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.
|
|
Sunday, 09 November 14
CAPE INDEX UP 3.06%; PANAMAX INDEX FELL 4.05%
COALspot.com: The BDI was almost at same levels compared to last week closing or just increased 0.77 pct from last week. The BDI was closed at 1437 ...
Friday, 07 November 14
U.S. PRODUCED 85.60 MILLION SHORT TONS OF COAL IN OCTOBER, UP 2.88% M-O-M
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.0 million short tons (mmst) of coal ...
Thursday, 06 November 14
THE ATLANTIC HAS REMAINED STRONG WITH A HEALTHY SUPPLY OF NEW CARGOES
Handy
This week has continued its slow trend in both hemispheres and even though rates are a bit up w-o-w it is not a clear sign for any improvem ...
Wednesday, 05 November 14
CAPESIZE SEGMENT ENJOYED FIRMING RATES ACROSS BOTH BASINS
Following a fantastic week in terms of rate performance for Capes, the Dry Bulk market managed to note another positive weekly closing, which stron ...
Wednesday, 05 November 14
SHIPPING MARKET INSIGHT - PANOS TSILINGIRIS
COALspot.com: The steep appreciation in dry bulker values between late 2012 and March 2014 resulted in unrealistically expensive ship values compar ...
|
|
|
Showing 3391 to 3395 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Bukit Baiduri Energy - Indonesia
- Bhushan Steel Limited - India
- Timah Investasi Mineral - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
- Tamil Nadu electricity Board
- Gujarat Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Neyveli Lignite Corporation Ltd, - India
- Orica Australia Pty. Ltd.
- Xindia Steels Limited - India
- Gujarat Sidhee Cement - India
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- Deloitte Consulting - India
- Formosa Plastics Group - Taiwan
- Interocean Group of Companies - India
- Vijayanagar Sugar Pvt Ltd - India
- VISA Power Limited - India
- Bayan Resources Tbk. - Indonesia
- ASAPP Information Group - India
- Kobexindo Tractors - Indoneisa
- Maheswari Brothers Coal Limited - India
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- Port Waratah Coal Services - Australia
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- Trasteel International SA, Italy
- ICICI Bank Limited - India
- Directorate Of Revenue Intelligence - India
- Vizag Seaport Private Limited - India
- Vedanta Resources Plc - India
- San Jose City I Power Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Wood Mackenzie - Singapore
- IEA Clean Coal Centre - UK
- Commonwealth Bank - Australia
- Kideco Jaya Agung - Indonesia
- CNBM International Corporation - China
- Price Waterhouse Coopers - Russia
- New Zealand Coal & Carbon
- International Coal Ventures Pvt Ltd - India
- Thai Mozambique Logistica
- Bangladesh Power Developement Board
- Electricity Generating Authority of Thailand
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- Uttam Galva Steels Limited - India
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- OPG Power Generation Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Wilmar Investment Holdings
- Georgia Ports Authority, United States
- Merrill Lynch Commodities Europe
- Kapuas Tunggal Persada - Indonesia
- Energy Link Ltd, New Zealand
- European Bulk Services B.V. - Netherlands
- Mercuria Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Cement Manufacturers Association - India
- Central Java Power - Indonesia
- Petron Corporation, Philippines
- Coalindo Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Salva Resources Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Malabar Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Borneo Indobara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- The Treasury - Australian Government
- Bukit Makmur.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Coal and Oil Company - UAE
- Agrawal Coal Company - India
- Meralco Power Generation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- South Luzon Thermal Energy Corporation
- CIMB Investment Bank - Malaysia
- Global Green Power PLC Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Mines - Canada
- Billiton Holdings Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- Oldendorff Carriers - Singapore
- Medco Energi Mining Internasional
- PetroVietnam Power Coal Import and Supply Company
- Jorong Barutama Greston.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- Lanco Infratech Ltd - India
- Indika Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- SMG Consultants - Indonesia
- Intertek Mineral Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Goldman Sachs - Singapore
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- London Commodity Brokers - England
- Baramulti Group, Indonesia
- Makarim & Taira - Indonesia
- Siam City Cement - Thailand
- Rio Tinto Coal - Australia
- Economic Council, Georgia
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- Power Finance Corporation Ltd., India
- Latin American Coal - Colombia
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMC Global Power, Philippines
- SN Aboitiz Power Inc, Philippines
- Renaissance Capital - South Africa
- Kartika Selabumi Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Ambuja Cements Ltd - India
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Larsen & Toubro Limited - India
- White Energy Company Limited
- PTC India Limited - India
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Oil Corporation Limited
- Australian Coal Association
- Grasim Industreis Ltd - India
- Sakthi Sugars Limited - India
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- Singapore Mercantile Exchange
- Kohat Cement Company Ltd. - Pakistan
- Mjunction Services Limited - India
- Energy Development Corp, Philippines
- The State Trading Corporation of India Ltd
- Chamber of Mines of South Africa
- Mercator Lines Limited - India
- Kepco SPC Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- India Bulls Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Romanian Commodities Exchange
- Karaikal Port Pvt Ltd - India
- Central Electricity Authority - India
- Bhatia International Limited - India
- Semirara Mining and Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Sarangani Energy Corporation, Philippines
- McConnell Dowell - Australia
- Planning Commission, India
- Marubeni Corporation - India
- Bharathi Cement Corporation - India
- Eastern Energy - Thailand
- Independent Power Producers Association of India
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement PLC, Thailand
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- Sindya Power Generating Company Private Ltd
- Riau Bara Harum - Indonesia
- Carbofer General Trading SA - India
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- Kaltim Prima Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Mining Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Antam Resourcindo - Indonesia
- Metalloyd Limited - United Kingdom
- The University of Queensland
- Standard Chartered Bank - UAE
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- Indonesian Coal Mining Association
- Global Coal Blending Company Limited - Australia
- Aboitiz Power Corporation - Philippines
- Aditya Birla Group - India
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining Corp, Philippines
- Dalmia Cement Bharat India
- Globalindo Alam Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
- Sree Jayajothi Cements Limited - India
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- GAC Shipping (India) Pvt Ltd
- Karbindo Abesyapradhi - Indoneisa
- Indian Energy Exchange, India
- Sical Logistics Limited - India
- Krishnapatnam Port Company Ltd. - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parry Sugars Refinery, India
- Indo Tambangraya Megah - Indonesia
|
| |
| |
|
