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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, 09 November 14
CAPE INDEX UP 3.06%; PANAMAX INDEX FELL 4.05%
COALspot.com: The BDI was almost at same levels compared to last week closing or just increased 0.77 pct from last week. The BDI was closed at 1437 ...
Friday, 07 November 14
U.S. PRODUCED 85.60 MILLION SHORT TONS OF COAL IN OCTOBER, UP 2.88% M-O-M
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.0 million short tons (mmst) of coal ...
Thursday, 06 November 14
THE ATLANTIC HAS REMAINED STRONG WITH A HEALTHY SUPPLY OF NEW CARGOES
Handy
This week has continued its slow trend in both hemispheres and even though rates are a bit up w-o-w it is not a clear sign for any improvem ...
Wednesday, 05 November 14
CAPESIZE SEGMENT ENJOYED FIRMING RATES ACROSS BOTH BASINS
Following a fantastic week in terms of rate performance for Capes, the Dry Bulk market managed to note another positive weekly closing, which stron ...
Wednesday, 05 November 14
SHIPPING MARKET INSIGHT - PANOS TSILINGIRIS
COALspot.com: The steep appreciation in dry bulker values between late 2012 and March 2014 resulted in unrealistically expensive ship values compar ...
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- Wilmar Investment Holdings
- Mjunction Services Limited - India
- White Energy Company Limited
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cigading International Bulk Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Trasteel International SA, Italy
- CIMB Investment Bank - Malaysia
- Indian Energy Exchange, India
- Australian Commodity Traders Exchange
- Neyveli Lignite Corporation Ltd, - India
- Ambuja Cements Ltd - India
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- Banpu Public Company Limited - Thailand
- Uttam Galva Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- Salva Resources Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Australian Coal Association
- Miang Besar Coal Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- Eastern Energy - Thailand
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- OPG Power Generation Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The State Trading Corporation of India Ltd
- Global Business Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Interocean Group of Companies - India
- Port Waratah Coal Services - Australia
- Dalmia Cement Bharat India
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Alfred C Toepfer International GmbH - Germany
- Deloitte Consulting - India
- Thiess Contractors Indonesia
- Manunggal Multi Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- Ceylon Electricity Board - Sri Lanka
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- Meralco Power Generation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Ministry of Transport, Egypt
- Kideco Jaya Agung - Indonesia
- VISA Power Limited - India
- PNOC Exploration Corporation - Philippines
- Electricity Generating Authority of Thailand
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- Global Coal Blending Company Limited - Australia
- Goldman Sachs - Singapore
- SMG Consultants - Indonesia
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
- Gujarat Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Kumho Petrochemical, South Korea
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Marubeni Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Parliament of New Zealand
- Mintek Dendrill Indonesia
- Tamil Nadu electricity Board
- Indian Oil Corporation Limited
- Central Java Power - Indonesia
- GAC Shipping (India) Pvt Ltd
- LBH Netherlands Bv - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Kaltim Prima Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indo Tambangraya Megah - Indonesia
- Eastern Coal Council - USA
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Kobexindo Tractors - Indoneisa
- Wood Mackenzie - Singapore
- Thai Mozambique Logistica
- Bukit Asam (Persero) Tbk - Indonesia
- Commonwealth Bank - Australia
- London Commodity Brokers - England
- PTC India Limited - India
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- PowerSource Philippines DevCo
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- Jorong Barutama Greston.PT - Indonesia
- Sical Logistics Limited - India
- Planning Commission, India
- Aboitiz Power Corporation - Philippines
- Borneo Indobara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- Renaissance Capital - South Africa
- Standard Chartered Bank - UAE
- Billiton Holdings Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- Videocon Industries ltd - India
- Samtan Co., Ltd - South Korea
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Lanco Infratech Ltd - India
- Petron Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Timah Investasi Mineral - Indoneisa
- Cement Manufacturers Association - India
- India Bulls Power Limited - India
- Malabar Cements Ltd - India
- New Zealand Coal & Carbon
- SN Aboitiz Power Inc, Philippines
- Mercator Lines Limited - India
- Bhushan Steel Limited - India
- Ministry of Finance - Indonesia
- Orica Australia Pty. Ltd.
- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
- Carbofer General Trading SA - India
- Indika Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Xindia Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Bhoruka Overseas - Indonesia
- Posco Energy - South Korea
- Siam City Cement - Thailand
- Intertek Mineral Services - Indonesia
- Madhucon Powers Ltd - India
- The Treasury - Australian Government
- ICICI Bank Limited - India
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- Chettinad Cement Corporation Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Sidhee Cement - India
- Siam City Cement PLC, Thailand
- Energy Development Corp, Philippines
- Electricity Authority, New Zealand
- Heidelberg Cement - Germany
- Orica Mining Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Oldendorff Carriers - Singapore
- Maheswari Brothers Coal Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Electricity Authority - India
- Iligan Light & Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Sarangani Energy Corporation, Philippines
- Economic Council, Georgia
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- San Jose City I Power Corp, Philippines
- Sakthi Sugars Limited - India
- Attock Cement Pakistan Limited
- Chamber of Mines of South Africa
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Independent Power Producers Association of India
- Bahari Cakrawala Sebuku - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Latin American Coal - Colombia
- Medco Energi Mining Internasional
- Parry Sugars Refinery, India
- Sojitz Corporation - Japan
- Sree Jayajothi Cements Limited - India
- TeaM Sual Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- Coal and Oil Company - UAE
- Star Paper Mills Limited - India
- Bangladesh Power Developement Board
- Bayan Resources Tbk. - Indonesia
- Makarim & Taira - Indonesia
- Binh Thuan Hamico - Vietnam
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
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