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Tuesday, 20 October 09
COAL PRICES TO SURGE IN 2010 DESPITE AMPLE SUPPLY
 Commodity Online reported that, Coal prices are indeed destined to go higher as they follow the rise of ‘coal currencies’ such as Australian Dollar (AUD), South African Rand (ZAR) and Columbian Peso (COP). Strong emerging market demand is also pushing up prices although it may be limited by abundant stocks on coal producing countries.
The BofA Merrill Lynch Global Report on energy pointed out that many “oil currencies” including UAE Dirhams (AED) and Saudi Arabian Riyal (SAR) are pegged to the US dollar, but coal exporters tend to keep a free float therefore currencies linked to coal have outperformed both their emerging market and G-10 peers. The report notes that near upside gains in steam coal will be limited to US dollar weakness.
Mirroring forex, prompt API-2 thermal coal prices have jumped 9% in the past month reaching $73/mt—slightly ahead of crude oil and petroleum products—while calendar prices for 2010 have recovered to a six-week high of over $84/mt. With coal inventories swelling to record highs around the globe, any near-term upside pressure on front-month coal prices above $80/mt is likely to be limited to further USD weakness. Although BofA Merrill Lynch Global report said that steam coal forwards to flatten significantly over the next six months as the recovery takes hold, excess supply will still dampen any upside pressure on near-dated spreads in the short-run.
The outlook for thermal coal markets should improve significantly and high inventories will be burned down next year as coal is set to regain market share relative to natural gas. Chinese and Indian demand for coal is already growing strongly. With a demand recovery coming in the rest of Asia, South Africa and the Atlantic Basin, the market is likely to tighten pretty quickly in 2010.
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As a result, API-4 South African coal prices have appreciated strongly in USD but not so much in local currencies. This situation arises because some of the world’s largest coal exporters like South Africa, Australia, and Colombia keep a free float. The logic supporting the recent move in coal prices is compelling. On the one hand, coal happens to be exported out of countries with a free-floating currency regime. On the other side, coal is the fuel of choice in an EM-led domestic recovery, as China, India, and many other emerging economies will require bucket-loads of cheap energy to maintain a fast pace of growth. Having said that, coal prices have lagged the rapid weakening of the trade-weighteddollar, suggesting coal prices could trend higher only to catch up with the recent currency moves, BofA Merrill Lynch Report said.
A wall of inventories will cap steam coal near-term
With coal inventories swelling to new record highs around the globe, any nearterm upside pressure in front-month coal prices above $80/mt will require further dollar weakness. Europe, a key consuming area for thermal coal, currently holds record stockpiles of Colombian and Russian material at its main ports in Amsterdam, Antwerp, and Rotterdam. European utilities are also awash with coal. In the US, the situation is even more pronounced, with inventories held at utilities standing at 70 days of consumption, 13 days higher than last year. In fact, coal inventories are pretty healthy everywhere, including parts of the Asia Pacific. India, and China are an exception as stocks seem to be drawing there at the moment.
Rising coal production will also limit upside on prices
Another factor limiting the near-term upside on coal is the healthy growth in supply. Russia seems to have turned its corner following an earlier slump in coal exports. During the first eight months of this year, Russian exports to Europe increased 19% relative to last year driven by rail and port de-bottlenecking. The export performance out of Australia has improved significantly in the past weeks and currently stands at the highest in over four months. Port congestion is down to just 20 ships, from 42 a few weeks ago, and should continue to improve gradually throughout next year as Newcastle adds a third terminal in Q1. Production in Colombia is also looking a lot healthier.
However, the thermal coal market will rebalance in 2010...
None of these bearish factors will last and we expect a rebound in global coal prices next year. The global thermal coal market will firmly rebalance primarily from the demand-side, BofA Merrill Lynch report stated. It expects the demand in Pacific region to outstrip that of West. demand in the Pacific outstrips demand in the West. Chinese and Indian demand for coal is already growing pretty strongly and once we add a demand recovery in the rest of Asia Pacific, South Africa, and the Atlantic Basin, the current excess supply in the market will be soaked up pretty quickly. A combination of power generation growth, industrial demand recovery, generation capacity growth, and fuel switching will firmly support global coal demand next year at around 3% growth, from -0.3% this year, according to BofA Merrill Lynch Global Report.
...as demand for coal is recovering, led by China and India
Looking at the main demand drivers in turn, demand in China and India is already growing pretty rapidly, driven by the upsurge in electricity generation and strategic stock-building of the past months. In the first eight months of this year, China imported 74 million mt of coal, up from 29 million mt in the prior year, a truly mind-boggling increase. As exports more than halved in the same period, China firmly switched from being a net exporter last year (4.8 million mt) to being a net importer (59 million mt YTD) (Chart 12). China has been moving away from Australia and Indonesia, at the margin, and started to source coal from farther away places like Russia, South Africa, Canada and Colombia— helped by low freight rates.
With prices below $100/t, China will remain a net importer
Paradoxically, the higher Chinese imports have occurred at a time that domestic production has surged to a new record. As regulators have kept domestic coal prices high relative to seaborne prices, Chinese utilities have moved to imported coal. Regional distribution bottlenecks, particularly in the railway system, have also continued to prevent the domestically produced coal to travel from the inner regions to the coastal demand centers, hence supporting coal prices in the East.
Coal demand in Asia Pacific is improving very rapidly...
In India, an acute shortage of domestic coal and a string of supply constraints have driven coal imports sharply higher. This material has come mainly from. Only 5 years ago, India hardly imported any coal but it now soaks up 70 million tons per annum. Bucking the global trend, Indian coal stocks are critically low due to a combination of monsoon rains, domestic mine strikes and stagnant production growth.
Meanwhile, coalfired generation growth is back to record highs but is now reportedly being constrained by the lack of coal (Chart 15). At this rate, coal supply shortages in India are likely to be prevalent for a long time. The government set stringent targets for electricity generation capacity and the share of coal-fired plants in the generation mix is set to rise to 57% by 2010, from 53% currently. With domestic demand for coal likely to grow unabated, Indian companies are now in the
process of buying up coal assets in South Africa, Indonesia, and Australia.
...and will eventually pull global thermal coal prices higher
While China and India currently stand out, demand will also come back strongly in other Asian countries, such as Korea, Taiwan, and Thailand. Japan is probably the only country that will not exert strong international buying pressure because domestic nuclear power generation capacity is coming back. Steadier demand growth is not only confined to Asia though. Power generation in South Africa, where 70% of capacity is coal-fired, is now almost back at pre-crisis levels. Relative to last year, power output is down by a meager 1.2%. Once coal demand returns to trend growth of 5%, it will quickly outpace production growth, which has remained fairly constant in the past years. Moreover, Eskom is constructing a number of coal-fired power stations, probably helping to drive coal demand higher.
Gas to coal fuel-switching will boost US, Europe demand
Capacity growth could also be a significant driver in the United States where a number of new coal-fired plants are coming to the market. Out of 19 GW potentially added next year, 7.5 GW alone will be coal-fired. No doubt, the recession has significantly reduced the demand for power and expanded reserve margins. However, coal is likely to gain back significant market share next year as the recovery sets in. Although gas-fired plants have displaced coal-fired generation
recently, this situation is not expected to last. Importantly, coal-to-gas switching occurred on the back of exceptionally low gas prices. BofA Merrill Lynch Global Report said that the spread of USnatural gas to coal will widen again next year, supporting coal demand.
In Europe, a toxic combination of falling power and industrial demand together with cheap natural gas prices has also contributed to loosen up the demand for the fossil fuel. Power supplies are likely to be reasonably comfortable this winter due to high natural gas inventories. Still, we expect this situation to reverse rapidly in the first half of next year. The lagged impact from rising oil prices will feed through to indexed European natural gas. Unless CO2 prices rise sharply—
which is unlikely given the current oversupply of permits—coal demand, which has also suffered from fuel switching, will pick up fairly significantly.
Economic recovery may push coal to over $100/t in 2010
In sum, the outlook for the thermal coal markets could improve significantly going forward.. Increased demand coupled with stronger “coal currencies”, could push European API-2 coal prices above $100/mt by the middle of next year, the report added.
Dry freight will buck the trend, remaining range-bound
Coal demand is set to eventually pick up driving up coal prices next year but freight rates will be low. A massive order book of new dry bulk ships will continue to push new ships online at a very rapid rate. Although demand for dry bulk goods, importantly iron ore, is improving everywhere as steel capacity utilization is rising, shipping bottlenecks will not reappear for another 2-3 years at the earliest, the BofA Merrill Lynch Global Report added.
Source: Commodity Online
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Tuesday, 20 October 09
RECAPITAL SET TO BUY INDONESIA'S BERAU COAL - SOURCES
* COULD PAY AT LEAST $1.3 BLN FOR BERAU - SOURCES
* RECAPITAL CONFIRMS IT HAS BID FOR BERAU
* BAKRIE GROUP LIKELY TO BACK BID – SOURCES
...
Tuesday, 20 October 09
INDIA MAY CUT STAKE IN NTPC BY DECEMBER, POWER SECRETARY SAYS
Bloomberg reported that, India’s government may sell a 5 percent stake in NTPC Ltd., the country’s biggest power producer, as early as D ...
Monday, 19 October 09
COAL PRICE UP AGAIN - RICHARDS BAY TERMINAL
Export prices rose 45 cents, or 0.7%, to an average of 64.05 a metric ton in the week ended Oct. 16, according to McCloskey Group.
The week was & ...
Monday, 19 October 09
COAL MINISTRY SEEKS EXPLANATION FROM AP GENCO
The Hindu Business reported that, the Coal Ministry has asked the Power Generation Corporation of Andhra Pradesh (AP Genco) to explain why there was ...
Monday, 19 October 09
CEMENT UNLIKELY TO COST MORE DESPITE COAL PRICE HIKE
Business-Standard reported that, Cement manufacturers will not immediately hike prices of the construction material, despite a surge in their input ...
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Showing 6326 to 6330 news of total 6871 |
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- Carbofer General Trading SA - India
- Electricity Authority, New Zealand
- Karaikal Port Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Wood Mackenzie - Singapore
- Baramulti Group, Indonesia
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- International Coal Ventures Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Mercuria Energy - Indonesia
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- PNOC Exploration Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Binh Thuan Hamico - Vietnam
- Trasteel International SA, Italy
- Borneo Indobara - Indonesia
- Siam City Cement - Thailand
- Savvy Resources Ltd - HongKong
- Rashtriya Ispat Nigam Limited - India
- Mercator Lines Limited - India
- Sojitz Corporation - Japan
- Tata Chemicals Ltd - India
- Ministry of Finance - Indonesia
- Orica Australia Pty. Ltd.
- Miang Besar Coal Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- Interocean Group of Companies - India
- Intertek Mineral Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Port Waratah Coal Services - Australia
- Bhushan Steel Limited - India
- White Energy Company Limited
- Global Business Power Corporation, Philippines
- Thiess Contractors Indonesia
- Medco Energi Mining Internasional
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Oldendorff Carriers - Singapore
- McConnell Dowell - Australia
- Romanian Commodities Exchange
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- Barasentosa Lestari - Indonesia
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- Kideco Jaya Agung - Indonesia
- Commonwealth Bank - Australia
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement PLC, Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Minerals Council of Australia
- Renaissance Capital - South Africa
- Eastern Energy - Thailand
- Indika Energy - Indonesia
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- Kartika Selabumi Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- Metalloyd Limited - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mjunction Services Limited - India
- Bayan Resources Tbk. - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Meralco Power Generation, Philippines
- GVK Power & Infra Limited - India
- Star Paper Mills Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- The Treasury - Australian Government
- Marubeni Corporation - India
- ICICI Bank Limited - India
- LBH Netherlands Bv - Netherlands
- Bharathi Cement Corporation - India
- Semirara Mining Corp, Philippines
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Parliament of New Zealand
- GMR Energy Limited - India
- Bangladesh Power Developement Board
- Jindal Steel & Power Ltd - India
- Globalindo Alam Lestari - Indonesia
- Eastern Coal Council - USA
- Australian Coal Association
- Directorate General of MIneral and Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- SMC Global Power, Philippines
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- Ind-Barath Power Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Indogreen Group - Indonesia
- IHS Mccloskey Coal Group - USA
- Power Finance Corporation Ltd., India
- Energy Development Corp, Philippines
- Planning Commission, India
- Maheswari Brothers Coal Limited - India
- Uttam Galva Steels Limited - India
- Chamber of Mines of South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- SMG Consultants - Indonesia
- Central Java Power - Indonesia
- Simpson Spence & Young - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- Makarim & Taira - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- The State Trading Corporation of India Ltd
- PTC India Limited - India
- Price Waterhouse Coopers - Russia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Anglo American - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Kumho Petrochemical, South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Therma Luzon, Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mintek Dendrill Indonesia
- VISA Power Limited - India
- Salva Resources Pvt Ltd - India
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Electricity Generating Authority of Thailand
- Kobexindo Tractors - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Rio Tinto Coal - Australia
- Samtan Co., Ltd - South Korea
- CIMB Investment Bank - Malaysia
- OPG Power Generation Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- MS Steel International - UAE
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- Manunggal Multi Energi - Indonesia
- Indian Oil Corporation Limited
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Coalindo Energy - Indonesia
- CNBM International Corporation - China
- Chettinad Cement Corporation Ltd - India
- Economic Council, Georgia
- Bhatia International Limited - India
- Cement Manufacturers Association - India
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Xindia Steels Limited - India
- Ministry of Transport, Egypt
- Alfred C Toepfer International GmbH - Germany
- Tamil Nadu electricity Board
- Merrill Lynch Commodities Europe
- Wilmar Investment Holdings
- Orica Mining Services - Indonesia
- The University of Queensland
- Videocon Industries ltd - India
- New Zealand Coal & Carbon
- Independent Power Producers Association of India
- Deloitte Consulting - India
- Kaltim Prima Coal - Indonesia
- Madhucon Powers Ltd - India
- Sindya Power Generating Company Private Ltd
- Central Electricity Authority - India
- Vedanta Resources Plc - India
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- Petron Corporation, Philippines
- PowerSource Philippines DevCo
- Bank of Tokyo Mitsubishi UFJ Ltd
- India Bulls Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Bhoruka Overseas - Indonesia
- Iligan Light & Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- Goldman Sachs - Singapore
- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Sree Jayajothi Cements Limited - India
- Africa Commodities Group - South Africa
- Latin American Coal - Colombia
- Aditya Birla Group - India
- Edison Trading Spa - Italy
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