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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, 13 November 14
MODERN DRY BULK SHIPS' PRICES START FIRMING UP - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
While the main story of the past few weeks has been the rebound of the dry bulk market, which has been a result of increased Chinese iron ore impor ...
Wednesday, 12 November 14
PANAMAX: WITNESSED A FAIRLY STABLE MARKET IN THE ATLANTIC
COALspot.com: Despite the fact that the Dry Bulk market noted another weekly increase, clouds of uncertainty returned mid-week onwards, as the mini ...
Wednesday, 12 November 14
SHIPPING MARKET INSIGHT - CHRISTOPHER T. WHITTY
COALspot.com: The fight continues between the low-cost iron ore producers and the big three: Vale, Rio Tinto and BHP Billiton. We are moving into a ...
Tuesday, 11 November 14
FACING CHALLENGES AND MEETING OPPORTUNITIES - INTERNATIONAL EPC CONFERENCE & EXHIBITION
Press Release: SKYCONNECTION and TRANSEVENT, which is fully supported by the Institution of Engineers Indonesia and Ministry of Industry of the Rep ...
Tuesday, 11 November 14
NEWCASTLE COAL SWAP CLOSED AT $ 52.65 FOR Q1' 15 DELIVERY
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery decreased US$ 2.83 (-5.10%) month over month and US$ 1.35 (-2.50%) week ove ...
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- PetroVietnam Power Coal Import and Supply Company
- Africa Commodities Group - South Africa
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- Australian Coal Association
- Therma Luzon, Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Energy Development Corp, Philippines
- Edison Trading Spa - Italy
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- OPG Power Generation Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Kaltim Prima Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Sree Jayajothi Cements Limited - India
- Power Finance Corporation Ltd., India
- Mercuria Energy - Indonesia
- Interocean Group of Companies - India
- New Zealand Coal & Carbon
- Kobexindo Tractors - Indoneisa
- Simpson Spence & Young - Indonesia
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- CNBM International Corporation - China
- Goldman Sachs - Singapore
- Star Paper Mills Limited - India
- Manunggal Multi Energi - Indonesia
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement PLC, Thailand
- Mercator Lines Limited - India
- Indogreen Group - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thiess Contractors Indonesia
- Holcim Trading Pte Ltd - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- Electricity Generating Authority of Thailand
- Pendopo Energi Batubara - Indonesia
- Deloitte Consulting - India
- McConnell Dowell - Australia
- Latin American Coal - Colombia
- Anglo American - United Kingdom
- Georgia Ports Authority, United States
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- Meralco Power Generation, Philippines
- GVK Power & Infra Limited - India
- Ambuja Cements Ltd - India
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- Eastern Coal Council - USA
- Bulk Trading Sa - Switzerland
- Wood Mackenzie - Singapore
- Sarangani Energy Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Cement Manufacturers Association - India
- Kumho Petrochemical, South Korea
- Indo Tambangraya Megah - Indonesia
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- South Luzon Thermal Energy Corporation
- GAC Shipping (India) Pvt Ltd
- Baramulti Group, Indonesia
- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- San Jose City I Power Corp, Philippines
- Sical Logistics Limited - India
- Lanco Infratech Ltd - India
- Australian Commodity Traders Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Wilmar Investment Holdings
- Bangladesh Power Developement Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- PTC India Limited - India
- Independent Power Producers Association of India
- TNB Fuel Sdn Bhd - Malaysia
- SMG Consultants - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- European Bulk Services B.V. - Netherlands
- PowerSource Philippines DevCo
- AsiaOL BioFuels Corp., Philippines
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Bayan Resources Tbk. - Indonesia
- Salva Resources Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Romanian Commodities Exchange
- Kideco Jaya Agung - Indonesia
- Rio Tinto Coal - Australia
- Vizag Seaport Private Limited - India
- Essar Steel Hazira Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Jindal Steel & Power Ltd - India
- Commonwealth Bank - Australia
- Xindia Steels Limited - India
- Trasteel International SA, Italy
- IEA Clean Coal Centre - UK
- Intertek Mineral Services - Indonesia
- Petron Corporation, Philippines
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Coal and Oil Company - UAE
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Kartika Selabumi Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indonesian Coal Mining Association
- Siam City Cement - Thailand
- Makarim & Taira - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Barasentosa Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- The University of Queensland
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- India Bulls Power Limited - India
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
- Riau Bara Harum - Indonesia
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
- Karaikal Port Pvt Ltd - India
- Parry Sugars Refinery, India
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- SN Aboitiz Power Inc, Philippines
- VISA Power Limited - India
- Indian Oil Corporation Limited
- Global Business Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Carbofer General Trading SA - India
- Krishnapatnam Port Company Ltd. - India
- Sindya Power Generating Company Private Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Planning Commission, India
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
- Bahari Cakrawala Sebuku - Indonesia
- Banpu Public Company Limited - Thailand
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coalindo Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- PNOC Exploration Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Kohat Cement Company Ltd. - Pakistan
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- ICICI Bank Limited - India
- The Treasury - Australian Government
- Orica Australia Pty. Ltd.
- Bhatia International Limited - India
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- Sakthi Sugars Limited - India
- Cigading International Bulk Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- Posco Energy - South Korea
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Medco Energi Mining Internasional
- Thai Mozambique Logistica
- LBH Netherlands Bv - Netherlands
- Maheswari Brothers Coal Limited - India
- Straits Asia Resources Limited - Singapore
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- Global Coal Blending Company Limited - Australia
- Aditya Birla Group - India
- GN Power Mariveles Coal Plant, Philippines
- Central Java Power - Indonesia
- Mintek Dendrill Indonesia
- Merrill Lynch Commodities Europe
- SMC Global Power, Philippines
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- GMR Energy Limited - India
- Eastern Energy - Thailand
- Kapuas Tunggal Persada - Indonesia
- Chettinad Cement Corporation Ltd - India
- Grasim Industreis Ltd - India
- Binh Thuan Hamico - Vietnam
- Attock Cement Pakistan Limited
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