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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, 27 October 14
CFR SOUTH CHINA COAL SWAPS PERFORMED POSITIVE THIS PAST WEEK
COALspot.com: API 8 CFR South China Coal swap for Q4’ 2014 delivery decreased US$ 1.68 (-2.55%) month over month and increased US$ 0.87 (+1.3 ...
Sunday, 26 October 14
CAPE'S STRONG PERFORMANCE PUSHES BDI INDEX UPWARDS
COALspot.com: The BDI was up by 26.27 pct and closed at 1192 points week and week. The Cape size performance has pushed up BDI and Cape size index ...
Friday, 24 October 14
WEEKLY U.S COAL PRODUCTION DOWN 2.7% FOR THE WEEK ENDING OCTOBER 18
COALspot.com – United States the world's one of largest coal producers, produced approximately 18.7 million short tons (mmst) of coal in ...
Thursday, 23 October 14
THE BEARS, HOWEVER, STILL CRY; FOR HOW LONG WILL IT LAST? - FEARNLEYS
Handy
"We experience a typical oversupply of ships in the Atlantic which causing rates to slide. In the USG it is just enough cargoes to kee ...
Wednesday, 22 October 14
MARKET INSIGHT - THEODORE NTALAKOS, INTERMODAL
ECO designs - revisited
The ECO vessels are already here but the oil and bunker prices are plummeting to their cheapest level since 2010. Is this ...
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Jindal Steel & Power Ltd - India
- Ministry of Mines - Canada
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ICICI Bank Limited - India
- Indonesian Coal Mining Association
- Kobexindo Tractors - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- Central Electricity Authority - India
- Savvy Resources Ltd - HongKong
- Banpu Public Company Limited - Thailand
- Xindia Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Port Waratah Coal Services - Australia
- SMC Global Power, Philippines
- Sakthi Sugars Limited - India
- Krishnapatnam Port Company Ltd. - India
- Aboitiz Power Corporation - Philippines
- Electricity Generating Authority of Thailand
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Simpson Spence & Young - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kepco SPC Power Corporation, Philippines
- SMG Consultants - Indonesia
- Thiess Contractors Indonesia
- Commonwealth Bank - Australia
- Trasteel International SA, Italy
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Lanco Infratech Ltd - India
- Australian Commodity Traders Exchange
- Coastal Gujarat Power Limited - India
- Iligan Light & Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Vizag Seaport Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- Indian Energy Exchange, India
- Dalmia Cement Bharat India
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Tata Chemicals Ltd - India
- LBH Netherlands Bv - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Indo Tambangraya Megah - Indonesia
- Indogreen Group - Indonesia
- Carbofer General Trading SA - India
- The University of Queensland
- Ind-Barath Power Infra Limited - India
- Aditya Birla Group - India
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Rio Tinto Coal - Australia
- TeaM Sual Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Economic Council, Georgia
- Energy Link Ltd, New Zealand
- Power Finance Corporation Ltd., India
- Meenaskhi Energy Private Limited - India
- Sojitz Corporation - Japan
- Deloitte Consulting - India
- Orica Mining Services - Indonesia
- MS Steel International - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- GVK Power & Infra Limited - India
- Sarangani Energy Corporation, Philippines
- Larsen & Toubro Limited - India
- Vedanta Resources Plc - India
- Meralco Power Generation, Philippines
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- PowerSource Philippines DevCo
- Malabar Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Edison Trading Spa - Italy
- PTC India Limited - India
- Uttam Galva Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Miang Besar Coal Terminal - Indonesia
- White Energy Company Limited
- Kaltim Prima Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Global Business Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Siam City Cement PLC, Thailand
- Global Coal Blending Company Limited - Australia
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Oldendorff Carriers - Singapore
- Goldman Sachs - Singapore
- Wilmar Investment Holdings
- Jorong Barutama Greston.PT - Indonesia
- South Luzon Thermal Energy Corporation
- Bukit Baiduri Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- London Commodity Brokers - England
- Videocon Industries ltd - India
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Madhucon Powers Ltd - India
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- Interocean Group of Companies - India
- VISA Power Limited - India
- Makarim & Taira - Indonesia
- Petron Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- Marubeni Corporation - India
- Star Paper Mills Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- Eastern Energy - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Binh Thuan Hamico - Vietnam
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining and Power Corporation, Philippines
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
- Bukit Makmur.PT - Indonesia
- The State Trading Corporation of India Ltd
- Romanian Commodities Exchange
- GAC Shipping (India) Pvt Ltd
- Bhoruka Overseas - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indika Energy - Indonesia
- Orica Australia Pty. Ltd.
- Mjunction Services Limited - India
- Ministry of Transport, Egypt
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- Posco Energy - South Korea
- Chettinad Cement Corporation Ltd - India
- Ambuja Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Siam City Cement - Thailand
- The Treasury - Australian Government
- Independent Power Producers Association of India
- Ministry of Finance - Indonesia
- Anglo American - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Renaissance Capital - South Africa
- Bhatia International Limited - India
- Kideco Jaya Agung - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Mintek Dendrill Indonesia
- Latin American Coal - Colombia
- Heidelberg Cement - Germany
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- Bayan Resources Tbk. - Indonesia
- Altura Mining Limited, Indonesia
- IEA Clean Coal Centre - UK
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- OPG Power Generation Pvt Ltd - India
- Gujarat Sidhee Cement - India
- McConnell Dowell - Australia
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- Electricity Authority, New Zealand
- Africa Commodities Group - South Africa
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- Baramulti Group, Indonesia
- Minerals Council of Australia
- Planning Commission, India
- Singapore Mercantile Exchange
- Billiton Holdings Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- India Bulls Power Limited - India
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Kalimantan Lumbung Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Medco Energi Mining Internasional
- Offshore Bulk Terminal Pte Ltd, Singapore
- Essar Steel Hazira Ltd - India
- Thai Mozambique Logistica
- GMR Energy Limited - India
- Parliament of New Zealand
- Borneo Indobara - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Neyveli Lignite Corporation Ltd, - India
- Bangladesh Power Developement Board
- European Bulk Services B.V. - Netherlands
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