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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, 02 March 15
FOB NEWCASTLE COAL SWAP ROSE 6.89% MONTH OVER MONTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 3.35 per MT (+6.89%) month over month and US$ 0.40 (0.78%) week on ...
Sunday, 01 March 15
BDI INDEX SLIGHTLY UP CAUSED AN INCREASE IN THE PANAMAX, SUPARAMAX AND HANDY SIZE INDICES
COALspot.com: The freight market saw some gains this week and BDI was up 5.26 pct closed at 540 points. However the Cape index failed to follow BDI ...
Friday, 27 February 15
WEEKLY US COAL PRODUCTION DOWN AN ESTIMATED 14.0% FROM LAST WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 16.5 million short tons (mmst) of coal ...
Thursday, 26 February 15
DRY BULK MARKET COULD REBOUND FROM HISTORICAL LOWS IN THE COMING WEEKS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market could exit from its historical lows in the coming weeks, as Chinese buyers reenter the market after the holiday celebrations. T ...
Thursday, 26 February 15
COAL POLICY RISK: HIGHER ROYALTIES FOR IUP HOLDERS - BAHANA SECURITIES | JAKARTA POST
The Energy and Mineral Resources Ministry plans to raise coal royalties charged to mining operation permit (IUP) holders by the end of the first qu ...
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- Wood Mackenzie - Singapore
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Australian Commodity Traders Exchange
- Barasentosa Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Sakthi Sugars Limited - India
- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Straits Asia Resources Limited - Singapore
- Bangladesh Power Developement Board
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Bayan Resources Tbk. - Indonesia
- Simpson Spence & Young - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
- Indian Oil Corporation Limited
- TNB Fuel Sdn Bhd - Malaysia
- CNBM International Corporation - China
- Sinarmas Energy and Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- Videocon Industries ltd - India
- TeaM Sual Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Global Coal Blending Company Limited - Australia
- Indonesian Coal Mining Association
- Ind-Barath Power Infra Limited - India
- Aboitiz Power Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Marubeni Corporation - India
- Chamber of Mines of South Africa
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- Mercator Lines Limited - India
- Makarim & Taira - Indonesia
- Georgia Ports Authority, United States
- Kapuas Tunggal Persada - Indonesia
- Vizag Seaport Private Limited - India
- Tamil Nadu electricity Board
- GVK Power & Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement - Thailand
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- Aditya Birla Group - India
- Central Java Power - Indonesia
- PNOC Exploration Corporation - Philippines
- Bhatia International Limited - India
- Ambuja Cements Ltd - India
- Eastern Coal Council - USA
- GN Power Mariveles Coal Plant, Philippines
- India Bulls Power Limited - India
- Goldman Sachs - Singapore
- LBH Netherlands Bv - Netherlands
- IEA Clean Coal Centre - UK
- Holcim Trading Pte Ltd - Singapore
- Xindia Steels Limited - India
- Maheswari Brothers Coal Limited - India
- London Commodity Brokers - England
- Jaiprakash Power Ventures ltd
- Ceylon Electricity Board - Sri Lanka
- Anglo American - United Kingdom
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- Global Green Power PLC Corporation, Philippines
- White Energy Company Limited
- Neyveli Lignite Corporation Ltd, - India
- Uttam Galva Steels Limited - India
- Savvy Resources Ltd - HongKong
- Metalloyd Limited - United Kingdom
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Medco Energi Mining Internasional
- Pipit Mutiara Jaya. PT, Indonesia
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- Sarangani Energy Corporation, Philippines
- Thiess Contractors Indonesia
- Sree Jayajothi Cements Limited - India
- Therma Luzon, Inc, Philippines
- Jindal Steel & Power Ltd - India
- Alfred C Toepfer International GmbH - Germany
- The Treasury - Australian Government
- Salva Resources Pvt Ltd - India
- Bharathi Cement Corporation - India
- SMC Global Power, Philippines
- Larsen & Toubro Limited - India
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Deloitte Consulting - India
- Parry Sugars Refinery, India
- Planning Commission, India
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- Eastern Energy - Thailand
- Kepco SPC Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Cement Manufacturers Association - India
- International Coal Ventures Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Sical Logistics Limited - India
- Energy Development Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Electricity Generating Authority of Thailand
- GMR Energy Limited - India
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- Chettinad Cement Corporation Ltd - India
- Kobexindo Tractors - Indoneisa
- Mercuria Energy - Indonesia
- Interocean Group of Companies - India
- Kaltim Prima Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Vedanta Resources Plc - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Independent Power Producers Association of India
- Merrill Lynch Commodities Europe
- Commonwealth Bank - Australia
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- MS Steel International - UAE
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Attock Cement Pakistan Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- VISA Power Limited - India
- OPG Power Generation Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Indo Tambangraya Megah - Indonesia
- Standard Chartered Bank - UAE
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- Parliament of New Zealand
- ASAPP Information Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indogreen Group - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Edison Trading Spa - Italy
- Dalmia Cement Bharat India
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- Electricity Authority, New Zealand
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- Posco Energy - South Korea
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Sindya Power Generating Company Private Ltd
- GAC Shipping (India) Pvt Ltd
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Africa Commodities Group - South Africa
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- SN Aboitiz Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Petron Corporation, Philippines
- Economic Council, Georgia
- Thai Mozambique Logistica
- Toyota Tsusho Corporation, Japan
- Bhushan Steel Limited - India
- Singapore Mercantile Exchange
- Energy Link Ltd, New Zealand
- Intertek Mineral Services - Indonesia
- Star Paper Mills Limited - India
- Rashtriya Ispat Nigam Limited - India
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Timah Investasi Mineral - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Australian Coal Association
- Cigading International Bulk Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Bhoruka Overseas - Indonesia
- Wilmar Investment Holdings
- South Luzon Thermal Energy Corporation
- Romanian Commodities Exchange
- Orica Mining Services - Indonesia
- Coal and Oil Company - UAE
- Port Waratah Coal Services - Australia
- PowerSource Philippines DevCo
- Altura Mining Limited, Indonesia
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- Essar Steel Hazira Ltd - India
- Renaissance Capital - South Africa
- Coastal Gujarat Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- Malabar Cements Ltd - India
- Tata Chemicals Ltd - India
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