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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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Thursday, 02 April 15
NEWBUILDING ORDERS FOR DRY BULK CARRIERS "DRY" UP
Newbuilding ordering activity remained subdued over the course of the past week, as ship owners are wary of adding further tonnage to an already pr ...
Wednesday, 01 April 15
SUPRAMAX & HANDY: RATES HELD STEADY TOWARDS THE WEEKEND
“Despite the fact that the Dry Bulk market closed off on the green last week, sentiment didn't improve by any means, not only because of ...
Wednesday, 01 April 15
WEEKLY SHIPPING MARKET UPDATE - INTERMODAL
There is no doubt that we are still witnessing a very challenging and at the same time very uncertain market, both with respect to dry chartering a ...
Wednesday, 01 April 15
Q4' 15 INDONESIA COAL SWAP CLOSED AT $45.15 W/E 27 MARCH 2015
COALspot.com: Indonesian coal swap for delivery Q2' 2015 drops month on month and week over week.
The Q2 swap declined US$ 1.54 (3.24%) mo ...
Tuesday, 31 March 15
RICHARDS BAY COAL SWAPS GAIN WEEK OVER WEEK
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 declined month over month but increased week on week.
The Q2 swap has ...
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- Agrawal Coal Company - India
- London Commodity Brokers - England
- Georgia Ports Authority, United States
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jaiprakash Power Ventures ltd
- Salva Resources Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Port Waratah Coal Services - Australia
- Karaikal Port Pvt Ltd - India
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Attock Cement Pakistan Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- The University of Queensland
- Samtan Co., Ltd - South Korea
- Romanian Commodities Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- MS Steel International - UAE
- Malabar Cements Ltd - India
- Mjunction Services Limited - India
- Global Coal Blending Company Limited - Australia
- Uttam Galva Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Singapore Mercantile Exchange
- Star Paper Mills Limited - India
- Ambuja Cements Ltd - India
- VISA Power Limited - India
- Toyota Tsusho Corporation, Japan
- Mercator Lines Limited - India
- Electricity Generating Authority of Thailand
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- Kapuas Tunggal Persada - Indonesia
- Sindya Power Generating Company Private Ltd
- Interocean Group of Companies - India
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Power Finance Corporation Ltd., India
- Sical Logistics Limited - India
- Deloitte Consulting - India
- Metalloyd Limited - United Kingdom
- Chettinad Cement Corporation Ltd - India
- International Coal Ventures Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Vedanta Resources Plc - India
- SMC Global Power, Philippines
- Lanco Infratech Ltd - India
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- Pendopo Energi Batubara - Indonesia
- Orica Australia Pty. Ltd.
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Cigading International Bulk Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Africa Commodities Group - South Africa
- Binh Thuan Hamico - Vietnam
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- Merrill Lynch Commodities Europe
- The State Trading Corporation of India Ltd
- Ministry of Transport, Egypt
- Meralco Power Generation, Philippines
- Iligan Light & Power Inc, Philippines
- Energy Development Corp, Philippines
- Semirara Mining Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Indian Energy Exchange, India
- Gujarat Sidhee Cement - India
- Barasentosa Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Standard Chartered Bank - UAE
- Bulk Trading Sa - Switzerland
- Makarim & Taira - Indonesia
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- TeaM Sual Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Straits Asia Resources Limited - Singapore
- Marubeni Corporation - India
- Bhushan Steel Limited - India
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Indika Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Savvy Resources Ltd - HongKong
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Mines - Canada
- Bayan Resources Tbk. - Indonesia
- Madhucon Powers Ltd - India
- Tamil Nadu electricity Board
- Economic Council, Georgia
- Kalimantan Lumbung Energi - Indonesia
- Electricity Authority, New Zealand
- Aditya Birla Group - India
- Formosa Plastics Group - Taiwan
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- Wood Mackenzie - Singapore
- Renaissance Capital - South Africa
- Indo Tambangraya Megah - Indonesia
- Edison Trading Spa - Italy
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- PNOC Exploration Corporation - Philippines
- India Bulls Power Limited - India
- Australian Commodity Traders Exchange
- European Bulk Services B.V. - Netherlands
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- Anglo American - United Kingdom
- Independent Power Producers Association of India
- Borneo Indobara - Indonesia
- Kideco Jaya Agung - Indonesia
- Parliament of New Zealand
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Posco Energy - South Korea
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- ASAPP Information Group - India
- Bhatia International Limited - India
- Directorate Of Revenue Intelligence - India
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- Siam City Cement PLC, Thailand
- Global Business Power Corporation, Philippines
- Chamber of Mines of South Africa
- Kepco SPC Power Corporation, Philippines
- GVK Power & Infra Limited - India
- PTC India Limited - India
- Wilmar Investment Holdings
- Latin American Coal - Colombia
- Coalindo Energy - Indonesia
- Siam City Cement - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Finance - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Mintek Dendrill Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- Billiton Holdings Pty Ltd - Australia
- Planning Commission, India
- Commonwealth Bank - Australia
- Videocon Industries ltd - India
- Indonesian Coal Mining Association
- Karbindo Abesyapradhi - Indoneisa
- Intertek Mineral Services - Indonesia
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Ceylon Electricity Board - Sri Lanka
- SN Aboitiz Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Kumho Petrochemical, South Korea
- Minerals Council of Australia
- Central Electricity Authority - India
- Vijayanagar Sugar Pvt Ltd - India
- White Energy Company Limited
- Tata Chemicals Ltd - India
- The Treasury - Australian Government
- Jindal Steel & Power Ltd - India
- Thai Mozambique Logistica
- TNB Fuel Sdn Bhd - Malaysia
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- Global Green Power PLC Corporation, Philippines
- Carbofer General Trading SA - India
- Bharathi Cement Corporation - India
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Sree Jayajothi Cements Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Kaltim Prima Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Goldman Sachs - Singapore
- PowerSource Philippines DevCo
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- ICICI Bank Limited - India
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- Directorate General of MIneral and Coal - Indonesia
- Eastern Energy - Thailand
- Trasteel International SA, Italy
- Rio Tinto Coal - Australia
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