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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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Wednesday, 04 February 15
MARKET INSIGHT - LINOS KOGEVINAS
It has been just about over 2 months since, in a move that surprised many and caused widespread apprehension, OPEC decided to maintain its producti ...
Tuesday, 03 February 15
Q1'15 FOB INDONESIA COAL SWAP CLOSED $ 3.29 HIGHER COMPARED TO Q4'15 DELIVERY PRICE
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 rose week over week and month on month.
The Q1 swap up US$ 0.68 (+1.41%) month o ...
Tuesday, 03 February 15
FOB NEWCASTLE COAL SWAP FOR Q4 DELIVERY CLOSED 5.86% LOWER THAN Q1 PRICE
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery rose US$ 0.26 per MT (+0.51%) week over week and declined US$ 0.02 (-0.04%) ...
Monday, 02 February 15
API 4 FOB RICHARDS BAY COAL SWAP ROSE WEEK OVER WEEK
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 declined month over month and day on day.
The Q1 swap has decli ...
Monday, 02 February 15
INDONESIA'S ADARO ENERGY PRODUCED 56.21 MILLION TONNES OF COAL IN 2014; UP 8% Y-O-Y
COALspot.com: PT. Adaro Energy, Indonesia’s largest coal producer, has increased coal production by 8% to 56.21 million tonnes (Mt) from both ...
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- Thai Mozambique Logistica
- Vizag Seaport Private Limited - India
- Power Finance Corporation Ltd., India
- Australian Coal Association
- Singapore Mercantile Exchange
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- Indogreen Group - Indonesia
- Globalindo Alam Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- India Bulls Power Limited - India
- Barasentosa Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- Medco Energi Mining Internasional
- Bangladesh Power Developement Board
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- Commonwealth Bank - Australia
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- Electricity Generating Authority of Thailand
- Bharathi Cement Corporation - India
- Energy Development Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- London Commodity Brokers - England
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- Minerals Council of Australia
- Gujarat Electricity Regulatory Commission - India
- AsiaOL BioFuels Corp., Philippines
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- MS Steel International - UAE
- Trasteel International SA, Italy
- Pendopo Energi Batubara - Indonesia
- Indonesian Coal Mining Association
- Heidelberg Cement - Germany
- Karbindo Abesyapradhi - Indoneisa
- Petron Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Makarim & Taira - Indonesia
- Star Paper Mills Limited - India
- Bulk Trading Sa - Switzerland
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
- Kohat Cement Company Ltd. - Pakistan
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- Rashtriya Ispat Nigam Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Kartika Selabumi Mining - Indonesia
- The State Trading Corporation of India Ltd
- Thiess Contractors Indonesia
- CIMB Investment Bank - Malaysia
- Mjunction Services Limited - India
- Savvy Resources Ltd - HongKong
- Cigading International Bulk Terminal - Indonesia
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- Coal and Oil Company - UAE
- Interocean Group of Companies - India
- Videocon Industries ltd - India
- Binh Thuan Hamico - Vietnam
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Global Green Power PLC Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercuria Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Electricity Authority - India
- Anglo American - United Kingdom
- Aboitiz Power Corporation - Philippines
- The University of Queensland
- SN Aboitiz Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Vedanta Resources Plc - India
- Siam City Cement - Thailand
- PNOC Exploration Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Gujarat Sidhee Cement - India
- Rio Tinto Coal - Australia
- Ministry of Transport, Egypt
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- Indian Oil Corporation Limited
- Kalimantan Lumbung Energi - Indonesia
- Chamber of Mines of South Africa
- Therma Luzon, Inc, Philippines
- Marubeni Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- McConnell Dowell - Australia
- Kapuas Tunggal Persada - Indonesia
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Bhoruka Overseas - Indonesia
- Deloitte Consulting - India
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Coastal Gujarat Power Limited - India
- Ministry of Finance - Indonesia
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Wood Mackenzie - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- PowerSource Philippines DevCo
- Timah Investasi Mineral - Indoneisa
- Mercator Lines Limited - India
- Riau Bara Harum - Indonesia
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Baramulti Group, Indonesia
- SMC Global Power, Philippines
- CNBM International Corporation - China
- Dalmia Cement Bharat India
- Metalloyd Limited - United Kingdom
- Georgia Ports Authority, United States
- IHS Mccloskey Coal Group - USA
- Sakthi Sugars Limited - India
- Kobexindo Tractors - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tata Chemicals Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Electricity Authority, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Agrawal Coal Company - India
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- Sarangani Energy Corporation, Philippines
- The Treasury - Australian Government
- GN Power Mariveles Coal Plant, Philippines
- European Bulk Services B.V. - Netherlands
- Sical Logistics Limited - India
- Coalindo Energy - Indonesia
- Sojitz Corporation - Japan
- GVK Power & Infra Limited - India
- PTC India Limited - India
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Aditya Birla Group - India
- Maharashtra Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Vijayanagar Sugar Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Manunggal Multi Energi - Indonesia
- Romanian Commodities Exchange
- Alfred C Toepfer International GmbH - Germany
- South Luzon Thermal Energy Corporation
- Indo Tambangraya Megah - Indonesia
- Independent Power Producers Association of India
- Africa Commodities Group - South Africa
- Ind-Barath Power Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Holcim Trading Pte Ltd - Singapore
- Lanco Infratech Ltd - India
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- GMR Energy Limited - India
- Directorate Of Revenue Intelligence - India
- Samtan Co., Ltd - South Korea
- Antam Resourcindo - Indonesia
- Essar Steel Hazira Ltd - India
- Salva Resources Pvt Ltd - India
- Ministry of Mines - Canada
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Energy - Thailand
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Global Coal Blending Company Limited - Australia
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Malabar Cements Ltd - India
- Merrill Lynch Commodities Europe
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- Parliament of New Zealand
- Ambuja Cements Ltd - India
- Cement Manufacturers Association - India
- ICICI Bank Limited - India
- Bhatia International Limited - India
- Planning Commission, India
- ASAPP Information Group - India
- Meenaskhi Energy Private Limited - India
- Grasim Industreis Ltd - India
- TeaM Sual Corporation - Philippines
- Siam City Cement PLC, Thailand
- San Jose City I Power Corp, Philippines
- Orica Australia Pty. Ltd.
- SMG Consultants - Indonesia
- Orica Mining Services - Indonesia
- Attock Cement Pakistan Limited
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- Eastern Coal Council - USA
- Kumho Petrochemical, South Korea
- Madhucon Powers Ltd - India
- Semirara Mining and Power Corporation, Philippines
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