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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, 27 January 15
Q1 FOB INDONESIA COAL SWAP CLOSED AT $ 47.87 FOR WEEK ENDING JAN. 23
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 gain week over week and declined month on month.
The Q1 swap has decline US$ 0.9 ...
Tuesday, 27 January 15
Q2 FOB NEWCASTLE COAL SWAP UP 4.5% W-O-W
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery declined US$ 0.28 per MT (-0.54%) month over month and increased US$ 1.23 ( ...
Monday, 26 January 15
OVERSUPPLY, AMPLE STOCKPILES, AND LACKLUSTER UNDERLYING STEEL DEMAND KEPT COKING COAL PRICES LOW IN 2014
COALspot.com: Coking coal prices (FOB & CFR) fell 15% and 18% respectively during the year, amidst persistent oversupply, ample inventory and s ...
Monday, 26 January 15
FOB RICHARDS BAY Q2 COAL SWAP CLOSED LOWER THAN Q1 CLOSING
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 fell ...
Monday, 26 January 15
API 8 CFR SOUTH CHINA COAL SWAP CONTINUE TO SLIDE M-O-M; ROSE W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined US$ 0.79 (-1.33%) per MT month over month and gained US$ 2.10&nb ...
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- Ambuja Cements Ltd - India
- McConnell Dowell - Australia
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- OPG Power Generation Pvt Ltd - India
- The University of Queensland
- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- Semirara Mining Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Larsen & Toubro Limited - India
- Kohat Cement Company Ltd. - Pakistan
- White Energy Company Limited
- ICICI Bank Limited - India
- Marubeni Corporation - India
- Kartika Selabumi Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Indo Tambangraya Megah - Indonesia
- Deloitte Consulting - India
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- Power Finance Corporation Ltd., India
- Jorong Barutama Greston.PT - Indonesia
- Petron Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Pipit Mutiara Jaya. PT, Indonesia
- PowerSource Philippines DevCo
- Global Coal Blending Company Limited - Australia
- CIMB Investment Bank - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Thai Mozambique Logistica
- Mercuria Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- New Zealand Coal & Carbon
- Rashtriya Ispat Nigam Limited - India
- Sakthi Sugars Limited - India
- Globalindo Alam Lestari - Indonesia
- Bangladesh Power Developement Board
- Aditya Birla Group - India
- Africa Commodities Group - South Africa
- Ministry of Mines - Canada
- The Treasury - Australian Government
- Rio Tinto Coal - Australia
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- Standard Chartered Bank - UAE
- Kapuas Tunggal Persada - Indonesia
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- Heidelberg Cement - Germany
- Price Waterhouse Coopers - Russia
- Bharathi Cement Corporation - India
- Wilmar Investment Holdings
- MS Steel International - UAE
- Attock Cement Pakistan Limited
- Bukit Makmur.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Trasteel International SA, Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Riau Bara Harum - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Georgia Ports Authority, United States
- Sarangani Energy Corporation, Philippines
- Independent Power Producers Association of India
- Binh Thuan Hamico - Vietnam
- Sical Logistics Limited - India
- Merrill Lynch Commodities Europe
- Holcim Trading Pte Ltd - Singapore
- TeaM Sual Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- Commonwealth Bank - Australia
- AsiaOL BioFuels Corp., Philippines
- Meenaskhi Energy Private Limited - India
- Directorate Of Revenue Intelligence - India
- Madhucon Powers Ltd - India
- Australian Commodity Traders Exchange
- Makarim & Taira - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Tata Chemicals Ltd - India
- Global Business Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Minerals Council of Australia
- Central Electricity Authority - India
- Videocon Industries ltd - India
- Interocean Group of Companies - India
- Bhushan Steel Limited - India
- Savvy Resources Ltd - HongKong
- Barasentosa Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Australian Coal Association
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- Star Paper Mills Limited - India
- Baramulti Group, Indonesia
- GVK Power & Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- CNBM International Corporation - China
- Economic Council, Georgia
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- Therma Luzon, Inc, Philippines
- Edison Trading Spa - Italy
- Meralco Power Generation, Philippines
- Indika Energy - Indonesia
- Thiess Contractors Indonesia
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- Agrawal Coal Company - India
- Mintek Dendrill Indonesia
- Aboitiz Power Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- Romanian Commodities Exchange
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- IEA Clean Coal Centre - UK
- Semirara Mining and Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Indogreen Group - Indonesia
- Electricity Generating Authority of Thailand
- Karbindo Abesyapradhi - Indoneisa
- Iligan Light & Power Inc, Philippines
- Anglo American - United Kingdom
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Maharashtra Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- Siam City Cement - Thailand
- Altura Mining Limited, Indonesia
- Kobexindo Tractors - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Indian Oil Corporation Limited
- Maheswari Brothers Coal Limited - India
- Planning Commission, India
- Global Green Power PLC Corporation, Philippines
- Jaiprakash Power Ventures ltd
- VISA Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Eastern Energy - Thailand
- LBH Netherlands Bv - Netherlands
- Manunggal Multi Energi - Indonesia
- Singapore Mercantile Exchange
- Neyveli Lignite Corporation Ltd, - India
- Krishnapatnam Port Company Ltd. - India
- Bukit Baiduri Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Wood Mackenzie - Singapore
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- Gujarat Sidhee Cement - India
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Posco Energy - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- Vedanta Resources Plc - India
- Renaissance Capital - South Africa
- PTC India Limited - India
- Jindal Steel & Power Ltd - India
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Parliament of New Zealand
- SMG Consultants - Indonesia
- Coal and Oil Company - UAE
- Gujarat Mineral Development Corp Ltd - India
- Metalloyd Limited - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Malabar Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Energy Development Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Lanco Infratech Ltd - India
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Cigading International Bulk Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Mercator Lines Limited - India
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Intertek Mineral Services - Indonesia
- Indian Energy Exchange, India
- Bulk Trading Sa - Switzerland
- Bhoruka Overseas - Indonesia
- Formosa Plastics Group - Taiwan
- Ministry of Finance - Indonesia
- Sojitz Corporation - Japan
- Siam City Cement PLC, Thailand
- Orica Mining Services - Indonesia
- Ministry of Transport, Egypt
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