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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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Monday, 17 November 14
SKULD ISSUES URGENT NOTICE ON BANKRUPTCY OF OW BUNKER A/S
Further to the Association’s advices of 7 November 2014, more information has come to light with respect to the potential impact and scale of ...
Monday, 17 November 14
INDONESIAN COAL PRICE REFERENCE CONTINUES FREE FALL; SLUMPS TO 69-MONTH LOW
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down the coal bench mark price once again in November. HBA for t ...
Monday, 17 November 14
API 5 FOB NEWCASTLE COAL SWAP FOR Q1' 15 DELIVERY CLOSED AT $ 52.75
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery has decreased US$ 1.77 (-3.25%) month over month and US$ 0.02 (-0.04%) day ...
Monday, 17 November 14
SOUTH CHINA COAL SWAP SLIGHTLY INCREASED WEEK OVER WEEK
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased US$ 1.73 (-2.67%) month over month and US$ 0.10 (-0.16%) da ...
Sunday, 16 November 14
THE BDI LOST 12.59% WEEK ON WEEK; THE BCI LOST 19.95%
COALspot.com: The BDI fell 12.59 percent to 1256 point week on week on Friday 14 November. All the segments were also most down this week. The cape ...
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- Bhoruka Overseas - Indonesia
- Economic Council, Georgia
- Manunggal Multi Energi - Indonesia
- Sojitz Corporation - Japan
- Romanian Commodities Exchange
- Leighton Contractors Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Indogreen Group - Indonesia
- Orica Mining Services - Indonesia
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Straits Asia Resources Limited - Singapore
- Toyota Tsusho Corporation, Japan
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GMR Energy Limited - India
- Indian Energy Exchange, India
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- Simpson Spence & Young - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Meenaskhi Energy Private Limited - India
- Mintek Dendrill Indonesia
- Bulk Trading Sa - Switzerland
- Binh Thuan Hamico - Vietnam
- Samtan Co., Ltd - South Korea
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- Asmin Koalindo Tuhup - Indonesia
- Power Finance Corporation Ltd., India
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Salva Resources Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chamber of Mines of South Africa
- McConnell Dowell - Australia
- Trasteel International SA, Italy
- LBH Netherlands Bv - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- Energy Development Corp, Philippines
- Commonwealth Bank - Australia
- Maheswari Brothers Coal Limited - India
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
- Therma Luzon, Inc, Philippines
- Tata Chemicals Ltd - India
- Baramulti Group, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Agrawal Coal Company - India
- PTC India Limited - India
- India Bulls Power Limited - India
- Star Paper Mills Limited - India
- Bhatia International Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- White Energy Company Limited
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Videocon Industries ltd - India
- Rio Tinto Coal - Australia
- London Commodity Brokers - England
- Ambuja Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bangladesh Power Developement Board
- Antam Resourcindo - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bukit Baiduri Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Merrill Lynch Commodities Europe
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- OPG Power Generation Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Aditya Birla Group - India
- Gujarat Sidhee Cement - India
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Meralco Power Generation, Philippines
- Banpu Public Company Limited - Thailand
- Georgia Ports Authority, United States
- TNB Fuel Sdn Bhd - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Deloitte Consulting - India
- Mercuria Energy - Indonesia
- Mjunction Services Limited - India
- Sical Logistics Limited - India
- European Bulk Services B.V. - Netherlands
- Thai Mozambique Logistica
- Neyveli Lignite Corporation Ltd, - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Barasentosa Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- Savvy Resources Ltd - HongKong
- IEA Clean Coal Centre - UK
- Electricity Generating Authority of Thailand
- Alfred C Toepfer International GmbH - Germany
- Kumho Petrochemical, South Korea
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- Planning Commission, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Petron Corporation, Philippines
- Cement Manufacturers Association - India
- Indian Oil Corporation Limited
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karaikal Port Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- The Treasury - Australian Government
- Parliament of New Zealand
- Timah Investasi Mineral - Indoneisa
- Central Electricity Authority - India
- Coalindo Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Minerals Council of Australia
- Wilmar Investment Holdings
- GAC Shipping (India) Pvt Ltd
- Independent Power Producers Association of India
- Indika Energy - Indonesia
- Marubeni Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- PNOC Exploration Corporation - Philippines
- Malabar Cements Ltd - India
- Vedanta Resources Plc - India
- Parry Sugars Refinery, India
- Billiton Holdings Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Makarim & Taira - Indonesia
- Jindal Steel & Power Ltd - India
- International Coal Ventures Pvt Ltd - India
- Larsen & Toubro Limited - India
- Heidelberg Cement - Germany
- Africa Commodities Group - South Africa
- Attock Cement Pakistan Limited
- Coal and Oil Company - UAE
- Dalmia Cement Bharat India
- Jaiprakash Power Ventures ltd
- Gujarat Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- CIMB Investment Bank - Malaysia
- Singapore Mercantile Exchange
- Siam City Cement PLC, Thailand
- Global Green Power PLC Corporation, Philippines
- Medco Energi Mining Internasional
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- Global Business Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Ministry of Finance - Indonesia
- The University of Queensland
- Tamil Nadu electricity Board
- Standard Chartered Bank - UAE
- ASAPP Information Group - India
- Bharathi Cement Corporation - India
- Madhucon Powers Ltd - India
- Posco Energy - South Korea
- Ceylon Electricity Board - Sri Lanka
- Xindia Steels Limited - India
- Grasim Industreis Ltd - India
- VISA Power Limited - India
- Ministry of Mines - Canada
- PowerSource Philippines DevCo
- Coastal Gujarat Power Limited - India
- Sree Jayajothi Cements Limited - India
- Bukit Makmur.PT - Indonesia
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Uttam Galva Steels Limited - India
- Mercator Lines Limited - India
- Indonesian Coal Mining Association
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Latin American Coal - Colombia
- Maharashtra Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- TeaM Sual Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
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