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Monday, 09 February 15
AUSTRALIAN COAL PRODUCERS BEST POSITIONED IN OVERSUPPLIED MARKET; US MINES MOST AT RISK - WOOD MACKENZIE
 In a 2015 global coal outlook report, Wood Mackenzie says that Australia and Indonesian coal suppliers will see some upside in the difficult months ahead as they continue to capture market share of coal exports from higher cost producers. Further modest productivity gains, the rapid fall in oil prices and currency devaluation in Australia and Russia will help lower costs. Therefore, Australian mines stands in a relatively strong position compared with higher cost suppliers - particularly those in the US - which are at much greater risk of closures this year. Even with increased closures and reduced US supply, Wood Mackenzie says they do not foresee sufficient volume exiting to balance the market and support price recovery. Lower-than-anticipated demand, especially from China combined with persistent production will be key factors that will sustain the weak market environment.
Australian producers best positioned in 2015
Mr Rory Simington, Principal Asia Pacific Coal Analyst says, “Australia is a standout competitor in both the metallurgical (met) and thermal coal trade, but particularly the former. Comparing 2014 from 2013, while global met coal import demand reduced by about 8 Mt, Australian exports rose by around 14 million tonnes (Mt), growing seaborne market share from 58% to 64%. The scalability of Australian mines and their high coal quality has enabled the displacement of major competitors in US, Canada and Indonesia. This trend is likely to continue thanks to a continued strong operating performance plus currency depreciation. On the other hand, US suppliers, many of which exhibit high costs, will not see the cost relief that currency devaluation brings to Australia.”
Furthermore, increased competition will come from higher Mozambique exports this year as Vale’s Nacala transport corridor ramps up indicating another year of aggressive pricing as producers fight to secure sales. In thermal coal, Australian exports were also strong, leaping 20Mt despite seaborne demand remaining essentially flat last year.
Lower costs discourage large-scale shutdowns
Despite a traumatic 2014 for the coal industry, mine shutdowns were relatively muted. Mr Simington explains, ”In fact metallurgical supply reductions were more than offset by the reduction in Chinese import demand, resulting in increased overcapacity. Although overall closures will accelerate this year, they will unlikely redress the imbalance.” Costly take or pay obligations in the event of closure, makes it more expensive for mines to shutdown than operate at a loss. As such, they remain in production and hamper the return to tighter market conditions. The recent low oil price and exchange rate has driven cost relief for Australia, Indonesia and Russia, which will further reduce the likelihood of wholesale supply cuts as well as delay any price recovery.
China uncertainties depress demand in oversupplied market
China’s economic rebalancing will continue to affect power demand growth and therefore thermal coal requirements. Of critical importance to the seaborne trade will be the effects of Government policies designed to protect the environment as well as domestic coal suppliers. Mr Robin Griffin, Research Director for Global Metallurgical Coal, says, “Current industry focus is on the new trace element restrictions for imported coal. We see most seaborne supply meeting the new guidelines but import levels are affected due to the uncertainty of the accuracy of coal quality tests and delays it may cause to the delivery process. Another big uncertainty to watch is the lengths to which the Chinese Government will go to protect its domestic industry.” Wood Mackenzie says stricter limits on imported coal quality is possible and the Government could make an aggressive move to waive the 17% value added tax (VAT) charged on coal sales which could considerably enhance the competitiveness of Chinese coal and enable some of the best quality and lowest cost Chinese coking coal to compete into Japan, South Korea or Taiwan. Should this occur, worsened oversupply conditions could occur in 2015.
Mr Griffin says “As China makes up 22% of seaborne trade and is expected see continued domestic oversupply, the country will be a major cause of depressed global import demand this year. Market fundamentals outside of China also remain uninspiring, for both metallurgical and thermal coal. Under such circumstances a material price recovery is unlikely this year”.
M&A activities to pick up in 2015
“Mine asset valuations have fallen considerably over the last three years due to the weakening market. Whilst low prices endure more companies will look to shed assets, perhaps to decrease debt or to allow a greater focus on their highest value operations. The negative price environment will persist through 2015 but not forever. Given our expectation of long term strength in coal demand fundamentals, the present market conditions offer a window of opportunity for both suppliers and buyers to consolidate their positions in the industry. We expect M&A to start picking up this year particularly for companies who want to gain a foothold in the industry for the long term.”
About Wood Mackenzie
Wood Mackenzie is a global leader in commercial intelligence for the energy, metals and mining industries. We provide objective analysis and advice on assets, companies and markets, giving clients the insights they need to make better strategic decisions
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Monday, 09 March 15
CHINA'S IMPORTS - NEVER MORE IMPORTANT TO SHIPPING? - CLARKSONS
Over the last 15 years China has led maritime forecasters a right old dance. In 2002, rumours that Chinese iron ore imports were about to take off ...
Sunday, 08 March 15
FREIGHT RATES FROM INDONESIA TO INDIA IS TRENDING UP
COALspot.com: The freight market continued to see gains this week and all the indices were rose except for Cape index. The BDI was increased 4.62 p ...
Friday, 06 March 15
BALTIC DRY INDEX: IS THIS POWERFUL INDICATOR SIGNALING A GLOBAL RECESSION? - STREET AUTHORITY
Although memories of the Great Recession linger, a case can be made that better days lie ahead.
That’s because central banks around the ...
Friday, 06 March 15
U.S. WEEKLY COAL PRODUCTION ROSE 3.5% WEEK ON WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.1 million short tons (mmst) of coal ...
Thursday, 05 March 15
PANAMAX : THE ATLANTIC ROUND IS NOW PAYING AROUND US$ 5K PER DAY
COALspot.com: Handy - The activity in the handy/supra segment is back. “ We see more fresh cargo in the market for 2nd half March dates ...
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- Marubeni Corporation - India
- Parry Sugars Refinery, India
- Cigading International Bulk Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Heidelberg Cement - Germany
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- TeaM Sual Corporation - Philippines
- Oldendorff Carriers - Singapore
- Karaikal Port Pvt Ltd - India
- Aditya Birla Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- VISA Power Limited - India
- Samtan Co., Ltd - South Korea
- Binh Thuan Hamico - Vietnam
- Sical Logistics Limited - India
- Tata Chemicals Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Transport, Egypt
- Bukit Makmur.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- OPG Power Generation Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- London Commodity Brokers - England
- Karbindo Abesyapradhi - Indoneisa
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- Metalloyd Limited - United Kingdom
- PNOC Exploration Corporation - Philippines
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Formosa Plastics Group - Taiwan
- Cement Manufacturers Association - India
- Grasim Industreis Ltd - India
- Directorate Of Revenue Intelligence - India
- India Bulls Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Singapore Mercantile Exchange
- Therma Luzon, Inc, Philippines
- GVK Power & Infra Limited - India
- Ambuja Cements Ltd - India
- Bharathi Cement Corporation - India
- Madhucon Powers Ltd - India
- CIMB Investment Bank - Malaysia
- Indian Energy Exchange, India
- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Pendopo Energi Batubara - Indonesia
- Vedanta Resources Plc - India
- Romanian Commodities Exchange
- MS Steel International - UAE
- AsiaOL BioFuels Corp., Philippines
- PowerSource Philippines DevCo
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- ICICI Bank Limited - India
- Eastern Coal Council - USA
- Jaiprakash Power Ventures ltd
- Sree Jayajothi Cements Limited - India
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- Directorate General of MIneral and Coal - Indonesia
- Makarim & Taira - Indonesia
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- Sojitz Corporation - Japan
- Orica Australia Pty. Ltd.
- Wilmar Investment Holdings
- Africa Commodities Group - South Africa
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Rio Tinto Coal - Australia
- Semirara Mining and Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Australian Commodity Traders Exchange
- Carbofer General Trading SA - India
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- Electricity Authority, New Zealand
- Standard Chartered Bank - UAE
- Central Java Power - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- Essar Steel Hazira Ltd - India
- San Jose City I Power Corp, Philippines
- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- Thai Mozambique Logistica
- South Luzon Thermal Energy Corporation
- Semirara Mining Corp, Philippines
- Bulk Trading Sa - Switzerland
- Georgia Ports Authority, United States
- Mercator Lines Limited - India
- Kartika Selabumi Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Uttam Galva Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- Global Business Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Gujarat Sidhee Cement - India
- Sindya Power Generating Company Private Ltd
- Kepco SPC Power Corporation, Philippines
- Latin American Coal - Colombia
- Borneo Indobara - Indonesia
- Planning Commission, India
- TNB Fuel Sdn Bhd - Malaysia
- Indian Oil Corporation Limited
- Antam Resourcindo - Indonesia
- Trasteel International SA, Italy
- Sinarmas Energy and Mining - Indonesia
- The State Trading Corporation of India Ltd
- Manunggal Multi Energi - Indonesia
- Economic Council, Georgia
- Coal and Oil Company - UAE
- Mjunction Services Limited - India
- Attock Cement Pakistan Limited
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Baramulti Group, Indonesia
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- Riau Bara Harum - Indonesia
- Agrawal Coal Company - India
- Malabar Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Banpu Public Company Limited - Thailand
- Bangladesh Power Developement Board
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- SMC Global Power, Philippines
- Power Finance Corporation Ltd., India
- Savvy Resources Ltd - HongKong
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parliament of New Zealand
- Petron Corporation, Philippines
- Larsen & Toubro Limited - India
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- The University of Queensland
- Lanco Infratech Ltd - India
- Bhatia International Limited - India
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- CNBM International Corporation - China
- Intertek Mineral Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Alfred C Toepfer International GmbH - Germany
- Australian Coal Association
- PTC India Limited - India
- Tamil Nadu electricity Board
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Port Waratah Coal Services - Australia
- Chamber of Mines of South Africa
- Barasentosa Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Wood Mackenzie - Singapore
- White Energy Company Limited
- Indonesian Coal Mining Association
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Mines - Canada
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ind-Barath Power Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Interocean Group of Companies - India
- Independent Power Producers Association of India
- Salva Resources Pvt Ltd - India
- ASAPP Information Group - India
- Coastal Gujarat Power Limited - India
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- IEA Clean Coal Centre - UK
- Simpson Spence & Young - Indonesia
- Energy Link Ltd, New Zealand
- GMR Energy Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Renaissance Capital - South Africa
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- Meenaskhi Energy Private Limited - India
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