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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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Tuesday, 24 February 15
IHS ENERGY COAL CONFERENCE OF THE AMERICAS
Attend the IHS Energy Coal Conference of the Americas 17-19 March in Cartagena, Colombia and learn about timely concerns in today's coal indust ...
Monday, 23 February 15
Q2' CFR SOUTH CHINA COAL SWAP FOR Q2 ROSE 3.39% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery rose US$ 1.90 (+3.39%) per MT month over month and declined US$ 0.08 ...
Monday, 23 February 15
Q2' API 5 FOB NEWCASTLE COAL SWAP CLOSED $1 HIGHER THAN Q3
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 3.12 per MT (+6.44%) month over month and fall US$ 0.43 (-0.83%) w ...
Sunday, 22 February 15
THE BALTIC DRY INDEX LOST ALMOST 3.2% OR 17 POINTS WEEK ON WEEK
COALspot.com: The Baltic Dry Index, one of the economic indicators that monitors the health of the world's economy by tracking the price of shi ...
Friday, 20 February 15
GOVT SET TO INCREASE COAL OUTPUT TARGET THIS YEAR - JAKARTA POST
The Energy and Mineral Resources Ministry is planning to increase its coal output target this year as the government seeks to offset the ongoing de ...
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- TeaM Sual Corporation - Philippines
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- Meralco Power Generation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Medco Energi Mining Internasional
- Directorate Of Revenue Intelligence - India
- Minerals Council of Australia
- Vedanta Resources Plc - India
- Independent Power Producers Association of India
- Larsen & Toubro Limited - India
- European Bulk Services B.V. - Netherlands
- Maheswari Brothers Coal Limited - India
- Ambuja Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Essar Steel Hazira Ltd - India
- Karaikal Port Pvt Ltd - India
- Indonesian Coal Mining Association
- Timah Investasi Mineral - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Central Java Power - Indonesia
- Parliament of New Zealand
- Trasteel International SA, Italy
- Wood Mackenzie - Singapore
- Thai Mozambique Logistica
- Vizag Seaport Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- Semirara Mining and Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Dalmia Cement Bharat India
- Interocean Group of Companies - India
- Asmin Koalindo Tuhup - Indonesia
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Heidelberg Cement - Germany
- Videocon Industries ltd - India
- Indian Oil Corporation Limited
- Gujarat Sidhee Cement - India
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
- Manunggal Multi Energi - Indonesia
- Georgia Ports Authority, United States
- Indika Energy - Indonesia
- Tamil Nadu electricity Board
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Bangladesh Power Developement Board
- Bayan Resources Tbk. - Indonesia
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- Kumho Petrochemical, South Korea
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- Planning Commission, India
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- Kartika Selabumi Mining - Indonesia
- Altura Mining Limited, Indonesia
- Bharathi Cement Corporation - India
- Anglo American - United Kingdom
- Chettinad Cement Corporation Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Finance - Indonesia
- Rio Tinto Coal - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Savvy Resources Ltd - HongKong
- Electricity Generating Authority of Thailand
- SMG Consultants - Indonesia
- Renaissance Capital - South Africa
- Australian Coal Association
- Toyota Tsusho Corporation, Japan
- Indo Tambangraya Megah - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aboitiz Power Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Energy - Thailand
- Intertek Mineral Services - Indonesia
- GMR Energy Limited - India
- Bukit Baiduri Energy - Indonesia
- Power Finance Corporation Ltd., India
- Mercator Lines Limited - India
- Ind-Barath Power Infra Limited - India
- Ministry of Mines - Canada
- Banpu Public Company Limited - Thailand
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- Australian Commodity Traders Exchange
- Jorong Barutama Greston.PT - Indonesia
- Central Electricity Authority - India
- Energy Link Ltd, New Zealand
- Barasentosa Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Semirara Mining Corp, Philippines
- Carbofer General Trading SA - India
- Lanco Infratech Ltd - India
- McConnell Dowell - Australia
- Parry Sugars Refinery, India
- Africa Commodities Group - South Africa
- CNBM International Corporation - China
- Wilmar Investment Holdings
- Coalindo Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- Bhushan Steel Limited - India
- PowerSource Philippines DevCo
- MS Steel International - UAE
- Simpson Spence & Young - Indonesia
- Sakthi Sugars Limited - India
- San Jose City I Power Corp, Philippines
- Uttam Galva Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jaiprakash Power Ventures ltd
- Makarim & Taira - Indonesia
- Star Paper Mills Limited - India
- Global Coal Blending Company Limited - Australia
- Metalloyd Limited - United Kingdom
- Jindal Steel & Power Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- VISA Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Economic Council, Georgia
- Samtan Co., Ltd - South Korea
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- IEA Clean Coal Centre - UK
- GN Power Mariveles Coal Plant, Philippines
- SMC Global Power, Philippines
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- Tata Chemicals Ltd - India
- Bhoruka Overseas - Indonesia
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- Port Waratah Coal Services - Australia
- Krishnapatnam Port Company Ltd. - India
- Coastal Gujarat Power Limited - India
- ASAPP Information Group - India
- Madhucon Powers Ltd - India
- Latin American Coal - Colombia
- Salva Resources Pvt Ltd - India
- Electricity Authority, New Zealand
- Meenaskhi Energy Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Petron Corporation, Philippines
- Merrill Lynch Commodities Europe
- Ministry of Transport, Egypt
- Goldman Sachs - Singapore
- Energy Development Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- London Commodity Brokers - England
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- GAC Shipping (India) Pvt Ltd
- New Zealand Coal & Carbon
- Orica Mining Services - Indonesia
- Formosa Plastics Group - Taiwan
- Binh Thuan Hamico - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Neyveli Lignite Corporation Ltd, - India
- Coal and Oil Company - UAE
- Sojitz Corporation - Japan
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Romanian Commodities Exchange
- Baramulti Group, Indonesia
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Aditya Birla Group - India
- TNB Fuel Sdn Bhd - Malaysia
- PTC India Limited - India
- ICICI Bank Limited - India
- Bulk Trading Sa - Switzerland
- Attock Cement Pakistan Limited
- Singapore Mercantile Exchange
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