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8/6/2019 LC News Friday, 10th June 2011
1/32 London Commodity Brokers Page 1 of 32 Friday, June 10, 2011
TABLE OF CONTENTSCONTACT DETAILS .................... .................... ..................... ................. ..................... ..................... ........ 2COAL PRICES ................. .................... ..................... ..................... .................... ..................... ................. 3
Coal Market Overview............................................................................................................................3Coal Market Prices .................... .................... ..................... ................. ..................... ..................... ........ 3SGX AsiaClear OTC Sub-Bituminous Coal FOB Indonesia Swaps ................. ..................... .................... 4
SUMMARY OF CHINA COAL PRICES ................ ..................... .................... ..................... .................... ... 5COAL MARKET NEWS..................... ..................... ..................... .................... ..................... ................. ...6
Newcastle coal exports leap 31 percent..................................................................................................6Dalrymple bay terminal coal exports maintain rising trend in early June................ ..................... .............. 6Spain Boosts Incentives to Coal, Gas Power Plants, Cinco Says................. ..................... ................. ...... 6Grindrod plans expansions of its coal terminals.......................................................................................7AEP to retire 6,000 MW of U.S. coal generation American Electric Power.......... ..................... ................. 7Colombia keeps coal output target despite heavy rains ................. .................... ..................... ................. 8Colombia passes plan to distribute coal,oil tax revenue...........................................................................8Euro Coal-Jly S.African trades at API4 minus $3/T..................................................................................8COAL Market seeks clearer direction...................................................................................................9European Coal Derivatives Rise, Nearing Highest Close in a Month........................................................9Merkel calls for 10-20 GW new power plant capacity...............................................................................9Czech Coal Eyes Higher Prices in New Deals, Hospodarske Reports.......... ..................... .................... ... 9JSW, Top EU Coking-Coal Producer, Sets Schedule in Largest 2011 Polish IPO................. .................. 10Endocoal to raise A$14.9M for projects ................ ..................... .................... ..................... ................. . 10Australia exports of coal and iron ore Jan-Apr 2011 ................ .................... ..................... .................... . 10QRC calls on government to get mines back into swing ............... ..................... ..................... ............... 10Jindal extends Rocklands offer period ..................... ..................... .................... ..................... ............... 10Coal producers to push for third party participation in unviable mines ................ ..................... ............... 11Indika aims to produce 31 million tons of coal in 2011................ .................... ..................... .................. 11Chamber objects to Eskom, Transnet changes .................... .................... ..................... ..................... ... 11Waterberg coal offtake deal set to last 38 years....... ..................... .................... ..................... ............... 12SAs coal industry in a strong position but also grappling with major challenges SACPS head........... 12Riversdale takes delivery of six locomotives as it moves towards completing Moz coal project ............... 13South Korea eyes Indonesia coal to close cost gap.................... .................... ..................... ................. . 13China miners, Japan utilities may settle coal price at US$145/T ............... ..................... .................... .... 14Shandong coal miners hike coking coal price........ ..................... .................... ..................... .................. 14Coking coal softens at China ports .................... ..................... .................... ..................... .................... . 14Gansu energy-using cos to get 14 mln T coal from Xinjiang...................... ..................... .................... .... 14Huanghua coal shipment up in May................ ..................... ................. ..................... .................... ....... 14Weekly CR China Thermal Coal Price Index Analysis and Forecast ..................... ..................... ............ 14Weekly CR China Coking Coal Price Index Analysis and Forecast ................. ..................... .................. 16Weekly CR China Met. Coke Price Index Analysis and Forecast ................. ..................... .................... . 18
FREIGHT.............. ..................... ................. ..................... .................... ..................... ..................... ......... 19Dry bulk on retreat mode.............. ..................... ..................... .................... ..................... ................. .... 20
OIL..... ..................... ..................... ................. ..................... .................... ..................... ..................... ...... 21Oil Futures Rise to One-Week High as OPEC Fails to Agree on Output Quotas.......... ..................... ...... 21
STEEL.................................... ................. ..................... ..................... .................... ..................... ............ 22Baosteel announces price cut for July............................ ................. ..................... ..................... ............ 22JSW Steel May crude ssteel production up by 2%...................... .................... ..................... .................. 22Taiwans CSC Issues output and sales results for May.................... ..................... ..................... ............ 22
Outokumpu sees E.Asia stainless steel demand staying slow in Q3 ..................... ..................... ............ 22Turkey steel exports dip 8.8 percent in May ................... ................. ..................... ..................... ............ 22
IRON ORE.................. .................... ..................... ..................... .................... ..................... .................... . 23Thursday, 9th June 2011 ............... ..................... .................... ..................... ..................... ............... 23
IRON ORE NEWS................ ................. ..................... ..................... .................... ..................... ............... 26Iron ore spot extends gains, limited high grade supply .................. .................... ..................... ............... 26Iron Ore May Remain around two week high, Simpson Spence says........ ..................... ..................... ... 27Ban sought on transport of iron ore in state.......................... ................. ..................... .................... ....... 27Indias april May iron ore exports from Goa port fall source.................... ..................... .................... . 27Cabinet gives thumbs up to ten-commodity beneficiation strategy ............... ..................... .................... . 27Exxaro reviewing its options after Noble trumps Territory bid.................... ..................... .................... .... 28Africa may turn major iron-ore exporter after 2020 ..................... .................... ..................... .................. 28
FORTHCOMING CONFERENCES....................... ..................... .................... ..................... ................. .... 29
8/6/2019 LC News Friday, 10th June 2011
2/32 London Commodity Brokers Page 2 of 32 Friday, June 10, 2011
CONTACT DETAILS
London Head Office1st Floor9 Savoy StreetLondonWC2E 7ERUnited Kingdom
Tel: +44 20 7240 1112Coal Desk: +44 20 7010 7500Iron Ore Desk +44 20 7010 7501Options Desk +44 20 7010 7502F: +44 (0)20 7240 5122Email: [email protected]
Clive Murray - CEOPaul Graham-Clarke Managing DirectorStephen PetcheyJessica HydlemanHelene MitrevaJamie JonesChris HudsonTed LarmourEmma ShillingfordBen WebbMyles ClementKenny GrothSteve GongPhil SimmsMichael McDermott
Dubai OfficeSuite no. 3702, Liwa Heights,Jumeirah Lake TowersDubai
T: +97 144534200F: +97 144534214
Ritunjay Mehta - Dubai ManagerSushil Shinde (Mobile +97 1554545394)Lalit Lodha (Mobile: +97 1554545364)Siddharth BanthiaKrishan MaluYallappa Rayannache
Johannesburg Office
23 Wellington RoadParktown, 2193JohannesburgSouth Africa
T: +27 11 486 9524F: +27 11 642 6011
Bevan Jones Johannesburg ManagerTracy ZunguEmma Franz
Singapore Office
Level 30, Six Battery RoadRaffles Place, 049909Singapore
T: +65 6725 6434 / 6435F: +65 6550 9898
Gareth Hudson - Singapore ManagerJames Graham-Clarke
Hong Kong OfficeLevel 19, Two International Finance Centre (2 IFC)8 Finance Street, CentralHong Kong
T: +852 2816 4326/7/8
F: +852 3010 0087
Stuart Murray - Hong Kong & China ManagerVictor ChowClaire Cheng
China Office2111-B, Flagship Tower,Cyber Port, 40 Hong Kong Mid RoadQingdao, 266071China
T: +86 532 8667 8682F: +86 532 8667 8683
Becky Bi 40, 2111-B
: +86 532 8667 8682: +86 532 8667 8683
mailto:[email protected]:[email protected]8/6/2019 LC News Friday, 10th June 2011
3/32 London Commodity Brokers Page 3 of 32 Friday, June 10, 2011
COAL PRICES
Coal Market OverviewThursday, 9
thJune 2011, the market opened bright and early and $60c up on the prompt, cal API2 remaining flattish.
Physical saw 9 trades across the board, FOB saw 650,000 tonnes go through including a US$120.75 in August, and 150,000tonnes in Q4 FOB RB at US$124. FOB NEWC saw an index -$1.00 Q4 for 225,000 tonnes. More action in the prompt marketwhere we saw a June FOB bid at US$114.50 and June DES Rott at US$122.50 for 50kt CRAPSUS which was index -$2.00 topaper at the time. Yesterday Aug FOB traded at US$120.00 whereas today US$120.75.Helene MitrevaCoal Market Prices
Date
Bid Offer API #2
Paper Mid
Bid
Offer
API#4
Paper Mid
Bid
Offer
NEWC
Paper Mid
June-11 -#$1.00 124.45$$115.00
$114.50 120.25$ 121.00$
July-11 -#$0.75 125.23$-#$2.00 -
#$0.75 121.17$ -#$0.75 123.45$
Aug-11 -#$1.10 126.00$ -#$0.75 122.00$ $121.00 $124.00 124.40$
Sep-11 126.78$ $120.50
$120.95
-#$1.50 -
#$0.25 122.83$ 125.35$
Q3 11 126.00$ 122.00$ 124.40$
Q4 11 128.60$-#$1.00 -
#$1.00 124.50$ -#$1.30 -#$0.10 127.25$
Q1' 12 130.20$ -#$0.50 126.20$ -#$0.60 -#$0.10 129.50$
Q2' 12 130.50$ 126.40$ -#$0.50 +#$0.50 129.70$
CAL 12 130.75$ -#$0.05 +#$0.65 126.65$ -#$0.50 +#$0.50 129.90$
CAL 13 133.40$ 128.30$ 130.55$
CAL 14 135.90$ 130.65$ 132.40$
CAL 15 138.15$ 132.90$ 134.40$
FOB Newcastle
DES / CIF ARA
FOB Richards Bay
Below is a list of prices that we offered the market Thursday 9th June 2011, the prices are fixed prices, the prices
represented by # refer to those that are index based. The coal paper mid rate is the point between the bid and offerspread on coal derivatives.
Coal Paper Market Mid Point Curve
$110.00
$120.00
$130.00
$140.00
$150.00
June
-11
July-
11
Aug-11
Sep-11
Q311
Q411
Q1'1
2
Q2'1
2
CAL12
CAL13
CAL14
CAL15
API #2Paper Mid
API#4Paper Mid
NEWCPaper Mid
8/6/2019 LC News Friday, 10th June 2011
4/32 London Commodity Brokers Page 4 of 32 Friday, June 10, 2011
SGX AsiaClear OTC Sub-Bituminous Coal FOB Indonesia Swaps
Daily Settlement Prices of SGX AsiaClear OTC Sub-Bit Coal FOB Indonesia Swaps
Contract
Period
Daily
Settlement
Price
Prev Daily
Settlement
Price
US$
Change
%
Change
Jun-11 88.25 88.32 -0.07 -0.08%Jul-11 88.53 88.56 -0.03 -0.03%Aug-11 88.87 88.9 -0.03 -0.03%Sep-11 89.21 89.24 -0.03 -0.03%Oct-11 89.8 89.83 -0.03 -0.03%Nov-11 89.8 89.83 -0.03 -0.03%Dec-11 89.89 89.92 -0.03 -0.03%Jan-12 90.33 90.42 -0.09 -0.10%Feb-12 90.33 90.42 -0.09 -0.10%Mar-12 90.42 90.51 -0.09 -0.10%Apr-12 90.93 91.01 -0.08 -0.09%May-12 90.93 91.01 -0.08 -0.09%Jun-12 91.02 91.1 -0.08 -0.09%Jul-12 91.32 91.4 -0.08 -0.09%
Period Average DSPPrev Averag
DSP
US
Change
%
Change Product Name:Q311 88.87 88.9 -0.03 -0.03% Contract Size:
Q411 89.83 89.86 -0.03 -0.03%
Q112 90.36 90.45 -0.09 -0.10%
Q212 90.96 91.04 -0.08 -0.09%
Cal 12 91.06 91.14 -0.08 -0.09%
Source: www.sgx.com/asiaclear
http://www.sgx.com/wps/portal/marketplace/mp-en/products/asiaclear/commodities
Below daily settlement prices are summarized below in quarterly
and yearly basis and are for reference only
Below are the Daily Settlement prices of SGX AsiaClear OTC Sub-Bituminous Coal FOB Indonesia Swaps as at 8.00pm Singapore times
on Thursday, 9th June, 8pm Singapore time).
SGX OTC Sub-Bituminous Coal FOB Indonesian Swap
1 lot = 1,000 metric tonnes
For more information please contact Mr. Tan Say Liang [email protected]
(DID: +65 6236 5130) or Mr. Kenneth Ng at [email protected](DID: +65 6236
8388).
# Above daily settlement prices are for market-to-market open
positions on contract month basis
8.00am - 4.00am
Last Trading Day : 8.00am - 8.00pm
r a e eg s ra onhours (Singapore
Time)
Last publication day (Friday) of IHS McCloskey Indonesian Sub-Bitumous
FOB marker in the contract month
Cash Settlement using the arithmetic average of all publications of HIS
MCCloskey Indonesian Sub-Bitumous FOB marker in the expiring
contract month, rounded to 2 decimal places
Last Trading Day
Final Settlement
price
The Indonesian sub-bituminous FOB marker is an assesment of the price of this quality coal delivered
into ocean going vessels from a range of East and South Kalimantan load-outs. It represents the types
of coal currently supplied by Adaro, Kideco, Bumi Resources (Melawan), ABK (Loajanan) and Straits
Asia (Jembayan) amonst others
Indonesian sub-bituminous coal specs: 4,900 NAR, 28% max Total Moisture, 40% Vols, 10% max
Ash, 1.0% max Sulphur, 1,200C AFT (IDT), basis 20,000t / day loading
refer: http://cr.mccloskeycoal.com/
Daily Settlement prices for SGX AsiaClear OTC
Indonesia Sub-Bit Coal Swaps
75
80
85
90
95
100
1-Ju
n-11
1-Jul-1
1
1-Au
g-11
1-Se
p-11
1-Oc
t-11
1-No
v-11
1-De
c-11
1-Jan
-12
1-Fe
b-12
1-Ma
r-12
1-Ap
r-12
1-M
ay-12
1-Jun
-12
Contract Months
Daily Settlement Price
Prev Daily Settlement Price
http://www.sgx.com/asiaclearhttp://www.sgx.com/wps/portal/marketplace/mp-en/products/asiaclear/commoditiesmailto:[email protected]:[email protected]://cr.mccloskeycoal.com/http://cr.mccloskeycoal.com/mailto:[email protected]:[email protected]://www.sgx.com/wps/portal/marketplace/mp-en/products/asiaclear/commoditieshttp://www.sgx.com/asiaclear8/6/2019 LC News Friday, 10th June 2011
5/32 London Commodity Brokers Page 5 of 32 Friday, June 10, 2011
SUMMARY OF CHINA COAL PRICES
CCIV - Comparative CFR Import Value
Origin
Brand of Coal
GAR/NAR NAR Specification Terms
9-Jun-11*CCIV
US$ 2-Jun-11
*CCIV
US$
+ / - from
prev week
+ / - on
CFR
US$
Qinhuangdao FOBT - (refer China Coal Resources - Daily Market Watch)
Qinhuangdao Datong Premium Blend NAR >6,000 CV 6,000, V 25 - 28%, S 0.5 - 1%, Mt 10 - 13% FOBT 890.00 106.23$ 885.00 105.59$ 5.00 0.63$
Qinhuangdao Shanxi Premium Blend NAR >5,500 C V 5 ,5 00 , V 25 -2 8% , S < 1% , Mt < 12 % F OB T 840.00 99.89$ 840.00 99.89$ - -$
Qinhuangdao Shanx i B lend NAR >5,000 C V 5 ,0 00 , V 24 - 2 7% , S < 1% , Mt < 13 % F OB T 745.00 87.86$ 740.00 87.22$ 5.00 0.63$
Qinhuangdao Common B lend NAR >4,500 C V 4 ,500 , V 25- 28 %, S < 1% , Mt 4,000 C V 4 ,0 00 , V 25 - 2 8% , S < 1 %, Mt 6,000 CV 6,000, V 25 - 28%, S 0.5 - 1%, Mt 10 - 13% Exstock 1,002.00 120.42$ 997.00 119.78$ 5.00 0.63$
Guangzhou Shanx i Premium Blend N AR >5,500 C V 5 ,5 00 , V 25 -2 8% , S < 1 %, Mt 5,000 C V 5 ,0 00 , V 24 - 2 7% , S
8/6/2019 LC News Friday, 10th June 2011
6/32 London Commodity Brokers Page 6 of 32 Friday, June 10, 2011
COAL MARKET NEWS
Newcastle coal exports leap 31 percent
Australia's coal exports from the eastern Newcastle port, which ships mostly thermal coal used in power plants,jumped 31 per cent in the week as demand increased. Exports rose to 2.569 million tonnes in the week to June6, up from 1.955 million the previous week, Newcastle Port Corporation said on its website today. Japan, thelargest importer of Australian coal, has seen coal purchasing decline since it was hit by a devastating earthquakeand tsunami in early March, but is seen slowly returning to the market. Australia's thermal coal on theNewcastle index for the week to date was $118.43 per tonne on Tuesday, up 93 cents from $117.50 a weekearlier, but down from $119.34 on Friday. The vessel queue at the port was up to 14 ships last week from 13,while the average waiting time for vessels at the port dropped to just over a day. Thirty-one ships were travellingto the port to load coal, down from twenty-two last week, the port said. The Hunter Valley Coal Chain Coordinator(HVCCC), which helps coordinate coal exports, put the number of vessels in the queue at the port at 22 bymidnight on Tuesday. The HVCCC calculates the number of ships in the vessel queue using a wider radius fromthe port than the Newcastle Port Corporation.Source: Reuters
Dalrymple bay terminal coal exports maintain rising trend in early June
Australia's Dalrymple Bay coal terminal, which handled coal exports of more than 4 million mt in April and May,after a decline following a record spell of bad weather, is seeing the increased shipping activity continue this
month, a terminal official said Thursday. "We are seeing an increase in ships arriving for which coal is available,and hopefully this is a long-term trend and a turning point," Dalrymple Bay coal terminal operations generalmanager, Greg Smith, said in a telephone interview. "We have quite a lot of coal moving to the terminal. Lastweek, the terminal took between 22 and 24 coal trains per day. I am not too sure how long this will last, hopefullyit will be a long-term situation," he said. At midnight Australian Eastern Standard Time June 8, DBCT had998,500 mt of coal on its stockpile and available for loading onto ships, according to the website of the DalrympleBay coal chain coordinator.
The Queensland coal terminal has been steadily increasing its coal exports since they hit a monthly low of 2.65million mt in February 2011. They hit 4.46 million in April, slipping slightly to 4.35 million mt in May, according todata posted on the NQBPC website. In the 11-month period ended May 2011, Dalrymple Bay coal terminal hasso far exported 50.27 million mt of coal exports, compared with 57.2 million in the corresponding 11-month periodto May 31 2010, according to data on the website of the terminal's port authority, North Queensland Bulk PortsCorp. Meanwhile, the terminal's offshore vessel queue has stayed below 20 ships since April and on June 8DBCT had 18 ships in its vessel queue that were waiting to load coal. The terminal's vessel queue was in the low40s last December. "The range we need to get the best productivity out of the coal supply chain is 15-20 ships,"said Smith commenting on the terminal's optimal vessel queue.
Having enough available coal to load on to arriving ships has been a pressing issue for the coal terminal for thepast few months, as heavy rainfall earlier in the year has caused persistent production problems for many BowenBasin coal miners. "Demand has always been there, but buyers of coal were not prepared to nominate ships forarrival at DBCT while mines were under force majeure," Smith said. "Now that these mines are out of forcemajeure, what appears to be happening is that the terminal is getting more ships arriving," he said. Approximately20 coal mines ship their coal exports through Dalrymple Bay coal terminal including, Anglo AmericanMetallurgical Coal, BHP Billiton-Mitsubishi Alliance, Macarthur Coal, Rio Tinto, Peabody Energy and Vale. Mostof the Bowen Basin's coal producers are understood to have now lifted their remaining restrictions on coalexports resulting from wet weather.
Anglo American Metallurgical Coal, however, declined to comment Thursday on the operational status of itsGerman Creek coking coal mining complex in central Queensland, in spite of market speculation that it hadrecently lifted restrictions on its coal exports. BHP Billiton, the operator of nine Bowen Basin coal mines has
restricted its operational updates to its quarterly production reports, the last of which on April 20 said: "Forcemajeure remains in place for the majority of our Bowen Basin products with production, sales and unit costs likelyto be impacted, to some extent, for the remainder of the 2011 calendar year." Separately, Dalrymple Bay coalterminal has postponed some of its scheduled maintenance to enable its coal company customers to maximizetheir coal exports in the lead up to the end of the Australian financial year on June 30. "We have deliberatelyeased or delayed maintenance to give miners the chance to catch up on throughput, it being the last month of thefinancial year," Smith said.Source: Platts
Spain Boosts Incentives to Coal, Gas Power Plants, Cinco Says
Spain plans to increase incentives for utility companies operating coal and gas power plants, Cinco Diasreported, citing a draft of a regulation to be passed by the Industry Ministry. The power plants will get a total of1.1 billion euros ($1.6 billion), an increase of 600 million euros, the newspaper said.Source: Bloomberg
8/6/2019 LC News Friday, 10th June 2011
7/32 London Commodity Brokers Page 7 of 32 Friday, June 10, 2011
Grindrod plans expansions of its coal terminals
As Richards Bay Coal Terminal (RBCT) creaks and groans with reduced coal volumes available for export,another coal terminal operator in South Africa and Mozambique, the Grindrod Group, says it intends expandingoperations at Richards Bay and Maputo. The Grindrod terminals act as a safety valve for mines unable to crackthe nut of becoming a favoured RBCT exporter, partly due to inadequate rail services by Transnet Freight Rail
(TFR) but also because many emerging miners are simply unable to gain access to RBCT. According to Grindrodexpansion of its operations is subject to the availability of rail capacity between the mines in South Africa and thetwo ports of Maputo and Richards Bay, where Grindrod has its coal terminals. The company has recentlyincreased capacity at the Maputo Matola coal and magnetite terminal to between six and seven million tones, ofwhich five million is for coal and two million for magnetite (an iron ore). Grindrod has been reported as saying itintends increasing the Matola terminal capacity to 20 million tonnes, which it hopes to have in service by the endof 2014. The Matola terminal is unable to compete on equal terms with RBCT on account of the limited draught inMaouto Bay, which prevents the use of Capesize vessels.
However, the reduced cost of transporting coal to Maputo from the adjacent Mpumalanga mines provides theMozambique port with its own advantage. We believe that the demand to move cargo through the coal terminalwill continue to grow and we are gearing up to accommodate this increased demand for capacity from bothestablished and junior miners. We look forward to continued interaction with TFR and CFM, building on ourrelationship with the Mozambican Government and working together with all stakeholders to optimise tradethrough the port of Maputo, Alan Olivier, Grindrods chief executive said last week. Grindrods terminal capacity
at Richards Bay, which is distinct from the 91mt capacity RBCT, will see capacity more than double from 1.5million tonnes a year to 3.2mt annually within months. Grindrod says it believes it is capable of increasing thatcapacity by another 10mt within a year of obtaining the required rail capacity. While Grindrods further expansionof its coal and iron ore activities remains largely dependent on improved rail services to be provided by TFR, it isironic that the company owns and operates its own rail services which so far it has been unable to usecommercially on TFR tracks.Source: Ports & Ships
AEP to retire 6,000 MW of U.S. coal generation American Electric Power
American electric Power, one of the country's largest coal-burning utilities, said on Thursday it plans to retirenearly one-quarter of its coal fleet and retrofit other units at a cost of as much as $8 billion to comply withproposed environmental regulations. To meet stricter pollution limits for air, water and coal waste, AEP said it willretire 6,000 megawatts of coal-fired generation in Virginia, West Virginia and Ohio in 2014. It also plans toupgrade or install new advanced emissions reduction equipment on another 10,100 MW, convert 1,070 MW ofcoal generation to 932 MW of natural gas capacity and build 1,220 MW of natural gas-fueled generation. TheColumbus, Ohio-based company, which operates utilities in 11 states serving 5 million customers, warned thatcosts of the proposed regulations to customers and local economies have "been vastly underestimated,"especially in Midwestern states that rely heavily on coal to produce electricity.
"Because of the unrealistic compliance timelines in the EPA proposals, we will have to prematurely shut downnearly 25% of our current coal-fueled generating capacity, cut hundreds of good power plant jobs, and investbillions of dollars in capital to retire, retrofit and replace coal-fueled power plants." Said Michael Morris, AEP'schairman. Duke Energy, Dominion Resources (D.N), Progress Energy (PGN.N), the Tennessee Valley Authorityand other utilities have already identified coal units they expect to retire in the next few years. Industry studieshave indicated that between 30,000 and 70,000 MW of coal-fired generation in the U.S. may be forced to shut,depending on the final EPA rules. While supporting the environmental benefits of the regulations, Morris saidAEP electric rates could jump from 10 percent to 35 percent as its utilities comply with the rules. AEP utilitiescurrently own nearly 25,000 MW of coal-fueled generation, about 65 percent of AEP's 38,000-MW generatingcapacity. Coal's share would drop to 57 percent of AEP's total generating capacity by the end of the decade, thecompany said in a release. Morris also said electric reliability in the Midwest could be affected as utilities jugglethe need to retire plants, shut others to install new pollution equipment and develop new gas generation.
"The proposed timelines for compliance aren't adequate for construction of significant retrofits or replacementgeneration so many coal-fueled plants would be prematurely retired or idled in just a few years," Morris said.Morris said the company will work with the EPA "with the hope that the agency will recognize the cumulativeimpact of the proposed rules and develop a more reasonable compliance schedule." "With more time andflexibility, we will get to the same level of emission reductions, but it will cost our customers less," Morris said."You could save billions in capital costs if you had until 2020 for compliance as opposed to the timeline in theproposed rules because you can stagger the work, you won't have to idle plants or buy power on the market."said AEP spokeswomanMelissa McHenry. However, several EPA deadlines have been set by federal courts andare beyond the EPA's control, said Mark Griffith, a managing director of Black & Veatch, a global consulting,engineer ing and construction company, "Asset owners have been aware of this for several years and have beenmaking plans," Griff ith said. "This can be done," he said. "It's a matter of spending money and managing theprocess. It's not simple and it's a lot of changes in the generation infrastructure in a relativelyshort period of time." Source: Reuters
8/6/2019 LC News Friday, 10th June 2011
8/32 London Commodity Brokers Page 8 of 32 Friday, June 10, 2011
Colombia keeps coal output target despite heavy rains
Colombia is keeping its coal production target for the year despite heavy rains that have lashed the country andcould have hampered production, Mining Minister Carlos Rodado said. Rodado expects that coal productionfigures for 2011 will reach 85 million tons to 90 million tons. The figure is higher than the 76 million tons producedin 2010, missing the government's target of 80 million. Heavy rains in 2010 reduced production in Colombia,
which relies on large open-pit coal mines for most of its output. The heavy rains have continued this year andRodado admitted that all economic sectors, including oil and mining, have been affected by the downpours. "Wehave to wait and see how the rains affect us" in the second half of the year, Rodado added. The mining ministeralso said that oil production and pipelines have been damaged by the remains. Colombia ranks as one of theworld's top coal producers, with firms such as BHP Billiton PLC and Glencore International AG's controlling someof the country's most important mines. Source: Fox business
Colombia passes plan to distribute coal,oil tax revenue
Colombias Congress passed a law to modify distribution of taxes on commodities to allow a greater swathe ofthe nation to benefit from rising revenue. The law enables provinces that dont produce oil and coal to receivemore funding for investments, Finance Minister Juan Carlos Echeverry told reporters today in Bogota. ColombianPresident Juan Manuel Santos said after taking office last year that the change will help the government financeconstruction of roads, ports and technology projects and accumulate savings. Colombia is South Americaslargest producer of coal and its third-largest supplier of oil. The government will earmark 10 percent of the taxrevenue for technology and innovation projects, Santos said in May. Government inroads against guerrilla groups
have improved security in the Andean nation, luring investors including billionaires Eike Batista and Carlos Slim,whose Grupo Carso SAB stepped into Colombian oil exploration this year. Colombia may produce 1.7 millionbarrels of crude and natural gas a day in 2020, closing in on Brazil, South Americas second-largest producerafter Venezuela, Energy and Mines Minister Carlos Rodado said in an interview in April.Source: Bloomberg
Euro Coal-Jly S.African trades at API4 minus $3/T
Lack of demand for prompt South African spot coal is finally starting to be reflected in physical prices, traders andutilities said on Thursday. Coal swaps held firm, however, bolstered by strong oil prices. Swaps have helped propup physical values despite daily weakening fundamentals. This has been most noticeable in the increasednumber of trades at deepening discounts to the API4 index, most recently a trade on Thursday for a July cargo at$3.00 below index, sold by a utility to a trader. On Wednesday, prompt South African prices had fallen to $1.50below index. South African prices have hovered either side of $120.00 a tonne for the past few months, a priceplus freight which has been uncompetitive and has prompted Indian, South Korean and European buyers to seekcoal from other origins. "South African is the unwanted problem child of the coal market today," one trader said."There's a lot of coal around in Europe, and nobody anywhere wants South African coal at these prices. Whoeverbought the July cargo at $3.00 under index was probably only covering an existing short position; it doesn't reflectreal demand," a major utility source said.
The increasing discounts to the index were an attempt by sellers to move coal, which was proving tough to sell at$118-120. South African prices are going to have to fall closer to $110 before fresh buying emerges from India,which has steered clear of South African coal for several months, or China, which is evaluating South Africanversus Australian, Russian and U.S. delivered prices. Chinese end-users have in the past week bought a fewstandard Russian coal cargoes of 6,000 kc/kg quality at prices of up to $134 a tonne delivered [ ID:nLDE75818M].This high-grade coal is likely to be blended with the substantial low-energy sub-bituminous imports alreadybought from Indonesia by Chinese power plants, traders said. "It makes sense for Russian to be one of thecheapest good quality coals to be sold into China, because the freight is so low but the quantity is small. It's adrop in the ocean. Everybody's got too much coal," another utility source said.Fixed-price South African cargoeshave yet to trade sharply lower, although downward pressure is increasing, but bid levels did fall steeply onThursday to $112-$115.00 a tonne, a drop of $3-5. Offers remained firm at close to $120.00 a tonne.
Active bidding and offering by one major utility in both the DES and Richards Bay markets has been a price-supporting factor for many months but is increasing the disconnect between weak fundamentals and visible fixedprices for physical material, traders, brokers and utilities said.A July loading South African cargo traded at $3.00 below the API4 index.An August South African cargo traded early on Thursday at $1.45 below API4.A September South African cargo traded at $1.15 below API4 via brokers.A September South African cargo traded at $121.25.A June delivery DES ARA cargo traded at $122.50, little changed.A June South African cargo was bid at $112.00 with no offer against it.A July South African cargo was bid at $115.50 and offered at $119.75.An August loading South African cargo was offered at $120.95, down $1.00.A July DES cargo was both bid and offered at $125.00 a tonne, up $2.00.Source: Reuters
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COAL Market seeks clearer direction
While coal market fundamentals remain bullish, a strengthening US dollar and limited demand are pressuringprices. The front quarter API 2 contract last traded at USD 126/t, USD 2.75 higher than at Fridays close, whilethe Cal 12 contract has gained USD 1.75 this week, last changing hands at USD 130.50/t, according to one
broker. Theres not much spare margin at the moment, said one Geneva-based coal trader, adding any slightdisruption to supply could cause a spike. Theres continued buying from German utilities, said a London-basedcoal trader, adding higher prices for associated commodities are also supportive for coal. The whole energysector is strong, he added. Nevertheless, bearish currency factors are helping to provide a ceiling. The dollarwas last seen at 1.4606 against the euro 0.4% stronger than Tuesdays close after weakening since thebeginning of the third decade of May.
The dollar hasnt moved massively, but it will [play a role], said the Geneva-based trader, noting it is unlikely theAPI 2 Cal 12 contract will breach USD 131/t. And although there is some physical purchasing going on inEurope, the deals are mainly focused further along the curve, players said. To be honest, Im not seeing muchactual physical demand for this summer at the moment, said a Finnish coal trader. I think the buyers are lookingfurther into the future, he added. On the physical market, a June stem for delivery in Europe traded in the currentsession at USD 122.50/t USD 2/t below the paper market on the Global Coal screen. China is the placewhere people say demand should come at this stage, the Finnish trader said. If China starts buying, the [thirdquarter API 2] will definitely gain more,
added the London trader.Source: Montel
European Coal Derivatives Rise, Nearing Highest Close in a Month
European coal derivatives rose for the third time this week in London trading. Coal for delivery to Amsterdam,Rotterdam or Antwerp with settlement next year added 25 cents, or 0.2 percent, to $130.50 a metric ton by 12:25p.m. in London. A close of $131 on June 7 was the highest in more than a month. The contract has risen 21percent in the past year. Profit from running coal-fired power plants for the next month, the so-called clean-darkspread, is about 6.37 euros ($9.29) a megawatt-hour, compared with 2.64 euros from burning natural gas,Bloomberg data showed. The calculation uses electricity prices in Germany, Europes biggest energy consumer,and takes emission costs into account. December carbon-dioxide permits under the European Union cap-and-trade system were 0.1 percent higher at 16.53 euros a ton. Gas for delivery in the six months through September2012 to the U.K., Europes biggest consumer of the fuel, was little changed at 66.15 pence ($1.09) a therm inLondon. Source: Bloomberg
Merkel calls for 10-20 GW new power plant capacityGermany will need fossil-fuel power plants for the transitory period into a renewable-based future, and as suchwill require additional coal and gas-fired generation capacity, chancellor Angela Merkel told parliament onThursday. An additional 10 GW to 20 GW will have to be built in the coming years, Merkel said when presentingthe governments energy legislation package consisting of eight laws and decrees. These include a revisednuclear act, which fixes an exit from nuclear power generation by 2022, as well as an amendment to the countrysrenewable energies act . The main focus of the latter will be the expansion of wind energy on land and at sea,Merkel said. In addition, the EEG amendment also introduces an optional market premium model, aimed atincentivising a more market-based approach to renewable energy generation, she added.
In the long term, we want to cut the costs for renewable energies support considerably, the chancellor said.The market premium has already drawn both protest and support from industry groups (see related story).SPD demands EEG changes. Meanwhile, the parliamentary leader of main opposition party the SocialDemocrats (SPD), Frank-Walter Steinmeier, said in parliament on Thursday that his party would not oppose thenuclear act. However, the SPD will seek changes to the EEG proposal, particularly in the field of onshore wind
energy, which was not currently given the chance to reach its full potential, he added. In the EEG proposal, thegovernment has increased subsidy cuts for onshore wind power by 0.5% from 1 January 2012, to 1.5% annually,while increasing offshore wind subsidies. On Wednesday, the head of German energy industry group BDEW,Hildegard Mller, told a parliament committee that net German fossil-fuelled power plant new build could be aslow as 5 GW by 2016.Source: Montel
Czech Coal Eyes Higher Prices in New Deals, Hospodarske Reports
Czech Coal AS, a mining company, plans to raise prices of brown coal in new contracts with heating companies,Hospodarske Noviny reported, citing company spokeswoman Gabriela Benesova. Brown coal may cost about 70koruna ($4) per gigajoule, compared with current price of 40 koruna to 45 koruna. Energeticky a PrumyslovyHolding AS, a company that manages several heating companies in the country, said more expensive coal wouldboost the cost of heating, Hospodarske reported.Source: Bloomberg
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JSW, Top EU Coking-Coal Producer, Sets Schedule in Largest 2011 Polish IPO
Poland expects to raise 5.25 billion zloty from the initial public offering of coal producer Jastrzebska SpolkaWeglowa SA, according to Bloomberg . Individual investors in Polands biggest IPO this year will be allowed tobid for a maximum of 75 shares in the European Unions largest coking-coal producer, known as JSW, according
to its prospectus. Sale procedures elsewhere on the companys website said individuals may buy about 10,000zloty of shares each, which implies a price of about 133 zloty for each of the 39.5 million shares being offered.The Treasury Ministry is seeking to raise 15 billion zloty from asset sales this year to help finance the budgetdeficit and curb debt. Poland sold 12 percent of Bank Gospodarki Zywnosciowej SA last month and is offering 10percent of its biggest insurer PZU SA today. Were starting one of the biggest IPOs in Europe this year andweve already received very positive feedback from investors, Minister Aleksander Grad said at a newsconference in Warsaw today. He declined to comment on the calculations by Bloomberg News.
JSWs maximum price will be announced on June 13, with final pricing on June 28, according to the prospectus.The government and JSW pledged not to sell shares for 360 days after the IPO. Poland, whose sole stockexchange is central Europes fastest-growing equity market, has had 84 IPOs so far this year, attracting morecompanies than all of western Europe and ranking second after China among emerging markets, according todata compiled by Bloomberg. Brokerages helping manage the sale value JSW at 13 billion zloty or more, aperson who had seen research from four of the nine underwriters said on May 31. JSW will be the biggest coalproducer listed in Warsaw when its stock starts trading on July 6, with a market value set to exceed New World
Resources NV (NWR) of the Czech Republic, Polands Lubelski Wegiel Bogdanka SA (LWB), and UkrainesSadovaya Group SA. Goldman Sachs Group Inc., JPMorgan Chase & Co., Citigroup Inc. and UniCredit SpA arejoint global coordinators and joint bookrunners for the sale. PKO Bank Polski SA, Ipopema Securities SA, SocieteGenerale SA, BRE Bank SA and Wood & Co. also help manage the IPO.Source: Bloomberg
Endocoal to raise A$14.9M for projects
Bowen Basin coal developer Endocoal has raised A$6.9M through a placement with institutional investors andplans to raise a further $8M via a share purchase plan. The institutional placement was significantlyoversubscribed with strong support from overseas institutional investors, Endocoal CEO Tim Hedley said.The share purchase plan offer will close on July 6. The expected $14.9M to be raised from the placement andshare purchase plan will be used to fast track exploration of the Rockwood PCI project and mine development atOrion Downs, 60km south east of Emerald.Source: coalportal.com
Australia exports of coal and iron ore Jan-Apr 2011Australias exports of coal and iron ore in the first third of the year have been more resilient to the variousdisruptions (floods in Queensland on the coal supply side and, on the coal and iron ore demand side, theearthquake in Japan) than at first thought possible. In fact for coal the past the past two months have seen asteady recovery from the low point of February when just 17.3 Mt were exported and the impact of the floods wasat its peak. Subsequently shipments reached 20.7 Mt in March and now 22.0 Mt in April however the exportersare still some distance from the monthly average seen last year of 25.0 Mt. On the iron ore side and after the 25.8Mt low of February exports recovered strongly to 35.9 Mt in March the third largest volume on record and havefollowed that up in April with a substantial 34.1 Mt. So by all accounts iron ore appears firmly back on track whilecoal might be expected to recover fully over the next two/three months and this, in turn, should contributepositively to underlying dry bulk demand particularly for Cape and Panamax tonnage.Source: ICAP Shipping
QRC calls on government to get mines back into swing
The Queensland Resources Council has added their voice to the growing chorus of industry players urging thegovernment to release flood waters hampering coal mine operations. Stymied by the Environment Departmentmines are being forced to pump water around temporary storage sites because they cant get permission torelease it off site. Before the wet season, Queensland's coal industry was set to export at least a record 200Mt ormore in 2010-11, but that will likely fall 40Mt short, costing Queensland coal exports of $7B, the QRC said.Coal exports in May were 23% below last year's level and were the lowest month of May export tally for at leastfive years. Source: coalportal.com
Jindal extends Rocklands offer period
Indian conglomerate Jindal Steel & Power has extended the offer period for its on-market takeover bid forQueensland coking coal developer Rocklands Richfield by a further two weeks. The offer period will now close at4pm Brisbane time on Tuesday, July 5. Jindal has made an unconditional cash offer of A$0.30 per share for allthe shares of Rocklands not already held by itself or its associates.Source: coalportal.com
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Coal producers to push for third party participation in unviable mines
Domestic coal miners such as Coal India Ltd (CIL) and Singareni Collieries Co Ltd are trying to include in theWorking Group report on Coal for the Twelfth Plan a proposal to exploit their unviable underground coal minesthrough private participation on a coal-sharing basis. The coal miners had earlier put forth this proposal to the
Government, but it did not get the approval, as any coal sharing formula between the miners and a third partywould be treated as deemed coal linkages and, therefore, fall outside the Government's coal distribution policy.The Working Group, which is slated to submit its draft report by December, is likely to include the proposal in itsreport, possibly with some modifications to the original proposal, sources said. Mr S. Narsing Rao, Chairman andManaging Director of SCCL, who is also a member on the Working Group, did not want to comment on the issue,but agreed that opening up unviable mines through third party participation could be an effective way to increaseIndia's production from underground sources.
The proposal was mooted by the coal producers with the objective of opening up unviable mines, mostlyunderground, across the country. It is expected to get a positive response from power producers, who could takeup such projects and, thereby, get assured supplies of the raw material at lower prices. CIL's production fromunderground resources, for instance, has fallen from 75 million tonnes in 1975 to about 40 mt today adecrease of almost one mt every year for the last 36 years. SCCL's underground production is 12 mt, which canat best be increased to 15.5 mt in the next five years. SCCL takes up mines that provide an IRR of 12 per cent at85 per cent yield levels its current cost of production is about Rs 1,400 a tonne, while its aggregate realisation
last fiscal was about Rs 1,610 a tonne. Project that involve an IRR below this level are bracketed under unviablemines. Such projects could be made viable by third party investors, including power producers, through improvedproductivity and technology. For instance, SCCL's wage costs work out to about 44 per cent of cost of itsproducts, which private operators could scale down to improve productivity.Source: The Hindu Business Line
Indika aims to produce 31 million tons of coal in 2011
PT Indika Energy Tbk, an integrated energy company, is targeting to increase its coal production up to 31 milliontons this year from 29.1 million tons in 2010, says an executive. Indika president director Arsjad Rasjid said bylooking at the first quarters production of 7.6 million tons worth US$62.5 per ton, he was upbeat that thecompany could reach the target by year end. In the first quarter we can reach around 24.6 percent of this yearstarget, so we are very optimistic we can achieve the target, Arsjad said at the companys public expose onWednesday. He said that 80 percent of the 31 million tons was already ordered under contracts, while theremaining 20 percent would be sold on the spot. Arsjad added that 70 percent of the total production would beexported to various countries such as India, China and Korea, while the remaining 30 percent would be sold inthe domestic market. The Indonesian Coal Mining Association (APBI) said Indonesian coal miners expected to
produce 340 million tons this year, an increase of 23 percent from 275 million tons in 2009.
Twenty percent of that amount around 70 million tons will be allocated to fulfill domestic demand, while theremaining 80 percent will be exported. Indika Energy director Azis Armand said the company had 651 million tonsof proven coal reserves and 1.4 billion tons of potential coal reserves. The proven reserves have beenrecognized in four or five areas and we will acquire more areas to increase the proven reserves, said Arsjad,adding Indika planned to increase its production capacity up to 50 million tons in 2012. Indika Energy puts itsstrategic investments in the areas of energy resources, energy services, energy infrastructure, contract mining,coal transport and logistics, and power generation. The company posted Rp 772.7 billion ($90.5 million) in netprofits in 2010, a 6.5 percent increase from Rp 726 billion in 2009. The growing profit resulted from a totalrevenue of Rp 3.7 trillion, up 51.4 percent from 2009s Rp 2.4 trillion, according to data released Wednesday.The company will pay dividends of about Rp 385.3 billion or about 50 percent of last years profit, Azis said. Headded that the company had declared final dividends payment of Rp 135.4 billion or Rp 26 per share, togetherwith Rp 249.9 billion interim dividends paid in November 2010.Source: The Jakarta Post
Chamber objects to Eskom, Transnet changes
SOUTH Africas Chamber of Mines (COM) said on Thursday it was deeply concerned about the removal ofelectricity parastatal Eskoms chairperson, as well as suggestions that Transnets chair was also on his way out.Government named Zola Tsotsi as the new chairperson of power utility Eskom, a cabinet statement said onThursday. Tsotsi, the former chairperson of the Lesotho Electricity Corporation, will replace Mpho Makwana, whobecame chairperson after a leadership crisis at Eskom in late 2009. Cabinet spokesperson Jimmy Manyi said themove to replace Makwana was not a reflection on his work, but rather part of the government's bigger strategy tochange the way state-owned companies are run. "It was done within the broad principles of renewing the board,bringing new thinking and new strategies in," Manyi said. He said the government was also looking atrestructuring the board of state-owned freight logistics Transnet, responsible for transporting coal and iron orefrom mines to export terminals at the coast. This could include the removal of chairperson Mafika Mkwanazi."There is a possibility that vacancies will be filled at the Transnet annual general meeting later this month andnew blood introduced," he said.
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CEO of the COM Bheki Sibiya said he was surprised by the board shuffles. He said that while the COM and itsmembers acknowledged the fact that the matter was an internal one between the shareholders of the two stateowned enterprises and their officials, it would be a dereliction of duty on our part, as major stakeholders in theseorganisations, to remain silent on this issue given its potential impact on our industry. It has been our
considered view that stability and efficiencies in these two enterprises are critical in ensuring a competitive andgrowing mining industry which is important to the economy of the country. During the short period in which MrMafika Mkwanazi and Mr Mpho Makwana have occupied their respectively strategic positions, they havemanaged to bring stability to their respective organisations which, to our vantage point, seemed to be inturbulence. We therefore do not understand the logic behind their removal from office. Sibiya said he wouldapproach Public Enterprises Minister Malusi Gigaba to try and understand the logic behind these developments.Source: miningmx
Waterberg coal offtake deal set to last 38 years
Price of each shipment will be based on the international market price at the time RESOURCE Generation,whose shares have yet to trade since it made its secondary listing on the JSE last year, yesterday announced arevision to its coal supply deal with a subsidiary of Indian company RPG Group, extending the life of the deal by18 years. The Indian company will now buy 139-million tons of thermal coal from the companys Boikarabelomine in the Waterberg region of Limpopo in a deal that will take place over 38 years, Resource Generation said.The Sydney-based company said CESC, a unit of RPG, was beginning a feasibility study about building "a
2x660MW coal-fired power station" adjacent to the mine to supply power to the local grid. The proposed stationwill use about half the additional product domestically, with the rest for the export market, it said. "The price ofeach shipment will be based on the international market price at the time," Resource Generation said.
A Citigroup Global Markets report released at the end of March warned that as China had big coal resources,there was always a risk that it could raise output and become a net exporter of the fuel, having a depressingeffect on coal price. Initially, Resource Generation had signed an offtake agreement with the RPG unit for 37-million tons over 20 years. The initial offtake in the deal has increased to 73-million, and will start when theBoikarabelo mine starts production in 2013. The balance of the additional offtake of 66-million tons will begin afterthe mines second stage of expansion. Since its secondary listing in Johannesburg last July, ResourceGeneration has not traded on the JSE. On the Australian bourse, the company has a market capitalisation ofAS$200m (R1,4bn). Compared to coal assets in Mpumalanga, the Waterberg region is not well served byinfrastructure such as rail to export coal. The company said in its Stock Exchange News Service announcementyesterday that it was engaged in talks with Transnet and Eskom over long-term coal supply agreements.Source: Business Day
SAs coal industry in a strong position but also grappling with major challenges SACPS head
Incoming South African Coal Processing Society (SACPS) chairperson Mark Cresswell has said the coal industryis in a strong position but faces significant challenges. Speaking at the societys yearly awards evening, in May,he referred to the gradual renewal of the Witbank-Highveld coalfield, which supplies coal for 80% of State-ownedpower utility Eskoms power output. Most power stations do not wash their coal. However, as they near the end oftheir initially contracted 40-year life of reserves, a relatively easy solution for extending these reserves is to startwashing some of the coal, [and improve the quality of the coal], which he believes is good news for the industry.He said the construction of the Medupi and Kusile power stations, which would have washing plants and addsignificant capacity to Eskoms reserves, also presented opportunities for the industry. Medupi is focusingattention on the Waterberg and the surrounding coalfields as the next major source of thermal and coking coal;and there were many studies under way in the region, which might result in key future projects. Theenvironmental sector also posed challenges for the industry, particularly regarding the necessity of saving waterand avoiding acid mine drainage.
Saving water in the processing plants has always been possible by the use of slimes filters; and it isencouraging to note that there are quite a few plants in full operation in the Witbank area which are routinelyreducing water consumption by up to 75%, down to about 45 /t, Cresswell said. Referring to talk of nationalisingthe industry, he said its current healthy state was largely a result of its intensively com- petitive nature. Althoughlarge mining houses were still significant players, Eskom now sourced over 20% of its coal from smaller,independent mines, he said. Cresswell said the CoalTech 2020 Research Programme was still going strong andthe SACPS would shortly be sponsoring a PhD student in coal-related research, financed by the sponsorshipmoney raised at its biannual conference. Coal-processing project house Taggert Jim Harrison Design AssociatesJim Harrison was named Coal Man of the Year at the awards evening in May.The award is presented to thosewho have made significant contributions to the coal-preparation industry over an extended period. The Student ofthe Year award went to Melanie Visser for her role in the advanced coal preparation course at Witbanks CollieryTraining College. This award is given to two long-standing members of the society, retired from the committee butnot from active work in the industry. Honorary SACPS life memberships were awarded to Amec consultant DaveTudor and former Isandla Coal Consulting MD Peter Hand, both former chairpersons of the society.Source: Mining Weekly
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Riversdale takes delivery of six locomotives as it moves towards completing Moz coal project
Australian coal-mining com- pany Riversdale Mining has taken another step towards completing the massiveBenga coal project, in Mozambique. he company received the first of six diesel locomotives earlier this month. Itcontracted US-based company National Railway Equip- ment and its European subcontractor, TV Gredlelj, of
Zagreb, Croatia, to deliver the locomotives. These newly built EMD GT26CW hood unit locomotives are equippedwith 1 067 mm bogies, driven by 3 300 hp engines and will be transporting coal from Benga along the Senarailroad, which links the Moatize mining region to the Port of Beira. There is an option for a further five moresimilar locomotives for Riversdale. Meanwhile, the company is currently working on the first phase of the project,estimated to cost about $270-million. The project will be developed in three principal stages, contemplated toalign with the completion and subsequent expansion of rail, port and river barging infrastructure in Mozambique.
The initial stage-one development, at 5,3-million run-of-mine (ROM) tons a year, will produce about 1,7-milliontons a year of high-quality hard coking coal and 300 000 t/y of export thermal coal. Riversdale Mining says in itsquarterly activities report for March 31, 2011, that the mining contractor for stage one of the pro- ject continues toassemble and commission various equipment components. Overburden removal has started in the south pit andcoal exposure is currently in full operation, with 1,8-million cubic metres of overburden already cleared and 920000 t of coal exposed. Civil works at the mining facilities have also started and the mine offices are currentlyunder construction. The construction of the conveyor and secondary haul road has been completed andconstruction of the conveyor structure is already in progress. Meanwhile, the design for the overland conveyors
and the ROM station was completed in late January 2011. Construction works started during the quarter and areadvancing. The licence approval for the building of the waste dump runoff is still outstanding. Further, bushclearing on the rail siding haul road has been completed and the earthworks are 27% complete.
Works at the Matambo substation have been finalised and the line construction has reached the Zambezi riverbank, with the laying of the foundations for the 66-kV-line poles on the river islands having started. heconstruction licence for the rail siding and haul road has been obtained and the associated works are in progress.The order for the rail track construction has been placed and the bulk of the materials has been supplied, withconstruction expected to have started by the end of May. The stage-two expansion will include the installation ofa second module of the coal handling and preparation plant and increase ROM production to 10,6-million tons ayear, boosting output to 3,3-million tons a year of high- quality hard coking coal, and two-million tons a year ofexport thermal coal. First coal is expected to be available for export at the Port of Beira before the end of 2011.The final stage is expected to increase coal production to about 20-million ROM tons a year, through theinstallation of two additional coal preparation plant modules. This will depend on, besides other things, future coalmarket conditions and the avail- ability of port, rail and barging capacity at the time.Source: Mining Weekly
South Korea eyes Indonesia coal to close cost gap
South Korea, the worlds third-largest thermal coal buyer after Japan and China, could increase Indonesian coaluse to more than half of imports in a bid to cut costs at loss-making state utility Korea Electric Power Corporation(Kepco). Kepco, which manages the transmission and distribut ion network, lost 61.4 billion Korean won ($57million) in 2010 and is struggling to plug the gap in a tariff review due this month, although political pressures andrising inflat ion mean it is unlikely to be able to claw back all its losses. The firms tariffs were 90.2 per cent of itscosts last year, according to its data. It buys power at the Korea Power Exchange, mostly from its six fully-ownedgenerating firms whose combined power output accounts for 92 per cent of the countrys total. Of the six powergenerators, five have thermal plants fed with imported coal, while the other generates power via nuclear andhydro. Kepco chooses power from the one with the lowest fuel costs, meaning price-competitive fuel mixing iscritical in increasing their revenue. Generating companies are doing their best to improve the blending ratio oflow calorific value Indonesian coal in order to take advantage of the relatively cheaper price, said Jason Jang,head of fuel procurement at Korea East-West Power (EWP), one of Kepcos power generating firms.
Korean generating companies are so sensitive to price that we have made a huge effort to lower coalspecificat ions to save on costs. Kepcos total fuel costs are 18.6 trillion won annually, with coal accounting for43 per cent, liquefied natural gas (LNG) 43 per cent, oil 9 per cent and nuclear the remainder, the company dataon its consolidated earning results showed. Coal prices surged nearly 30 per cent since last December in thewake of floods in Australia and rising global demand, before easing back given a lack of Japanese spotdemand. The GlobalCoal Daily Index on Thursday showed that Australian coal from Newcastle was at $119.03per tonne, DES ARA European coal at $123.45 and RB South African coal at $119.93 on a free-on-board (FOB)basis for a heating value of 6,000 kcal/kg. Traders said Indonesian coal was at $108-$109, FOB, for the sameheating value. Even with freight added, final prices of Indonesian coal are still about $10 a tonne lower than otherorigins, they said. Shipping costs (of Indonesian coal) are not so burdensome thanks to a short distance, and asit is low calorific, its price has a discount, said a Korean utility source who could not be named due to thesensitivity of discussing contract prices for coal.Source: Reuters
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China miners, Japan utilities may settle coal price at US$145/T
China's top coal miners and Japanese utilities may settle term price at US$145 per tonne for thermal coalcontracts to be delivered in next fiscal year starting from Apr, reported the 21st Century Business Herald, citingone top coal official. Talks on next year's term contracts, which had been delayed by the massive earthquake andtsunami that hit Japan in Mar, may finalize in the end of Jun or early Jul, with price settling at some US$15/t
higher than the Japan-Australia settlements, the report cited an unnamed top coal official as said. On Apr 15,Australian coal miners reached agreement with Japanese utilities at US$129.85/t for thermal coal supplies duringthe next fiscal year. Top Chinese coal producers led by Shenhua Group and China National Coal took part innegotiations with 11 Japanese utilities represented by Tokyo Electric Power.Source: en.sxcoal.com
Shandong coal miners hike coking coal price
Main coal companies in East Chinas Shandong province raised the price of coking coal by 20-30 yuan/t recently,as the provincial government limited deliveries of other coal types to prioritize coal transport to power plants amidpower crunch. Currently, the ex-works price of 1/3 coking coal in Zaozhuang is 1410 yuan/t and that of gas coalin Linyi at 1170 yuan/t, both inclusive of VAT, showed data released by China Coal Resource (en.sxcoal.com).Yankuang Group hiked the price for washed coking coal by 30 yuan/t to 1170 yuan/t, local media reportedrecently. Source: en.sxcoal.com
Coking coal softens at China ports
The domestic coking coal market witnessed a weakening in the past few weeks as mills expected demand toshrink during this summer. Jingtang, the major north China port that handles both domestic and imported cokingcoal, saw prices down RMB5/ t in the week ended May 30, with imported premiums traded at RMB1675-1705/t,while domestic materials at RMB1675-1695/ t. At producing regions, Liulin no. 4 coking coal, a premium brand inShanxi, was priced at RMB1,650/t FOB railcar on June 6, declining RMB30/t from a month ago, although otherproducts were stagnated. Coking coal imports remained weak at Jingtang in the said period, with 119,913 tonnesarrived, dropping 4,866t or 3.89% from last week.Source: China Coal Times
Gansu energy-using cos to get 14 mln T coal from Xinjiang
Northwestern Chinas autonomous region of Xinjiang will deliver 14 million tonnes coal to Gansus energy-consuming companies to ensure electricity supply, 60%-70% of which is for power plants, reported Xinhua newsagency, citing Gausu Industry and Information Commission. Coal-fired power plants in Gansu consumed a totalof 26.62 million tonnes coal in the first five months this year, up by 22% from the same period last year, saidYang Guagnwen, director of transport and logistics department under the commission. The regions coal miners
would delivered 20 million tonnes coal to power generators in Gansu this year, expected the commission.Gansus key coal-consuming companies has singed 2011 supply contract with the regions main coal producers.Source: en.sxcoal.com
Huanghua coal shipment up in May
Huanghua, Chinas second largest coal loading port owned by Shenhua, delivered 7.9mt in May, which was anincrease of 0.1mt from April, although unchanged from May last year. Its YTD handling saw a rise of 6.7mt to40.5mt, announced the port June 9. Coal railings to the port was 8.4mt in May, declining 0.1mt from the previousmonth, but rising 0.2mt from the same month of 2010, with the total for the first five months at 43.1mt, climbing6mt year on year. Loading capacity of Huanghua is expected to reach 110mt/yr this year, and will further climb to150mt/yr by 2015, according to plans. The port shipped 90mt in 2010, up 15% from 78mt in 2009.Source: China Coal Times
Weekly CR China Thermal Coal Price Index Analysis and Forecast
CR China Thermal Coal Index
0
50
100
150
200
250
300
350
15-Jun-05 15-Apr-06 15-Feb-07 15-Dec-07 15-Oct-08 15-A ug-09 15-Jun-10 15-Apr-11
Price Index
Stock Index
Market Balance Index
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Price indexAs of Jun 6, the CR China Thermal Coal Price Index (CRTP) went up to 222.314 points, an increase of 2.207points or 1% from the week before, and the CR China Thermal Coal Stock Index (CRTS) rose to 185.181 points,up 0.972 point or 0.53% from the previous week. The CR Qinhuangdao Thermal Coal Price Index or CR (QHD)was 845 yuan/t, rising 5 yuan/t from the week before and the CR Guangzhou Imported Thermal Coal Price Index
or CR (GZ) stayed at 646 yuan/t, unchanged from one week earlier.CR China Thermal Coal Price Index and Forecast Range
120
140
160
180
200
220
240
8-Dec-08 9-Mar-09 15-Jun-
09
14-Sep-
09
21-Dec-
09
29-Mar-
10
28-Jun-
10
27-Sep-
10
3-Jan-11 4-Apr-11
Price Index
Lower lim it
Upper lim it
Long-term trend
2. PriceMain sample areas The price of thermal coal at Qinhuangdao Port continued to rise in the period from May 30 toJun 5 (this period). The VAT-included ceiling FOB price of thermal coal with calorific value of 6000 kcal/kg, 5500kcal/kg, 5000 kcal/kg and 4500 kcal/kg rose to 890 yuan/t, 845 yuan/t, 750 yuan/t and 655 yuan/t respectively, up10 yuan/t, 5 yuan/t, 10 yuan/t and 15 yuan/t from one week ago. And, in the production area of Datong, the free-on-rail price of thermal coal with calorific value of 5500 kcal/kg was 685 yuan/t, inclusive of VAT, unchanged fromthe previous week. In power plants along the Yangtze River in East China, the purchase price of thermal coalrose by 5-20 yuan/t from one week ago. Other main areas Thermal coal price in some areas edged up thisperiod. The mine-mouth price of Tengzhou thermal coal (5500 kcal/kg) and Chongqing thermal coal (4500kcal/kg) rose to 760 yuan/t and 510 yuan/t, up 40 yuan/t and 50 yuan/t from the week before. In transferringplaces, Jingtang port saw price hike in thermal coal with certain calorific value. The FOBt price of thermal coalwith calorific value of 5800 kcal/kg, 5500 kcal/kg and 4500 kcal/kg increased to 890 yuan/t, 840 yuan/t and 640yuan/t respectively, all up 5 yuan/t from one week ago. While that of 5000 kcal/kg stayed at 740 yuan/t,unchanged from the week before. The price of imported thermal coal with various calorific values in Guangzhouport remained the same as that in one week earlier.3. Stock: In the production place, Datong Coal Mine Group had 4.95 million tonnes of coal in stock as of Jun 3,down 249,000 tonnes from the previous week. Ports saw ups and downs in their coal stocks. As of Jun 3, thermalcoal stockpiled at Qinhuangdao increased to 5.79 million tonnes, up 31,000 tonnes from one week earlier. While,coal stocks at Guangzhou Port declined to 2.42 million tonnes, down 38,000 tonnes from the previous week. Coalstockpiled at the power plants of Chinas top six power groups and some local power generators in Shanxi edgedup to 10 million tonnes on Jun 3, up 582,600 tonnes from one week before.4. Price forecast (Jun 6-Jun 12)
CR China Thermal Coal Price and Stock Index Trend
176.649
168.325
202.569
198.698
191.084
207.110
223.750
150
160
170
180
190
200
210
220
07-Jun-10 07-Aug-10 07-Oct-10 07-Dec-10 07-Feb-11 07-Apr-11 07-Jun-11
160
170
180
190
200
210
220
230
Stock Index Price Index
As showed the above zoom-in chart of the recent thermal coal price and stock index, the CRTS kept rising thisperiod, but at a slower pace. The CRTP continued to climb, reflecting the general rise in thermal coal price.The CR China Thermal Coal Market Balance Index (CRTB) was 120.052 points this period, up 0.564 point or0.47% from one week before. As of Jun 4, coal stocks at Qinhuangdao port climed to over 6 million tonnes due tonavigation closure, but fell to 5.5 million tonnes on Jun 6 when transportation got normal, which indicated a strongdemand for the fuel. Coal inventories at power plants belonging to six major power groups still maintained at highlevel with about 16 days of consumption.
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China would enter the peak demand season for power starting from Jun. According to estimates by relevantagencies, the highest power demand this summer may rise by 14% on year. The latest freight for vessels fromQinhuangdao to Shanghai stayed at 53 yuan/t from the previous week. And, that from Qinhuangdao toGuangzhou decreased to 82 yuan/t, down 3 yuan/t from the week before. The National Development and
Reform Commission (NDRC) is expected to further strengthen its supervision on coal price and launch inspectioncampaigns in main production provinces regarding coal price. Meanwhile, NDRC have ordered large coalproducers to take the lead in stabilizing power coal price. On the whole, thermal coal price would likelycontinue to go up next period, but at a slower pace considering stock levels and demand for the fuel.By the moving average method, we predict that the CRTP will move between 222.314 and 223.750 points nextperiod, up 0-0.65%. The weighted CR Thermal Coal Price would likely edge up.5. Spot trading index
Port Last week
Mon Tue W ed Thu Fri
5500 kcal/kg(yuan/t)
840 840 845 845 845
Stock (kt) 5730 5710 5680 5760 5790Throughput(kt) 750 719 690 650 690
Vessel queue 119 121 131 128 136
Qinhuangdao
Vesselexpected
13 18 11 17 21
Indonesia5000 kcal/kg(yuan/t)
646 646 646 646 646Guangzhou
Stock (kt) 2630 2690 2600 2550
Weekly CR China Coking Coal Pr ice Index Analysis and Forecast
CR China Coking Coal Index
0
200
400
600
800
1000
1200
1400
20-Apr-02 30-Jan-05 10-Feb-06 20-Jan-07 10-Jan-0822-Dec-0831-Aug-0910-May-10 10-Jan-11
Price Index
Stock Index
Market Balance Index
Price indexAs of Jun 6, the CR China Coking Coal Price Index (CRCP) was 699.598 points, unchanged from one weekbefore, while the CR China Coking Coal Stock Index (CRCS) decreased by 11.407 points or 2.32% from theprevious week to 480.994 points. The CR Jingtang Imported Coking Coal Price Index or CR (JT) was 1349yuan/t, the same as one week ago.
CR China Coking Coal Price Index and Forecast Range
0
200
400
600
800
1000
1200
13-Jan-02 01-Nov-04 10-Jan-06 20-Dec-06 10-Dec-07 01-Dec-08 10-Aug-09 19-Apr-10 20-Dec-10
Price Index
Long-term trend
Lower l imit
Upper l imit
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PriceMain sample areas The price of coking coal remained steady in Shanxi this period (May 30-Jun 5). Of that, theVAT-included mine-mouth price of Liulin 4# primary coking coal stayed at 1150 yuan/t, unchanged from the lastweek. And, that of Lingshi 2# fat coal, Puxian 1/3 coking coal and Xiangyuan lean coal remained at 1040 yuan/t,900 yuan/t and 670 yuan/t, the same as the week before. The VAT-included mine-mouth price of Lishi primary
coking coal and Hongtong 1/3 coking coal stayed at 1045 yuan/t and 840 yuan/t, unchanged from the previousweek. The free-on-rail price of clean coking coal also followed the same trend as the mine-mouth price. The FORprice of Liulin 4# clean primary coking coal was 1650 yuan/t, the same as the week before. And, that of Lingshi2# clean fat coal, Puxian clean 1/3 coking coal and Xianghuan clean lean coal stayed at 1520 yuan/t, 1480 yuan/tand 1200 yuan/t, unchanged from one week ago. The FOR price of Lishi primary coking coal and Hongtong clean1/3 coking coal remained at 1530 yuan/t and 1350 yuan/t, unchanged from the week before. While that of Lingshi9# fat coal dropped to 1420 yuan/t, down 30 yuan/t from the previous week.
Other main areas Coking coal price remained steady in other main production areas this period. The FOR priceof Tengzhou gas fat coal and Yanzhou clean gas coal stayed at 1000 yuan/t and 1120 yuan/t respectively, andthat of Wuhai clean 1/3 coking coal remained at 1100 yuan/t, all unchanged from the previous week. Meanwhile,the FOR price of Tongchuan clean coking coal and clean lean coal stayed at 650 yuan/t and 500 yuan/trespectively, unchanged from one week ago. And the ex-works price of Pingdingshan primary coking coal andclean 1/3 coking coal stayed at 1520 yuan/t and 1390 yuan/t, unchanged from the previous week.Stock: Our monitoring data shows, as of Jun 3, coking coal stockpiled at 32 major steel mills was 6.91 million
tonnes, a decrease of 145,600 tonnes from the week before, which was enough for 16 days of consumption.4. Price forecast (Jun 6-Jun 12)
CR China Coking Coal Price and Stock Index Trend
293.465
334.712
459.499
621.820654.969
724.381705.514
250
300
350
400
450
500
550
2010-7-5 2010-9-5 2010-11-5 2011-1-5 2011-3-5 2011-5-5
550
570
590
610
630
650
670
690
710
730
750
Stock Index Price Index
The CRCS edged up this period, as indicated the above zoom-in chart of the recent coking coal price and stockindex. While, the CRCP remained stable. The CR China Coking Coal Market Balance Index (CRCB) was145.448 points this period, an increase of 3.369 points or 2.37% from the week ago. After a minor rebound,coking coal stockpiled at 32 main steel mills fell to below 7 million tonnes. Steel market runs weak recently,manifested by fluctuating price and mild transaction volume of the product. Affected by that, the overall cokingcoal market seams quiet. Starting from Jun 1, the country lifted sales price of power by an average of 1.67 cent in15 provinces, which may push up production cost of steel makers to some extent.Coking coal market may still keep weak in the short term due to the impact from policies and lack of demandsupport.The forecast of coking coal price for next period is made with the moving average method. It is predicted that theCRCP will move between 699.598 and 705.514 points, up 0-0.85%. The weighted CR Coking Coal Price wouldlikely keep stable.Spot trading index
Last weekPort
Mon Tue Wed Thu Fri
Avg. price ofimp. primarycoking coal(yuan/t)
1349 1349 1349 1349 1349
Stock (kt) 1170 1130 1140 1150 1180Throughput(kt) 138 138 117 113 99Vesselqueue 8 6 16 12 16
Jingtang
Vesselexpected 3 7 5 3 3
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Weekly CR China Met. Coke Price Index Analysis and Forecast
CR China Met. Coke Index
0
50
100
150
200
250
300
350
26-Jun-06 26-Feb-07 26-Oct-07 26-Jun-08 26-Feb-09 26-Oct-09 26-Jun-10 26-Feb-11
0
500
1000
1500
2000
2500Price Index
Stock Index
Market Balance Index
Price index: As of Jun 6, the CR China Met. Coke Price Index (CRMP) was 197.235 points, unchanged for threeweeks, while the CR China Met. Coke Stock Index (CRMS) dropped to 115.028 points, a decrease of 2.728points or 2.32% from the previous week. The CR Tianjin Met. Coke Price Index or CR (TJ) was 2120 yuan/t,unchanged from one week ago.
CR China Met. Coke Price Index and Forecast Range
20
70
120
170
220
270
320
370
6-Feb-
06
6-Sep-
06
6-Apr-
07
6-Nov-
07
6-Jun-
08
6-Jan-
09
6-Aug-
09
6-Mar-
10
6-Oct-
10
6-May-
11
Price Index
Long-term trend
Lower limit
Upper limit
Price: Coke price remained stable in most Chinas main production areas this period (May 30-Jun 5). Of that, the
ex-works price of Grade II met. coke in Taiyuan and Linfen stayed at 1780 yuan/t and 1740 yuan/t respectively,unchanged from the week ago. And, that in Tangshan and Weifang remained at 1930 yuan/t and 1950 yuan/trespectively, the same as the previous week. While, that in Jincheng fell to 1750 yuan/t, down 30 yuan/t from theweek before. Coke price in some southwestern China edged up. Of that, the ex-works price of Grade II met. cokein Liupanshui and Qujin rose to 1910 yuan/t and 2080 yuan/t, up 50 yuan/t and 30 yuan/t from the previous week.The purchase price of most steel mills for Grade II met. coke also kept steady this period. The purchase price ofGrade I met. coke at Tangshan Steel and Tonghua Steel remained at 2070 yuan/t and 2100 yuan/t respectively,the same as the previous week. And, the purchase price of Grade II met. coke at Xiangtan Steel, Xinyu Steel,Shagang and Chengde Steel remained at 1920 yuan/t, 1910 yuan/t, 1950 yuan/t and 1850 yuan/t respectively,unchanged from one week before.Stock : Monitoring data showed Tianjin port had 1.37 million tonne of coke as of Jun 2, up 66,000 from the weekbefore. While, coke stocks at Lianyungang dropped to 230,000 tonnes, down 30,000 tonnes from the weekbefore.Price forecast (Jun 6 -Jun 12)
CR China Met. Coke Price and Stock Index Trend
98.606
89.070
112.173
107.820
110.159
116.650
178.171
182.298
198.902
197.880
70
80
90
100
110
120
130
2010-10-11 2010-12-11 2011-2-11 2011-4-11 2011-6-11
170
175
180
185
190
195
200
205
210
Stock Index Price Index
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The CRMP remained steady this period, reflecting a generally stable coke market for the time being, indicated theabove zoom-in chart of the recent coke price and stock index. The CR China Met. Coke Market Balance Index(CRMB) was 171.467 points this period, up 3.972 points or 2.37% from the week before. Coke market ran stablein most ports of the country this period. Hebei Coking and Chemical Industry Association suggested coke plantsto keep restricting production, reducing coal stocks and lowering purchase price. Relevant data showed coke
companies are only running 80% of the full capacity on average for the time being. Recently, steel market hasbeen fluctuating. And, coke purchase by steel makers in north China maintains steady thanks to less powerrationing on these end users, which has eased stock pressure on coke plants. So far, Chinas coke supply haskept a balance with its demand.By analyzing the current coke supply-demand situation, we predict coke price would likely keep steady nextperiod. The forecast of coke price for next period is made by the moving average method. It is predicted that theCRMP will move between 197.235 and 197.880 points, up 0%-0.33%. And, the weighted CR Coke Price wouldlikely remain steady.Spot trading index
Last weekPort
Mon Tue Wed Thu FriGradeI metcoke(FOByuan/t)
2320 2320 2320 2320 2320
Tianjin
Stock(kt) 1318 1313 1343 1369
FREIGHT
Port of Newcastle Daily Performance Report (as at midnight of 9th
June 2011)
There is currently 1 vessel assembled with 21 vessels currently in queue. The average waiting time last weekwas 6 days compared to 4 days from the previous week. Port Coal Stocks on hand 933,000 tonnes. Actual
volume for May was 116.6mtpa, target volume throughput for June 100.9 MTPA.Source: Hunter Valley Coal Chain Logistic Team
Richards Bay - Coal loading (as at 0600 on 9th
June 2011)
There are no vessels alongside this morning. There is 1 vessel at anchorage. There are a total of 6 berthsavailable for loading.Source: LBH South Africa
Handysize and Max Market Report
Pacific analysis:
Indian ocean seen a bit of a slide today with supras fixing lower than they were hoping at the end of the week.Nopac rds and India/China biz have also softened today. Supramax very positional with right time and placecommanding decent rates. Lots of handies on the market charters talking high 11k for supramax.Direction: softeningAtlantic Analysis:
Atlantic basin still feeling t ight ppt vessels. Not much enquiry out of the Cont/Med but the hot spots in USG/NCSA still tying up tonnage. That said for the first time this week a ceiling seems to have been reached for rates.Last couple of spot ships expecting premium levels but anticipating a softening not too far into the future.Direction: firmSource: Clarksons Handy/Max Market Update 9th June 2011
Cape Market Report
Market Analysis:
It was a busy day with plenty of fixtures reported, especially in the East. On west Australia-Qingdao rumours arethat over 20 vessels have now been covered in total this week, with more being done today between $7.50 7.60for end June dates. There is still very little T/A cargo available with the bid comfortably below index. On period,$10,500 has reportedly been concluded for 12 mos on a modern vessel with delivery in the Far East.Source: Clarksons Cape Market Update 9th June 2011
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Price Indication:
Capesize RBCT Rotterdam $ 10.00 Previous $ 10.00Panamax RBCT Rotterdam $ 15.86 Previous $ 15.21Source: Clarksons Daily Coal Report 9 th June 2011
Dry bulk on retreat mode
This week has offered dry bulk ship owners no real reason to smile, as the industrys benchmarket, the Baltic DryIndex (BDI) has been steadily falling, trimming the gains achieved during the past couple of weeks. Yesterday,the BDI was down by 0.42% to 1,428 with Capesizes once again on the downside. The Baltic Capesize Index(BCI) fell by 1.89% to 1,767. By contrast, the only positive tone in the market at the moment is the Panamaxsegment, which recorded gains of 2.42% yesterday to 1,903 points. Brokers indicated that ship supply is stillweighing down in the market, with each single event in terms of cargo supply, being enough to send rates on afalling pattern. Vales deployment of the first in many of the worlds largest carriers, the so called Very Large OreCarriers (VLCOs), able to carry 400,000 tons, isnt also helping the situation.
Earnings for panamaxes, which usually transport 60,000-70,000 tonne cargoes of coal or grains, have more thanhalved since the same period last year said Reuters in a story. Brokers said coal cargoes from Australia andIndonesia to China was providing some support, although gains were capped by slower grains activity out ofSouth America. It went to mention that operators were watching for further signs that China's economy was
slowing, given the dry freight market's dependence on Chinese imports, especially of coal and iron ore.In its latest weekly report, shipbroker Fearnleys said that the Capesize market cold water is again coming out ofthe shower for owners as spot levels fall due to softening demand - average daily earnings down 10% w-o-w tocome in at USD 10k.
In Atlantic, fronthaul activity is cooling down, although rates not yet dramatically affected. The sudden lack oftransatlantic trade is more felt, with a resultant drop of almost 30% to an estimated USD 10k/day. Far Eastremains challenging and keeps hovering around OPEX levels low USD 7ks for rounds and uninspiring USD7.50 pmt for the Dampier/Qingdao conference trade. As forward paper prices give no support at present, periodactivity has come to a halt after a handful of units were concluded for short and medium periods - exemplified by174kdwt/blt 2006 done for 12 months at USD 11k and 169kdwt/blt 2009 done for 4-6 months at USD 10500, bothbasis prompt delivery in Far East said the