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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, 16 October 14
PANAMAX OWNERS RECEIVE A PREMIUM FOR GOING TO INDIA VIA INDONESIA - FEARNLEYS AS
Handy
The Handy/Supra market continues to slide in both hemispheres, said Fearnleys AS in its latest week report. In the Atlantic we see rates co ...
Thursday, 16 October 14
ARE WE GOING TO SHOOT OURSELVES IN THE FOOT ONCE AGAIN? - PANOS MAKRINOS
As the East part of our globe was coming back from its October holidays last week, everyone expected that the Dry Bulk market would follow suit and ...
Wednesday, 15 October 14
PANAMAX: ACTIVITY IN THE PACIFIC WAS UNIMPRESSIVE
The Dry Bulk market noted another weekly decline last week, while the BDI moved below 1,000 points taking down with it expectations that a post hol ...
Wednesday, 15 October 14
INDONESIAN COAL PRICE REFERENCE FELL TO FRESH MULTI-YEAR LOWS IN OCTOBER
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down the coal bench mark price once again in October 2014.
...
Wednesday, 15 October 14
DRY BULK SHIPPING: RATE IMPROVEMENTS ARRIVED AS FORECAST, BUT UNCERTAINTY MOUNTS FOR 2015 DEMAND - BIMCO
BIMCO released its latest short term assessment of the dry bulk market, estimating that over the October-November period, the level of Capesize TC ...
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- International Coal Ventures Pvt Ltd - India
- Meralco Power Generation, Philippines
- Sical Logistics Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Planning Commission, India
- SMC Global Power, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Central Java Power - Indonesia
- PowerSource Philippines DevCo
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- Medco Energi Mining Internasional
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement PLC, Thailand
- Deloitte Consulting - India
- Orica Mining Services - Indonesia
- VISA Power Limited - India
- Semirara Mining Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Commonwealth Bank - Australia
- Cement Manufacturers Association - India
- Alfred C Toepfer International GmbH - Germany
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Standard Chartered Bank - UAE
- Minerals Council of Australia
- San Jose City I Power Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Independent Power Producers Association of India
- Latin American Coal - Colombia
- Iligan Light & Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- IEA Clean Coal Centre - UK
- Timah Investasi Mineral - Indoneisa
- Baramulti Group, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Power Finance Corporation Ltd., India
- Edison Trading Spa - Italy
- South Luzon Thermal Energy Corporation
- CIMB Investment Bank - Malaysia
- Semirara Mining and Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Price Waterhouse Coopers - Russia
- Grasim Industreis Ltd - India
- Wilmar Investment Holdings
- Energy Link Ltd, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Africa Commodities Group - South Africa
- Sree Jayajothi Cements Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Tamil Nadu electricity Board
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- GMR Energy Limited - India
- Kobexindo Tractors - Indoneisa
- Singapore Mercantile Exchange
- Carbofer General Trading SA - India
- Kalimantan Lumbung Energi - Indonesia
- Agrawal Coal Company - India
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
- Leighton Contractors Pty Ltd - Australia
- Aditya Birla Group - India
- Electricity Authority, New Zealand
- Mjunction Services Limited - India
- Bharathi Cement Corporation - India
- Trasteel International SA, Italy
- Central Electricity Authority - India
- Uttam Galva Steels Limited - India
- CNBM International Corporation - China
- Attock Cement Pakistan Limited
- Banpu Public Company Limited - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Finance - Indonesia
- Port Waratah Coal Services - Australia
- Bulk Trading Sa - Switzerland
- Thiess Contractors Indonesia
- Interocean Group of Companies - India
- Anglo American - United Kingdom
- Xindia Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Maheswari Brothers Coal Limited - India
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Mintek Dendrill Indonesia
- Coalindo Energy - Indonesia
- Georgia Ports Authority, United States
- ICICI Bank Limited - India
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Bhoruka Overseas - Indonesia
- Kideco Jaya Agung - Indonesia
- Goldman Sachs - Singapore
- SMG Consultants - Indonesia
- Sakthi Sugars Limited - India
- Star Paper Mills Limited - India
- Ind-Barath Power Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
- Krishnapatnam Port Company Ltd. - India
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- ASAPP Information Group - India
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Australian Coal Association
- Orica Australia Pty. Ltd.
- Posco Energy - South Korea
- Kumho Petrochemical, South Korea
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- McConnell Dowell - Australia
- Essar Steel Hazira Ltd - India
- Chamber of Mines of South Africa
- Parliament of New Zealand
- Global Coal Blending Company Limited - Australia
- Australian Commodity Traders Exchange
- Rashtriya Ispat Nigam Limited - India
- London Commodity Brokers - England
- New Zealand Coal & Carbon
- Larsen & Toubro Limited - India
- Bhushan Steel Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Sindya Power Generating Company Private Ltd
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- Coastal Gujarat Power Limited - India
- Parry Sugars Refinery, India
- Barasentosa Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- White Energy Company Limited
- Gujarat Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bukit Makmur.PT - Indonesia
- Gujarat Sidhee Cement - India
- Bangladesh Power Developement Board
- Directorate Of Revenue Intelligence - India
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- Indika Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Oldendorff Carriers - Singapore
- Economic Council, Georgia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Lanco Infratech Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Wood Mackenzie - Singapore
- Formosa Plastics Group - Taiwan
- Jaiprakash Power Ventures ltd
- Videocon Industries ltd - India
- GVK Power & Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- PTC India Limited - India
- Heidelberg Cement - Germany
- Romanian Commodities Exchange
- Jorong Barutama Greston.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Electricity Generating Authority of Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Tata Chemicals Ltd - India
- Salva Resources Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
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