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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, 08 October 18
KOMIPO INVITES BIDS FOR 520,000 TONS OF COLOMBIAN ORIGIN OF 5,700 NAR COAL
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a tender for 520,000 MT of min. 5700 NAR coal of Colombian origin ...
Sunday, 07 October 18
SUPRAMAX: INDO-INDIA USUAL COAL RUNS WERE COVERED AT US$ 12K - FEARNLEYS
Capesize
Average daily earnings up close to 15 pct in 5 trading days, thus patience finally paying off for owners of the big ships - Chinese play ...
Sunday, 07 October 18
A CASE FOR 20/20 VISION? IMO'S LOW SULPHUR FUEL LIMIT UNDER MARPOL ANNEX VI WHICH COMES INTO FORCE ON 1ST JANUARY 2020
KNOWLEDGE TO ELEVATE
The implementation of the global 0.5% sulphur cap for bunker fuel under MARPOL Annex VI in just under 18 months’ ti ...
Friday, 05 October 18
COAL PRODUCTION REACHES 64% OF 2018 TARGET : THE JAKARTA POST
National coal production up to August has already reached 311 million tons, or 64 percent of this year's total target of 485 million tons, acco ...
Wednesday, 03 October 18
VALUE OF AUSTRALIAN COAL EXPORTS TIPPED TO DECLINE SHARPLY OVER NEXT 18 MONTHS - THE GUARDIAN
Thermal coal prices forecast to drop 25% and metallurgical coal prices 23% as value of iron ore exports also falls
The value of Aust ...
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- Central Electricity Authority - India
- Heidelberg Cement - Germany
- Directorate Of Revenue Intelligence - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- London Commodity Brokers - England
- Salva Resources Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- GMR Energy Limited - India
- Siam City Cement - Thailand
- Xindia Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Sakthi Sugars Limited - India
- Sinarmas Energy and Mining - Indonesia
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Sical Logistics Limited - India
- Ambuja Cements Ltd - India
- Interocean Group of Companies - India
- Petron Corporation, Philippines
- Orica Mining Services - Indonesia
- Bhatia International Limited - India
- Cement Manufacturers Association - India
- Videocon Industries ltd - India
- Renaissance Capital - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Electricity Generating Authority of Thailand
- Chettinad Cement Corporation Ltd - India
- Thiess Contractors Indonesia
- Kideco Jaya Agung - Indonesia
- Gujarat Sidhee Cement - India
- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- The State Trading Corporation of India Ltd
- Bangladesh Power Developement Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Carbofer General Trading SA - India
- Leighton Contractors Pty Ltd - Australia
- SMC Global Power, Philippines
- Siam City Cement PLC, Thailand
- Vedanta Resources Plc - India
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- Kobexindo Tractors - Indoneisa
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- Jindal Steel & Power Ltd - India
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Medco Energi Mining Internasional
- Semirara Mining and Power Corporation, Philippines
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Simpson Spence & Young - Indonesia
- Therma Luzon, Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- Jaiprakash Power Ventures ltd
- Latin American Coal - Colombia
- Global Coal Blending Company Limited - Australia
- Maheswari Brothers Coal Limited - India
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Madhucon Powers Ltd - India
- Sojitz Corporation - Japan
- Bulk Trading Sa - Switzerland
- Globalindo Alam Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Meralco Power Generation, Philippines
- Bhoruka Overseas - Indonesia
- Iligan Light & Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- CIMB Investment Bank - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Georgia Ports Authority, United States
- Indian Oil Corporation Limited
- Ministry of Mines - Canada
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Toyota Tsusho Corporation, Japan
- Larsen & Toubro Limited - India
- Tamil Nadu electricity Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Attock Cement Pakistan Limited
- Savvy Resources Ltd - HongKong
- Australian Coal Association
- Grasim Industreis Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Neyveli Lignite Corporation Ltd, - India
- Straits Asia Resources Limited - Singapore
- Energy Link Ltd, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- The Treasury - Australian Government
- Coalindo Energy - Indonesia
- Mintek Dendrill Indonesia
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- Semirara Mining Corp, Philippines
- Trasteel International SA, Italy
- Parry Sugars Refinery, India
- PowerSource Philippines DevCo
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
- OPG Power Generation Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Posco Energy - South Korea
- Thai Mozambique Logistica
- PetroVietnam Power Coal Import and Supply Company
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- McConnell Dowell - Australia
- Miang Besar Coal Terminal - Indonesia
- Agrawal Coal Company - India
- Vizag Seaport Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Bhushan Steel Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- Wilmar Investment Holdings
- Indogreen Group - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Baramulti Group, Indonesia
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Marubeni Corporation - India
- European Bulk Services B.V. - Netherlands
- Indo Tambangraya Megah - Indonesia
- Chamber of Mines of South Africa
- Binh Thuan Hamico - Vietnam
- Mercuria Energy - Indonesia
- Barasentosa Lestari - Indonesia
- CNBM International Corporation - China
- Eastern Coal Council - USA
- Australian Commodity Traders Exchange
- Gujarat Mineral Development Corp Ltd - India
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Central Java Power - Indonesia
- Mjunction Services Limited - India
- Kaltim Prima Coal - Indonesia
- Merrill Lynch Commodities Europe
- TNB Fuel Sdn Bhd - Malaysia
- Deloitte Consulting - India
- Wood Mackenzie - Singapore
- India Bulls Power Limited - India
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- GVK Power & Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- Ind-Barath Power Infra Limited - India
- Parliament of New Zealand
- SN Aboitiz Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Edison Trading Spa - Italy
- Aditya Birla Group - India
- Altura Mining Limited, Indonesia
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Transport, Egypt
- Indian Energy Exchange, India
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- New Zealand Coal & Carbon
- Asmin Koalindo Tuhup - Indonesia
- Banpu Public Company Limited - Thailand
- Kartika Selabumi Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Romanian Commodities Exchange
- Bukit Makmur.PT - Indonesia
- Goldman Sachs - Singapore
- The University of Queensland
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- White Energy Company Limited
- Borneo Indobara - Indonesia
- Minerals Council of Australia
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Anglo American - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Essar Steel Hazira Ltd - India
- Uttam Galva Steels Limited - India
- ICICI Bank Limited - India
- Holcim Trading Pte Ltd - Singapore
- Coastal Gujarat Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Economic Council, Georgia
- Planning Commission, India
- San Jose City I Power Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Lanco Infratech Ltd - India
- Standard Chartered Bank - UAE
- VISA Power Limited - India
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