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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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Wednesday, 22 October 14
CAPESIZE MARKET REMAINED UNDER PRESSURE
COALspot.com: The Dry Bulk market closed on the red for yet another week although following Friday sentiment has started to improve on the back of ...
Tuesday, 21 October 14
INDIA'S DIESEL DEREGULATION POSITIVE FOR OIL COMPANIES - FITCH
The Indian government's 18 October decision to deregulate diesel prices will have a positive effect on the national oil marketing companies tha ...
Tuesday, 21 October 14
LOW DEMAND PUTTING COAL SWAPS UNDER PRESSURE
COALspot.com: Indonesian coal swaps for delivery Q4' 2014 lost on day, week and month.
The swap has lost US$ 1.57 (-3.04%) month on month ...
Monday, 20 October 14
CHINA'S ENVIRONMENTAL POLICIES DO NOT SPELL THE END FOR COAL - WOOD MACKENZIE
China's environmental policies do not spell the end for coal Analysis across energy commodities show coal still accounting for 64% of power mix ...
Monday, 20 October 14
CFR SOUTH CHINA COAL SWAPS FAILED TO PERFORM POSITIVE
COALspot.com: API 8 CFR South China Coal swap for Q4’ 2014 delivery decreased US$ 3.04 (-4.57%) month over month and US$ 1.75 (-2.68%) week o ...
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- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- Bhatia International Limited - India
- Mercator Lines Limited - India
- Planning Commission, India
- Neyveli Lignite Corporation Ltd, - India
- Indogreen Group - Indonesia
- Energy Link Ltd, New Zealand
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- Uttam Galva Steels Limited - India
- Therma Luzon, Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- Bhoruka Overseas - Indonesia
- OPG Power Generation Pvt Ltd - India
- Minerals Council of Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Madhucon Powers Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Singapore Mercantile Exchange
- Cement Manufacturers Association - India
- Makarim & Taira - Indonesia
- Sree Jayajothi Cements Limited - India
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- Indika Energy - Indonesia
- PowerSource Philippines DevCo
- Chettinad Cement Corporation Ltd - India
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Salva Resources Pvt Ltd - India
- Georgia Ports Authority, United States
- Mjunction Services Limited - India
- Formosa Plastics Group - Taiwan
- Global Business Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Renaissance Capital - South Africa
- Samtan Co., Ltd - South Korea
- SMG Consultants - Indonesia
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- Independent Power Producers Association of India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aditya Birla Group - India
- Lanco Infratech Ltd - India
- Savvy Resources Ltd - HongKong
- Bhushan Steel Limited - India
- Price Waterhouse Coopers - Russia
- Kumho Petrochemical, South Korea
- Goldman Sachs - Singapore
- Coalindo Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Miang Besar Coal Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Romanian Commodities Exchange
- Ministry of Mines - Canada
- Toyota Tsusho Corporation, Japan
- GMR Energy Limited - India
- Semirara Mining and Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- New Zealand Coal & Carbon
- Attock Cement Pakistan Limited
- Ambuja Cements Ltd - India
- Rio Tinto Coal - Australia
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- Trasteel International SA, Italy
- Petrochimia International Co. Ltd.- Taiwan
- IHS Mccloskey Coal Group - USA
- Ministry of Finance - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kapuas Tunggal Persada - Indonesia
- Bharathi Cement Corporation - India
- Globalindo Alam Lestari - Indonesia
- Wood Mackenzie - Singapore
- Merrill Lynch Commodities Europe
- Vizag Seaport Private Limited - India
- Videocon Industries ltd - India
- Banpu Public Company Limited - Thailand
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- Iligan Light & Power Inc, Philippines
- Parry Sugars Refinery, India
- European Bulk Services B.V. - Netherlands
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- International Coal Ventures Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Altura Mining Limited, Indonesia
- Bukit Makmur.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- Indonesian Coal Mining Association
- London Commodity Brokers - England
- Oldendorff Carriers - Singapore
- Krishnapatnam Port Company Ltd. - India
- Economic Council, Georgia
- Malabar Cements Ltd - India
- Anglo American - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Sical Logistics Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PTC India Limited - India
- Mercuria Energy - Indonesia
- Deloitte Consulting - India
- Electricity Generating Authority of Thailand
- Kalimantan Lumbung Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Coastal Gujarat Power Limited - India
- Standard Chartered Bank - UAE
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- Jindal Steel & Power Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- Riau Bara Harum - Indonesia
- Siam City Cement - Thailand
- Mintek Dendrill Indonesia
- CIMB Investment Bank - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Coal and Oil Company - UAE
- Sojitz Corporation - Japan
- San Jose City I Power Corp, Philippines
- Tata Chemicals Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Wilmar Investment Holdings
- India Bulls Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Latin American Coal - Colombia
- Eastern Energy - Thailand
- Xindia Steels Limited - India
- Chamber of Mines of South Africa
- Thai Mozambique Logistica
- Bahari Cakrawala Sebuku - Indonesia
- Indo Tambangraya Megah - Indonesia
- Larsen & Toubro Limited - India
- VISA Power Limited - India
- Manunggal Multi Energi - Indonesia
- Australian Coal Association
- Aboitiz Power Corporation - Philippines
- Sakthi Sugars Limited - India
- Vedanta Resources Plc - India
- White Energy Company Limited
- Meenaskhi Energy Private Limited - India
- Simpson Spence & Young - Indonesia
- SN Aboitiz Power Inc, Philippines
- Edison Trading Spa - Italy
- MS Steel International - UAE
- Sinarmas Energy and Mining - Indonesia
- Marubeni Corporation - India
- Kobexindo Tractors - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Tamil Nadu electricity Board
- The University of Queensland
- Karaikal Port Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Offshore Bulk Terminal Pte Ltd, Singapore
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- Star Paper Mills Limited - India
- Antam Resourcindo - Indonesia
- Bangladesh Power Developement Board
- South Luzon Thermal Energy Corporation
- Borneo Indobara - Indonesia
- Barasentosa Lestari - Indonesia
- Posco Energy - South Korea
- LBH Netherlands Bv - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Sidhee Cement - India
- Electricity Authority, New Zealand
- SMC Global Power, Philippines
- Indian Oil Corporation Limited
- Vijayanagar Sugar Pvt Ltd - India
- Thiess Contractors Indonesia
- Central Electricity Authority - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Sindya Power Generating Company Private Ltd
- TeaM Sual Corporation - Philippines
- Medco Energi Mining Internasional
- Port Waratah Coal Services - Australia
- Kohat Cement Company Ltd. - Pakistan
- Kideco Jaya Agung - Indonesia
- Timah Investasi Mineral - Indoneisa
- Dalmia Cement Bharat India
- Interocean Group of Companies - India
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- Gujarat Mineral Development Corp Ltd - India
- Bayan Resources Tbk. - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Metalloyd Limited - United Kingdom
- Orica Australia Pty. Ltd.
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- Leighton Contractors Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Power Finance Corporation Ltd., India
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Sarangani Energy Corporation, Philippines
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