Energy and commodity price benchmarking and market insights

Transcription

1 Energy and commodity price benchmarking and market insights London, Houston, Washington, New York, Portland, Calgary, Santiago, Bogota, Rio de Janeiro, Singapore, Beijing, Tokyo, Sydney, Dubai, Moscow, Astana, Kiev, Porto and Johannesburg

2 Colombia: Atlantic basin pacesetter Argus Webinar 31 July 2013 Ross Allen Molly Christian

3 Agenda for today Argus in market data services Global market intelligence provider Market trends & fundamentals Colombian production and exports Quality Competing coals: Russia, South Africa, USA Methodological discussion Indexation in Colombia 2013 and beyond What s coming up

4 Argus Media Report prices globally for Gas Power NGL & LPG Emissions Coal and coke Refined products Crude Fertilizers Petrochemicals Nearly 500 staff globally Rapid growth in spot and term contract indexation, swap market indexation

5 Argus in market data services

6 Coal, transport & ore Reports include: Coal prices Freight rates Cross-commodity comparisons Iron ore and coke information Clear and robust methodology

7 Indexation and benchmarks include: Key crude benchmarks: Argus Sour Crude Index Argus ESPO Blend Argus Dubai Crude Products benchmarks: Eurobob oxy (gasoline) German diesel LPG benchmarks: ANSI Argus cif ARA large Full list available at Argusmedia.com Key coal indexes include: Argus/IHS McCloskey Indexes: API 2; API 4; API 5; API 6; API 8; API 10; and API C1 Rail coal freight rates Physical indexation in Central Appalachian, PRB and Illinois basin markets

8 Colombian coal markets & fundamentals

9 Colombian steam coal exports rise in Competitive costs and more favorable weather aiding volumes but sour labor relations have dented tonnage in 2012 and mn mt/month Thermal exports last year were down by 5pc from 2011 because of strikes but 9.5pc above the five-year average Source: SIMCO

10 Major producers planning expansions Cerrejon (BHP Billiton, Xstrata, Anglo American) planning to raise output to 40mn mt/yr from 34.6mn mt in 2012 Glencore s Prodeco unit targeting 20mn mt in 2014 from 14.7mn mt last year Inaugurated Puerto Nuevo terminal in May (initial loading capacity of 21mn mt/yr) Drummond had been targeting more than 30mn mt this year compared with 26mn mt in 2012 ahead of strike, port setbacks Colombian steam output to reach 108mn mt in 2018, up 27pc from last year, mines and energy minister Federico Renjifo says

11 Labor strife, lower prices cloud near-term outlook Colombian thermal exports in January-May down 47pc from same period last year (Deep Blue shipping agency) Cerrejon, Colombian Natural Resources and Drummond have all encountered strike or port disruptions this year Lower seaborne prices reflect softer demand: FOB Bolivar prompt 90-day prices off by 20pc from the start of mn mt/month Jan Mar May Jul Sep Nov Jan Mar May Source: Deep Blue

12 Thermal coal reserves in Cesar, Guajira, Cordoba 86pc of Colombia s exports from largest miners o Cerrejon (2010: 43pc) o Drummond (30pc) o Prodeco (13pc) Reflects significant project capital needs o Mines o Railroads o Terminals

13 Reserves have decent heat but levels vary Producer: Typical NCV: (kcal/kg) Sulphur: Terminal: Cerrejon 5,906-5,933* < 1pc Puerto Bolivar Drummond 6,017-6,350 < 1pc Puerto Drummond Glencore 5,933-6,350 < 1pc Puerto Nuevo Colombia Natural Resources 5,294-5,739 < 1pc Rio Cordoba Pacific Coal 6,239-6,739 < 1pc Carbosan *Range of 5,628-6,000 kcal/kg Source: Producers, US EIA

14 Colombian cost advantage

15 Colombian steam exports by destination in 2012, mn mt Venezuela Belgium Taiwan India Dominican Republic Cayman Islands Japan Slovenia Germany Croatia Guatemala Argentina France Canada Italy Ireland Brazil Denmark South Korea Portugal China Chile Israel Spain US Other Turkey Netherlands Source: SIMCO

16 European delivered prices hit three-year lows Europe s economic headwinds and high US, Colombian exports are pressuring prices $/mt Markets expected to stay under pressure in the near term despite favorable economics of burning coal versus natural gas

17 Arbitrage window shut for most US coals US east coast<1pc sulphur fob port Capesize Delivered CIF $76/mt FOB US Gulf <1pc sulphur fob port Capesize Delivered FOB US Gulf 3pc typical fob port Capesize Delivered Prices are in $/mt for prompt 90 days, 6,000kcal

18 Russian coal also above index on delivered basis CIF $76/mt Russia fob Baltic port Panamax 8.85 Delivered Prices are in $/mt for prompt 90 days, 6,000kcal

19 Delivered South African coal closer to ARA levels CIF $76/mt Prices are in $/mt for prompt 90 days, 6,000kcal Richards Bay, South Africa fob port Capesize 8.20 Delivered 80.71

20 Colombia can comfortably price into Europe US east coast fob port Capesize Delivered CIF $76/mt Russia fob Baltic port Panamax 8.85 Delivered Puerto Bolivar fob port Capesize Delivered Prices are in $/mt for prompt 90 days, 6,000kcal Richards Bay, South Africa fob port Capesize 8.20 Delivered 80.71

21 Asia-Pacific is a tougher target (cfr south China $85/mt) Pitt Seam 13,000 Btu, 3.5lb SO2 Port delivered Cape, Panamax 31, 39* Delivered Puerto Bolivar (6,000kcal) fob port Capesize 26* Delivered Prices are in $/mt for prompt 90-day period, except Pitt Seam. *estimated seaborne rate Newcastle (6,000kcal) fob port Capesize 150k 9.20 Delivered 86.22

22 Colombia price assessment methodology

23 Argus/IHS McCloskey Coal Price Indexes Argus/IHS McCloskey provides coal prices and historical trend data for the API indexes, which are the key price benchmarks used in the international coal industry. Exchanges using the API indexes include CME and ICE. The Argus/IHS McCloskey coal indexes are used as the settlement prices in 90% of the world's coal derivative contracts. Spot and historical data can be accessed in numerous ways, including online and via FTP. More information at: ArgusMcCloskeyCoal.com

24 Argus/IHS McCloskey Coal Price Indexes - Thermal API 2 - the standard reference price benchmark for coal imported into northwest Europe. It is an average of the Argus cif ARA assessment and the IHS McCloskey NW Europe Steam Coal marker. API 4 - the benchmark price for coal exported out of South Africa's Richards Bay. The API 4 index is an average of the Argus fob Richards Bay assessment and the IHS McCloskey Richards Bay FOB marker. API 5 - an average of the Argus fob Newcastle 5500 assessment and the IHS McCloskey Australian 5,500 kcal NAR FOB marker. API 6 - an average of the Argus fob Newcastle assessment and the IHS McCloskey Newcastle FOB marker. API 8 - an average of the Argus cfr south China assessment and the IHS McCloskey/Xinhua Infolink South China CFR (5,500 kcal NAR) marker. API 10 - an average of the Argus fob Puerto Bolivar assessment and the IHS McCloskey Colombia FOB marker. More information at: ArgusMcCloskeyCoal.com

25 Argus/IHS McCloskey Coal Price Indexes API 10 API 10 averages the Argus fob Puerto Bolivar assessment and the IHS McCloskey Colombia FOB marker. Argus FOB Puerto Bolivar Typical Reject Heat: 6000 kcal/kg 5750 kcal/kg Sulphur: <1pc 1pc Lot size: 50,000 kt N/A Delivery point: Puerto Bolivar N/A More information at: ArgusMcCloskeyCoal.com and ArgusMedia.com

26 Argus coal methodology is transaction based Argus has a two-stage price identification process: Volume weighted average Market survey fob Colombia $101x10 fob $104x10 fob Colombia $100x10 30 deals of equal volume at yields $101.67/mt VWA maintains firm foundation in reported deals Survey process keeps check on leverage and validates the VWA transactions Full list methodology always at Argusmedia.com

27 Argus: How we work Argus strives towards the highest possible standards in its business operations. Methodology Argus uses a market-appropriate methodology to assess prices in the markets it covers. Argus consults with the range of participants involved in different markets and publishes methodologies for each price report on its website. Each methodology is reviewed regularly to ensure that it always meets the needs of market participants and is in line with industry practice. Argus seeks to reflect the way markets are traded, rather than impose its own view. Editorial Code of Conduct All Argus journalists operate according to a rigorous editorial code of conduct that aligns with best journalistic practice, including the avoidance of conflicts of interest. Compliance and Ethics Argus operates a rigorous and transparent controls framework to govern its price reporting activities. This is underpinned by its global compliance policy, which can be downloaded below, and which includes an ethics policy and a business continuity plan. The company s Global Compliance Officer oversees the compliance framework, including a rolling program of internal audits to ensure compliance with stated methodologies and policies. Complaints Argus has a formal complaints handling procedure, which can be found on page 6 of the global compliance policy. Excerpted from:

28 Ross Allen, Vice President Business Development Molly Christian, Editor Argus Coal Daily Copyright notice All intellectual property rights in this presentation and the information herein are the exclusive property of Argus and and/or its licensors and may only be used under licence from Argus. Without limiting the foregoing, by reading this presentation you agree that you will not copy or reproduce any part of its contents (including, but not limited to, single prices or any other individual items of data) in any form or for any purpose whatsoever without the prior written consent of Argus. Trademark notice ARGUS, ARGUS MEDIA, the ARGUS logo, FMB, DeWitt, ARGUS publication titles and ARGUS index names are trademarks of Argus Media Ltd. Visit for more information. Disclaimer All data and other information presented (the Data ) are provided on an as is basis. Argus makes no warranties, express or implied, as to the accuracy, adequacy, timeliness, or completeness of the Data or fitness for any particular purpose. Argus shall not be liable for any loss or damage arising from any party s reliance on the Data and disclaims any and all liability related to or arising out of use of the Data to the full extent permissible by law.