CovEr STory - Mjunction

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coal market fundamentals Price fixed for Q1 Coal Insights Bureau An agreement has been reached after price negotiations with regard to hard coking coal and LV PCI coal for blast furnace for the first quarter (April to June) of FY2012. Out of the above, the first quarter contract price of highgrade hard coking coal of Queensland, Australian and Canadian origins is around $205-210 per ton fob, nearly 11 percent less from the previous term (January to March). On the other hand, the first quarter contract price of LV PCI coal of Queensland and Canadian origins is around $153.30 per ton fob, 10.4 percent less from the previous term. As a result of these, the prices of both hard coking coal and LV PCI coal have been reduced in four consecutive terms since second quarter (July to September) of FY2011. Incidentally, the contract prices of high-grade hard coking coal and LV PCI coal for first quarter of FY2011 were $330 per per ton fob and $275 per ton fob respectively. The prices have been reduced because of the worldwide dwindling demand on the steel products attributed to the economic crisis in the European Union. The contract price for the fourth quarter of 2011- 12 (January to March in 2012) was $230-235 per ton fob Australia. Therefore, it becomes a price reduction by around $25 (nearly 11 percent) from the one for the previous term. The contract for third quarter (October-December) was signed at around $285 a ton, but since then the spot prices had dipped sharply on low demand from European, US and Chinese steel makers. The contract for second quarter (July-September) was signed at $315 a ton compared with $330 for the first quarter (April-June) of 2011-12. Coking coal prices, which was earlier fixed on yearly basis, was around $97 per ton fob during 2007-08. The prices touched a higher of $300 per ton in 2008-09 before dropping to $129 per ton in 2009-10. However, prices started rising again from 2010-11 and the miners started quarterly contract from Q1 of 2010-11 and touched a high of $225 per ton for the fourth quarter of the year. Prices peaked to $330 per ton in the first quarter of 2011- 12 owing to floods in the Queensland region of Australia, but gradually fell to current levels as supply became normal over time. Met coke import prices rise in March Met coke import prices rose in March on some rebound in demand from steel mills and supply constraints of coking coal following the bad weather in Queensland region of Australia. The import prices of met coke were hovering around $385 per ton currently, up from $372 per ton at the end of February. LAM coke demand, which is currently at 33 million tons per annum (mtpa) domestically, is expected to shoot up to 58 mtpa in the next five years, as steel makers increase capacity, according to industry estimates. transportation link for Bowen Basin coking coal mines was shut on March 20 after heavy rainfall caused flooding on a section of the track, operator QR National said. According to reports, the world’s largest coking coal export port Dalrymple Bay Coal Terminal was also closed. The likely duration of the rail closure was unclear. The Goonyella system links 30 mines to DBCT and Hay Coking coal & Met coke price trend in March 2012 Date HCC Peak Down fob Australia ($ per ton) Premium hard coking coal prices (premium low vol) fob Australia ($ per ton) HCC 64 Mid Vol fob Australia ($ per ton) Low Vol PCI fob Australia ($ per ton) Semi soft coking coal rates fob Australia ($ per ton) Met coke price cfr India (($ per ton) 02-Mar 211 211.5 187 149.5 138.5 370 05-Mar 210 210 186 148.5 137.5 367 06-Mar 209 209.5 186 148.5 136.5 366 12-Mar 208 208.5 187 145 134 385 15-Mar 209 209.5 187 145.5 136 385 Point Coal Terminal. However, operations west of Coppabella remained open, and the Newlands and Blackwater systems also remained open. Separately, Peak Downs Highway, the main artery for shipping fuel and other supplies to the Bowen Basin coal mines, has also been cut off by the rain, according to reports. The low demand from India was attributed to a scarcity of iron ore facing the steel sector. The Indian steel plants are still reeling under a shortage of iron ore and have reduced its coal consumption substantially. In 2010-11, domestic steelmakers imported close to 27 mt of the raw material. COAL INSIGHTS 26 March 2012
feature CIL may raise prices in April-May Coal Insights Bureau Asked about the likely movement of prices post review, Perti said, “Whether prices will go up or come down cannot be said at this point. For that we have to analyse the data first.” CIL acting chairperson Zohra Chatterji however indicated the industry may expect a price rise sometime in April. The industry on its part also expected an upward revision around that time. The company was earlier forced to roll back an average 12.5 percent price rise under Gross Calorific Value (GCV)- based system, on January 31 following severe protests from domestic consumers led by the power industry. The miner had decided to do away with the system of pricing based on useful heat value (UHV) to align with global practices. Under the UHV system, the highest quality coal in A-grade – with heat value exceeding 6,200 Kcal/kg – was sold at `4,100 per ton. Under the GCV system, the highest band coal – with a calorific value exceeding 7,000 Kcal/kg – cost `4,900 per ton. After the roll-back, this price was brought down to `4,870 per ton. Zohra Chatterji, Chairperson, Coal India Limited The proposed review of GCV-based pricing system by Coal India Ltd (CIL) is likely to be delayed by around a month and may take place in late April or early May 2012, coal secretary Alok Perti told Coal Insights. “The data will start coming in only from the middle or end of April. We will analyse the data and then come to a decision (about a possible revision in prices),” Perti said. Earlier, the coal ministry (MoC) had announced it would review the impact of the revised prices on CIL’s revenue after March. The review was proposed as CIL was compelled to partially withdraw a “substantial” hike in coal prices on January 31 due to large scale protest from consumers, especially the power sector. The problem started after CIL switched over to gross calorific value (GCV) based pricing from useful heat value (UHV) based pricing which led to a sharp increase in coal prices with effect from January 1, 2012. Analysts foresee 12% rise CIL, which partly withdrew its coal price hike in February, may again go for another round of price increase during the first quarter of 2012-13, an analyst report by BNP Paribas said. The report stated that CIL may increase its coal prices by around 12 percent by June 2012. However, “one industry participant believed that 1QFY13 price hike by CIL will be limited to 5-6 percent only (vs. our assumption of 12 percent),” the report said. “There was also a clear consensus that CIL will be forced to reduce the supply of higher priced linkage coal to non-power customers and e-auction volumes to improve availability for power sector, thus negatively impacting ASPs and margins,” it added. Hike needed to offset wage cost The roll-back in prices on January 31 had eroded CIL’s cushion against the `6,500-crore impact of wage hike for over 360,000 workers. Some estimates showed the new grading system would have given CIL an additional `6,250 crore annually. CIL’s new wage pact signed on January 31 saw an 88 percent increase in minimum basic of its employees to `15,712 per month, as against `8,360 per month during the previous deal. The other important highlights of the agreement were a special allowance of 4 percent of revised basic; and HRA of 2 percent of the basic pay for those who have not been provided with residential accommodation in other than urban area. Post retirement, medicare scheme for retired non-executives and COAL INSIGHTS 27 March 2012
Page 3 and 4: Chief Editor Rakesh Dubey, Tel: +91
Page 6: Cover Story India’s quest for UCG
Page 9 and 10: DIG DOWN, AND YOU’LL FIND IT’S
Page 12: Cover Story The UCG process The UCG
Page 16: Cover Story UCG only way to exploit
Page 20: Cover Story and appropriate technol
Page 24 and 25: coal market fundamentals Thermal co
Page 28 and 29: Feature The new and effective price
Page 30 and 31: Feature Govt may start auction of n
Page 32 and 33: fEATURE MoC may deallocate 58 block
Page 34 and 35: fEATURE Ministry of Coal and repres
Page 36 and 37: Feature COAL INSIGHTS 36 March 2012
Page 38 and 39: fEATURE Trans Damodar coal block st
Page 40 and 41: fEATURE Union Budget a mixed bag fo
Page 42 and 43: fEATURE Indian plants generate 70,9
Page 44 and 45: fEATURE Power utilities’ coal imp
Page 46 and 47: Special Feature Recovering carbon f
Page 48 and 49: Special Feature “There are reacti
Page 50 and 51: Technology ♦♦ Timely availabili
Page 52 and 53: CORPORATE RCF, CIL JV to set up coa
Page 54 and 55: CORPORATE BKT plans 32% hike in pro
Page 56 and 57: CORPORATE BKT’s R&D capabilities
Page 58 and 59: CORPORATE product ensuring a produc
Page 60 and 61: Expert Speak most of it is under fo
Page 62 and 63: Expert Speak within 2-3 years time,
Page 64 and 65: International US coal consumption,
Page 66 and 67: INTERNATIONAL New coking coal mines
Page 68 and 69: INTERNATIONAL UK mining equipment m
Page 70 and 71: logistics Dedicated Freight Corrido
Page 72 and 73: Logistics Port traffic down 0.74% y
Page 74 and 75: power sector update ALL INDIA ENERG
Page 76 and 77:
Power sector update List of utility
Page 78 and 79:
Power sector update Power Supply Po
Page 80 and 81:
Power sector update Power supply to
Page 82:
Power sector update Generation capa
Page 85 and 86:
port data Major Ports through which
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CovEr STory - Mjunction

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