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Tuesday, 14 October 14
KING COAL UNDER ATTACK? - EVA TZIMA
 With the last quarter of the year being well underway and with no strong signs that the Dry Bulk market could be ready for a big positive reversal, everyone is thirsty for market developments that could more clearly set out the path of freights in the following months. While most of the attention on the dry bulker side is usually placed on iron ore around this time of the year, coal recently made head-lines as well, following the new policies set in place by the Chinese government in relation to its trade. As the country remains the world’s biggest producer and consumer of coal, recently announced plans to set a floor on the quality of coal consumed domestically, has brought the Asia Pacific dry bulk trade to the spotlight.
The Chinese government has during the past years tried to pursue more environmentally friendly policies and coal consumption has been one of the main issues those policies have tried to tackle. Up until recently the pledge to reduce coal usage in the Chinese energy mix, without nevertheless setting a specific limit of coal consumption, has been the only solid promise by the government to intervene in the trade of the commodity. Earlier this year though the country’s administration started considering a ban on lower-quality coal imports and despite the fact that different versions of this policy were being drafted since 2013, it was only a few weeks ago that the final regulation was set out. So what is the impact on imports and most importantly; are dry bulk rates in the Pacific due for another hit?
As China ranks second amongst those countries with the biggest coal reserves internationally, the country’s need to import coal has been inextricably linked with its continuously growing appetite for the commodity, as well as the fact that importing coal would come cheaper compared to producing it and transporting it domestically, since the main coal producing provinces are located far from the major coal consuming city centres. While S. Africa also managed to get a piece of the pie in the most recent years, Indonesia and Australia have been traditionally those countries satisfying the largest portion of Chinese imports.
The new regulations, which are set to come into effect as soon as January 1st 2015, will restrict the import and local sale of coal with ash content over 16% and sulphur content over 1%, in main Chinese population centres, while a total ban will be imposed on the sale, transportation and import of coal in cases where ash and sulphur content exceed 40% and 3% respectively.
At a first glance, with the biggest chunk of Australian coal having an ash content of more than 20%, it seems that Chinese coal imports from the Land Down Under will be the ones that could take a hit. Panamax up to Capesize range vessels are usually the ones facilitating this trade, so pressure on rates for these segments is logically expected. Whether this pressure is going to last is still questionable at this stage though. We could well see sooner rather than later coal producers in Australia invest in upgrading the quality of their production to meet the new quality standards, while even in the case that they don’t, Australian production could most probably be directed towards countries like India that has been displaying growing appetite for coal.
At the same time, as quality restrictions also apply to Chinese domestic production, the time it will take for local producers to adjust to the new standards could also be a period during which imports will have to remain strong. Since the majority of Indonesian production is meeting the recently announced quality standards, China will most probably turn to Indonesia to increase its imports. Although there is a chance that Indonesia’s own recent regulations with regards to export permits could possibly delay some of the upside created by the squeeze out of Australian exports, once these issues are streamlined, we could soon see Supramax rates that facilitate this trade enjoying some nice upside, while Ultramax rates could also benefit as this segment is expected to get a piece of that trade as well in the near future.
So even though in the short to medium term Australian exports to China might take a hit, seaborne coal trade volumes in the Pacific could soon find their balance back. Australians might improve the quality of their production and lure back demand ex China, or they could shift their imports to countries like India limiting the downside on Panamax – Cape rates. On top of that, coal exports to China from other countries, like Indonesia, might intensify, boosting earnings for Supramax/Ultramax tonnage.
Some argue that what could actually hurt Chinese growth of coal usage is the growth rate of coal intensive sectors in the country. The growth in industries like those of crude steel, cement, and pig iron, which are heavily using coal as an energy source, has slowed down and that could also put pressure on coal volumes. But in my opinion, as these sectors are bound to continue operations, despite any short or longer term growth squeeze, they will still remain dependent on coal and the fact that their profit margins might stay under pressure, will be exactly what will support the usage of coal, which still re-mains one of the cheapest options for energy out there, a knowledge well adopted across the Asia Pacific region.
Compiled by:
Intermodal Research & Valuations
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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Sunday, 23 November 14
ITALY'S STEAM COAL IMPORTS TO DROP BY 11% IN 2014 - ASSOCARBONI
COALspot.com: Italy’s steam coal imports expected to drop to 16 million tons in 2014 (-11% compared to 2013); coking coal imports to plunge t ...
Saturday, 22 November 14
THE FALL IN BUNKER PRICES REDUCE FUEL COSTS SIGNIFICANTLY - BIMCO, PETER SAND
For a ship that burns 24 tonnes of fuel per day while steaming, fuel costs are reduced by as much as USD 1 million a year if current price level st ...
Saturday, 22 November 14
DRY BULKERS NEWBUILDING DELIVERIES REACHED 11.8 MILLION DWT DURING THIRD QUARTER, NET FLEET GROWTH FOR 2014 TO REACH 5% - HELLENIC SHIPPING NEWS
The dry bulk market has rebounded since its less than impressive performance since the start of the year, but overall, third quarter figures could ...
Friday, 21 November 14
BUMI ENTERS INTO CONDITIONAL SALE & PURCHASE AGREEMENT TO SELL FBS STAKE
COALspot.com: PT Bumi Resources Tbk, one of the Indonesia's largest coal producers confirms that it has executed a Conditional Sale and Purchas ...
Friday, 21 November 14
U.S LAST WEEK'S COAL PRODUCTION STAYS FLAT W-O-W
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.9 million short tons (mmst) of coal ...
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- Sakthi Sugars Limited - India
- Krishnapatnam Port Company Ltd. - India
- Global Green Power PLC Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Sidhee Cement - India
- Xindia Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Orica Australia Pty. Ltd.
- Singapore Mercantile Exchange
- Ind-Barath Power Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Ministry of Finance - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Australian Commodity Traders Exchange
- Thiess Contractors Indonesia
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Directorate Of Revenue Intelligence - India
- Ambuja Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Vedanta Resources Plc - India
- Asmin Koalindo Tuhup - Indonesia
- Energy Development Corp, Philippines
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- European Bulk Services B.V. - Netherlands
- Sojitz Corporation - Japan
- Essar Steel Hazira Ltd - India
- Bulk Trading Sa - Switzerland
- Offshore Bulk Terminal Pte Ltd, Singapore
- The State Trading Corporation of India Ltd
- Sical Logistics Limited - India
- Power Finance Corporation Ltd., India
- Tata Chemicals Ltd - India
- Sarangani Energy Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- Indonesian Coal Mining Association
- SMG Consultants - Indonesia
- Parliament of New Zealand
- Indogreen Group - Indonesia
- Salva Resources Pvt Ltd - India
- Mercator Lines Limited - India
- Global Coal Blending Company Limited - Australia
- ASAPP Information Group - India
- TeaM Sual Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Medco Energi Mining Internasional
- Eastern Coal Council - USA
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- MS Steel International - UAE
- Vijayanagar Sugar Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Africa Commodities Group - South Africa
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- Australian Coal Association
- Jorong Barutama Greston.PT - Indonesia
- Meralco Power Generation, Philippines
- Kartika Selabumi Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- Karaikal Port Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Renaissance Capital - South Africa
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- Uttam Galva Steels Limited - India
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Deloitte Consulting - India
- Cement Manufacturers Association - India
- Bhushan Steel Limited - India
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Independent Power Producers Association of India
- Oldendorff Carriers - Singapore
- Planning Commission, India
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- Grasim Industreis Ltd - India
- Carbofer General Trading SA - India
- Kumho Petrochemical, South Korea
- Wood Mackenzie - Singapore
- Price Waterhouse Coopers - Russia
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tamil Nadu electricity Board
- Kepco SPC Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Electricity Generating Authority of Thailand
- Meenaskhi Energy Private Limited - India
- Samtan Co., Ltd - South Korea
- Eastern Energy - Thailand
- Straits Asia Resources Limited - Singapore
- Bangladesh Power Developement Board
- Global Business Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Kobexindo Tractors - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Wilmar Investment Holdings
- Georgia Ports Authority, United States
- Petrochimia International Co. Ltd.- Taiwan
- Riau Bara Harum - Indonesia
- McConnell Dowell - Australia
- New Zealand Coal & Carbon
- Mjunction Services Limited - India
- Iligan Light & Power Inc, Philippines
- Bhatia International Limited - India
- Gujarat Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Orica Mining Services - Indonesia
- PowerSource Philippines DevCo
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Cigading International Bulk Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- GMR Energy Limited - India
- Siam City Cement - Thailand
- Ministry of Transport, Egypt
- CIMB Investment Bank - Malaysia
- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- Energy Link Ltd, New Zealand
- Coalindo Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- OPG Power Generation Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- San Jose City I Power Corp, Philippines
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- Savvy Resources Ltd - HongKong
- Petron Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- CNBM International Corporation - China
- Sindya Power Generating Company Private Ltd
- Marubeni Corporation - India
- GAC Shipping (India) Pvt Ltd
- Coal and Oil Company - UAE
- Chettinad Cement Corporation Ltd - India
- Agrawal Coal Company - India
- Mintek Dendrill Indonesia
- Dalmia Cement Bharat India
- Manunggal Multi Energi - Indonesia
- Semirara Mining Corp, Philippines
- Vizag Seaport Private Limited - India
- Edison Trading Spa - Italy
- Posco Energy - South Korea
- Timah Investasi Mineral - Indoneisa
- London Commodity Brokers - England
- Bhoruka Overseas - Indonesia
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- Thai Mozambique Logistica
- Minerals Council of Australia
- Malabar Cements Ltd - India
- Interocean Group of Companies - India
- IEA Clean Coal Centre - UK
- Formosa Plastics Group - Taiwan
- Billiton Holdings Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Port Waratah Coal Services - Australia
- Ministry of Mines - Canada
- Makarim & Taira - Indonesia
- Globalindo Alam Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Central Electricity Authority - India
- LBH Netherlands Bv - Netherlands
- Simpson Spence & Young - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- Kaltim Prima Coal - Indonesia
- Indian Energy Exchange, India
- White Energy Company Limited
- Commonwealth Bank - Australia
- Lanco Infratech Ltd - India
- PNOC Exploration Corporation - Philippines
- The University of Queensland
- Binh Thuan Hamico - Vietnam
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- Economic Council, Georgia
- Bharathi Cement Corporation - India
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