Category: Commodities

Coal Outlook: China & Indonesia Factors

China government’s plan to halt construction of new coal-fired power plants to avoid avoid risks of overcapacity and promote a clean energy mix might have contributed to significant drop in thermal coal prices by 6% to US$90 per ton Tuesday (Aug 15). In the short-medium term, however, difficulties from Chinese miners to boost production will likely support the commodity.

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Indo Tambangraya & The Land Cases

Indo Tambangraya (ITMG), coal producer controlled by Thailand’s Banpu Pcl, has been facing series of land compensation cases in the past few years. In the case of Yohanes Anceq et al, South Jakarta District Court ordered the company to pay Rp150 billion to the plaintiffs for material damages.

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SGX-Listed Plantation Companies in First Half (2)

First Resources Ltd, controlled by Surya Dumai Group, booked net profit of US$71.63 million in the first half of 2017, skyrocketed 128% from the corresponding period of last year due to higher yield and average selling price of crude palm oil (CPO). Like Bumitama Agri, First Resources also recorded substantially wider acreage of mature plantation.

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First Half Results: Sinarmas’ Golden Energy

Coal producer Golden Energy Mines (GEMS), controlled by Sinarmas Group, booked net profit of US$51.25 million in the first half of 2017, skyrocketed from US$3.6 million in the corresponding period last year. Payment of corporate income tax also surged to nearly US$11 million from less than US$3 million in the first half of 2016.

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Coal Outlook & Indonesian Factors

Russia’s coal production grew 6.8% year-on-year in the first seven months of 2017; Indian state ports’ coal import in July fell 13.74%; South Africa’s June thermal coal export down 9%; China’s coal imports in July down 8.25% year-on-year; US coal production, meanwhile, grew 14.5% to 465.8 million short tons in the first seven months of 2017. All of these, however, failed to drag down thermal coal prices.

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Sugih Energy, Rp50 Finally; Lemang Block-KKR?

Two years ago, oil and gas company Sugih Energy (SUGI) was valued Rp9 trillion. On Wednesday, the stock touched the lowest quotable price on Indonesia Stock Exchange (IDX): Rp50. At this price, SUGI, linked to Edward Soeryadjaya, brother of Erwin Soeryadjaya, has ‘market value’ of Rp1.24 trillion. What a mess for Pension Fund of state-oil and gas company Pertamina, which entered SUGI with valuation of Rp8.6 trillion.

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Positive Signals in Oil & Gas Sector

After years of uncertainty, the government has finally pushed through a settlement for the development of Jambaran Tiung Biru (JTB) gas field within Cepu production sharing contract (PSC) in the border of Central and East Java. The US$1.55 billion project will finally go through to commercial phase with state oil and gas company Pertamina in the driving seat.

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DOID, Pada Idi Coal & Petro Energy

PT Bukit Makmur Mandiri Utama (BUMA), coal mining contracting subsidiary of Delta Dunia Makmur (DOID), has been granted a mining service contract worth around US$385 million by PT Pada Idi, a subsidiary of Petro Energy, which is engaged in the mining and energy business. Who’s behind Petro Energy?

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Coal Rally

Thermal coal advanced to US$94.55 per ton Friday (Aug 4), the highest level seen since early this year amidst reports about temporary suspension of two coal mines of China Shenhua, poor weather in Indonesia, and strong import from Japan in June. Reports about higher production in the United States failed to stop the rally because China’s ban on thermal coal imports at Tier 2 ports since end of June started to make an impact.

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Nickel: Survival of The Fittest (2)

Nickel ended up slightly higher to US$10,241 per ton Wednesday (Aug 2) as investors digested first half data of major nickel producers, including nickel ore exporters in the Philippines and Indonesia. Our research on nine nickel majors, including Nickel Asia Corp from the Philippines, suggested significant production decline in the first half.

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Commodities & The Economy

Brent crude oil moved closer to US$53 per barrel this morning, while nickel is now traded above US$10,100 per ton, the highest level in fourt months. Thermal coal, key export commodity for Indonesia, was traded at US$86 per ton. Crude palm oil (CPO) contracts for delivery in January 2018 and beyond are now traded above RM2700 per ton on the Bursa Malaysia Derivatives.

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First Half Results: LSIP & SGRO

Like Astra Agro Lestari (AALI), two plantation firms PT London Sumatra Indonesia (LSIP) Tbk and PT Sampoerna Agro Tbk (SGRO) reported substantially smaller net profit in the second quarter. In the first half of 2017, however, both companies posted net profit closer and higher than full year of 2016 already.

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