India's largest coal handling agency - Mjunction

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coal market fundamentals for every brand from the second quarter (July-September). At the same time at the end of August, low volatile (LV) PCI coal of Russian origin was set at $130 per ton fob with the reduction of $40 (22.5 percent) from the previous quarter. Furthermore from end August through early September, the prices of LV PCI coal produced in Queensland Australia have been settled one after another. LV PCI coal for the third quarter became $147 per ton to $150 per ton fob, down $30 to $33 (16.7 percent to 18.3 percent) from the previous quarter. The price negotiations with the blast furnace steel producers on Hongay anthracite of Vietnamese origin for the third quarter of the fiscal year 2010 (October-December) was also heard to have been completed. The contract price for the third quarter of Hongay No.6 coal for PCI operation was set at $150 or so, while that of the Hongay No.8 coal for sintering at $143 per ton fob or so with price reductions of $30 plus (about 17 percent) for No.6 coal and $27 plus (about 16 percent) from the first half of the fiscal year 2010 (April-September). Meanwhile, as the quarterly contract prices are getting settled, weakness is seen in certain crucial markets including China. Market sources revealed that domestic coking coal prices in China’s Shanxi province have become depressed due to weak demand. Many feel that relatively high priced coking coal price have impacted demand from coke makers. Coke market lukewarm The global coke market, which is clearly dominated by China, has remained rather uneventful. As per available information, domestic coke prices in China’s Shanxi province have remained more-or-less stable over the past month, despite weak demand from steel mills. Market sources informed that first grade coke in Shanxi province was selling for RMB 1800 to 1850 per ton ($270-277 per ton) on October 11 including 17 percent VAT, the same price as on September 17. Prices of second grade coke from the province were around RMB 1700 per ton ($255 per ton) including 17 percent VAT, up slightly by RMB 20-50 per ton ($3-8 per ton) compared with 1,650-1,680 per ton on September 17. Overall, the market has been impacted by the relatively weak demand situation. Things were no different back home during the first half of October. During the first week of the month, coke price hovered between $370 and $390 per ton depending on requirement, which is almost the same or slightly on the lower side compared to the rates prevailing around a fortnight ago. At that time, Chinese coke was available in India at around $400 per ton fob. Vietnamese coke was also available at around the same rate ($400 per ton). However, things have been improving of late. During early second half of the month, coke (with ash content 12.5 percent) was selling at a minimum price of `20,500 per ton. Sources informed that around October 19, prevailing price of hard coking coal in northern China’s Shanxi province was around RMB 1450 to 1500 per ton ($218-226 per ton) including 17 percent VAT, down by RMB 50 per ton ($8 per ton) from RMB 1500 per ton on September 20. As far as supply is concerned, it has been learnt that Xstrata Coal saw its production of coking coal decline 5 percent in the third quarter 2010 from the same period a year ago to 1.9 million tons (mt). Production of semi-soft coking coal (Australia) was also lower in Q3 2010 to 1.5 mt from 1.7 mt in Q3 2009. Average received prices for coking coal were however much higher than the previous year at $230.40 per ton in Q3 2010 compared to $150.90 per ton in Q3 2009. Semisoft prices were also much higher in Q3 2010 at $149 per ton from $83.30 per ton in Q3 2009. Russian raw materials producer Evraz also saw its production drop. Evraz’s coking coal production fell 20.8 percent to 1524 mt in Q3 2010 from 1923 mt in Q3 2009. This lower figure was the result of an explosion at the Raspadskaya mine on May 9. However, things may get tougher in the spot market on back of supply problem from Queensland. Heavy rains in central Queensland have caused coking coal spot prices to jump $10 per ton and major producers to declare force majeure on coal exports during middle of October. As a result, Wesfarmers has reduced its 2010-11 coking coal production guidance by around 3,00,000 tons to 6.2 to 6.7 mt because of bad weather. Anglo American Metallurgical Coal said it was unable to confirm that it issued a force majeure notice because of disruptions to its Capcoal German Creek and Foxleigh mines in Queensland. Although the impact on supply is yet to be fully understood, it is hoped that supply would get normal shortly. Heavy rains have also affected coking coal production in Indonesia. However, long term expectation remains intact. Many analysts feel that the coking coal market is for continued supply tightness until 2013. The proportion of coking coal that China imports is likely to grow until 2013 as it will be unable to meet its own additional demand for coking coal over the period, even based on a “relatively pessimistic” forecast of slowing steel production over the next few years. Speaking at a recently held Dry Bulk Shipping Market Outlook Conference, director of commodities research at Deutsche Bank, Daniel Brebner, said that China’s attempts to increase its domestic coking coal production, as well as imports from neighbouring Mongolia, will suffer from infrastructure constraints. The construction of an additional railroad to carry coking coal and thermal coal from Inner Mongolia and Shanxi to the northern port of Qinhuangdao will increase capacity when it is completed in 2012, Brebner notes. However, he believes that bottlenecks will not be eliminated. Demand from Brazil and India, which are nearly wholly dependent on imports of coking coal, will continue to rise over the period, placing upward pressure on prices. On the supply side, the major coking coal producers are unlikely to in1crease production significantly over the next two years. COAL INSIGHTS 24 October 2010
Feature Competitive bidding: Will it improve the situation Coal Insights Bureau The ministry of coal recently cleared all hurdles in the way of introduction of the system of allocation of captive coal blocks through competitive bidding route. The main argument behind the introduction of this new system is to speed up the process of development of such blocks by selecting serious players or consumers. The new system is likely to be introduced within next six months and the notification seeking application for allotment of coal blocks through this new system of competitive bidding route, is likely to come sometime towards end of current financial year 2010-11 and the first allotment might be made anytime around first or second quarter of next financial year. However, certain doubts are being raised on whether this new system will at all help the government realise its goal of increasing the country’s coal production through captive coal block route. Till now, the allocation of coal blocks to private parties is being done through the mechanism of an Inter-Ministerial and Inter-Governmental body called the Screening Committee. The Screening Committee is chaired by the Secretary (Coal) and comprises representatives from the Ministry of Steel, Ministry of Power, Ministry of Industry and Commerce, Ministry of Environment and Forests, Ministry of Railways, Coal India Ltd (CIL), Central Mine Planning and Design Institute Ltd (CMPDIL) and the concerned state governments. This committee evaluates the applications received from various entities and then allots a single block to a single entity or multiple entities depending upon their requirement as well as various other parameters. As per the Coal Ministry’s Annual Report of 2009-10, a total of 229 coal blocks (148 existing and 81 newly identified) had been identified for allocation to specified end users and government companies. There are 25 remaining coal blocks with geological reserves of about 7262.66 million tons (mt) from the old list that is yet to be allotted. COAL INSIGHTS 25 October 2010
Page 3 and 4: Chief Editor Rakesh Dubey, Tel: +91
Page 5 and 6: India’s largest coal handling age
Page 8: Cover Story INDUSTRIAL GROWTH INDIC
Page 12: Cover Story India, China lead globa
Page 16: Cover Story Beml plans to double tu
Page 20: Cover Story complete longwall minin
Page 23: coal market fundamentals Coking coa
Page 27 and 28: Feature allotment of captive coal b
Page 29 and 30: Feature Coal ministry puts illegal
Page 31 and 32: Feature Coke shortage may hamper st
Page 33 and 34: Feature How coke making evolved Tho
Page 35 and 36: Feature Cement makers to hike price
Page 37 and 38: Feature increased imports, which is
Page 39 and 40: Feature Forestry clearance delays m
Page 41 and 42: Feature embarked on a massive affor
Page 43 and 44: Feature India misses Sept power gen
Page 45: government Coal ministry firm on pr
Page 49 and 50: INTERNATIONAL Forum seeks Canada-In
Page 51 and 52: INTERNATIONAL UAE 269,462 331,688 1
Page 53 and 54: INTERNATIONAL EIA raises 2010 US co
Page 55 and 56: Expert Speak Heat recovery chinese
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Page 61 and 62: CORPORATE We have already commissio
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Page 65 and 66: CORPORATE Banks not tapped for capt
Page 67 and 68: Logistics down rates and increased
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Page 71 and 72: Power sector update CAPACITY ADDITI
Page 73 and 74: Power sector update Northern WESTER
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All India coal data - August 2010 N
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port DATA Major Ports Through Which
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India's largest coal handling agency - Mjunction

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