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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, 13 October 14
INDONESIAN COAL SWAPS FOR DELIVERY Q4' 2014 GAINED WEEK ON WEEK AND DAY ON DAY
COALspot.com: Indonesian coal swaps for delivery Q4' 2014 gained week on week and day on day.
The swap lost US$ 0.13 (-0.25%) month on mon ...
Monday, 13 October 14
Q1' 2015 CFR SOUTH CHINA COAL SWAP CLOSED US$ 0.31 PMT HIGHER THAN Q4' 2014 CLOSING
COALspot.com: API 8 CFR South China Coal swap for Q4’ 2014 delivery decreased US$ 0.66 (-1.00%) month over month and US$ 0.40 (-0.61%) ...
Sunday, 12 October 14
INDONESIA TO INDIA FREIGHT RATES ARE EXPECTED TO BE WEAK - VISTAAR
COALspot.com: This week all the segments softened. The BDI down 7.13 pct week on week and closed below 1000 points at 963 points.
The Cape ind ...
Saturday, 11 October 14
COAL PRODUCTION RISES ONLY SLIGHTLY AS GOVT LIMITS MINING OPERATIONS - THE JAKARTA POST
Indonesian coal production rose by only 4 percent in the first nine months of this year, a relatively low increase compared to previous years, as t ...
Friday, 10 October 14
INDONESIA TO DEVELOP DOWNSTREAM COAL INDUSTRY - JP
The government is planning to launch a program to develop the downstream coal industry to increase the commodity’s added value, an official h ...
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- Videocon Industries ltd - India
- Sakthi Sugars Limited - India
- Mercuria Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Pipit Mutiara Jaya. PT, Indonesia
- LBH Netherlands Bv - Netherlands
- San Jose City I Power Corp, Philippines
- IEA Clean Coal Centre - UK
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Planning Commission, India
- Eastern Coal Council - USA
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- GMR Energy Limited - India
- Holcim Trading Pte Ltd - Singapore
- Sindya Power Generating Company Private Ltd
- Ministry of Finance - Indonesia
- Romanian Commodities Exchange
- Kideco Jaya Agung - Indonesia
- Wilmar Investment Holdings
- OPG Power Generation Pvt Ltd - India
- Heidelberg Cement - Germany
- Larsen & Toubro Limited - India
- Sarangani Energy Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Sree Jayajothi Cements Limited - India
- Interocean Group of Companies - India
- Barasentosa Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- Kohat Cement Company Ltd. - Pakistan
- Sical Logistics Limited - India
- Medco Energi Mining Internasional
- Asmin Koalindo Tuhup - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Parry Sugars Refinery, India
- Parliament of New Zealand
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- Uttam Galva Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kumho Petrochemical, South Korea
- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- Ind-Barath Power Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Carbofer General Trading SA - India
- Bhoruka Overseas - Indonesia
- Kepco SPC Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Energy Link Ltd, New Zealand
- Jaiprakash Power Ventures ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Mining Services - Indonesia
- Essar Steel Hazira Ltd - India
- Cement Manufacturers Association - India
- Electricity Generating Authority of Thailand
- Wood Mackenzie - Singapore
- SN Aboitiz Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Coal and Oil Company - UAE
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- Banpu Public Company Limited - Thailand
- Gujarat Sidhee Cement - India
- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- Jorong Barutama Greston.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Antam Resourcindo - Indonesia
- Goldman Sachs - Singapore
- Ambuja Cements Ltd - India
- Makarim & Taira - Indonesia
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- London Commodity Brokers - England
- Iligan Light & Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Oldendorff Carriers - Singapore
- European Bulk Services B.V. - Netherlands
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- Ministry of Mines - Canada
- Kalimantan Lumbung Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- Toyota Tsusho Corporation, Japan
- Africa Commodities Group - South Africa
- Electricity Authority, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- Bukit Asam (Persero) Tbk - Indonesia
- PowerSource Philippines DevCo
- TeaM Sual Corporation - Philippines
- Trasteel International SA, Italy
- PNOC Exploration Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Thiess Contractors Indonesia
- Lanco Infratech Ltd - India
- The University of Queensland
- Meenaskhi Energy Private Limited - India
- SMC Global Power, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Energy Exchange, India
- Miang Besar Coal Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Ministry of Transport, Egypt
- Riau Bara Harum - Indonesia
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Deloitte Consulting - India
- Latin American Coal - Colombia
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- Central Electricity Authority - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- Madhucon Powers Ltd - India
- GAC Shipping (India) Pvt Ltd
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- Intertek Mineral Services - Indonesia
- Central Java Power - Indonesia
- The State Trading Corporation of India Ltd
- Bangladesh Power Developement Board
- PetroVietnam Power Coal Import and Supply Company
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- Indogreen Group - Indonesia
- Coastal Gujarat Power Limited - India
- Posco Energy - South Korea
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- International Coal Ventures Pvt Ltd - India
- Mercator Lines Limited - India
- Indika Energy - Indonesia
- Rio Tinto Coal - Australia
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- Vedanta Resources Plc - India
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Renaissance Capital - South Africa
- Eastern Energy - Thailand
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- Global Business Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Sinarmas Energy and Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Tamil Nadu electricity Board
- Indonesian Coal Mining Association
- SMG Consultants - Indonesia
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- The Treasury - Australian Government
- Karbindo Abesyapradhi - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Baramulti Group, Indonesia
- Bhatia International Limited - India
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- Semirara Mining Corp, Philippines
- ASAPP Information Group - India
- Kapuas Tunggal Persada - Indonesia
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- Timah Investasi Mineral - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Mintek Dendrill Indonesia
- Therma Luzon, Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- Straits Asia Resources Limited - Singapore
- McConnell Dowell - Australia
- Grasim Industreis Ltd - India
- Savvy Resources Ltd - HongKong
- Merrill Lynch Commodities Europe
- MS Steel International - UAE
- CNBM International Corporation - China
- Anglo American - United Kingdom
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Independent Power Producers Association of India
- Salva Resources Pvt Ltd - India
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- Attock Cement Pakistan Limited
- Bharathi Cement Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coalindo Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Siam City Cement - Thailand
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