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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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Thursday, 12 February 15
DRY BULK OWNERS SCRAP MORE VESSELS, AS MARKET REACHES HISTORICAL LOWS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has reached historical lows this week, with the Baltic Dry Index (BDI) now trading at levels below operating expense levels for ...
Thursday, 12 February 15
INDONESIAN COAL PRICE REFERENCE INCHED DOWN 1.44% IN FEBRUARY
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down Indonesian coal bench mark price this month to US$ 62.92 pe ...
Thursday, 12 February 15
NEWBUILDING ORDERING ACTIVITY DRAGS ON, AS OWNERS ARE LOOKING FOR LOWER PRICES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Ship owners appear to be waiting for lower prices in their dealings with Asian shipyards, as the dry bulk market is at historical lows. According t ...
Wednesday, 11 February 15
DRY BULK MARKET REMAINED UNDER PRESSURE : STABILIZING CAPE MARKET HARDLY HELPED SENTIMENT
COALspot.com: The Dry Bulk market remained under pressure last week, while the stabilizing Cape market hardly helped sentiment.
Greece based s ...
Wednesday, 11 February 15
BDI HITTING THE ALL-TIME LOW; FFA MARKETS NOT SHOWING ANY POSITIVE SIGNS
With the BDI hitting the all-time low and with FFA markets not showing any positive signs for a possible recovery in the near future, pessimism is ...
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- Holcim Trading Pte Ltd - Singapore
- Kepco SPC Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- PowerSource Philippines DevCo
- Jaiprakash Power Ventures ltd
- Gujarat Sidhee Cement - India
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- Orica Mining Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Simpson Spence & Young - Indonesia
- PNOC Exploration Corporation - Philippines
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Manunggal Multi Energi - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Malabar Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- Directorate Of Revenue Intelligence - India
- Ambuja Cements Ltd - India
- Electricity Authority, New Zealand
- Miang Besar Coal Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Africa Commodities Group - South Africa
- Eastern Coal Council - USA
- Larsen & Toubro Limited - India
- Leighton Contractors Pty Ltd - Australia
- Wilmar Investment Holdings
- Thiess Contractors Indonesia
- New Zealand Coal & Carbon
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Alfred C Toepfer International GmbH - Germany
- Jindal Steel & Power Ltd - India
- Petron Corporation, Philippines
- Romanian Commodities Exchange
- Trasteel International SA, Italy
- Economic Council, Georgia
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- SN Aboitiz Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- Madhucon Powers Ltd - India
- Planning Commission, India
- Meralco Power Generation, Philippines
- Indo Tambangraya Megah - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Parry Sugars Refinery, India
- CIMB Investment Bank - Malaysia
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Sarangani Energy Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Star Paper Mills Limited - India
- Bhatia International Limited - India
- Vizag Seaport Private Limited - India
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- Global Business Power Corporation, Philippines
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Goldman Sachs - Singapore
- Riau Bara Harum - Indonesia
- Central Electricity Authority - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GMR Energy Limited - India
- Oldendorff Carriers - Singapore
- GVK Power & Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- Banpu Public Company Limited - Thailand
- Bangladesh Power Developement Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kobexindo Tractors - Indoneisa
- Anglo American - United Kingdom
- Sree Jayajothi Cements Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sical Logistics Limited - India
- Siam City Cement PLC, Thailand
- Mercator Lines Limited - India
- Coastal Gujarat Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- VISA Power Limited - India
- Minerals Council of Australia
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- Australian Coal Association
- Pipit Mutiara Jaya. PT, Indonesia
- Kideco Jaya Agung - Indonesia
- Toyota Tsusho Corporation, Japan
- GAC Shipping (India) Pvt Ltd
- Singapore Mercantile Exchange
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Transport, Egypt
- SMC Global Power, Philippines
- Interocean Group of Companies - India
- Cigading International Bulk Terminal - Indonesia
- PTC India Limited - India
- Australian Commodity Traders Exchange
- Bhushan Steel Limited - India
- Mercuria Energy - Indonesia
- Latin American Coal - Colombia
- Therma Luzon, Inc, Philippines
- Energy Development Corp, Philippines
- McConnell Dowell - Australia
- San Jose City I Power Corp, Philippines
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- Kartika Selabumi Mining - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Aditya Birla Group - India
- The University of Queensland
- OPG Power Generation Pvt Ltd - India
- Tata Chemicals Ltd - India
- Kumho Petrochemical, South Korea
- Price Waterhouse Coopers - Russia
- The Treasury - Australian Government
- Agrawal Coal Company - India
- European Bulk Services B.V. - Netherlands
- Carbofer General Trading SA - India
- Ind-Barath Power Infra Limited - India
- Siam City Cement - Thailand
- Essar Steel Hazira Ltd - India
- IEA Clean Coal Centre - UK
- Barasentosa Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Mines - Canada
- Mintek Dendrill Indonesia
- ICICI Bank Limited - India
- ASAPP Information Group - India
- Indika Energy - Indonesia
- Indonesian Coal Mining Association
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- Samtan Co., Ltd - South Korea
- Semirara Mining Corp, Philippines
- India Bulls Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Ministry of Finance - Indonesia
- Cement Manufacturers Association - India
- Kaltim Prima Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
- Merrill Lynch Commodities Europe
- Altura Mining Limited, Indonesia
- MS Steel International - UAE
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- Indian Oil Corporation Limited
- Borneo Indobara - Indonesia
- Chamber of Mines of South Africa
- Aboitiz Power Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Baramulti Group, Indonesia
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Indian Energy Exchange, India
- Rashtriya Ispat Nigam Limited - India
- Bulk Trading Sa - Switzerland
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- SMG Consultants - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Savvy Resources Ltd - HongKong
- Globalindo Alam Lestari - Indonesia
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- Wood Mackenzie - Singapore
- LBH Netherlands Bv - Netherlands
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Bukit Makmur.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- White Energy Company Limited
- Thai Mozambique Logistica
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- Mjunction Services Limited - India
- Grasim Industreis Ltd - India
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