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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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Monday, 02 February 15
API 8 CFR SOUTH CHINA COAL SWAP PICKS UP W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined US$ 0.81 (-1.36%) per MT month over month and gained US$ 0.18&nb ...
Monday, 02 February 15
SOUTH KOREA'S KOMIPO INVITES BIDS FOR 280K MT OF SUB-BITUMINOUS COAL
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender to buy total 280,000 MT of Sub-bituminous coal coa ...
Sunday, 01 February 15
INDONESIA-TO-INDIA COAL FREIGHT RATES REMAIN WEAK NEXT WEEK
COALspot.com: The BDI continued its fall reached lowest levels since 1986 this week.
The BDI declined 15.55 pct to 608 points on Friday 30, Ja ...
Friday, 30 January 15
CONTANGO AND TANKERS - SKULD
KNOWLEDGE TO ELEVATE
Like an invitation to a dance, the word contango may have some people flustered, but for tanker owners this market phenome ...
Friday, 30 January 15
U.S. YEAR-TO-DATE COAL PRODUCTION REACHED 65.7 MMST
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.9 million short tons (mmst) of coal ...
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- SMG Consultants - Indonesia
- Singapore Mercantile Exchange
- Vizag Seaport Private Limited - India
- Renaissance Capital - South Africa
- Kapuas Tunggal Persada - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sakthi Sugars Limited - India
- Eastern Energy - Thailand
- Parry Sugars Refinery, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- International Coal Ventures Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Altura Mining Limited, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- New Zealand Coal & Carbon
- Thai Mozambique Logistica
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Jaiprakash Power Ventures ltd
- Mjunction Services Limited - India
- Billiton Holdings Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Dalmia Cement Bharat India
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- Ministry of Transport, Egypt
- Kideco Jaya Agung - Indonesia
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
- The University of Queensland
- Pipit Mutiara Jaya. PT, Indonesia
- Baramulti Group, Indonesia
- Attock Cement Pakistan Limited
- Marubeni Corporation - India
- Ministry of Finance - Indonesia
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Wood Mackenzie - Singapore
- Power Finance Corporation Ltd., India
- LBH Netherlands Bv - Netherlands
- Economic Council, Georgia
- Coal and Oil Company - UAE
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- Karaikal Port Pvt Ltd - India
- Petron Corporation, Philippines
- Energy Link Ltd, New Zealand
- Deloitte Consulting - India
- VISA Power Limited - India
- Latin American Coal - Colombia
- Orica Mining Services - Indonesia
- Australian Coal Association
- Energy Development Corp, Philippines
- Commonwealth Bank - Australia
- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Eastern Coal Council - USA
- Samtan Co., Ltd - South Korea
- Indogreen Group - Indonesia
- Gujarat Sidhee Cement - India
- Coastal Gujarat Power Limited - India
- Riau Bara Harum - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Edison Trading Spa - Italy
- India Bulls Power Limited - India
- Sojitz Corporation - Japan
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- Tamil Nadu electricity Board
- Carbofer General Trading SA - India
- Timah Investasi Mineral - Indoneisa
- Star Paper Mills Limited - India
- Jindal Steel & Power Ltd - India
- Antam Resourcindo - Indonesia
- Bhatia International Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Bhoruka Overseas - Indonesia
- Sical Logistics Limited - India
- Xindia Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Videocon Industries ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Cigading International Bulk Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Cement Manufacturers Association - India
- San Jose City I Power Corp, Philippines
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Pendopo Energi Batubara - Indonesia
- Ministry of Mines - Canada
- Georgia Ports Authority, United States
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- CIMB Investment Bank - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- European Bulk Services B.V. - Netherlands
- Bharathi Cement Corporation - India
- Manunggal Multi Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Mercator Lines Limited - India
- Anglo American - United Kingdom
- GMR Energy Limited - India
- Iligan Light & Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Salva Resources Pvt Ltd - India
- Planning Commission, India
- Siam City Cement - Thailand
- Rio Tinto Coal - Australia
- Sree Jayajothi Cements Limited - India
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indonesian Coal Mining Association
- OPG Power Generation Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Mercuria Energy - Indonesia
- Central Electricity Authority - India
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Larsen & Toubro Limited - India
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- Metalloyd Limited - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement PLC, Thailand
- Indika Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Semirara Mining Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- Formosa Plastics Group - Taiwan
- PTC India Limited - India
- Goldman Sachs - Singapore
- Sarangani Energy Corporation, Philippines
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- Orica Australia Pty. Ltd.
- Meenaskhi Energy Private Limited - India
- White Energy Company Limited
- SMC Global Power, Philippines
- Chamber of Mines of South Africa
- Neyveli Lignite Corporation Ltd, - India
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- Straits Asia Resources Limited - Singapore
- Coalindo Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Africa Commodities Group - South Africa
- Electricity Generating Authority of Thailand
- McConnell Dowell - Australia
- Romanian Commodities Exchange
- Oldendorff Carriers - Singapore
- Borneo Indobara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Grasim Industreis Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- Kepco SPC Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Posco Energy - South Korea
- Agrawal Coal Company - India
- Maharashtra Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Madhucon Powers Ltd - India
- SN Aboitiz Power Inc, Philippines
- Interocean Group of Companies - India
- Binh Thuan Hamico - Vietnam
- Therma Luzon, Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Bayan Resources Tbk. - Indonesia
- Mintek Dendrill Indonesia
- Indo Tambangraya Megah - Indonesia
- Price Waterhouse Coopers - Russia
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- The Treasury - Australian Government
- Central Java Power - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ambuja Cements Ltd - India
- Vedanta Resources Plc - India
- Trasteel International SA, Italy
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- IHS Mccloskey Coal Group - USA
- ICICI Bank Limited - India
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- Heidelberg Cement - Germany
- TeaM Sual Corporation - Philippines
- Medco Energi Mining Internasional
- Kaltim Prima Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
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