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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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Sunday, 01 March 15
BDI INDEX SLIGHTLY UP CAUSED AN INCREASE IN THE PANAMAX, SUPARAMAX AND HANDY SIZE INDICES
COALspot.com: The freight market saw some gains this week and BDI was up 5.26 pct closed at 540 points. However the Cape index failed to follow BDI ...
Friday, 27 February 15
WEEKLY US COAL PRODUCTION DOWN AN ESTIMATED 14.0% FROM LAST WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 16.5 million short tons (mmst) of coal ...
Thursday, 26 February 15
DRY BULK MARKET COULD REBOUND FROM HISTORICAL LOWS IN THE COMING WEEKS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market could exit from its historical lows in the coming weeks, as Chinese buyers reenter the market after the holiday celebrations. T ...
Thursday, 26 February 15
COAL POLICY RISK: HIGHER ROYALTIES FOR IUP HOLDERS - BAHANA SECURITIES | JAKARTA POST
The Energy and Mineral Resources Ministry plans to raise coal royalties charged to mining operation permit (IUP) holders by the end of the first qu ...
Thursday, 26 February 15
DRY BULK MARKET LOOKING FOR POSITIVE MOMENTUM, BUT PROSPECTS REMAIN DIM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As the Baltic Dry Index (BDI) inched a bit higher over the past couple of sessions and the Chinese are returning to the market after a week long hi ...
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Minerals Council of Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- Karaikal Port Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Directorate General of MIneral and Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Eastern Energy - Thailand
- Makarim & Taira - Indonesia
- Sical Logistics Limited - India
- SN Aboitiz Power Inc, Philippines
- Energy Development Corp, Philippines
- Australian Coal Association
- Mjunction Services Limited - India
- Orica Mining Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Deloitte Consulting - India
- Samtan Co., Ltd - South Korea
- VISA Power Limited - India
- Global Business Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Therma Luzon, Inc, Philippines
- Merrill Lynch Commodities Europe
- Antam Resourcindo - Indonesia
- Kideco Jaya Agung - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- Cement Manufacturers Association - India
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Salva Resources Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Mercator Lines Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement - Thailand
- New Zealand Coal & Carbon
- Star Paper Mills Limited - India
- Barasentosa Lestari - Indonesia
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bayan Resources Tbk. - Indonesia
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- Grasim Industreis Ltd - India
- Directorate Of Revenue Intelligence - India
- Australian Commodity Traders Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Coal Council - USA
- Wilmar Investment Holdings
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Medco Energi Mining Internasional
- PTC India Limited - India
- Thiess Contractors Indonesia
- Indo Tambangraya Megah - Indonesia
- Kaltim Prima Coal - Indonesia
- Marubeni Corporation - India
- Vizag Seaport Private Limited - India
- Edison Trading Spa - Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- PNOC Exploration Corporation - Philippines
- Baramulti Group, Indonesia
- IEA Clean Coal Centre - UK
- Gujarat Mineral Development Corp Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- Standard Chartered Bank - UAE
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- Chamber of Mines of South Africa
- Renaissance Capital - South Africa
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- GAC Shipping (India) Pvt Ltd
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Ministry of Finance - Indonesia
- Jaiprakash Power Ventures ltd
- Billiton Holdings Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- Ambuja Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Energy Link Ltd, New Zealand
- Indika Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- White Energy Company Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- San Jose City I Power Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Coal and Oil Company - UAE
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Larsen & Toubro Limited - India
- Chettinad Cement Corporation Ltd - India
- Petron Corporation, Philippines
- Carbofer General Trading SA - India
- Simpson Spence & Young - Indonesia
- Orica Australia Pty. Ltd.
- Siam City Cement PLC, Thailand
- Planning Commission, India
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- South Luzon Thermal Energy Corporation
- Xindia Steels Limited - India
- Thai Mozambique Logistica
- The State Trading Corporation of India Ltd
- Iligan Light & Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Attock Cement Pakistan Limited
- PowerSource Philippines DevCo
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- Meralco Power Generation, Philippines
- London Commodity Brokers - England
- Coastal Gujarat Power Limited - India
- Metalloyd Limited - United Kingdom
- Global Green Power PLC Corporation, Philippines
- ICICI Bank Limited - India
- AsiaOL BioFuels Corp., Philippines
- Sakthi Sugars Limited - India
- Bulk Trading Sa - Switzerland
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- LBH Netherlands Bv - Netherlands
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The Treasury - Australian Government
- Ministry of Transport, Egypt
- Lanco Infratech Ltd - India
- Bhatia International Limited - India
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Globalindo Alam Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bhushan Steel Limited - India
- SMG Consultants - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Bukit Makmur.PT - Indonesia
- Latin American Coal - Colombia
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- Maheswari Brothers Coal Limited - India
- Mintek Dendrill Indonesia
- Jindal Steel & Power Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- GMR Energy Limited - India
- Indian Energy Exchange, India
- Posco Energy - South Korea
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Africa Commodities Group - South Africa
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- Power Finance Corporation Ltd., India
- Vedanta Resources Plc - India
- Aditya Birla Group - India
- Aboitiz Power Corporation - Philippines
- Bharathi Cement Corporation - India
- Manunggal Multi Energi - Indonesia
- Georgia Ports Authority, United States
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Malabar Cements Ltd - India
- GVK Power & Infra Limited - India
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- Independent Power Producers Association of India
- SMC Global Power, Philippines
- Sojitz Corporation - Japan
- Coalindo Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Straits Asia Resources Limited - Singapore
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- Kobexindo Tractors - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Riau Bara Harum - Indonesia
- India Bulls Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
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