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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, 21 January 15
SHIFT IN INTERNATIONAL COAL TRADE TO THE PACIFIC BASIN WILL CONTINUE - IMF
COALspot.com: The shift in international coal trade to the Pacific Basin will continue, IMF said in its latest Medium-Term Coal Market Report.
...
Wednesday, 21 January 15
MARKET INSIGHT - VASSILIS LOGOTHETIS, INTERMODAL
The World Bank has lowered its forecast for global growth in 2015 to 3% down from its previous level of 3.4% amid rising concerns over the economic ...
Wednesday, 21 January 15
THERMAL COAL PRICE OUTLOOK DEPENDENT ON INDIAN IMPORT DEMAND - MATTHEW BOYLE, CRU
COALspot.com: Supply and demand side developments in India will be an important determinant of future market dynamics and prices for thermal coal a ...
Wednesday, 21 January 15
PORT OF NEWCASTLE COAL EXPORTS JUMP 16.19% ON MONTH TO 15.80 MIL MT IN DECEMBER' 14
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.136 billi ...
Tuesday, 20 January 15
INDIA TO SURPASS THE UNITED STATES AND BECOME THE SECOND-LARGEST COAL CONSUMER IN THE WORLD BY 2019 - IMF
COALspot.com: In 2013, coal added more primary energy than any other fuel and was the fastest-growing fossil fuel, enhancing its position as the se ...
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- London Commodity Brokers - England
- Ambuja Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Latin American Coal - Colombia
- Georgia Ports Authority, United States
- Jaiprakash Power Ventures ltd
- Interocean Group of Companies - India
- Indo Tambangraya Megah - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Ceylon Electricity Board - Sri Lanka
- IHS Mccloskey Coal Group - USA
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- Tata Chemicals Ltd - India
- Maheswari Brothers Coal Limited - India
- VISA Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Simpson Spence & Young - Indonesia
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- Marubeni Corporation - India
- Anglo American - United Kingdom
- Standard Chartered Bank - UAE
- Straits Asia Resources Limited - Singapore
- Bukit Makmur.PT - Indonesia
- Indian Energy Exchange, India
- Dalmia Cement Bharat India
- Bharathi Cement Corporation - India
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- White Energy Company Limited
- Bulk Trading Sa - Switzerland
- MS Steel International - UAE
- Sical Logistics Limited - India
- Energy Link Ltd, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Australian Commodity Traders Exchange
- Cigading International Bulk Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Videocon Industries ltd - India
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- Port Waratah Coal Services - Australia
- Attock Cement Pakistan Limited
- Savvy Resources Ltd - HongKong
- Intertek Mineral Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Formosa Plastics Group - Taiwan
- Manunggal Multi Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Singapore Mercantile Exchange
- Independent Power Producers Association of India
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- OPG Power Generation Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- TeaM Sual Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Authority, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Lanco Infratech Ltd - India
- The University of Queensland
- Bhatia International Limited - India
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- Leighton Contractors Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Aditya Birla Group - India
- Energy Development Corp, Philippines
- India Bulls Power Limited - India
- Larsen & Toubro Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Indian Oil Corporation Limited
- Power Finance Corporation Ltd., India
- Bahari Cakrawala Sebuku - Indonesia
- South Luzon Thermal Energy Corporation
- Bukit Baiduri Energy - Indonesia
- Coalindo Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Sakthi Sugars Limited - India
- CIMB Investment Bank - Malaysia
- Bayan Resources Tbk. - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kapuas Tunggal Persada - Indonesia
- Madhucon Powers Ltd - India
- Pendopo Energi Batubara - Indonesia
- Kartika Selabumi Mining - Indonesia
- The Treasury - Australian Government
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- Mercuria Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coastal Gujarat Power Limited - India
- Makarim & Taira - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Star Paper Mills Limited - India
- Renaissance Capital - South Africa
- Borneo Indobara - Indonesia
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Merrill Lynch Commodities Europe
- Central Java Power - Indonesia
- San Jose City I Power Corp, Philippines
- Siam City Cement PLC, Thailand
- GAC Shipping (India) Pvt Ltd
- Grasim Industreis Ltd - India
- Edison Trading Spa - Italy
- Medco Energi Mining Internasional
- Mintek Dendrill Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Essar Steel Hazira Ltd - India
- European Bulk Services B.V. - Netherlands
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- Global Coal Blending Company Limited - Australia
- Mercator Lines Limited - India
- Minerals Council of Australia
- Kumho Petrochemical, South Korea
- Bhushan Steel Limited - India
- Baramulti Group, Indonesia
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- Ministry of Mines - Canada
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- Meenaskhi Energy Private Limited - India
- CNBM International Corporation - China
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Riau Bara Harum - Indonesia
- Chamber of Mines of South Africa
- PTC India Limited - India
- The State Trading Corporation of India Ltd
- Posco Energy - South Korea
- Carbofer General Trading SA - India
- SN Aboitiz Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Mjunction Services Limited - India
- Xindia Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ICICI Bank Limited - India
- Eastern Energy - Thailand
- Therma Luzon, Inc, Philippines
- Salva Resources Pvt Ltd - India
- Eastern Coal Council - USA
- Parliament of New Zealand
- Semirara Mining Corp, Philippines
- Coal and Oil Company - UAE
- Orica Australia Pty. Ltd.
- PowerSource Philippines DevCo
- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Parry Sugars Refinery, India
- LBH Netherlands Bv - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petron Corporation, Philippines
- Indonesian Coal Mining Association
- Global Green Power PLC Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Uttam Galva Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Directorate Of Revenue Intelligence - India
- Samtan Co., Ltd - South Korea
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- Electricity Generating Authority of Thailand
- GMR Energy Limited - India
- Siam City Cement - Thailand
- Planning Commission, India
- Australian Coal Association
- PNOC Exploration Corporation - Philippines
- Economic Council, Georgia
- Thiess Contractors Indonesia
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Central Electricity Authority - India
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Ministry of Transport, Egypt
- Vedanta Resources Plc - India
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