Jindal Steel & Power Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Indian Energy Exchange, India
- Malabar Cements Ltd - India
- The State Trading Corporation of India Ltd
- Independent Power Producers Association of India
- Bharathi Cement Corporation - India
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Indika Energy - Indonesia
- Videocon Industries ltd - India
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- Interocean Group of Companies - India
- Posco Energy - South Korea
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- Kaltim Prima Coal - Indonesia
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Bayan Resources Tbk. - Indonesia
- Iligan Light & Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- Semirara Mining and Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- ASAPP Information Group - India
- Sarangani Energy Corporation, Philippines
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
- Bhushan Steel Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Minerals Council of Australia
- Central Electricity Authority - India
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- CNBM International Corporation - China
- The Treasury - Australian Government
- Latin American Coal - Colombia
- Kalimantan Lumbung Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Energy Link Ltd, New Zealand
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- Ceylon Electricity Board - Sri Lanka
- Directorate General of MIneral and Coal - Indonesia
- Thiess Contractors Indonesia
- Sical Logistics Limited - India
- Kartika Selabumi Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Eastern Coal Council - USA
- Ambuja Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Rio Tinto Coal - Australia
- Energy Development Corp, Philippines
- Uttam Galva Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Globalindo Alam Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Commonwealth Bank - Australia
- Price Waterhouse Coopers - Russia
- Orica Mining Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pendopo Energi Batubara - Indonesia
- Semirara Mining Corp, Philippines
- Electricity Generating Authority of Thailand
- McConnell Dowell - Australia
- VISA Power Limited - India
- IHS Mccloskey Coal Group - USA
- Bangladesh Power Developement Board
- Barasentosa Lestari - Indonesia
- Central Java Power - Indonesia
- Indo Tambangraya Megah - Indonesia
- Petron Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Vedanta Resources Plc - India
- Ministry of Finance - Indonesia
- Directorate Of Revenue Intelligence - India
- Grasim Industreis Ltd - India
- TeaM Sual Corporation - Philippines
- PTC India Limited - India
- Aditya Birla Group - India
- Siam City Cement - Thailand
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- ICICI Bank Limited - India
- Binh Thuan Hamico - Vietnam
- Standard Chartered Bank - UAE
- SMG Consultants - Indonesia
- Aboitiz Power Corporation - Philippines
- Port Waratah Coal Services - Australia
- Kumho Petrochemical, South Korea
- Rashtriya Ispat Nigam Limited - India
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- GMR Energy Limited - India
- Tamil Nadu electricity Board
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Vizag Seaport Private Limited - India
- Maheswari Brothers Coal Limited - India
- Mercuria Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- Sojitz Corporation - Japan
- Kideco Jaya Agung - Indonesia
- Africa Commodities Group - South Africa
- Chamber of Mines of South Africa
- Bulk Trading Sa - Switzerland
- Karaikal Port Pvt Ltd - India
- Agrawal Coal Company - India
- Anglo American - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Medco Energi Mining Internasional
- Gujarat Sidhee Cement - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coal and Oil Company - UAE
- Deloitte Consulting - India
- Trasteel International SA, Italy
- Romanian Commodities Exchange
- Dalmia Cement Bharat India
- India Bulls Power Limited - India
- Goldman Sachs - Singapore
- Essar Steel Hazira Ltd - India
- Metalloyd Limited - United Kingdom
- Mercator Lines Limited - India
- Bukit Baiduri Energy - Indonesia
- Star Paper Mills Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Sree Jayajothi Cements Limited - India
- IEA Clean Coal Centre - UK
- Edison Trading Spa - Italy
- Borneo Indobara - Indonesia
- Indonesian Coal Mining Association
- Chettinad Cement Corporation Ltd - India
- Eastern Energy - Thailand
- SN Aboitiz Power Inc, Philippines
- SMC Global Power, Philippines
- Intertek Mineral Services - Indonesia
- Thai Mozambique Logistica
- Antam Resourcindo - Indonesia
- Planning Commission, India
- Billiton Holdings Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Bukit Makmur.PT - Indonesia
- Xindia Steels Limited - India
- Indogreen Group - Indonesia
- Riau Bara Harum - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Merrill Lynch Commodities Europe
- Australian Coal Association
- Leighton Contractors Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- Singapore Mercantile Exchange
- South Luzon Thermal Energy Corporation
- Maharashtra Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Global Business Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Holcim Trading Pte Ltd - Singapore
- Formosa Plastics Group - Taiwan
- Bhoruka Overseas - Indonesia
- Power Finance Corporation Ltd., India
- Kepco SPC Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Global Coal Blending Company Limited - Australia
- Oldendorff Carriers - Singapore
- Meralco Power Generation, Philippines
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- Heidelberg Cement - Germany
- Madhucon Powers Ltd - India
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