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Saturday, 07 June 14
EVERYTHING CHANGES, AND NOTHING ABIDES - HERACLITUS
 A couple of weeks ago, and while everyone was focusing on the struggling freight market, Russia and China made history by signing a three-decade long gas deal. Gazprom, the world’s largest extractor of natural gas, in which the Russian government holds a majority stake, has agreed to provide China with up to 38 billion cubic meters of natural gas a year starting probably in 2018. This represents more than China’s total pipeline imports throughout 2013 and 1/5 of Russia’s yearly exports. The deal, which is estimated at $400 billion, is the biggest gas contract in Russia’s history and one of the biggest energy deals to ever be reached worldwide and came after a decade of negotiations between the two countries.
The “why now?” was quickly explained as Russia’s effort to retaliate US and EU policy. Amidst sanctions from the US and Europe and the threat of further economic isolation from the West, Russia’s move was seen as an effort to expedite the process of diversifying its gas export markets, as energy represents roughly one third of the country’s GDP. The truth lies somewhere in the middle. The reality is that Gazprom and China National Petroleum Corporation (CNPC) had already agreed to most of the basic terms of the deal back in September 2013, way before tensions in Ukraine mounted. Did Russia push for resolution of those points that were holding up the deal from materializing? The answer would be yes as it probably wanted to send the West a message that sanctions can’t harm its economy that much.
The “what is the significance?” touches upon a few aspects, a couple of which are fairly interesting to look at, even at this early stage of the agreement. The impact on the natural gas market is the first and most obvious one. Once the Russian pipeline becomes active the supply could reach to over 61 billion cbm a year, almost 40% of what Russia exports to the E.U. and therefore a good hedge if Europe diverts its energy sources away from Russian gas. Would China’s appetite be satisfied though?
The Chinese demand for gas is expected to keep growing. Only last year Chinese gas imports via pipe-lines increased by more than 20% and despite the fact that the country is still very much dependant on coal, it is estimated that by 2017, gas will amount for roughly 10% of the domestic energy mix. As gas satisfies around 30% of global energy needs, one can understand the vast opportunities that lie in the Chinese market, should the country reaches these levels going forward. With demand set to grow, this also means that pipeline supplies can only keep satisfying a certain portion of it, rendering LNG imports equally necessary. Therefore the real question here is not whether LNG will still be in the picture for China but at what cost.
The Chinese will pay Russia more or less the price they currently pay for gas from the Turkmenistan pipeline. The cost of importing LNG in China is estimated to be 30% more than that. With China increasing its pipeline imports there will be pressure on the price of LNG in the Asia region, which by next year is set to become the 2nd biggest gas market worldwide. With the Chinese being charged considerably less for Russian natural gas and potentially in the future Russian LNG as well, other LNG heavy importers like Japan and S. Korea will add on to the need for discounts on the LNG price in Asian countries, which are already paying more than what the rest of the world does. China’s preference to natural gas could lead to a point where future or even current LNG projects across Australia, Canada and the U.S.A, partly scheduled to serve the country’s LNG needs, won’t be as lucrative, or in some cases even economically viable, as they were before this deal. After all, the high price of LNG in the region was the reason why so many pricey investments were inked in the first place, with predictions up until recently insisting that China’s demand would continue to primarily be met by LNG.
Another interesting aspect of the deal is that it will be paid in local currencies rather than US Dollars, as Russia is trying to protect itself from possible additional sanctions that will impede monetizing of the deal. At the same time, the Chinese government, being already the biggest holder of US debt, is trying to further distance itself from the US currency that has been losing value following the FED’s pro-longed low interest rate policy. Although per se the impact on the reserve currency doesn’t appear to be great, the reality is that this point of the deal represents another hit on the greenback dominance.
As a matter of fact, for the past few years, the BRICs – Brazil, Russia, India and China - have been taking meaningful steps away from the US currency, continuously challenging its reserve currency status by “snubbing” it in their mutual trading and this is the case here as well. No, the Dollar cannot be that easily dropped, but steps like that are undeniable hits on the market’s confidence on the currency and most importantly steps that become the ground for further similar agreements of even bigger impact on the currency.
The control of energy supply has always been a powerful weapon on the hands of anyone who had access to a sizeable portion of it and a weapon responsible for big changes in the global chessboard once fired. It usually takes time for change to happen, global trade patterns to shift and geopolitics to make a big scale impact but one thing is certain; change is unavoidable and it usually comes gradually rather than in one big bang.
- Eva Tzima -
Analysts:
Mr. George Lazaridis
Ms. Eva Tzima
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no re-producing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
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Thursday, 19 June 14
PANAMAX: VERY CLOSE TO BREAKING THE ALL TIME LOW RECORD - FEARNLEYS AS
Handy
The Supra-Handy market is experiencing the same market slow down as its bigger sister markets however not to the same extent. We see TA rat ...
Wednesday, 18 June 14
CHINESE STEEL PRODUCTION SETS RECORD DURING FIRST TEN DAYS OF JUNE - COMMODORE RESEARCH & CONSULTANCY
Recently released data shows that average daily crude steel production at China's key steel mills hit a record high of 1.833 million tons durin ...
Wednesday, 18 June 14
MARKET INSIGHT - TIMOS PAPADIMITRIOU
Back in January the expectations for Q3 and Q4 were more than great. Talks and claims for a rising BDI and a healthy market were coming from everyw ...
Tuesday, 17 June 14
DRY BULK FREIGHT RATES TO RISE DURING THE SECOND HALF OF 2014, AS CHINA IS EXPECTED TO START IMPORTING MORE IRON ORE FROM BRAZIL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
In its latest analysis of the dry bulk market, BIMCO said that it doesn’t expect freight rates to react significantly to increased demand bef ...
Monday, 16 June 14
INDONESIAN COAL SWAPS FOR Q3 DELIVERY FALL 2.34 % MONTH ON MONTH
COALspot.com: Indonesian coal swaps for average Q3’ 2014 lost on day, week and on month according to AsiaClear OTC coal swap's reports re ...
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Showing 3651 to 3655 news of total 6871 |
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- Cement Manufacturers Association - India
- Kalimantan Lumbung Energi - Indonesia
- Metalloyd Limited - United Kingdom
- Sical Logistics Limited - India
- Baramulti Group, Indonesia
- Marubeni Corporation - India
- Bukit Baiduri Energy - Indonesia
- Vizag Seaport Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Mjunction Services Limited - India
- Leighton Contractors Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Grasim Industreis Ltd - India
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
- European Bulk Services B.V. - Netherlands
- Barasentosa Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Finance - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Banpu Public Company Limited - Thailand
- Bayan Resources Tbk. - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kumho Petrochemical, South Korea
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Indika Energy - Indonesia
- Uttam Galva Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Billiton Holdings Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- London Commodity Brokers - England
- Thai Mozambique Logistica
- White Energy Company Limited
- Singapore Mercantile Exchange
- Global Coal Blending Company Limited - Australia
- Eastern Coal Council - USA
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Madhucon Powers Ltd - India
- Ministry of Transport, Egypt
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Coastal Gujarat Power Limited - India
- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- Gujarat Sidhee Cement - India
- Bukit Makmur.PT - Indonesia
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMC Global Power, Philippines
- GMR Energy Limited - India
- Formosa Plastics Group - Taiwan
- Krishnapatnam Port Company Ltd. - India
- ASAPP Information Group - India
- Trasteel International SA, Italy
- Port Waratah Coal Services - Australia
- SN Aboitiz Power Inc, Philippines
- Electricity Authority, New Zealand
- Dalmia Cement Bharat India
- Maheswari Brothers Coal Limited - India
- Tamil Nadu electricity Board
- IHS Mccloskey Coal Group - USA
- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Anglo American - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Chettinad Cement Corporation Ltd - India
- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Indo Tambangraya Megah - Indonesia
- Posco Energy - South Korea
- Siam City Cement - Thailand
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- Aditya Birla Group - India
- Straits Asia Resources Limited - Singapore
- Standard Chartered Bank - UAE
- Rio Tinto Coal - Australia
- Sindya Power Generating Company Private Ltd
- Jorong Barutama Greston.PT - Indonesia
- Bangladesh Power Developement Board
- Borneo Indobara - Indonesia
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
- Siam City Cement PLC, Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Sakthi Sugars Limited - India
- Kapuas Tunggal Persada - Indonesia
- Energy Link Ltd, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- SMG Consultants - Indonesia
- San Jose City I Power Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Global Business Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- Thiess Contractors Indonesia
- Cigading International Bulk Terminal - Indonesia
- Agrawal Coal Company - India
- Riau Bara Harum - Indonesia
- Ind-Barath Power Infra Limited - India
- MS Steel International - UAE
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Energy - Thailand
- Minerals Council of Australia
- Globalindo Alam Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Orica Mining Services - Indonesia
- Edison Trading Spa - Italy
- Mercuria Energy - Indonesia
- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- ICICI Bank Limited - India
- Attock Cement Pakistan Limited
- Indian Energy Exchange, India
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- Wilmar Investment Holdings
- New Zealand Coal & Carbon
- Australian Coal Association
- VISA Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Star Paper Mills Limited - India
- Georgia Ports Authority, United States
- Kepco SPC Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- Electricity Generating Authority of Thailand
- Ambuja Cements Ltd - India
- Xindia Steels Limited - India
- Carbofer General Trading SA - India
- Jindal Steel & Power Ltd - India
- Planning Commission, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sojitz Corporation - Japan
- CIMB Investment Bank - Malaysia
- Economic Council, Georgia
- South Luzon Thermal Energy Corporation
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
- Renaissance Capital - South Africa
- The University of Queensland
- Bahari Cakrawala Sebuku - Indonesia
- Medco Energi Mining Internasional
- CNBM International Corporation - China
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- Essar Steel Hazira Ltd - India
- Manunggal Multi Energi - Indonesia
- Bhushan Steel Limited - India
- Interocean Group of Companies - India
- Parliament of New Zealand
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- Commonwealth Bank - Australia
- PNOC Exploration Corporation - Philippines
- Independent Power Producers Association of India
- Central Electricity Authority - India
- Kartika Selabumi Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Orica Australia Pty. Ltd.
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- Therma Luzon, Inc, Philippines
- IEA Clean Coal Centre - UK
- Simpson Spence & Young - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining Corp, Philippines
- India Bulls Power Limited - India
- Meenaskhi Energy Private Limited - India
- The Treasury - Australian Government
- Sree Jayajothi Cements Limited - India
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- GAC Shipping (India) Pvt Ltd
- Semirara Mining and Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Larsen & Toubro Limited - India
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Indogreen Group - Indonesia
- Australian Commodity Traders Exchange
- Latin American Coal - Colombia
- Aboitiz Power Corporation - Philippines
- Bharathi Cement Corporation - India
- International Coal Ventures Pvt Ltd - India
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