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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, 25 January 15
PANAMAX FREIGHT RATES STILL FALLING
COALspot.com: The BDI was slightly down this week to 720 points. The BDI lost 2.83 pct week on week.
The cape index continued its upward trend ...
Friday, 23 January 15
U.S. WEEKLY COAL PRODUCTION FOR WEEK ENDING JAN. 17 UP 2.5%
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.4 million short tons (mmst) of coal ...
Thursday, 22 January 15
PANAMAX: A SOFTER TONE AND OVERALL A SLUGGISH MARKET - FEARNLEYS
Handy
The handy and supra market has experienced yet another week with slow activity and softening rates in both hemispheres, broker Fearnleys AS ...
Thursday, 22 January 15
BUMI RESOURCES POSTS NET INCOME OF $13.3 MILLION 9M-2014
COALspot.com: Bumi Resources, Indonesia’s largest coal miner, reported today that, the company has recorded a net income of $13.3 million for ...
Wednesday, 21 January 15
PANAMAX MARKET MOVED SIDEWAYS OVERALL LAST WEEK - INTERMODAL
COALspot.com: The positive sentiment in which the week prior ended carried on through-out last week as well, the end of which marked the first posi ...
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- Planning Commission, India
- Grasim Industreis Ltd - India
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- Rio Tinto Coal - Australia
- Mintek Dendrill Indonesia
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- Thiess Contractors Indonesia
- London Commodity Brokers - England
- PTC India Limited - India
- Minerals Council of Australia
- Directorate General of MIneral and Coal - Indonesia
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- South Luzon Thermal Energy Corporation
- Uttam Galva Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Vedanta Resources Plc - India
- Eastern Coal Council - USA
- Kobexindo Tractors - Indoneisa
- CNBM International Corporation - China
- Thai Mozambique Logistica
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Savvy Resources Ltd - HongKong
- Standard Chartered Bank - UAE
- CIMB Investment Bank - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Energy Exchange, India
- The Treasury - Australian Government
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- ICICI Bank Limited - India
- Ministry of Mines - Canada
- Chamber of Mines of South Africa
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- ASAPP Information Group - India
- Therma Luzon, Inc, Philippines
- Bangladesh Power Developement Board
- Parry Sugars Refinery, India
- New Zealand Coal & Carbon
- GVK Power & Infra Limited - India
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- The University of Queensland
- Heidelberg Cement - Germany
- Toyota Tsusho Corporation, Japan
- Sindya Power Generating Company Private Ltd
- Coalindo Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Kumho Petrochemical, South Korea
- Bhushan Steel Limited - India
- Romanian Commodities Exchange
- Krishnapatnam Port Company Ltd. - India
- Kalimantan Lumbung Energi - Indonesia
- SMG Consultants - Indonesia
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- Straits Asia Resources Limited - Singapore
- Madhucon Powers Ltd - India
- Riau Bara Harum - Indonesia
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- MS Steel International - UAE
- Siam City Cement - Thailand
- Indo Tambangraya Megah - Indonesia
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- Banpu Public Company Limited - Thailand
- Sakthi Sugars Limited - India
- Dalmia Cement Bharat India
- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- Cement Manufacturers Association - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Energy Link Ltd, New Zealand
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- Chettinad Cement Corporation Ltd - India
- Ministry of Finance - Indonesia
- Bukit Baiduri Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- Mjunction Services Limited - India
- Indogreen Group - Indonesia
- Kaltim Prima Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Wilmar Investment Holdings
- The State Trading Corporation of India Ltd
- Deloitte Consulting - India
- Rashtriya Ispat Nigam Limited - India
- Electricity Generating Authority of Thailand
- Asmin Koalindo Tuhup - Indonesia
- Oldendorff Carriers - Singapore
- Indian Oil Corporation Limited
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- Sical Logistics Limited - India
- Kepco SPC Power Corporation, Philippines
- White Energy Company Limited
- Independent Power Producers Association of India
- Commonwealth Bank - Australia
- Ambuja Cements Ltd - India
- Mercuria Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- SMC Global Power, Philippines
- Marubeni Corporation - India
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- Kideco Jaya Agung - Indonesia
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- Eastern Energy - Thailand
- Meenaskhi Energy Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Bharathi Cement Corporation - India
- Globalindo Alam Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Coal and Oil Company - UAE
- PowerSource Philippines DevCo
- Medco Energi Mining Internasional
- Leighton Contractors Pty Ltd - Australia
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- Electricity Authority, New Zealand
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- Sree Jayajothi Cements Limited - India
- Gujarat Sidhee Cement - India
- Gujarat Mineral Development Corp Ltd - India
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Goldman Sachs - Singapore
- Simpson Spence & Young - Indonesia
- Energy Development Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Directorate Of Revenue Intelligence - India
- Renaissance Capital - South Africa
- Global Business Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Bhoruka Overseas - Indonesia
- Central Java Power - Indonesia
- PNOC Exploration Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Price Waterhouse Coopers - Russia
- GMR Energy Limited - India
- Trasteel International SA, Italy
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Posco Energy - South Korea
- Power Finance Corporation Ltd., India
- Bayan Resources Tbk. - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Wood Mackenzie - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- Pendopo Energi Batubara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Central Electricity Authority - India
- Lanco Infratech Ltd - India
- Indika Energy - Indonesia
- Xindia Steels Limited - India
- Malabar Cements Ltd - India
- Australian Coal Association
- Bhatia International Limited - India
- Barasentosa Lestari - Indonesia
- Sojitz Corporation - Japan
- Anglo American - United Kingdom
- Makarim & Taira - Indonesia
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