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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, 10 February 15
IRON ORE MARKET TO REMAIN OVERSUPPLIED IN 2015: PRICE FORECAST $70/T - WOOD MACKENZIE
COALspot.com: With January witnessing the price of iron ore falling to its lowest levels since May 2009, Roger Emslie, Principal Metals & ...
Tuesday, 10 February 15
SUB-BIT FOB INDONESIA COAL SWAP ADVANCES 3.79% WEEK ON WEEK
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 rose week over week and month on month.
The Q2 swap up US$ 0.85 (+1.81%) month o ...
Tuesday, 10 February 15
FOB NEWCASTLE COAL SWAPS SURGE WEEK OVER WEEK, RAISING HOPES?
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 0.95 per MT (+1.91%) week over week and declined US$ 0.06 (-0.12%) ...
Monday, 09 February 15
FOB RICHARDS BAY COAL SWAP GAINS 3.65% TO ONE-MONTH HIGH
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 surge month over month and day on day.
The Q2 swap has soared US$ 2.1 ...
Monday, 09 February 15
Q2' CFR SOUTH CHINA COAL SWAP DECLINED 3.28% TO $ 56.92 W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 1.93 (-3.28%) per MT month over month and US$ 0.10 (-0 ...
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- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- Medco Energi Mining Internasional
- Price Waterhouse Coopers - Russia
- Meenaskhi Energy Private Limited - India
- India Bulls Power Limited - India
- Makarim & Taira - Indonesia
- PowerSource Philippines DevCo
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- Bayan Resources Tbk. - Indonesia
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Renaissance Capital - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- South Luzon Thermal Energy Corporation
- GMR Energy Limited - India
- New Zealand Coal & Carbon
- Mintek Dendrill Indonesia
- GVK Power & Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Indo Tambangraya Megah - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kaltim Prima Coal - Indonesia
- Altura Mining Limited, Indonesia
- Global Business Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Mjunction Services Limited - India
- Maheswari Brothers Coal Limited - India
- TeaM Sual Corporation - Philippines
- Goldman Sachs - Singapore
- Coal and Oil Company - UAE
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- Dalmia Cement Bharat India
- Kumho Petrochemical, South Korea
- Borneo Indobara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Agrawal Coal Company - India
- Kartika Selabumi Mining - Indonesia
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- Siam City Cement - Thailand
- Xindia Steels Limited - India
- Sical Logistics Limited - India
- Billiton Holdings Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Chamber of Mines of South Africa
- Kapuas Tunggal Persada - Indonesia
- White Energy Company Limited
- Indian Oil Corporation Limited
- Rio Tinto Coal - Australia
- Indika Energy - Indonesia
- Tamil Nadu electricity Board
- Vijayanagar Sugar Pvt Ltd - India
- Energy Development Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- Banpu Public Company Limited - Thailand
- LBH Netherlands Bv - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- MS Steel International - UAE
- Rashtriya Ispat Nigam Limited - India
- Parry Sugars Refinery, India
- Australian Coal Association
- Madhucon Powers Ltd - India
- SN Aboitiz Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Intertek Mineral Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- Deloitte Consulting - India
- Jindal Steel & Power Ltd - India
- Metalloyd Limited - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Australian Commodity Traders Exchange
- Miang Besar Coal Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meralco Power Generation, Philippines
- Videocon Industries ltd - India
- Iligan Light & Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Power Finance Corporation Ltd., India
- Central Electricity Authority - India
- Orica Mining Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- GAC Shipping (India) Pvt Ltd
- Aboitiz Power Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Posco Energy - South Korea
- Indian Energy Exchange, India
- Thai Mozambique Logistica
- Simpson Spence & Young - Indonesia
- Singapore Mercantile Exchange
- Aditya Birla Group - India
- GN Power Mariveles Coal Plant, Philippines
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- Wilmar Investment Holdings
- Orica Australia Pty. Ltd.
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Eastern Coal Council - USA
- Maharashtra Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- Malabar Cements Ltd - India
- Barasentosa Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- Manunggal Multi Energi - Indonesia
- Sakthi Sugars Limited - India
- Siam City Cement PLC, Thailand
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- Mercuria Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indonesian Coal Mining Association
- Minerals Council of Australia
- Globalindo Alam Lestari - Indonesia
- Marubeni Corporation - India
- OPG Power Generation Pvt Ltd - India
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Electricity Authority, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Salva Resources Pvt Ltd - India
- Coalindo Energy - Indonesia
- Samtan Co., Ltd - South Korea
- ASAPP Information Group - India
- McConnell Dowell - Australia
- San Jose City I Power Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Commonwealth Bank - Australia
- Wood Mackenzie - Singapore
- Coastal Gujarat Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- Bhatia International Limited - India
- Africa Commodities Group - South Africa
- Bhoruka Overseas - Indonesia
- Lanco Infratech Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Alfred C Toepfer International GmbH - Germany
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Java Power - Indonesia
- Vedanta Resources Plc - India
- Binh Thuan Hamico - Vietnam
- Ministry of Finance - Indonesia
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- London Commodity Brokers - England
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- VISA Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Latin American Coal - Colombia
- The Treasury - Australian Government
- Ambuja Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Uttam Galva Steels Limited - India
- Jaiprakash Power Ventures ltd
- Thiess Contractors Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vizag Seaport Private Limited - India
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
- Electricity Generating Authority of Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Antam Resourcindo - Indonesia
- Global Green Power PLC Corporation, Philippines
- Indogreen Group - Indonesia
- Attock Cement Pakistan Limited
- Economic Council, Georgia
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- Mercator Lines Limited - India
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Ind-Barath Power Infra Limited - India
- Parliament of New Zealand
- CIMB Investment Bank - Malaysia
- Karaikal Port Pvt Ltd - India
- Anglo American - United Kingdom
- Gujarat Sidhee Cement - India
- Kideco Jaya Agung - Indonesia
- Sindya Power Generating Company Private Ltd
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