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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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Tuesday, 28 August 18
SUPRAMAX: A COAL TRIP VIA INDONESIA PAID $13,500 ON A 56,000DWT TO WC INDIA - BALTIC BRIEFING
Capesize
The Singapore holiday mid-week disrupted trading and unsettled the market, with owners losing some resilience. The market took on a la ...
Tuesday, 28 August 18
SHIPPING MARKET UPDATE - GEORGE LAZARIDIS
As we edge close to the start of the Autumn Season, a period within the year that is usually characterized as the pivot point from the final quarte ...
Friday, 24 August 18
KOREAN RESTRICTIONS ON COAL SULPHUR IMPACTING HUNTER EXPORTS - THE HERALD
WARNINGS that Korean restrictions on sulphur levels in coal could hurt the Hunter industry appear to have been accurate, according to a report in t ...
Thursday, 23 August 18
RUSSIA'S MECHEL PRODUCED 9.69 MMT OF RUN-OF-MINE COAL IN 1H'2018
Mechel PAO, one of the leading Russian mining and metals companies, announces 1H2018 operational results.
Mechel PAO’s Chief E ...
Thursday, 23 August 18
SUPRAMAX: SOME FRESH COAL CARGOES APPEARED IN SE ASIA, GIVING A BIT PRESSURE ON RATES FOR END AUGUST SHIPMENTS - FEARNLEYS
Capesize
Slightly softer but generally very healthy for the big ships, with limited supply of early tonnage and positive Brazilian ore export v ...
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Showing 1636 to 1640 news of total 6871 |
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- Chettinad Cement Corporation Ltd - India
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- Attock Cement Pakistan Limited
- Wood Mackenzie - Singapore
- Mintek Dendrill Indonesia
- Sical Logistics Limited - India
- Rio Tinto Coal - Australia
- Essar Steel Hazira Ltd - India
- Salva Resources Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Intertek Mineral Services - Indonesia
- Indian Energy Exchange, India
- Goldman Sachs - Singapore
- Kobexindo Tractors - Indoneisa
- Vedanta Resources Plc - India
- Price Waterhouse Coopers - Russia
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Lanco Infratech Ltd - India
- Barasentosa Lestari - Indonesia
- Coal and Oil Company - UAE
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Deloitte Consulting - India
- Altura Mining Limited, Indonesia
- White Energy Company Limited
- Indogreen Group - Indonesia
- Straits Asia Resources Limited - Singapore
- Binh Thuan Hamico - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Star Paper Mills Limited - India
- Central Electricity Authority - India
- Baramulti Group, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Central Java Power - Indonesia
- Indian Oil Corporation Limited
- Timah Investasi Mineral - Indoneisa
- Carbofer General Trading SA - India
- Sojitz Corporation - Japan
- OPG Power Generation Pvt Ltd - India
- Ambuja Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Sakthi Sugars Limited - India
- Edison Trading Spa - Italy
- Jindal Steel & Power Ltd - India
- Krishnapatnam Port Company Ltd. - India
- AsiaOL BioFuels Corp., Philippines
- Gujarat Mineral Development Corp Ltd - India
- Sarangani Energy Corporation, Philippines
- Independent Power Producers Association of India
- Gujarat Sidhee Cement - India
- IHS Mccloskey Coal Group - USA
- Gujarat Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- SMC Global Power, Philippines
- Bangladesh Power Developement Board
- Karaikal Port Pvt Ltd - India
- Orica Mining Services - Indonesia
- Electricity Authority, New Zealand
- Kartika Selabumi Mining - Indonesia
- Orica Australia Pty. Ltd.
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- Romanian Commodities Exchange
- PNOC Exploration Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Therma Luzon, Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Mjunction Services Limited - India
- Larsen & Toubro Limited - India
- Siam City Cement PLC, Thailand
- Trasteel International SA, Italy
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- Planning Commission, India
- Simpson Spence & Young - Indonesia
- Videocon Industries ltd - India
- Wilmar Investment Holdings
- Australian Coal Association
- Minerals Council of Australia
- The Treasury - Australian Government
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Heidelberg Cement - Germany
- Tata Chemicals Ltd - India
- Bhatia International Limited - India
- Indo Tambangraya Megah - Indonesia
- Cigading International Bulk Terminal - Indonesia
- GMR Energy Limited - India
- Sree Jayajothi Cements Limited - India
- PowerSource Philippines DevCo
- Indonesian Coal Mining Association
- Parliament of New Zealand
- Aditya Birla Group - India
- Interocean Group of Companies - India
- Tamil Nadu electricity Board
- SN Aboitiz Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Bayan Resources Tbk. - Indonesia
- Coalindo Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- LBH Netherlands Bv - Netherlands
- Sindya Power Generating Company Private Ltd
- Leighton Contractors Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Cement Manufacturers Association - India
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Makmur.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- Xindia Steels Limited - India
- Thai Mozambique Logistica
- Ministry of Transport, Egypt
- Siam City Cement - Thailand
- Madhucon Powers Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Formosa Plastics Group - Taiwan
- Samtan Co., Ltd - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Mines - Canada
- Commonwealth Bank - Australia
- Uttam Galva Steels Limited - India
- Indika Energy - Indonesia
- Africa Commodities Group - South Africa
- San Jose City I Power Corp, Philippines
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- Aboitiz Power Corporation - Philippines
- Grasim Industreis Ltd - India
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- Iligan Light & Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- McConnell Dowell - Australia
- Australian Commodity Traders Exchange
- Medco Energi Mining Internasional
- European Bulk Services B.V. - Netherlands
- Petron Corporation, Philippines
- Thiess Contractors Indonesia
- Riau Bara Harum - Indonesia
- VISA Power Limited - India
- New Zealand Coal & Carbon
- Asmin Koalindo Tuhup - Indonesia
- Marubeni Corporation - India
- South Luzon Thermal Energy Corporation
- Global Business Power Corporation, Philippines
- The University of Queensland
- ICICI Bank Limited - India
- Energy Link Ltd, New Zealand
- Merrill Lynch Commodities Europe
- TeaM Sual Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
- Bhushan Steel Limited - India
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- Bharathi Cement Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Singapore Mercantile Exchange
- Maheswari Brothers Coal Limited - India
- Parry Sugars Refinery, India
- SMG Consultants - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- ASAPP Information Group - India
- Jaiprakash Power Ventures ltd
- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- Malabar Cements Ltd - India
- Anglo American - United Kingdom
- Toyota Tsusho Corporation, Japan
- Kapuas Tunggal Persada - Indonesia
- Chamber of Mines of South Africa
- Economic Council, Georgia
- Metalloyd Limited - United Kingdom
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Ceylon Electricity Board - Sri Lanka
- Kepco SPC Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Antam Resourcindo - Indonesia
- Alfred C Toepfer International GmbH - Germany
- CNBM International Corporation - China
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