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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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Friday, 20 February 15
U.S. PRODUCED AROUND 19.2 MILLION SHORT TONS OF COAL WEEK ON WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.2 million short tons (mmst) of coal ...
Thursday, 19 February 15
PANAMAX: NOPAC AND AUSSIE ROUNDS ARE DONE IN LOW/MID $ 4000; TRIPS VIA INDONESIA TO INDIA CLOSER TO THE $5000 MARK - FEARNLEYS
Handy
The handy and supra market has not seen any firming rates in front of the Chinese New Year and still suffering on low activity in both hemi ...
Wednesday, 18 February 15
DRY BULK SHIPPING TO RECOVER IN LATE 2015 - DREWRY MARITIME RESEARCH
Strong trade growth, moderating fleet development and deployment of new fuel efficient vessels are expected to lead to a recovery in dry bulk shipp ...
Tuesday, 17 February 15
WHO PAYS THE SUEZ CANAL FEES? - INCE & CO
KNOWLEDGE TO ELEVATE
This was an appeal from an arbitration award on a point of construction in relation to the wording of an addendum to a ch ...
Tuesday, 17 February 15
BUOYANT WAVES IN RECENT YEARS: GLOBAL SHIP INVESTMENT SINCE THE CRASH - HELLENIC SHIPPING NEWS
Anxiety about fleet expansion is a recurring feature of world shipping markets. Within the global maritime community, worries about the vast amount ...
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- Therma Luzon, Inc, Philippines
- Ministry of Mines - Canada
- International Coal Ventures Pvt Ltd - India
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Riau Bara Harum - Indonesia
- Global Coal Blending Company Limited - Australia
- Deloitte Consulting - India
- Planning Commission, India
- Lanco Infratech Ltd - India
- Chamber of Mines of South Africa
- Standard Chartered Bank - UAE
- Aboitiz Power Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Goldman Sachs - Singapore
- Coalindo Energy - Indonesia
- The University of Queensland
- Wilmar Investment Holdings
- Port Waratah Coal Services - Australia
- Samtan Co., Ltd - South Korea
- Cement Manufacturers Association - India
- Cigading International Bulk Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Mercator Lines Limited - India
- Renaissance Capital - South Africa
- Orica Australia Pty. Ltd.
- Central Electricity Authority - India
- PetroVietnam Power Coal Import and Supply Company
- Indian Energy Exchange, India
- Star Paper Mills Limited - India
- Sarangani Energy Corporation, Philippines
- The Treasury - Australian Government
- Bukit Baiduri Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Australian Coal Association
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Iligan Light & Power Inc, Philippines
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- Bhoruka Overseas - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bank of Tokyo Mitsubishi UFJ Ltd
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- Energy Link Ltd, New Zealand
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- Semirara Mining Corp, Philippines
- Merrill Lynch Commodities Europe
- Borneo Indobara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- Central Java Power - Indonesia
- Vizag Seaport Private Limited - India
- Interocean Group of Companies - India
- Miang Besar Coal Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Petrochimia International Co. Ltd.- Taiwan
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- Xindia Steels Limited - India
- Eastern Coal Council - USA
- Indo Tambangraya Megah - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sakthi Sugars Limited - India
- Sojitz Corporation - Japan
- Pendopo Energi Batubara - Indonesia
- Tata Chemicals Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Banpu Public Company Limited - Thailand
- Ind-Barath Power Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Agrawal Coal Company - India
- European Bulk Services B.V. - Netherlands
- Oldendorff Carriers - Singapore
- Essar Steel Hazira Ltd - India
- Indonesian Coal Mining Association
- Petron Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- London Commodity Brokers - England
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Kumho Petrochemical, South Korea
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Coal and Oil Company - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Meralco Power Generation, Philippines
- Siam City Cement - Thailand
- GVK Power & Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Toyota Tsusho Corporation, Japan
- Latin American Coal - Colombia
- CNBM International Corporation - China
- Straits Asia Resources Limited - Singapore
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- Barasentosa Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- Posco Energy - South Korea
- IHS Mccloskey Coal Group - USA
- Siam City Cement PLC, Thailand
- Bhatia International Limited - India
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- Jorong Barutama Greston.PT - Indonesia
- Sical Logistics Limited - India
- Parry Sugars Refinery, India
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- Indika Energy - Indonesia
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- India Bulls Power Limited - India
- Africa Commodities Group - South Africa
- Indogreen Group - Indonesia
- Metalloyd Limited - United Kingdom
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- ICICI Bank Limited - India
- Vedanta Resources Plc - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Trasteel International SA, Italy
- SN Aboitiz Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- GMR Energy Limited - India
- PowerSource Philippines DevCo
- Billiton Holdings Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Bhushan Steel Limited - India
- New Zealand Coal & Carbon
- Minerals Council of Australia
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Ministry of Finance - Indonesia
- Altura Mining Limited, Indonesia
- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- PTC India Limited - India
- Savvy Resources Ltd - HongKong
- Wood Mackenzie - Singapore
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- Romanian Commodities Exchange
- Mintek Dendrill Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Development Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Parliament of New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- McConnell Dowell - Australia
- Malabar Cements Ltd - India
- Bharathi Cement Corporation - India
- White Energy Company Limited
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CIMB Investment Bank - Malaysia
- SMC Global Power, Philippines
- Thai Mozambique Logistica
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- Edison Trading Spa - Italy
- The State Trading Corporation of India Ltd
- MS Steel International - UAE
- Thiess Contractors Indonesia
- Kepco SPC Power Corporation, Philippines
- ASAPP Information Group - India
- Kideco Jaya Agung - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- LBH Netherlands Bv - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Manunggal Multi Energi - Indonesia
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Madhucon Powers Ltd - India
- Intertek Mineral Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Bangladesh Power Developement Board
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Kobexindo Tractors - Indoneisa
- Carbofer General Trading SA - India
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