SDJ1.16aGeo Energy Resources has reported higher revenue after coal mining operations started in Dec 2015 at its SDJ mine in South Kalimantan.
Photo: Company


COAL PRICES, which have slid and languished for many years, have been making a comeback. We quote various recent news sources below. The uptrend, if sustained, is likely to benefit Geo Energy Resources and Resources Prima Group, both of which are coal miners listed on the SGX. 

Jakarta Post (9 June 2016): Attendance at the recent Coaltrans Asia Conference in Bali has upgraded the Indonesian sector rating from “underweight” to “neutral” on the back of likely limited coal-price downside from current levels as global demand (see Exhibit 2) is soon expected to outstrip supplies. 


The 2016 coal demand of 862 million metric tons is expected to outstrip supplies amounting to 846 million metric tons, according to a Coaltrans panellist. This condition is expected to persist through 2020, helped by increasing demand from North Asia, excluding China. (Read more...)

 

Business Standard (10 Sept 2016): The recent global surge in coal prices, however, is not on account of higher demand, but on account of  reducing its supply. 


According to Fitch Ratings, the strong rebound in key Asian thermal coal reference prices since the beginning of this year is a function of the Chinese government's regulations surrounding supply management, and is not supported by improvements in fundamentals. (Read more....)

LQM ad141e“It’s (coal) a commodity that’s been on a slippery slide for the past four years and it’s making a remarkable recovery. There’s a strong pulse.”

- Erik Stavseth, an analyst at Arctic Securities in Oslo, who’s tracked the market for almost a decade. (Source: Bloomberg)

Bloomberg (9 Sept 2016):  For all the predictions about the death of coal, it’s now one of the hottest commodities in the world. The resurrection may have further to run.

A surge in Chinese imports to compensate for lower domestic production has seen European prices jump to near an 18-month high, while Australia’s benchmark is set for the first annual gain since 2010. (Read more....)

♦ Geo Energy presentation
TungKumHon2tb 1.2016Geo Energy CEO Tung Kum Hon (above) will make a presentation @ Phillip Securities (#06-00, Raffles City Tower) on Monday, Sept 26. Time: 12-2 pm. Lunch will be provided. If you are keen to attend,  please send an email to Colin Lum with your full name, company and title, and mobile number. Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Indonesia Investments (8 Aug 2016): Over the past two months global coal prices have surged, primarily on the back of rising coal demand in China where local coal production capacity was curtailed as authorities seek to curb industrial overcapacity.

Indonesia's coal price (Harga Batubara Acuan, abbreviated HBA), a monthly rate set by the nation's Energy and Mineral Resource Ministry, rose 10.1 percent (m/m) to USD $58.37 per ton in August from USD $53.00 per ton in the preceding month, a remarkable rebound that pushed the HBA to a one-year high. (Read more...)

LQM ad141eWhat you have had is a (Chinese) government mandate to restrict production in the short term. This may not be sustainable because the benefits of this policy have transferred to international producers. So I think there is a risk of prices weakening and volumes reducing as well, once that process is completed.

-- Daniel Morgan, analyst, UBS (Sydney).
(Read more...)

 

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