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, 19 October 14
LOW DEMAND PUSHES DOWN COAL FREIGHT RATES; VOLATILITY CONTINUES
COALspot.com: This week all the segments softened including BDI except for Panamax index.
The BDI was down by1.70 pct and clsoed at 944 points ...
Friday, 17 October 14
INTERNATIONAL COAL PRICES ARE AT LOWEST LEVEL; COAL STOCKS AT INDIAN POWER PLANTS ARE ALSO AT LOWEST LEVEL
International coal prices as well as coal freights are falling and reaching to its lowest levels. According to PTI, fuel stockpiles at the thermal ...
Friday, 17 October 14
U.S. COAL PRODUCTION UP BY 3.6% WEEK - ON - WEEK
COALspot.com – United States the world's one of largest coal producers, produced approximately 19.20 million short tons (mmst) of coal in ...
Friday, 17 October 14
DRY BULK SHIPPING'S OUTLOOK NOW SHIFTING TO A LESS PROMISING ONE, SHIP PRICES EXPECTED TO FOLLOW SOON - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
China’s and other Asian countries’ return to the dry bulk market last week, didn’t trigger the hoped support towards the dry bulk ...
Thursday, 16 October 14
KOREA MIDLAND POWER TO BUY 490K MT OF LCV COAL FOR 1Q 2015
COALspot.com : Korea Midland Power Co., Ltd. has invited bids through International open bidding for 490,000 Metric Tons (MT) of LCV (Sub) Bitumino ...
|
|
|
Showing 3421 to 3425 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Kapuas Tunggal Persada - Indonesia
- CNBM International Corporation - China
- Latin American Coal - Colombia
- Romanian Commodities Exchange
- Semirara Mining Corp, Philippines
- Posco Energy - South Korea
- Karaikal Port Pvt Ltd - India
- Orica Australia Pty. Ltd.
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- The Treasury - Australian Government
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Meenaskhi Energy Private Limited - India
- Merrill Lynch Commodities Europe
- Standard Chartered Bank - UAE
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- Indo Tambangraya Megah - Indonesia
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- Energy Link Ltd, New Zealand
- Price Waterhouse Coopers - Russia
- Pipit Mutiara Jaya. PT, Indonesia
- Parry Sugars Refinery, India
- Sree Jayajothi Cements Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Baramulti Group, Indonesia
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asmin Koalindo Tuhup - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- CIMB Investment Bank - Malaysia
- Bhatia International Limited - India
- Malabar Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Indian Oil Corporation Limited
- Mercuria Energy - Indonesia
- Mjunction Services Limited - India
- OPG Power Generation Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Bukit Baiduri Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aditya Birla Group - India
- Ind-Barath Power Infra Limited - India
- Simpson Spence & Young - Indonesia
- Ambuja Cements Ltd - India
- Australian Commodity Traders Exchange
- Indogreen Group - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Makarim & Taira - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- Meralco Power Generation, Philippines
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement - Thailand
- VISA Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Energy Exchange, India
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- MS Steel International - UAE
- Kaltim Prima Coal - Indonesia
- Vizag Seaport Private Limited - India
- Attock Cement Pakistan Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Africa Commodities Group - South Africa
- Binh Thuan Hamico - Vietnam
- Uttam Galva Steels Limited - India
- Eastern Coal Council - USA
- Renaissance Capital - South Africa
- Planning Commission, India
- Videocon Industries ltd - India
- Heidelberg Cement - Germany
- Georgia Ports Authority, United States
- Medco Energi Mining Internasional
- Sarangani Energy Corporation, Philippines
- Kumho Petrochemical, South Korea
- Indika Energy - Indonesia
- Gujarat Sidhee Cement - India
- Aboitiz Power Corporation - Philippines
- Marubeni Corporation - India
- Cement Manufacturers Association - India
- Grasim Industreis Ltd - India
- Global Business Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- AsiaOL BioFuels Corp., Philippines
- Rashtriya Ispat Nigam Limited - India
- Thai Mozambique Logistica
- Deloitte Consulting - India
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- Commonwealth Bank - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Rio Tinto Coal - Australia
- Australian Coal Association
- Eastern Energy - Thailand
- Riau Bara Harum - Indonesia
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- Edison Trading Spa - Italy
- Coalindo Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Holcim Trading Pte Ltd - Singapore
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Lanco Infratech Ltd - India
- Tamil Nadu electricity Board
- PowerSource Philippines DevCo
- Bukit Makmur.PT - Indonesia
- Therma Luzon, Inc, Philippines
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- Central Java Power - Indonesia
- Orica Mining Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bangladesh Power Developement Board
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- Economic Council, Georgia
- Kohat Cement Company Ltd. - Pakistan
- Directorate Of Revenue Intelligence - India
- Electricity Generating Authority of Thailand
- India Bulls Power Limited - India
- Carbofer General Trading SA - India
- Semirara Mining and Power Corporation, Philippines
- SMC Global Power, Philippines
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- Xindia Steels Limited - India
- Antam Resourcindo - Indonesia
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- SMG Consultants - Indonesia
- Iligan Light & Power Inc, Philippines
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Tata Chemicals Ltd - India
- SN Aboitiz Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement PLC, Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- European Bulk Services B.V. - Netherlands
- Interocean Group of Companies - India
- Bhushan Steel Limited - India
- Altura Mining Limited, Indonesia
- Minerals Council of Australia
- Gujarat Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- GMR Energy Limited - India
- Sical Logistics Limited - India
- Chamber of Mines of South Africa
- Global Coal Blending Company Limited - Australia
- Intertek Mineral Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The State Trading Corporation of India Ltd
- Wilmar Investment Holdings
- Savvy Resources Ltd - HongKong
- IHS Mccloskey Coal Group - USA
- Sojitz Corporation - Japan
- Miang Besar Coal Terminal - Indonesia
- Goldman Sachs - Singapore
- Bhoruka Overseas - Indonesia
- Trasteel International SA, Italy
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- GAC Shipping (India) Pvt Ltd
- Kalimantan Lumbung Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- South Luzon Thermal Energy Corporation
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Toyota Tsusho Corporation, Japan
- Krishnapatnam Port Company Ltd. - India
- Independent Power Producers Association of India
- Coastal Gujarat Power Limited - India
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Kideco Jaya Agung - Indonesia
- Oldendorff Carriers - Singapore
- Bharathi Cement Corporation - India
- London Commodity Brokers - England
- Coal and Oil Company - UAE
- Central Electricity Authority - India
- Jorong Barutama Greston.PT - Indonesia
- Parliament of New Zealand
- Jaiprakash Power Ventures ltd
- Barasentosa Lestari - Indonesia
|
| |
| |
|
