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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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Monday, 30 March 15
WORST IS OVER FOR THE DRY BULK MARKET, BUT THE PAIN WILL REMAIN FOR YEARS TO COME, SAYS BIMCO CHIEF ANALYST - HELLENIC SHIPPING
The current demise of the dry bulk market isn’t one to go away anytime soon. That doesn’t mean that it can’t improve, with all sh ...
Monday, 30 March 15
Q3' 15 CFR SOUTH CHINA COAL SWAP: DECLINED 8.7% M-M; 12.77% Y-TO-D
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 5.00 (-8.70%) per MT month over month and US$ 1.33 (-2 ...
Monday, 30 March 15
Q2' FOB NEWCASTLE COAL SWAP CLOSED 4.47% HIGHER THAN Q4' CLOSING PRICE
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 5.42 per MT (-10.43%) month over month and US$ 1.60 (-3.32%) w ...
Sunday, 29 March 15
INDO - INDIA: SUPRAMAX & PANAMAX FREIGHT MARKET STEADY
COALspot.com: The freight market was almost stable as all segments slightly up except Panamax sector.
The BDI was up by just 0.85% week over w ...
Saturday, 28 March 15
IS NORTHERN EUROPE THE NEW MINING ELDORADO?
The Europe Mining 2015 Summit, organised by Global Summits organizer IRN on 17-18 June in Amsterdam, The Netherlands, will gather senior level repr ...
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- Goldman Sachs - Singapore
- Energy Development Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Indonesian Coal Mining Association
- Eastern Coal Council - USA
- Economic Council, Georgia
- Savvy Resources Ltd - HongKong
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Lanco Infratech Ltd - India
- The University of Queensland
- Gujarat Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Mercuria Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Electricity Authority, New Zealand
- Larsen & Toubro Limited - India
- Orica Australia Pty. Ltd.
- Manunggal Multi Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Tamil Nadu electricity Board
- Posco Energy - South Korea
- Toyota Tsusho Corporation, Japan
- Georgia Ports Authority, United States
- Meenaskhi Energy Private Limited - India
- Meralco Power Generation, Philippines
- Grasim Industreis Ltd - India
- Bukit Makmur.PT - Indonesia
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- Electricity Generating Authority of Thailand
- Bharathi Cement Corporation - India
- Semirara Mining and Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Indika Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- New Zealand Coal & Carbon
- Kapuas Tunggal Persada - Indonesia
- Vizag Seaport Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Vedanta Resources Plc - India
- SMC Global Power, Philippines
- Metalloyd Limited - United Kingdom
- Star Paper Mills Limited - India
- Sarangani Energy Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Wilmar Investment Holdings
- Uttam Galva Steels Limited - India
- Riau Bara Harum - Indonesia
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Siam City Cement PLC, Thailand
- Coastal Gujarat Power Limited - India
- Power Finance Corporation Ltd., India
- Jindal Steel & Power Ltd - India
- Banpu Public Company Limited - Thailand
- Standard Chartered Bank - UAE
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Salva Resources Pvt Ltd - India
- Marubeni Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Sidhee Cement - India
- Dalmia Cement Bharat India
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- Cement Manufacturers Association - India
- Kaltim Prima Coal - Indonesia
- Videocon Industries ltd - India
- Bhoruka Overseas - Indonesia
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- Romanian Commodities Exchange
- Commonwealth Bank - Australia
- European Bulk Services B.V. - Netherlands
- McConnell Dowell - Australia
- Barasentosa Lestari - Indonesia
- London Commodity Brokers - England
- Bhatia International Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Kumho Petrochemical, South Korea
- Anglo American - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- Ministry of Finance - Indonesia
- International Coal Ventures Pvt Ltd - India
- Independent Power Producers Association of India
- India Bulls Power Limited - India
- TeaM Sual Corporation - Philippines
- Wood Mackenzie - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Singapore Mercantile Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Timah Investasi Mineral - Indoneisa
- Central Electricity Authority - India
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
- ASAPP Information Group - India
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- Orica Mining Services - Indonesia
- Petron Corporation, Philippines
- Rio Tinto Coal - Australia
- Coalindo Energy - Indonesia
- Eastern Energy - Thailand
- Tata Chemicals Ltd - India
- Planning Commission, India
- Iligan Light & Power Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Renaissance Capital - South Africa
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- Sinarmas Energy and Mining - Indonesia
- Australian Coal Association
- Mjunction Services Limited - India
- MS Steel International - UAE
- Bhushan Steel Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- PowerSource Philippines DevCo
- Aboitiz Power Corporation - Philippines
- GVK Power & Infra Limited - India
- The Treasury - Australian Government
- Ambuja Cements Ltd - India
- Edison Trading Spa - Italy
- PNOC Exploration Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Thiess Contractors Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Alfred C Toepfer International GmbH - Germany
- Aditya Birla Group - India
- CIMB Investment Bank - Malaysia
- Kobexindo Tractors - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indogreen Group - Indonesia
- Price Waterhouse Coopers - Russia
- Therma Luzon, Inc, Philippines
- Medco Energi Mining Internasional
- PTC India Limited - India
- Sojitz Corporation - Japan
- Agrawal Coal Company - India
- Parry Sugars Refinery, India
- OPG Power Generation Pvt Ltd - India
- Latin American Coal - Colombia
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- Kepco SPC Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Carbofer General Trading SA - India
- Deloitte Consulting - India
- Samtan Co., Ltd - South Korea
- Pendopo Energi Batubara - Indonesia
- White Energy Company Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GMR Energy Limited - India
- Australian Commodity Traders Exchange
- Maheswari Brothers Coal Limited - India
- Siam City Cement - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Oldendorff Carriers - Singapore
- Ministry of Mines - Canada
- Offshore Bulk Terminal Pte Ltd, Singapore
- AsiaOL BioFuels Corp., Philippines
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
- Sree Jayajothi Cements Limited - India
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
- Indo Tambangraya Megah - Indonesia
- Mintek Dendrill Indonesia
- Port Waratah Coal Services - Australia
- Parliament of New Zealand
- Thai Mozambique Logistica
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Heidelberg Cement - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Formosa Plastics Group - Taiwan
- Interocean Group of Companies - India
- Kideco Jaya Agung - Indonesia
- IEA Clean Coal Centre - UK
- Global Business Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- CNBM International Corporation - China
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Ministry of Transport, Egypt
- Xindia Steels Limited - India
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