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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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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Posco Energy - South Korea
- OPG Power Generation Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Star Paper Mills Limited - India
- Jindal Steel & Power Ltd - India
- Global Coal Blending Company Limited - Australia
- AsiaOL BioFuels Corp., Philippines
- Sarangani Energy Corporation, Philippines
- Indika Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- Iligan Light & Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- Siam City Cement - Thailand
- Trasteel International SA, Italy
- Petrochimia International Co. Ltd.- Taiwan
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- ICICI Bank Limited - India
- Globalindo Alam Lestari - Indonesia
- Anglo American - United Kingdom
- Essar Steel Hazira Ltd - India
- Samtan Co., Ltd - South Korea
- Minerals Council of Australia
- Kobexindo Tractors - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Xindia Steels Limited - India
- Formosa Plastics Group - Taiwan
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- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Ambuja Cements Ltd - India
- The State Trading Corporation of India Ltd
- McConnell Dowell - Australia
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- TNB Fuel Sdn Bhd - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Transport, Egypt
- Bulk Trading Sa - Switzerland
- Economic Council, Georgia
- Salva Resources Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Bayan Resources Tbk. - Indonesia
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- Aboitiz Power Corporation - Philippines
- Parliament of New Zealand
- Renaissance Capital - South Africa
- Interocean Group of Companies - India
- Jorong Barutama Greston.PT - Indonesia
- VISA Power Limited - India
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Finance - Indonesia
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Bukit Makmur.PT - Indonesia
- Bangladesh Power Developement Board
- IEA Clean Coal Centre - UK
- Therma Luzon, Inc, Philippines
- Energy Development Corp, Philippines
- Aditya Birla Group - India
- White Energy Company Limited
- Lanco Infratech Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Asmin Koalindo Tuhup - Indonesia
- Borneo Indobara - Indonesia
- SMC Global Power, Philippines
- Deloitte Consulting - India
- Billiton Holdings Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhatia International Limited - India
- India Bulls Power Limited - India
- Edison Trading Spa - Italy
- Power Finance Corporation Ltd., India
- Sindya Power Generating Company Private Ltd
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- SMG Consultants - Indonesia
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- New Zealand Coal & Carbon
- Sical Logistics Limited - India
- Madhucon Powers Ltd - India
- Australian Coal Association
- Grasim Industreis Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Malabar Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Indo Tambangraya Megah - Indonesia
- Medco Energi Mining Internasional
- Marubeni Corporation - India
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Meenaskhi Energy Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Agrawal Coal Company - India
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Toyota Tsusho Corporation, Japan
- Meralco Power Generation, Philippines
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GMR Energy Limited - India
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate Of Revenue Intelligence - India
- International Coal Ventures Pvt Ltd - India
- Heidelberg Cement - Germany
- CNBM International Corporation - China
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- Chamber of Mines of South Africa
- London Commodity Brokers - England
- Baramulti Group, Indonesia
- Coalindo Energy - Indonesia
- Australian Commodity Traders Exchange
- Kohat Cement Company Ltd. - Pakistan
- LBH Netherlands Bv - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Orica Australia Pty. Ltd.
- Timah Investasi Mineral - Indoneisa
- Petron Corporation, Philippines
- Port Waratah Coal Services - Australia
- PowerSource Philippines DevCo
- Thiess Contractors Indonesia
- Binh Thuan Hamico - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- ASAPP Information Group - India
- Electricity Generating Authority of Thailand
- Barasentosa Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Videocon Industries ltd - India
- Bhoruka Overseas - Indonesia
- GVK Power & Infra Limited - India
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- Simpson Spence & Young - Indonesia
- Vedanta Resources Plc - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coal and Oil Company - UAE
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Altura Mining Limited, Indonesia
- Electricity Authority, New Zealand
- Latin American Coal - Colombia
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Gujarat Sidhee Cement - India
- Sree Jayajothi Cements Limited - India
- PTC India Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Oldendorff Carriers - Singapore
- Manunggal Multi Energi - Indonesia
- Mintek Dendrill Indonesia
- Savvy Resources Ltd - HongKong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parry Sugars Refinery, India
- Sojitz Corporation - Japan
- Eastern Coal Council - USA
- Carbofer General Trading SA - India
- Sakthi Sugars Limited - India
- Ind-Barath Power Infra Limited - India
- Planning Commission, India
- Indian Oil Corporation Limited
- Indonesian Coal Mining Association
- Vijayanagar Sugar Pvt Ltd - India
- Goldman Sachs - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- Ministry of Mines - Canada
- Siam City Cement PLC, Thailand
- Riau Bara Harum - Indonesia
- MS Steel International - UAE
- Coastal Gujarat Power Limited - India
- Central Electricity Authority - India
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- Romanian Commodities Exchange
- Chettinad Cement Corporation Ltd - India
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- Merrill Lynch Commodities Europe
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Singapore Mercantile Exchange
- Wilmar Investment Holdings
- Eastern Energy - Thailand
- Orica Mining Services - Indonesia
- Maheswari Brothers Coal Limited - India
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