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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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Saturday, 28 March 15
THE DRY BULK FLEET AT BREAKING POINT - CLARKSONS
The severe oversupply in the bulkcarrier fleet has contributed to the current trough in the dry bulk market, putting considerable financial pressur ...
Friday, 27 March 15
INDONESIA: NEW REGULATION REQUIRES LETTER OF CREDIT FOR EXPORT OF PRODUCTS FROM NATURAL RESOURCES
The Minister of Trade issued Ministerial Regulation No. 04/M-DAG/PER/1/2015 (“Regulation No. 4/2015”) on 5 January 2015. Regulati ...
Friday, 27 March 15
WEEKLY U.S COAL OUTPUT FALLS 1.7% W-W; 7.9% Y-Y
COALspot.com – United States the world's one of the largest coal producers, produced approximately totaled an estimated 18.2 million ...
Thursday, 26 March 15
CHINA IRON ORE IMPORT FOR THE FIRST 2 MONTHS DECLINED BY 1.2 % Y-O-Y; PANAMAX AUSSIE/CHINA ROUNDS BEING FIXED IN THE $4 -5K RANGE - FEARNLEYS
Handy
There has been more activity in both hemispheres this week. Especially the USG market has picked up with more cargoes for prompter dates en ...
Thursday, 26 March 15
RATES FOR THE SMALLER SIZE SEGMENT CONTINUED TO IMPROVE LAST WEEK - INTERMODAL
To see green across the board is a rare occurrence in the Dry Bulk market nowadays and while the upside in which last week closed off is not of the ...
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- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Savvy Resources Ltd - HongKong
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- Vizag Seaport Private Limited - India
- Indogreen Group - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- CNBM International Corporation - China
- Sojitz Corporation - Japan
- Merrill Lynch Commodities Europe
- Goldman Sachs - Singapore
- Meralco Power Generation, Philippines
- Orica Australia Pty. Ltd.
- Indian Oil Corporation Limited
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- Bharathi Cement Corporation - India
- Maheswari Brothers Coal Limited - India
- Parliament of New Zealand
- Energy Development Corp, Philippines
- Metalloyd Limited - United Kingdom
- Kobexindo Tractors - Indoneisa
- Anglo American - United Kingdom
- Planning Commission, India
- London Commodity Brokers - England
- SMG Consultants - Indonesia
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- Vijayanagar Sugar Pvt Ltd - India
- India Bulls Power Limited - India
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- GMR Energy Limited - India
- Price Waterhouse Coopers - Russia
- CIMB Investment Bank - Malaysia
- Ind-Barath Power Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- GVK Power & Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kartika Selabumi Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Minerals Council of Australia
- LBH Netherlands Bv - Netherlands
- Alfred C Toepfer International GmbH - Germany
- Eastern Coal Council - USA
- Deloitte Consulting - India
- IHS Mccloskey Coal Group - USA
- SMC Global Power, Philippines
- Kepco SPC Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- The Treasury - Australian Government
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Renaissance Capital - South Africa
- Sinarmas Energy and Mining - Indonesia
- Coalindo Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Medco Energi Mining Internasional
- Tamil Nadu electricity Board
- Australian Coal Association
- European Bulk Services B.V. - Netherlands
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- New Zealand Coal & Carbon
- MS Steel International - UAE
- Thiess Contractors Indonesia
- Indo Tambangraya Megah - Indonesia
- Electricity Generating Authority of Thailand
- Maharashtra Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- Salva Resources Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Sindya Power Generating Company Private Ltd
- Lanco Infratech Ltd - India
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- SN Aboitiz Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Central Electricity Authority - India
- Aboitiz Power Corporation - Philippines
- Wood Mackenzie - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Sree Jayajothi Cements Limited - India
- PowerSource Philippines DevCo
- Ministry of Mines - Canada
- Mjunction Services Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- Interocean Group of Companies - India
- Ambuja Cements Ltd - India
- Oldendorff Carriers - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Meenaskhi Energy Private Limited - India
- Xindia Steels Limited - India
- Carbofer General Trading SA - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Simpson Spence & Young - Indonesia
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining and Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- Latin American Coal - Colombia
- Globalindo Alam Lestari - Indonesia
- ASAPP Information Group - India
- Orica Mining Services - Indonesia
- Posco Energy - South Korea
- Aditya Birla Group - India
- Siam City Cement - Thailand
- Leighton Contractors Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Binh Thuan Hamico - Vietnam
- Marubeni Corporation - India
- Jaiprakash Power Ventures ltd
- Ministry of Finance - Indonesia
- Commonwealth Bank - Australia
- Coastal Gujarat Power Limited - India
- Straits Asia Resources Limited - Singapore
- Antam Resourcindo - Indonesia
- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
- Indonesian Coal Mining Association
- Banpu Public Company Limited - Thailand
- Central Java Power - Indonesia
- Attock Cement Pakistan Limited
- Jorong Barutama Greston.PT - Indonesia
- Port Waratah Coal Services - Australia
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- Essar Steel Hazira Ltd - India
- Georgia Ports Authority, United States
- Edison Trading Spa - Italy
- The University of Queensland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Energy - Thailand
- Power Finance Corporation Ltd., India
- Madhucon Powers Ltd - India
- Thai Mozambique Logistica
- Kumho Petrochemical, South Korea
- Manunggal Multi Energi - Indonesia
- Siam City Cement PLC, Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Green Power PLC Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Australian Commodity Traders Exchange
- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- Indika Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- Global Coal Blending Company Limited - Australia
- Bahari Cakrawala Sebuku - Indonesia
- The State Trading Corporation of India Ltd
- Malabar Cements Ltd - India
- Gujarat Sidhee Cement - India
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- Semirara Mining Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Wilmar Investment Holdings
- TNB Fuel Sdn Bhd - Malaysia
- Bhatia International Limited - India
- Makarim & Taira - Indonesia
- Samtan Co., Ltd - South Korea
- Pendopo Energi Batubara - Indonesia
- Standard Chartered Bank - UAE
- Chettinad Cement Corporation Ltd - India
- Ministry of Transport, Egypt
- Bukit Asam (Persero) Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sical Logistics Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Heidelberg Cement - Germany
- Coal and Oil Company - UAE
- Bukit Makmur.PT - Indonesia
- Global Business Power Corporation, Philippines
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vedanta Resources Plc - India
- Larsen & Toubro Limited - India
- Mercator Lines Limited - India
- Iligan Light & Power Inc, Philippines
- Grasim Industreis Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- PTC India Limited - India
- Petron Corporation, Philippines
- Riau Bara Harum - Indonesia
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Kapuas Tunggal Persada - Indonesia
- Dalmia Cement Bharat India
- Karaikal Port Pvt Ltd - India
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
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