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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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Thursday, 20 November 14
MOST MAJOR ASIAN ECONOMIES TO BENEFIT FROM LOWER OIL - FITCH
COALspot.com: The 25% drop in the price of oil since July is likely to lift economic growth prospects, improve terms of trade, and have a pot ...
Thursday, 20 November 14
HANDY: INDO ROUNDS ARE BEING FIXED IN REGION OF US$ 10K - FEARNLEYS
Handy
In the Atlantic we have experienced firmer rates this week much lead by the grain activity out of USG. Vsls open in the USG can achieve in ...
Thursday, 20 November 14
DEMAND FOR DRY BULK CARRIERS INCREASES ON THE BACK OF HEIGHTENED FREIGHT RATE MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Ship owners are looking to take advantage of favorable market conditions through the acquisition of more dry bulk carriers. According to shipbroker ...
Wednesday, 19 November 14
INDONESIA FUEL-PRICE RISE A CLEAR, POSITIVE REFORM SIGNAL - FITCH
COALspot.com: Indonesia's hike of more than 30% in administered fuel prices, announced on 17 November, provides a clear, positive signal of the ...
Wednesday, 19 November 14
CAPES WERE UNDER PRESSURE; LOST 20% WITHIN A WEEK
COALspot.com: " The negative environment in which the week prior ended, marked this past week as well, which closed off on Friday noting the f ...
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- Grasim Industreis Ltd - India
- Marubeni Corporation - India
- Energy Link Ltd, New Zealand
- Semirara Mining Corp, Philippines
- Thai Mozambique Logistica
- Pipit Mutiara Jaya. PT, Indonesia
- Anglo American - United Kingdom
- Posco Energy - South Korea
- Binh Thuan Hamico - Vietnam
- Star Paper Mills Limited - India
- Renaissance Capital - South Africa
- Therma Luzon, Inc, Philippines
- TeaM Sual Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Aboitiz Power Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- IEA Clean Coal Centre - UK
- South Luzon Thermal Energy Corporation
- Agrawal Coal Company - India
- Bayan Resources Tbk. - Indonesia
- Sarangani Energy Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- Makarim & Taira - Indonesia
- SMC Global Power, Philippines
- Tamil Nadu electricity Board
- Lanco Infratech Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- LBH Netherlands Bv - Netherlands
- Karaikal Port Pvt Ltd - India
- Rio Tinto Coal - Australia
- SMG Consultants - Indonesia
- Australian Coal Association
- Baramulti Group, Indonesia
- Oldendorff Carriers - Singapore
- ASAPP Information Group - India
- Holcim Trading Pte Ltd - Singapore
- Mjunction Services Limited - India
- Wood Mackenzie - Singapore
- Barasentosa Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Jaiprakash Power Ventures ltd
- OPG Power Generation Pvt Ltd - India
- Goldman Sachs - Singapore
- Jindal Steel & Power Ltd - India
- Bhoruka Overseas - Indonesia
- Interocean Group of Companies - India
- Meralco Power Generation, Philippines
- Kumho Petrochemical, South Korea
- Romanian Commodities Exchange
- Coal and Oil Company - UAE
- Planning Commission, India
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Kobexindo Tractors - Indoneisa
- Eastern Coal Council - USA
- Antam Resourcindo - Indonesia
- Kaltim Prima Coal - Indonesia
- Georgia Ports Authority, United States
- Asmin Koalindo Tuhup - Indonesia
- Chamber of Mines of South Africa
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Singapore Mercantile Exchange
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Electricity Authority, New Zealand
- Bhatia International Limited - India
- Orica Mining Services - Indonesia
- Petron Corporation, Philippines
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- GMR Energy Limited - India
- Chettinad Cement Corporation Ltd - India
- Bulk Trading Sa - Switzerland
- Maharashtra Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining and Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Coalindo Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Sakthi Sugars Limited - India
- International Coal Ventures Pvt Ltd - India
- Trasteel International SA, Italy
- ICICI Bank Limited - India
- White Energy Company Limited
- New Zealand Coal & Carbon
- Savvy Resources Ltd - HongKong
- Iligan Light & Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Dalmia Cement Bharat India
- Ind-Barath Power Infra Limited - India
- The Treasury - Australian Government
- Intertek Mineral Services - Indonesia
- Orica Australia Pty. Ltd.
- Sical Logistics Limited - India
- Global Business Power Corporation, Philippines
- Ministry of Transport, Egypt
- Sojitz Corporation - Japan
- Uttam Galva Steels Limited - India
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- Kideco Jaya Agung - Indonesia
- Port Waratah Coal Services - Australia
- Krishnapatnam Port Company Ltd. - India
- Central Electricity Authority - India
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Australian Commodity Traders Exchange
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Madhucon Powers Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- Maheswari Brothers Coal Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- Essar Steel Hazira Ltd - India
- Sindya Power Generating Company Private Ltd
- Indika Energy - Indonesia
- MS Steel International - UAE
- Rashtriya Ispat Nigam Limited - India
- Cigading International Bulk Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- Cement Manufacturers Association - India
- PetroVietnam Power Coal Import and Supply Company
- Indonesian Coal Mining Association
- Jorong Barutama Greston.PT - Indonesia
- VISA Power Limited - India
- Parliament of New Zealand
- Bukit Makmur.PT - Indonesia
- Ministry of Finance - Indonesia
- PowerSource Philippines DevCo
- Neyveli Lignite Corporation Ltd, - India
- Videocon Industries ltd - India
- Independent Power Producers Association of India
- Directorate Of Revenue Intelligence - India
- Price Waterhouse Coopers - Russia
- Aditya Birla Group - India
- GAC Shipping (India) Pvt Ltd
- Malabar Cements Ltd - India
- Altura Mining Limited, Indonesia
- Kepco SPC Power Corporation, Philippines
- CNBM International Corporation - China
- Simpson Spence & Young - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Mintek Dendrill Indonesia
- Electricity Generating Authority of Thailand
- Ambuja Cements Ltd - India
- The State Trading Corporation of India Ltd
- Thiess Contractors Indonesia
- Miang Besar Coal Terminal - Indonesia
- Minerals Council of Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Petrochimia International Co. Ltd.- Taiwan
- Heidelberg Cement - Germany
- India Bulls Power Limited - India
- Eastern Energy - Thailand
- Africa Commodities Group - South Africa
- Ceylon Electricity Board - Sri Lanka
- Vijayanagar Sugar Pvt Ltd - India
- PTC India Limited - India
- Straits Asia Resources Limited - Singapore
- Wilmar Investment Holdings
- Indogreen Group - Indonesia
- Riau Bara Harum - Indonesia
- CIMB Investment Bank - Malaysia
- Coastal Gujarat Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement PLC, Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- Mercuria Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- McConnell Dowell - Australia
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- Xindia Steels Limited - India
- Banpu Public Company Limited - Thailand
- Economic Council, Georgia
- Medco Energi Mining Internasional
- Kartika Selabumi Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Bhushan Steel Limited - India
- Indo Tambangraya Megah - Indonesia
- Gujarat Sidhee Cement - India
- Carbofer General Trading SA - India
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