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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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Sunday, 08 February 15
BDI FELL CONTINUOUSLY HIT A THREE DECADES LOW
COALspot.com: This week Baltic Exchange Dry Freight Index (BDI) fell continuously hit a three decades low.
The BDI continuously fell and was d ...
Friday, 06 February 15
WEEKLY U.S. COAL PRODUCTION UP AN ESTIMATED 1.1% FROM LAST WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 20.1 million short tons (mmst) of coal ...
Friday, 06 February 15
SHIP DAMAGED BY FIRE CAUSED BY PIRATES FOUND TO BE CONSTRUCTIVE TOTAL LOSS - TAYLOR WESSING
KNOWLEDGE TO ELEVATE
The High Court was asked to determine a number of preliminary issues, including whether a vessel was a constructive total ...
Thursday, 05 February 15
BDI HAS NOW FALLEN A LEVEL CLOSE TO THE INDEX'S HISTORIC LOW - INTERMODAL
They say a picture is worth a thousand words and in this instance just one look at the tables above is enough to understand the great pressure the ...
Thursday, 05 February 15
ULTRAMAX LEVELS FROM INDIA TO CHINA IN THE MID US$ 5000'S - FEARNLEYS AS
Handy
Despite the overall weak sentiment, there is a scent of optimism in the Atlantic market for ppt dates. Continent is still struggling with o ...
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- Jindal Steel & Power Ltd - India
- Chamber of Mines of South Africa
- Kartika Selabumi Mining - Indonesia
- Eastern Coal Council - USA
- Directorate Of Revenue Intelligence - India
- Tata Chemicals Ltd - India
- Africa Commodities Group - South Africa
- CIMB Investment Bank - Malaysia
- Aditya Birla Group - India
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- Holcim Trading Pte Ltd - Singapore
- Indika Energy - Indonesia
- Semirara Mining Corp, Philippines
- Merrill Lynch Commodities Europe
- Trasteel International SA, Italy
- Ministry of Mines - Canada
- Kalimantan Lumbung Energi - Indonesia
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- Wilmar Investment Holdings
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- LBH Netherlands Bv - Netherlands
- Independent Power Producers Association of India
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Metalloyd Limited - United Kingdom
- London Commodity Brokers - England
- Marubeni Corporation - India
- Eastern Energy - Thailand
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- Tamil Nadu electricity Board
- Commonwealth Bank - Australia
- Ceylon Electricity Board - Sri Lanka
- International Coal Ventures Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PowerSource Philippines DevCo
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Parry Sugars Refinery, India
- Bayan Resources Tbk. - Indonesia
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Sindya Power Generating Company Private Ltd
- Energy Link Ltd, New Zealand
- Sakthi Sugars Limited - India
- Dalmia Cement Bharat India
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- Timah Investasi Mineral - Indoneisa
- Straits Asia Resources Limited - Singapore
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Parliament of New Zealand
- Wood Mackenzie - Singapore
- ASAPP Information Group - India
- Bhatia International Limited - India
- Manunggal Multi Energi - Indonesia
- Georgia Ports Authority, United States
- Bukit Asam (Persero) Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- CNBM International Corporation - China
- Bhushan Steel Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Oil Corporation Limited
- IHS Mccloskey Coal Group - USA
- Kideco Jaya Agung - Indonesia
- New Zealand Coal & Carbon
- Australian Coal Association
- McConnell Dowell - Australia
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- Central Electricity Authority - India
- South Luzon Thermal Energy Corporation
- Mercator Lines Limited - India
- Mjunction Services Limited - India
- Gujarat Sidhee Cement - India
- Petrochimia International Co. Ltd.- Taiwan
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- Thai Mozambique Logistica
- Pendopo Energi Batubara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Rio Tinto Coal - Australia
- Star Paper Mills Limited - India
- Posco Energy - South Korea
- Economic Council, Georgia
- Intertek Mineral Services - Indonesia
- Carbofer General Trading SA - India
- Bhoruka Overseas - Indonesia
- Medco Energi Mining Internasional
- Romanian Commodities Exchange
- Karaikal Port Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- San Jose City I Power Corp, Philippines
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Heidelberg Cement - Germany
- Anglo American - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Banpu Public Company Limited - Thailand
- Toyota Tsusho Corporation, Japan
- Ind-Barath Power Infra Limited - India
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- Salva Resources Pvt Ltd - India
- Indian Energy Exchange, India
- Price Waterhouse Coopers - Russia
- Miang Besar Coal Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Goldman Sachs - Singapore
- Indogreen Group - Indonesia
- SMC Global Power, Philippines
- OPG Power Generation Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Thiess Contractors Indonesia
- Minerals Council of Australia
- Kaltim Prima Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Electricity Authority, New Zealand
- Antam Resourcindo - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Vedanta Resources Plc - India
- Madhucon Powers Ltd - India
- Kobexindo Tractors - Indoneisa
- European Bulk Services B.V. - Netherlands
- Formosa Plastics Group - Taiwan
- Sojitz Corporation - Japan
- Kapuas Tunggal Persada - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Simpson Spence & Young - Indonesia
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Standard Chartered Bank - UAE
- Ministry of Finance - Indonesia
- Renaissance Capital - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Energy Development Corp, Philippines
- Makarim & Taira - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Larsen & Toubro Limited - India
- Uttam Galva Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Mintek Dendrill Indonesia
- Sarangani Energy Corporation, Philippines
- Deloitte Consulting - India
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- Coalindo Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Essar Steel Hazira Ltd - India
- Edison Trading Spa - Italy
- Latin American Coal - Colombia
- Interocean Group of Companies - India
- Bukit Baiduri Energy - Indonesia
- GMR Energy Limited - India
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- Electricity Generating Authority of Thailand
- Meralco Power Generation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bangladesh Power Developement Board
- The University of Queensland
- PTC India Limited - India
- Cement Manufacturers Association - India
- Petron Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- Vizag Seaport Private Limited - India
- Orica Mining Services - Indonesia
- Kumho Petrochemical, South Korea
- Barasentosa Lestari - Indonesia
- VISA Power Limited - India
- Binh Thuan Hamico - Vietnam
- Orica Australia Pty. Ltd.
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- Borneo Indobara - Indonesia
- Port Waratah Coal Services - Australia
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