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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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Tuesday, 30 December 14
U.S WEEKLY COAL PRODUCTION ALMOST FLAT AT -0.2%
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.8 million short tons (mmst) of coal ...
Monday, 29 December 14
CHINESE COAL IMPORTS: REGULATORY RISKS? - CLARKSONS
In recent years, Chinese seaborne coal imports have surged, registering average growth of 67% p.a. between 2009 and 2013 to total 265mt. However, t ...
Monday, 29 December 14
BULK MARKET ENDS YEAR ON SOUR NOTE, SHIPBROKER SEES 'BUMPY ROAD AHEAD' - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
2014 was supposed to be the year that the dry bulk market would stage a comeback and a sustainable one for that matter. However, while for the most ...
Monday, 29 December 14
Q1'15 CFR SOUTH CHINA COAL SWAP CLOSED AT $59.42
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased by US$ 3.51 (-5.58%) month over month and US$ 0.08 (-0.13%) ...
Monday, 29 December 14
SGX'S FOB NEWCASTLE COAL SWAPS IMPROVED W-O-W, LOST M-O-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.44 per MT (-2.73%) month over month and gained US$ 0.36 (+0.71%) ...
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- Bhoruka Overseas - Indonesia
- Ind-Barath Power Infra Limited - India
- Chamber of Mines of South Africa
- Agrawal Coal Company - India
- New Zealand Coal & Carbon
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Videocon Industries ltd - India
- Maheswari Brothers Coal Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Coal Blending Company Limited - Australia
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- Star Paper Mills Limited - India
- Samtan Co., Ltd - South Korea
- Jaiprakash Power Ventures ltd
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- Posco Energy - South Korea
- ICICI Bank Limited - India
- Kapuas Tunggal Persada - Indonesia
- Mercuria Energy - Indonesia
- Petron Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Africa Commodities Group - South Africa
- Intertek Mineral Services - Indonesia
- The Treasury - Australian Government
- Cement Manufacturers Association - India
- Central Java Power - Indonesia
- Orica Australia Pty. Ltd.
- Coalindo Energy - Indonesia
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- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
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- Savvy Resources Ltd - HongKong
- Indika Energy - Indonesia
- Independent Power Producers Association of India
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- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Grasim Industreis Ltd - India
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Goldman Sachs - Singapore
- Oldendorff Carriers - Singapore
- Aditya Birla Group - India
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- Sical Logistics Limited - India
- Sindya Power Generating Company Private Ltd
- PTC India Limited - India
- London Commodity Brokers - England
- PowerSource Philippines DevCo
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- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
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- Minerals Council of Australia
- Meralco Power Generation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- Tata Chemicals Ltd - India
- ASAPP Information Group - India
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- Siam City Cement PLC, Thailand
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- Bayan Resources Tbk. - Indonesia
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- San Jose City I Power Corp, Philippines
- Attock Cement Pakistan Limited
- Coastal Gujarat Power Limited - India
- Karaikal Port Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- Vijayanagar Sugar Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Power Finance Corporation Ltd., India
- Australian Coal Association
- Carbofer General Trading SA - India
- CIMB Investment Bank - Malaysia
- Globalindo Alam Lestari - Indonesia
- White Energy Company Limited
- Eastern Coal Council - USA
- Energy Link Ltd, New Zealand
- Eastern Energy - Thailand
- Simpson Spence & Young - Indonesia
- Price Waterhouse Coopers - Russia
- CNBM International Corporation - China
- Ministry of Transport, Egypt
- Mjunction Services Limited - India
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
- Kobexindo Tractors - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Electricity Generating Authority of Thailand
- European Bulk Services B.V. - Netherlands
- Australian Commodity Traders Exchange
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Petrochimia International Co. Ltd.- Taiwan
- Planning Commission, India
- Kepco SPC Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Bhatia International Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Makarim & Taira - Indonesia
- LBH Netherlands Bv - Netherlands
- Tamil Nadu electricity Board
- Meenaskhi Energy Private Limited - India
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Ministry of Finance - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- Thiess Contractors Indonesia
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Standard Chartered Bank - UAE
- Jindal Steel & Power Ltd - India
- Ambuja Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- GMR Energy Limited - India
- Malabar Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Borneo Indobara - Indonesia
- Indonesian Coal Mining Association
- Therma Luzon, Inc, Philippines
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- India Bulls Power Limited - India
- Metalloyd Limited - United Kingdom
- Iligan Light & Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Energy Development Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- Gujarat Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- International Coal Ventures Pvt Ltd - India
- Semirara Mining Corp, Philippines
- The University of Queensland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- Global Green Power PLC Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- Latin American Coal - Colombia
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- Medco Energi Mining Internasional
- Wilmar Investment Holdings
- Indian Energy Exchange, India
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- Singapore Mercantile Exchange
- Larsen & Toubro Limited - India
- Marubeni Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Barasentosa Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Mintek Dendrill Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Madhucon Powers Ltd - India
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- Altura Mining Limited, Indonesia
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- Cigading International Bulk Terminal - Indonesia
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- Edison Trading Spa - Italy
- Indo Tambangraya Megah - Indonesia
- Vedanta Resources Plc - India
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- Aboitiz Power Corporation - Philippines
- Parliament of New Zealand
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