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Tuesday, 17 March 15
GAS TO CHALLENGE COAL IN THE ASIAN POWER GENERATION MIX - WOOD MACKENZIE
 KNOWLEDGE TO ELEVATE
Wood Mackenzie says that coal is facing increasing competition from gas in the power sector. Coal has dominated as the fuel of choice in Asia, even in the gas-centric power markets of SE Asia since 2010. In recent years, it has been assumed that coal will remain the most economical option for power generation. However, downward pressure on gas prices as well as individual market conditions in Asia are creating conditions in which it might compete with coal in the region.
Mr Graham Tyler, Research Director for Asia gas & power says, "While gas-coal competition is more commonplace in the US and Europe, in Asia, this is a new dynamic as coal and gas prices have not been at close enough levels for this to be a consideration. Spot LNG prices have fallen to around US$7 per million British thermal units (mmbtu) in recent months and we do not forecast any sustained price recovery above US$10/mmbtu with over a 100 million tonnes per annum (Mtpa) of new LNG expected to be operational by 2020. This looming supply glut will create an environment where coal versus gas competition in Asia is a real possibility." Asia's near-term gas demand growth is slowing, primarily due to a weaker economic growth and structural changes in the key market of China.
Turning to coal, Mr Prakash Sharma Research Director for Asia coal markets, says, "Benchmark thermal coal prices in the seaborne market are trading below the marginal cost of supply for many producers, and therefore are unlikely to fall significantly lower in the future. Coal prices are sitting at multi-year lows due to several factors including weakening demand and domestic protectionism in China: Delivered thermal coal prices have fallen from a peak of around US$110 per tonne (US$/t) in 2012 to below US$80/t in recent months already and historically, coal prices only fluctuated within a narrow band of US$2-4/mmbtu." Currently coal accounts for half of all power generation across Asia, while gas only accounts for 11%. However with coal prices not expected to fall more dramatically and gas prices expected to see renewed softening after this summer, Wood Mackenzie asserts that the price differential between gas and coal will be one to watch.
Mr Tyler says; "The price differential is key but there is not one single price across Asia at which gas will compete with coal. Instead, environmental initiatives and individual market influencers will determine the points at which the scales will tip in favour to gas. This is because Asia is not a singular gas market. Rather, it is a diverse range of markets with differing characteristics such as levels of economic development, fuel resources, market structures and government policies. The power markets are also discrete and have different dynamics even within some countries. Consequently, the factors that set the price at which gas will compete with coal differs between each market."
Wood Mackenzie's analysis points to China, South Korea and Malaysia as examples of this market diversity. Mr Tyler explains, "South Korea reflects a mature economy with an energy market dependent on imported fuels, and therefore has relatively high fuel costs. It has also introduced a carbon cap and trade scheme in January, which will favour gas due to its lower carbon content and thus; lower related carbon costs. Whereas in China, air quality is a key issue and gas-fired power generation is subsidized in some provinces. China is also introducing a national carbon trading scheme; and other markets are also implementing or looking at carbon initiatives. These factors all make gas the more attractive option."
Wood Mackenzie expects that pressure on the regulated price will allow an increase in gas-fired operation For example, Peninsular Malaysia is currently oversupplied with pipeline gas - a situation forecast to continue until 2020. Mr Tyler says "We have already seen delays to new-build coal plants currently under-construction in Malaysia. In a low commodity price world, where local gas production is over-supplied, if gas prices stay attractive we may see gas having a greater role. With weak gas prices and increasing environmental pressures, the cost of switching to gas-fired plants could become more economical. This shift in the competitive dynamic between coal and gas must now be front of mind for energy planners, utilities and fuel suppliers."
Wood Mackenzie says that Asia's strong long term economic growth will see power demand growth average 5% a year through to 2030, which will require over 2,000 gigawatts (GW) of additional power generation capacity to be built between now and then. With gas prices set to remain soft and increasing environmental pressures, it's likely gas will account for a higher proportion of this new power generation. As long as gas prices remain low, industry players need to continue to watch for individual market influencers to see where the most upside for gas may emerge
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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Friday, 10 April 15
US COAL PRODUCTION FELL 4.7% W-O-W : EIA
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 17.4 million short ...
Friday, 10 April 15
DRY BULK MARKET'S DOWNFALL ALSO OFFER INVESTMENT BARGAINS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Dry bulk market rates have fallen to historical lows over the past few weeks, with no clear path of recovery, at least in the near term. As such, m ...
Thursday, 09 April 15
CAPESIZE: RATES ARE STILL DISAPPOINTING - FEARNLEYS
Handy
The handy market had a stronger sentiment before the Easter holidays, but have as the bigger panamaxes seen a softening tendency this week. ...
Wednesday, 08 April 15
DRY BULK MARKET SEEMS UNABLE TO CATCH A BREAK - INTERMODAL
COALspot.com: The Dry Bulk market seems unable to catch a break these days.
According to Intermodal, following the market stabilization that p ...
Wednesday, 08 April 15
CHINA BURNS HALF OF THE WORLD'S COAL - CHRISTOPHER T. WHITTY
Intermodal Weekly Market Update
China is the world's largest consumer of coal, using more coal each year than the United States, the Europ ...
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- Kobexindo Tractors - Indoneisa
- Georgia Ports Authority, United States
- Indo Tambangraya Megah - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Malabar Cements Ltd - India
- Tamil Nadu electricity Board
- Jaiprakash Power Ventures ltd
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- Kapuas Tunggal Persada - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Latin American Coal - Colombia
- CIMB Investment Bank - Malaysia
- Grasim Industreis Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Australian Coal Association
- Altura Mining Limited, Indonesia
- Edison Trading Spa - Italy
- Orica Mining Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- International Coal Ventures Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Tata Chemicals Ltd - India
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- Miang Besar Coal Terminal - Indonesia
- Chamber of Mines of South Africa
- Siam City Cement - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- Sarangani Energy Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Price Waterhouse Coopers - Russia
- Jorong Barutama Greston.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Parry Sugars Refinery, India
- Renaissance Capital - South Africa
- Interocean Group of Companies - India
- Indika Energy - Indonesia
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- Bhatia International Limited - India
- Kideco Jaya Agung - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vedanta Resources Plc - India
- Therma Luzon, Inc, Philippines
- Vizag Seaport Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Mercuria Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Deloitte Consulting - India
- Electricity Generating Authority of Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Neyveli Lignite Corporation Ltd, - India
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- Kumho Petrochemical, South Korea
- GN Power Mariveles Coal Plant, Philippines
- Krishnapatnam Port Company Ltd. - India
- Straits Asia Resources Limited - Singapore
- Simpson Spence & Young - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Marubeni Corporation - India
- Parliament of New Zealand
- Sindya Power Generating Company Private Ltd
- Indian Oil Corporation Limited
- Iligan Light & Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Economic Council, Georgia
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Merrill Lynch Commodities Europe
- Bulk Trading Sa - Switzerland
- South Luzon Thermal Energy Corporation
- Manunggal Multi Energi - Indonesia
- Planning Commission, India
- Central Electricity Authority - India
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- McConnell Dowell - Australia
- Ministry of Transport, Egypt
- Ambuja Cements Ltd - India
- Eastern Coal Council - USA
- Semirara Mining Corp, Philippines
- Larsen & Toubro Limited - India
- GMR Energy Limited - India
- Sakthi Sugars Limited - India
- Mintek Dendrill Indonesia
- Mjunction Services Limited - India
- Attock Cement Pakistan Limited
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- Baramulti Group, Indonesia
- Dalmia Cement Bharat India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Business Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Oldendorff Carriers - Singapore
- Leighton Contractors Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Formosa Plastics Group - Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Java Power - Indonesia
- Thiess Contractors Indonesia
- PowerSource Philippines DevCo
- Sical Logistics Limited - India
- Binh Thuan Hamico - Vietnam
- The Treasury - Australian Government
- Singapore Mercantile Exchange
- Energy Development Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- Romanian Commodities Exchange
- Gujarat Mineral Development Corp Ltd - India
- Petron Corporation, Philippines
- Bhushan Steel Limited - India
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Independent Power Producers Association of India
- Global Coal Blending Company Limited - Australia
- Heidelberg Cement - Germany
- Mercator Lines Limited - India
- Medco Energi Mining Internasional
- Indian Energy Exchange, India
- New Zealand Coal & Carbon
- Carbofer General Trading SA - India
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- Posco Energy - South Korea
- Coalindo Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
- Gujarat Sidhee Cement - India
- IHS Mccloskey Coal Group - USA
- Kaltim Prima Coal - Indonesia
- ICICI Bank Limited - India
- Energy Link Ltd, New Zealand
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Antam Resourcindo - Indonesia
- Kartika Selabumi Mining - Indonesia
- Thai Mozambique Logistica
- Timah Investasi Mineral - Indoneisa
- Makarim & Taira - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Cement Manufacturers Association - India
- Bukit Baiduri Energy - Indonesia
- Uttam Galva Steels Limited - India
- Jindal Steel & Power Ltd - India
- Wood Mackenzie - Singapore
- Riau Bara Harum - Indonesia
- VISA Power Limited - India
- Xindia Steels Limited - India
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Aboitiz Power Corporation - Philippines
- Trasteel International SA, Italy
- Semirara Mining and Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Salva Resources Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
- Holcim Trading Pte Ltd - Singapore
- Orica Australia Pty. Ltd.
- Karbindo Abesyapradhi - Indoneisa
- PTC India Limited - India
- Intertek Mineral Services - Indonesia
- Anglo American - United Kingdom
- Sojitz Corporation - Japan
- London Commodity Brokers - England
- Alfred C Toepfer International GmbH - Germany
- Maheswari Brothers Coal Limited - India
- Videocon Industries ltd - India
- Siam City Cement PLC, Thailand
- Barasentosa Lestari - Indonesia
- Ministry of Mines - Canada
- Goldman Sachs - Singapore
- Commonwealth Bank - Australia
- Directorate General of MIneral and Coal - Indonesia
- ASAPP Information Group - India
- Asmin Koalindo Tuhup - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate Of Revenue Intelligence - India
- Global Green Power PLC Corporation, Philippines
- Ministry of Finance - Indonesia
- The University of Queensland
- Indogreen Group - Indonesia
- Bharathi Cement Corporation - India
- Bangladesh Power Developement Board
- Essar Steel Hazira Ltd - India
- SMG Consultants - Indonesia
- Wilmar Investment Holdings
- Star Paper Mills Limited - India
- Meralco Power Generation, Philippines
- The State Trading Corporation of India Ltd
- GAC Shipping (India) Pvt Ltd
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