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Friday, 28 September 18
FITCH RATINGS: METALLURGICAL COAL MINERS MAY CURB COSTS AS PRICES SLIP
Strong cost inflation in the global metallurgical coal sector suggests that miners may focus on cost controls as prices decline from their current high levels over the next 18 months, say Fitch Ratings and CRU. However, mining companies rated by Fitch are well-positioned for any potential squeeze on margins, as their costs are relatively low by global standards and, in most cases, their diversified business operations limit exposure to the sector.
CRU estimates that global costs in the metallurgical coal sector increased by 18% in 2017 and continued to rise in 2018. Severe weather has played a role in Australia, causing supply-chain disruption that led to demurrage penalties and increased storage costs for unshipped coal. However, costs have also been pushed up globally by higher oil prices and attempts by mining companies to maximise production to take advantage of high prices.
Coking coal prices are currently sufficiently high that cost inflation has not undermined profitability. CRU estimates that the seaborne industry generated an average cash margin of 40% in 2016-2017, and profitability has remained very strong this year.
The metallurgical coal market is unlikely to become oversupplied in the near term, and Fitch does not expect prices to fall deep into the cost curve, as they did during 2014-2016. However, prices have already eased off from their peak of USD260/tonne in 4Q16, and are likely to decline further as supply constraints continue to ease. Fitch’s current assumptions are that hard coking coal prices will average USD185/tonne this year and USD140/tonne thereafter. These declines could put pressure on some less competitive mining companies to reduce costs to protect margins.
Among Fitch-rated companies, Teck Resources (BB+/Positive) has the largest exposure to the metallurgical coal sector, which accounted for 60% of its segment EBITDA in the 12 months to 30 June 2018. The company is among those that have increased use of contractors and rented more mining equipment to raise short-term output, which has pushed up marginal costs. Nevertheless, Teck is still in the lower half of the global cost curve (FOB port) and its costs remain lower in US dollar terms than in 2014. Teck has also taken advantage of strong margins and cash flow to reduce leverage. The main credit issue facing the company is the prospect of continued project spending and its funding resulting in weaker cash flows and higher financial leverage.
BHP Billiton (A/Stable) and Anglo American (BBB-/Stable) also have significant metallurgical coal assets, mostly located in Australia, where coal mines are generally relatively low cost by global standards. BHP and Anglo also have diversified operations, with metallurgical coal accounting for only around 16% of BHP Billiton’s revenue and 17% of Anglo’s in the financial year ending June 2017. There could be increased focus on improving efficiency in the Australian coal sector, as already signalled by some companies, but CRU and the Australian government expect production to continue to grow strongly over the next four years.
Meanwhile, mining service companies and earthmoving equipment manufacturers should continue to benefit from rising demand and a better pricing environment as miners continue with new projects and increase production. Emeco (B/Stable), which has the largest exposure to metallurgical coal among Fitch-rated companies, reported improved EBITDA margin as the commodity sector recovered. It also improved its leverage position. Further leverage improvements are likely in 2019-2021 due to equity-funded acquisitions and a tight rental equipment market in Australia.
Source: Fitch Ratings
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Monday, 29 October 18
IMPLEMENTATION OF SULPHUR 2020 LIMIT - CARRIAGE BAN ADOPTED - IMO
An amendment to support consistent implementation of the forthcoming 0.50% limit on sulphur in ships fuel oil was adopted by the International Mari ...
Monday, 29 October 18
SUPRAMAX: THE ASIAN AREA SAW FALLING RATES, WITH A 61,000DWT FIXING DELIVERY KOHSICHANG TRIP VIA INDONESIA, REDELIVERY INDIA, AT $10,500 - BALTIC BRIEFING
Capesize
A market of two halves for most of the week with rates in the Atlantic firming and easing in the East for most of the week, but then, ...
Friday, 26 October 18
SHIP OPERATING COSTS EXPECTED TO RISE IN 2018 AND 2019 - MOORE STEPHENS
Total vessel operating costs in the shipping industry are expected to rise by 2.7% in 2018 and by 3.1% in 2019, according to our latest survey.
...
Friday, 26 October 18
SEVERAL CONTRACTIONS IN GLOBAL STEEL PRODUCTION - JEFFREY LANDSBERG
World Steel Association data released today shows that global crude steel production totaled approximately 151.7 million tons in September. T ...
Thursday, 25 October 18
WHAT DOES THE "IMO 2020" REGULATION REALLY SAY? A QUICK GUIDE - BIMCO
KNOWLEDGE TO ELEVATE
The shipping industry has all eyes firmly fixed on the topic, but what exactly do the “IMO 2020” global sulph ...
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- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- The Treasury - Australian Government
- The University of Queensland
- Eastern Energy - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Authority, New Zealand
- Meenaskhi Energy Private Limited - India
- Africa Commodities Group - South Africa
- Gujarat Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Sree Jayajothi Cements Limited - India
- Indogreen Group - Indonesia
- Thai Mozambique Logistica
- CIMB Investment Bank - Malaysia
- Power Finance Corporation Ltd., India
- Global Coal Blending Company Limited - Australia
- Sojitz Corporation - Japan
- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- Makarim & Taira - Indonesia
- Tata Chemicals Ltd - India
- Baramulti Group, Indonesia
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- Banpu Public Company Limited - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Sarangani Energy Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- Sical Logistics Limited - India
- Central Electricity Authority - India
- Port Waratah Coal Services - Australia
- Lanco Infratech Ltd - India
- Samtan Co., Ltd - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- PowerSource Philippines DevCo
- Star Paper Mills Limited - India
- Bhatia International Limited - India
- Kartika Selabumi Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Planning Commission, India
- Grasim Industreis Ltd - India
- Minerals Council of Australia
- Larsen & Toubro Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Barasentosa Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- India Bulls Power Limited - India
- Oldendorff Carriers - Singapore
- Simpson Spence & Young - Indonesia
- Romanian Commodities Exchange
- Sinarmas Energy and Mining - Indonesia
- Mercator Lines Limited - India
- Krishnapatnam Port Company Ltd. - India
- Antam Resourcindo - Indonesia
- OPG Power Generation Pvt Ltd - India
- Anglo American - United Kingdom
- Vedanta Resources Plc - India
- Jaiprakash Power Ventures ltd
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- Jorong Barutama Greston.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Pendopo Energi Batubara - Indonesia
- Uttam Galva Steels Limited - India
- Energy Development Corp, Philippines
- McConnell Dowell - Australia
- Malabar Cements Ltd - India
- Aditya Birla Group - India
- MS Steel International - UAE
- Maheswari Brothers Coal Limited - India
- Riau Bara Harum - Indonesia
- International Coal Ventures Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- CNBM International Corporation - China
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Oil Corporation Limited
- Sindya Power Generating Company Private Ltd
- Intertek Mineral Services - Indonesia
- Cement Manufacturers Association - India
- Karbindo Abesyapradhi - Indoneisa
- Mjunction Services Limited - India
- Xindia Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Renaissance Capital - South Africa
- Australian Coal Association
- Central Java Power - Indonesia
- Singapore Mercantile Exchange
- Neyveli Lignite Corporation Ltd, - India
- Bukit Makmur.PT - Indonesia
- Ministry of Transport, Egypt
- Madhucon Powers Ltd - India
- Iligan Light & Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Videocon Industries ltd - India
- VISA Power Limited - India
- TeaM Sual Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- Standard Chartered Bank - UAE
- Ambuja Cements Ltd - India
- Siam City Cement - Thailand
- Georgia Ports Authority, United States
- Billiton Holdings Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Ministry of Finance - Indonesia
- Coalindo Energy - Indonesia
- Ministry of Mines - Canada
- Mercuria Energy - Indonesia
- IEA Clean Coal Centre - UK
- GVK Power & Infra Limited - India
- Tamil Nadu electricity Board
- Indian Energy Exchange, India
- London Commodity Brokers - England
- ICICI Bank Limited - India
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- Kapuas Tunggal Persada - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
- Parliament of New Zealand
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- AsiaOL BioFuels Corp., Philippines
- New Zealand Coal & Carbon
- Electricity Generating Authority of Thailand
- Bukit Baiduri Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Meralco Power Generation, Philippines
- Chamber of Mines of South Africa
- GAC Shipping (India) Pvt Ltd
- GN Power Mariveles Coal Plant, Philippines
- Rio Tinto Coal - Australia
- Orica Australia Pty. Ltd.
- Kumho Petrochemical, South Korea
- Wilmar Investment Holdings
- Goldman Sachs - Singapore
- White Energy Company Limited
- LBH Netherlands Bv - Netherlands
- Interocean Group of Companies - India
- Global Green Power PLC Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Parry Sugars Refinery, India
- Ceylon Electricity Board - Sri Lanka
- Asmin Koalindo Tuhup - Indonesia
- SMC Global Power, Philippines
- Binh Thuan Hamico - Vietnam
- Indika Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Attock Cement Pakistan Limited
- South Luzon Thermal Energy Corporation
- Carbofer General Trading SA - India
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- Merrill Lynch Commodities Europe
- Bharathi Cement Corporation - India
- Coal and Oil Company - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Kobexindo Tractors - Indoneisa
- The State Trading Corporation of India Ltd
- Indonesian Coal Mining Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Dalmia Cement Bharat India
- Marubeni Corporation - India
- Petron Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Formosa Plastics Group - Taiwan
- PTC India Limited - India
- Borneo Indobara - Indonesia
- Global Business Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Independent Power Producers Association of India
- IHS Mccloskey Coal Group - USA
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- Price Waterhouse Coopers - Russia
- Heidelberg Cement - Germany
- Siam City Cement PLC, Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Altura Mining Limited, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Cigading International Bulk Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Gujarat Sidhee Cement - India
- Holcim Trading Pte Ltd - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Coastal Gujarat Power Limited - India
- Latin American Coal - Colombia
- Vizag Seaport Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- Medco Energi Mining Internasional
- Economic Council, Georgia
- SMG Consultants - Indonesia
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