We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Monday, 06 October 14
THE IRON ORE SHIPPING BUSINESS IS FACING SOME ROUGH SEAS - EAST ASIA FORUM
 The impact of Chinese demand on global iron ore prices is well known. A less acknowledged consequence of China’s emergence is the transformation of incentive structures in the global shipping market. Dramatic increases in freight rates shifted global iron ore producers’ comparative advantage further in favour of Australian exporters to the detriment of the Brazilians. During the commodities boom, between 2002 and 2008, the freight differential between Brazil–China and Australia–China rates increased to around US$60 per tonne for 150,000–160,000 deadweight tonne (dwt) ships.
Japan’s tenure as dominant market player in the second half of the twentieth century was marked by a gradual evolution of the shipping pricing regime, much of it under Japanese control. In stark contrast, China’s impact on the shipping market has been much more concentrated in time, with an absence of long-term planning and coordination between the Chinese steelmakers and ship owners or operators.
In 2008, to compete with BHP and Rio Tinto over shipping costs, the shipping company Vale commissioned, at a cost of over US$2 billion, a new line of ‘Very Large Ore Carriers’ (VLOCs), dubbed the ‘Valemax’. The Valemax carrier is the largest bulk carrier ever built: over twice as big as Cape-size carriers (400,000 dwt). Current shipping costs from Australia to China stand at around US$10/tonne, whereas it currently costs around US$22/tonne to ship iron ore from Brazil to China. Direct Valemax trips from Brazil to China would bring shipping costs down to about US$15/tonne.
Vale had 24 out of 35 of these huge carriers built in China, and the rest in South Korea. China’s Export-Import Bank and the Bank of China even financed the project to the scale of US$1.3 billion, so Vale was confident that this step was in the interest of iron ore consumers in China and that these cargoes would be welcomed.
But, on 29 January 2012, the Chinese Ministry of Transport issued a notice specifying that cargo ships with a capacity greater than 350,000 dwt could not dock in Chinese ports, citing safety concerns. Interviews confirm that Vale was taken aback, alongside many Chinese iron ore industry insiders.
The blocking of the Valemax carriers was not the result of coordinated, state-led, revisionist behaviour. It was not a directive coming from the central government or the Chinese Iron ore and Steel Association, or even the large steel SOEs, all of whom favoured the Valemax since it would reduce the overall price of Brazilian iron ore. The opposition, and lobbying, came from Chinese ship owners/operators, led by COSCO (China Ocean Shipping Company), who stood to lose shipping business, and held enough sway with the Chinese Ship-owners Association, the port authorities and the Transport Ministry to make this happen. It is testament to China’s weight in global markets that a unilateral move by one Chinese interest group could have such destabilising consequences. The blocking of the Valemax was the result of the fragmentation of China’s iron ore industry, and the high jacking of policy-making by a particular interest group, against broader national priorities.
On 6 December 2011, Shouguo Zhang, Vice Executive Chairman of China Ship owners’ Association, said that ‘Vale is an iron ore producing corporation that obviously lacks experience in ship safety management, ship pollution prevention … [It] holds the cargo to itself and now intends to control shipping tonnage. It is a matter of monopoly and unfair competition which not only harms the shipping interest of mainland China but also that of South Korea, Japan and Taiwan’. It is worth noting that the president of the Chinese Ship-owners Association at the time was Wei Jiafu, also president of COSCO.
The Wall Street Journal has spoken to shipping engineers who said that safety concerns cited by the Chinese Transport Ministry were ‘insufficient to cast serious doubt on the safety of Valemax ships. Valemax vessels have docked at ports in such places as Japan, Italy, the Netherlands and the Philippines’. Ralph Leszczynski, head of research at shipping services firm Banchero Costa, said that COSCO’s reaction is natural as ‘the moment a company like Vale decides to build their own ships they are entering the “business turf” of companies like COSCO and they take those companies’ business away’. The ban has been extremely costly for Vale, as the company has had to transfer cargo to smaller carriers in the Philippines at an extra cost of between US$2 and US$7 a tonne.
Industry analysts have ventured that the only way out for Vale, as a concession to COSCO and other Chinese ship operators, would be for it to agree to a charter or sharing solution with the Chinese shipping companies, by transferring Valemax ships for Chinese ship-owners to operate.
In December 2013, news of one such five-year ‘bareboat charter arrangement’ with Shandong Shipping Alliance was announced by Vale’s Jose Carlos Martin.
On 10 February 2014, the Chinese Ministry of Transport issued a notice reframing coastal berthing regulations. From 1 July 2014, oversized cargo ships have been allowed to dock in Chinese ports with a capacity not exceeding 250,000 dwt, as long as they match their load with the port’s capacity. Some analysts say this new regulation slowly opens the door to Valemax cargoes docking in China, while the China Ship-owners Association reiterated its opposition to 400,000 dwt cargoes ever docking at Chinese ports.
Then on 12 September 2014, in a ground-breaking announcement, Vale revealed that it had reached a ‘framework agreement for strategic cooperation in iron ore shipping’ with COSCO. This is another step towards resolving the almost 3-year-old impasse between the two giants. Following the terms of the agreement, Vale will transfer 4 VLOCs to COSCO and charter them back from the shipping giant for the next 25 years. It also agreed to similar terms regarding 10 more VLOCs to be built by COSCO to transport iron ore from Brazil.
The new agreement between COSCO and Vale will presumably lead to the Chinese Ministry of Transport fully lifting the ban on the Valemax cargoes in the near future.
The Valemax story highlights the role of non-state actors as a determinant of Chinese international procurement behaviour. It also highlights the fact that despite China’s share of global demand, Chinese stakeholders feel powerless in global commodity markets whose rules were established long before Chinese re-emergence. The sheer reach of COSCO’s behaviour demonstrates how important it is to understand Chinese domestic market dynamics, and also points to broader patterns we can expect as China tries to carve itself a position commensurate with its global purchasing power. China’s domestic dynamics have now become a determining feature of the global economy.
Source: East Asia Forum / Hellenic Shipping News
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Wednesday, 19 November 14
SHIPPING MARKET INSIGHT - BY KATERINA RESTIS
The current Ebola outbreak in West Africa has been declared as a worldwide health emergency by the World Health Organization and has had a great im ...
Tuesday, 18 November 14
VALEMAX DEAL TO DETERMINE DRY BULK MARKET'S FATE - DREWRY MARITIME RESEARCH
Vale’s accord to sell and lease four Valemax vessels to COSCO might have negative repercussions on dry bulk freight rates. Vale has committed ...
Tuesday, 18 November 14
SUB-BIT FOB INDONESIA COAL SWAP DELIVERY Q2' 2015 CLOSED AT $ 49.55; DOWN 4.10% M-O-M
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month, gained week on week and day on day.
The Q1 swap has lost US ...
Tuesday, 18 November 14
FOB RICHARDS BAY COAL SWAP FOR Q1' 2015 DELIVERY CLOSED AT $ 66.31; UP 1.33% W-O-W
COALspot.com: API 4 FOB Richards Bay Coal swap for Q1’ 2015 delivery has gained US$ 0.27 (+0.41%) month over month and US$ 0.87 (+1.33%) week ...
Tuesday, 18 November 14
CHEAP OIL PRICES COULD RESHAPE GLOBAL OIL EXPORTING MAP - HELLENIC SHIPPING
Tanker owners have enjoyed a rather healthy 2014, but as the year draws to a close, the fall of oil prices is bound to reshape traditional, as well ...
|
|
|
Showing 3366 to 3370 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- PowerSource Philippines DevCo
- Coastal Gujarat Power Limited - India
- Deloitte Consulting - India
- CIMB Investment Bank - Malaysia
- Bhoruka Overseas - Indonesia
- Indo Tambangraya Megah - Indonesia
- Australian Coal Association
- Aboitiz Power Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- ASAPP Information Group - India
- Sarangani Energy Corporation, Philippines
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Posco Energy - South Korea
- AsiaOL BioFuels Corp., Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Therma Luzon, Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Grasim Industreis Ltd - India
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
- Sojitz Corporation - Japan
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Latin American Coal - Colombia
- Sakthi Sugars Limited - India
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
- New Zealand Coal & Carbon
- Pendopo Energi Batubara - Indonesia
- CNBM International Corporation - China
- Jorong Barutama Greston.PT - Indonesia
- Chamber of Mines of South Africa
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- South Luzon Thermal Energy Corporation
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The State Trading Corporation of India Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Thiess Contractors Indonesia
- Samtan Co., Ltd - South Korea
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- Videocon Industries ltd - India
- Bukit Baiduri Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Wilmar Investment Holdings
- Trasteel International SA, Italy
- SMG Consultants - Indonesia
- Vizag Seaport Private Limited - India
- TeaM Sual Corporation - Philippines
- Cement Manufacturers Association - India
- Edison Trading Spa - Italy
- Ambuja Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- The Treasury - Australian Government
- Heidelberg Cement - Germany
- Ministry of Mines - Canada
- Price Waterhouse Coopers - Russia
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- Star Paper Mills Limited - India
- Parliament of New Zealand
- Tata Chemicals Ltd - India
- Vedanta Resources Plc - India
- Petrochimia International Co. Ltd.- Taiwan
- Bharathi Cement Corporation - India
- Intertek Mineral Services - Indonesia
- Ministry of Transport, Egypt
- Petron Corporation, Philippines
- Mintek Dendrill Indonesia
- Chettinad Cement Corporation Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sindya Power Generating Company Private Ltd
- Straits Asia Resources Limited - Singapore
- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- GMR Energy Limited - India
- Simpson Spence & Young - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Riau Bara Harum - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Gujarat Sidhee Cement - India
- Global Business Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Coalindo Energy - Indonesia
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- London Commodity Brokers - England
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- The University of Queensland
- Anglo American - United Kingdom
- Lanco Infratech Ltd - India
- Independent Power Producers Association of India
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Goldman Sachs - Singapore
- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- Asmin Koalindo Tuhup - Indonesia
- White Energy Company Limited
- India Bulls Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- MS Steel International - UAE
- Miang Besar Coal Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Mercator Lines Limited - India
- Carbofer General Trading SA - India
- PTC India Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sical Logistics Limited - India
- Parry Sugars Refinery, India
- Iligan Light & Power Inc, Philippines
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Thai Mozambique Logistica
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Generating Authority of Thailand
- Bhushan Steel Limited - India
- Central Electricity Authority - India
- Indogreen Group - Indonesia
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Borneo Indobara - Indonesia
- Standard Chartered Bank - UAE
- Aditya Birla Group - India
- GAC Shipping (India) Pvt Ltd
- Savvy Resources Ltd - HongKong
- Renaissance Capital - South Africa
- Jindal Steel & Power Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Energy Link Ltd, New Zealand
- Global Coal Blending Company Limited - Australia
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Uttam Galva Steels Limited - India
- IEA Clean Coal Centre - UK
- ICICI Bank Limited - India
- Bhatia International Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Marubeni Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
- Xindia Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Electricity Authority, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- International Coal Ventures Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Central Java Power - Indonesia
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- Siam City Cement - Thailand
- IHS Mccloskey Coal Group - USA
- Dalmia Cement Bharat India
- Essar Steel Hazira Ltd - India
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Indika Energy - Indonesia
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Planning Commission, India
- Maheswari Brothers Coal Limited - India
- Bayan Resources Tbk. - Indonesia
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- Meenaskhi Energy Private Limited - India
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- Ceylon Electricity Board - Sri Lanka
- McConnell Dowell - Australia
- Orica Mining Services - Indonesia
- Siam City Cement PLC, Thailand
- Commonwealth Bank - Australia
- Attock Cement Pakistan Limited
|
| |
| |
|
