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, 14 September 14
FREIGHT RATES RALLY AS DEMAND INCREASED
COALspot.com: The Baltic Dry Index (BDI) is a number (in US$) issued daily by the London-based Baltic Exchange up 2.25 percent week on week. BDI cl ...
Friday, 12 September 14
U.S. YEAR-TO-DATE COAL PRODUCTION TOTALED 673.3 MMST, SAYS EIA
COALspot.com – United States the world's second largest coal producer, produced approximately 19.20 million short tons (mmst) of coal in ...
Thursday, 11 September 14
THE PANAMAX MARKET IS TAKING A BREATHER - FEARNLEYS
Handy
We have experienced more activity in both hemispheres this week, said Fearnleys in this week's weekly report.
"We see rates c ...
Wednesday, 10 September 14
ARE GREEK BANKS ON THE VERGE TO START LENDING AGAIN? - JOHN N. COTZIAS
It is well known that Greek Banks had suffered severely after the economic crisis of 2008. From that period onwards, major changes have occur ...
Tuesday, 09 September 14
WEAK M&A DESPITE ABUNDANT DISTRESSED INDONESIA COAL ASSETS - FITCH RATINGS
COALspot.com: Fitch Ratings says that a meaningful level of merger and acquisition (M&A) activity leading to a consolidation of the coal sector ...
|
|
|
Showing 3491 to 3495 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Global Business Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bayan Resources Tbk. - Indonesia
- Attock Cement Pakistan Limited
- Electricity Generating Authority of Thailand
- Sree Jayajothi Cements Limited - India
- Price Waterhouse Coopers - Russia
- Independent Power Producers Association of India
- Karaikal Port Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Kumho Petrochemical, South Korea
- Energy Link Ltd, New Zealand
- LBH Netherlands Bv - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Economic Council, Georgia
- Georgia Ports Authority, United States
- Indian Oil Corporation Limited
- Vijayanagar Sugar Pvt Ltd - India
- Petron Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Manunggal Multi Energi - Indonesia
- Romanian Commodities Exchange
- Bhatia International Limited - India
- Power Finance Corporation Ltd., India
- Coal and Oil Company - UAE
- Global Coal Blending Company Limited - Australia
- Metalloyd Limited - United Kingdom
- Sarangani Energy Corporation, Philippines
- Xindia Steels Limited - India
- Australian Coal Association
- PTC India Limited - India
- Global Green Power PLC Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- Electricity Authority, New Zealand
- Minerals Council of Australia
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Wilmar Investment Holdings
- Altura Mining Limited, Indonesia
- Orica Australia Pty. Ltd.
- Bhushan Steel Limited - India
- IEA Clean Coal Centre - UK
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- Lanco Infratech Ltd - India
- Bangladesh Power Developement Board
- Mercuria Energy - Indonesia
- Indogreen Group - Indonesia
- Parry Sugars Refinery, India
- Cement Manufacturers Association - India
- Antam Resourcindo - Indonesia
- Savvy Resources Ltd - HongKong
- Indonesian Coal Mining Association
- SMG Consultants - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Merrill Lynch Commodities Europe
- Jorong Barutama Greston.PT - Indonesia
- Interocean Group of Companies - India
- Indo Tambangraya Megah - Indonesia
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Latin American Coal - Colombia
- Sinarmas Energy and Mining - Indonesia
- Medco Energi Mining Internasional
- Bukit Baiduri Energy - Indonesia
- Deloitte Consulting - India
- Directorate General of MIneral and Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Riau Bara Harum - Indonesia
- Sojitz Corporation - Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- McConnell Dowell - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aditya Birla Group - India
- PNOC Exploration Corporation - Philippines
- Therma Luzon, Inc, Philippines
- The State Trading Corporation of India Ltd
- Bukit Makmur.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- The Treasury - Australian Government
- Bulk Trading Sa - Switzerland
- Ministry of Finance - Indonesia
- Kaltim Prima Coal - Indonesia
- Siam City Cement - Thailand
- Cigading International Bulk Terminal - Indonesia
- VISA Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- Tata Chemicals Ltd - India
- India Bulls Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Aboitiz Power Corporation - Philippines
- Posco Energy - South Korea
- Chettinad Cement Corporation Ltd - India
- Star Paper Mills Limited - India
- CNBM International Corporation - China
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining Corp, Philippines
- Vedanta Resources Plc - India
- Neyveli Lignite Corporation Ltd, - India
- Indika Energy - Indonesia
- Central Electricity Authority - India
- GN Power Mariveles Coal Plant, Philippines
- Heidelberg Cement - Germany
- Larsen & Toubro Limited - India
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Gujarat Mineral Development Corp Ltd - India
- White Energy Company Limited
- Miang Besar Coal Terminal - Indonesia
- Singapore Mercantile Exchange
- Intertek Mineral Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- ICICI Bank Limited - India
- Timah Investasi Mineral - Indoneisa
- Africa Commodities Group - South Africa
- New Zealand Coal & Carbon
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Trasteel International SA, Italy
- Bharathi Cement Corporation - India
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- London Commodity Brokers - England
- Eastern Coal Council - USA
- Meralco Power Generation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- European Bulk Services B.V. - Netherlands
- Billiton Holdings Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- Ministry of Mines - Canada
- GMR Energy Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Sindya Power Generating Company Private Ltd
- ASAPP Information Group - India
- Kideco Jaya Agung - Indonesia
- Central Java Power - Indonesia
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Malabar Cements Ltd - India
- Dalmia Cement Bharat India
- Krishnapatnam Port Company Ltd. - India
- San Jose City I Power Corp, Philippines
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- The University of Queensland
- Vizag Seaport Private Limited - India
- Videocon Industries ltd - India
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Edison Trading Spa - Italy
- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- Orica Mining Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- Sical Logistics Limited - India
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Jaiprakash Power Ventures ltd
- OPG Power Generation Pvt Ltd - India
- Sakthi Sugars Limited - India
- Ind-Barath Power Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Renaissance Capital - South Africa
- Binh Thuan Hamico - Vietnam
- MS Steel International - UAE
- Commonwealth Bank - Australia
- Gujarat Sidhee Cement - India
- Goldman Sachs - Singapore
- Parliament of New Zealand
- Standard Chartered Bank - UAE
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- Mjunction Services Limited - India
- Marubeni Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Barasentosa Lestari - Indonesia
- Rio Tinto Coal - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thiess Contractors Indonesia
- IHS Mccloskey Coal Group - USA
- Thai Mozambique Logistica
- Eastern Energy - Thailand
- Simpson Spence & Young - Indonesia
- PowerSource Philippines DevCo
- Planning Commission, India
- GAC Shipping (India) Pvt Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- GVK Power & Infra Limited - India
- Agrawal Coal Company - India
- Bukit Asam (Persero) Tbk - Indonesia
|
| |
| |
|
