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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, 15 October 14
SHIPOWNER NOT LIABLE FOR CARGO DAMAGE RESULTING FROM POOR STOWAGE - CLYDE & CO
KNOWLEDGE TO ELEVATE
Russian metal trading company Yuzhny Zavod Metall Profil (YZMP), the holder of a CONGEN 1994 bill of lading, took delivery o ...
Wednesday, 15 October 14
NEWCASTLE SHIPPED 13.96 MILLION TONS OF COAL IN SEPTEMBER; UP 5.72%
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1,227.7 wor ...
Tuesday, 14 October 14
THE NEW CHINESE TRANSPORTATION TAX LAW: WHAT DOES IT MEAN FOR GREEK SHIPPING? - DELOITTE
China has recently promulgated a new law which imposes tax on profits from freights of inbound routes. The objective of the new tax law titled &ldq ...
Monday, 13 October 14
CHINESE COAL IMPORT TARIFFS YET ANOTHER BLOW TO AUSTRALIAN COAL EXPORTS - TIM BUCKLEY
COALspot.com: China’s unexpected move to reintroduce thermal coal import tariffs of 6% will have a materially negative impact on the viabilit ...
Monday, 13 October 14
NEWCASTLE COAL SWAP FOR Q1' 2015 DELIVERY CLOSED AT US$ 54.92, SGX DATA SHOWS
COALspot.com: API 5 FOB Newcastle Coal swap for delivery Q4' 2014 decreased US$ 0.80 (-1.46%) month over month and US$ 0.52 (-0.95%) week over ...
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- Independent Power Producers Association of India
- Mintek Dendrill Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Coastal Gujarat Power Limited - India
- Ministry of Mines - Canada
- Simpson Spence & Young - Indonesia
- The Treasury - Australian Government
- Sojitz Corporation - Japan
- Samtan Co., Ltd - South Korea
- GMR Energy Limited - India
- Rio Tinto Coal - Australia
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- Australian Coal Association
- Alfred C Toepfer International GmbH - Germany
- Parliament of New Zealand
- ICICI Bank Limited - India
- Ambuja Cements Ltd - India
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- Global Green Power PLC Corporation, Philippines
- PowerSource Philippines DevCo
- Krishnapatnam Port Company Ltd. - India
- White Energy Company Limited
- Bayan Resources Tbk. - Indonesia
- Manunggal Multi Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Formosa Plastics Group - Taiwan
- Kalimantan Lumbung Energi - Indonesia
- MS Steel International - UAE
- Posco Energy - South Korea
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Medco Energi Mining Internasional
- Kepco SPC Power Corporation, Philippines
- New Zealand Coal & Carbon
- Siam City Cement - Thailand
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Altura Mining Limited, Indonesia
- Rashtriya Ispat Nigam Limited - India
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Parry Sugars Refinery, India
- Leighton Contractors Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Price Waterhouse Coopers - Russia
- Ceylon Electricity Board - Sri Lanka
- Jindal Steel & Power Ltd - India
- The State Trading Corporation of India Ltd
- Coal and Oil Company - UAE
- Indian Oil Corporation Limited
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Trasteel International SA, Italy
- Intertek Mineral Services - Indonesia
- Salva Resources Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Madhucon Powers Ltd - India
- Sindya Power Generating Company Private Ltd
- AsiaOL BioFuels Corp., Philippines
- GN Power Mariveles Coal Plant, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- India Bulls Power Limited - India
- CNBM International Corporation - China
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- Timah Investasi Mineral - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Meenaskhi Energy Private Limited - India
- Wood Mackenzie - Singapore
- Minerals Council of Australia
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- LBH Netherlands Bv - Netherlands
- Carbofer General Trading SA - India
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- San Jose City I Power Corp, Philippines
- Oldendorff Carriers - Singapore
- Mjunction Services Limited - India
- Vizag Seaport Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Uttam Galva Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Anglo American - United Kingdom
- Power Finance Corporation Ltd., India
- Romanian Commodities Exchange
- Semirara Mining Corp, Philippines
- Bharathi Cement Corporation - India
- Deloitte Consulting - India
- Makarim & Taira - Indonesia
- Mercator Lines Limited - India
- Petron Corporation, Philippines
- Wilmar Investment Holdings
- Indonesian Coal Mining Association
- SMC Global Power, Philippines
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Petrochimia International Co. Ltd.- Taiwan
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Renaissance Capital - South Africa
- European Bulk Services B.V. - Netherlands
- Xindia Steels Limited - India
- Star Paper Mills Limited - India
- Electricity Authority, New Zealand
- Tamil Nadu electricity Board
- Central Java Power - Indonesia
- Metalloyd Limited - United Kingdom
- Cement Manufacturers Association - India
- Gujarat Sidhee Cement - India
- Maharashtra Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Commonwealth Bank - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Barasentosa Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- PTC India Limited - India
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kapuas Tunggal Persada - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- VISA Power Limited - India
- GVK Power & Infra Limited - India
- Vedanta Resources Plc - India
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- Orica Mining Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Central Electricity Authority - India
- Africa Commodities Group - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- Eastern Energy - Thailand
- Orica Australia Pty. Ltd.
- Therma Luzon, Inc, Philippines
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- Standard Chartered Bank - UAE
- Iligan Light & Power Inc, Philippines
- Coalindo Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- SN Aboitiz Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate Of Revenue Intelligence - India
- Neyveli Lignite Corporation Ltd, - India
- IEA Clean Coal Centre - UK
- London Commodity Brokers - England
- Agrawal Coal Company - India
- SMG Consultants - Indonesia
- Karaikal Port Pvt Ltd - India
- Latin American Coal - Colombia
- Holcim Trading Pte Ltd - Singapore
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aditya Birla Group - India
- The University of Queensland
- Thai Mozambique Logistica
- Grasim Industreis Ltd - India
- International Coal Ventures Pvt Ltd - India
- Planning Commission, India
- Ministry of Transport, Egypt
- TeaM Sual Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Videocon Industries ltd - India
- Indika Energy - Indonesia
- Energy Link Ltd, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Business Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Borneo Indobara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- Georgia Ports Authority, United States
- Goldman Sachs - Singapore
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
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