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Thursday, 04 March 10
GLOBAL COAL PRICES GETS SUPPORT FROM EM DEMAND
 Commodity Online reported that, AP12 coal prices look well supported in 2010 thanks to positive outlook for Chinese coal demand whereas coal demand in Europe, rest of the world is shockingly low and stocks have hardly drawn despite the coldest winter in decades, according to an analysis by Bank of America- Merrill Lynch (BofAML).
Japan, by far the biggest importer of thermal coal, cut back on its appetite for coal by almost 20 million mt last year, to 117million mt. Europe took in 22 million metric tons less last year, driven particularly by Spain, Italy, the UK and France as low natural gas prices supported switching out of coal in the power sector
Last year China imported 70.4 mn mt of thermal coal, relative to outflows of 7.8 mn in 2008. China's imports will witness slowdown due to ramping up of internal proudction, according to BofAML.
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“Last year China imported 70.4 mln mt of thermal coal, relative to outflows of 7.8 mln in 2008. China's imports will witness slowdown due to ramping up of internal production” - BofAML
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Coal prices are protected to the downside by the high marginal cost of production, particularly in Russia. However, the oversupply in Europe will likely keep a lid on API2 prices near-term.
API2 front month coal increased from a low of $75/mt in mid December to $97/mt in early January, sharply outpacing other energy markets. Heavy snowstorms led to local power shortages, particularly in the South of the country.
Perhaps more importantly, a much stronger-than-expected cyclical rebound in China drove power generation growth to new highs, up 33% YoY over the past three months, helping to fuel coal demand. Other Asian countries also experienced a turn-around in electricity generation. In turn, due to the heavy snowfall and rail constraints, China resorted to seaborne coal as opposed to domestically produced material. Elsewhere, a glaringly cold winter in Europe provided some support to sentiment. Producer infrastructure constraints, particularly in Australia, South Africa and Indonesia, temporarily tightened the international coal market.
Ultimately, the 3-week rally in coal did not last and prices reversed sharply in mid January as the snowfalls in China receded and the USD strengthened. In recent weeks, front-month API2 coal traded down to $72.75/mt and has been in the $72/mt to $79/mt range. Chinese imports in January, though still at a very high level, cooled off month-on-month basis. Moreover, big European coal users, like Germany, France and the UK, recorded steep demand losses in January, at a time that they experienced the sharpest winter in decade, BofAML analysis said.
In the UK for instance, coal demand in December equalled 4.6 million mt, down from 6.3 million mt in the prior year. Preliminary data indicates that the trend continued over the past weeks.
Traditional European coal suppliers are doing what they can to manage supply to Europe. Russia has reportedly closed some mines to keep exports to Europe low. South Africa is actively diversifying away from Europe towards demand outlets in Asia Pacific. During 2009, 31% of South African exports went to India, from virtually nothing in previous years. That trend was particularly pronounced over the past months. Although in small volumes, South Africa has also been pushing material into China. More absurdly, Colombia-- who typically exports 50-60% of their coal to Europe with the balance going to the Americas--
has now detected interest in Asia.
Colombia exported small volumes to China in December to the tune of 1.5-1.7 million mt, for the first time ever. Of course, sharply lower freight rates are helping these trade flows. As we see continued supply of new Capesize vessels in 2010, freight will likely remain cheap by historical standards in the near-term. Once freight recovers, possibly at the end of this year with the cyclical demand recovery soaking up the supply in ships, these trade-flows are unlikely to be sustainable.
Europe's coal inventories remain at excessive levels at key import ports in Rotterdam and Amsterdam as supply exceeds demand. BofAML sses strong relationship between spreads in AP12 and coal inventories. Hence it is no surprise that the contango in API2 has steepened even more, with front month to front calendar year spreads at the widest since July last year , reflecting the oversupply in the European market and bulging inventories.
Coal markets in the Pacific are a lot tighter, with inventories relatively low in key coal consumers like China, India and South Korea. Meanwhile, the Newcastle coal market is trading in backwardation. Several coal mines in Australia had to declare force majeure in response to severe rainfalls on the east coast which flooded mines, while major rail lines had to close, clogging up the coal chain infrastructure. 47 vessels are currently again lining up outside Newcastle , underscoring that infrastructure problems will not go away easily, BofAML analysis said.
Overall, the outlook for emerging market coal demand remains very positive though. China is expected buy more seaborne coal as as the Chinese Renminbi is likely to be revalued by mid year. In BofAMl analysis, a CNY revaluation is undoubtedly positive for global thermal coal prices. Other EMs likeMexico and Turkey are sharply ramping up coal imports. India continues to suffer from a negative coal balance and will have to rely on the seaborne market for supplies. On a medium-term horizon, we believe that global seaborne coal prices have immense upside from the current level given the growth in coal-fired generation capacity.
Source:Commodity Online - By Madhurima R S
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Wednesday, 13 January 10
ADHUNIK GROUP TO BUY 50 PCT IN AUSTRALIA MINE
The Adhunik group of Industries is in talks to acquire 50 percent in an Australian coking coal mine for $100 million, the Economic Times reported on ...
Wednesday, 13 January 10
COAL MARKETS 2010 CONFERENCE - SINGAPORE, 28 - 29 JANUARY 2010
COALspot.com (Press Release): As an established annual event that has been running for more than 7 years now with extensive industry support from ke ...
Wednesday, 13 January 10
IRON ORE PRICE TIPPED TO RISE 40PC, SAYS ANZ
THE price battle in the controversial iron ore negotiations is expected to intensify.
ANZ senior commodities analyst Mark Pervan has increased h ...
Wednesday, 13 January 10
KANGAROO RESOURCES KICKS OFF INDONESIAN COAL PRODUCTION
Coal-focused company Kangaroo Resources has formally joined the ranks of international coal operators after wrapping up the delivery and sale o ...
Wednesday, 13 January 10
CONSOL SELLS FIRST COAL TO CHINA
Coal and natural gas company CONSOL Energy Inc.made its first sale of high-volume coking coal to Asia from its Bailey Mine in Northern Appalachia. T ...
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- Bulk Trading Sa - Switzerland
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- PTC India Limited - India
- Minerals Council of Australia
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- Carbofer General Trading SA - India
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- Madhucon Powers Ltd - India
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- Anglo American - United Kingdom
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- Georgia Ports Authority, United States
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- Renaissance Capital - South Africa
- Eastern Energy - Thailand
- Directorate Of Revenue Intelligence - India
- GVK Power & Infra Limited - India
- London Commodity Brokers - England
- CNBM International Corporation - China
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- Semirara Mining Corp, Philippines
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Billiton Holdings Pty Ltd - Australia
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- European Bulk Services B.V. - Netherlands
- Sojitz Corporation - Japan
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- Sindya Power Generating Company Private Ltd
- Petron Corporation, Philippines
- Mercuria Energy - Indonesia
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- The University of Queensland
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- OPG Power Generation Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
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- Uttam Galva Steels Limited - India
- Kartika Selabumi Mining - Indonesia
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- Africa Commodities Group - South Africa
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- Oldendorff Carriers - Singapore
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- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- Posco Energy - South Korea
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Malabar Cements Ltd - India
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- Cement Manufacturers Association - India
- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
- Ministry of Finance - Indonesia
- Australian Coal Association
- Intertek Mineral Services - Indonesia
- Orica Mining Services - Indonesia
- Australian Commodity Traders Exchange
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Siam City Cement - Thailand
- Vedanta Resources Plc - India
- Karaikal Port Pvt Ltd - India
- New Zealand Coal & Carbon
- Ambuja Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- Karbindo Abesyapradhi - Indoneisa
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- Rashtriya Ispat Nigam Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
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- Medco Energi Mining Internasional
- LBH Netherlands Bv - Netherlands
- Sical Logistics Limited - India
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- ASAPP Information Group - India
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- Indonesian Coal Mining Association
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- GAC Shipping (India) Pvt Ltd
- Alfred C Toepfer International GmbH - Germany
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- PowerSource Philippines DevCo
- Orica Australia Pty. Ltd.
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- Videocon Industries ltd - India
- Commonwealth Bank - Australia
- Energy Link Ltd, New Zealand
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