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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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Friday, 10 October 14
U.S. PRODUCED 83.2 MMST OF COAL IN SEPTEMBER, SAYS EIA
COALspot.com – United States the world's one of largest coal producers, produced approximately 18.6 million short tons (mmst) of coal in ...
Thursday, 09 October 14
CAPESIZE MARKET HAS CONTINUED TO SHOW WEAKNESS - FEARNLEYS
Handy
We mentioned last week that after several weeks of rate increase for the Supras, the bigger Panamaxes started to snap up better paying Supr ...
Thursday, 09 October 14
SHIPPING REMAINS CHALLENGED AS GLOBAL GROWTH DISAPPOINTS - BIMCO
The global shipping industry finds no grace from much stronger economic activity going forward, as the global recovery remains fragile and uneven. ...
Wednesday, 08 October 14
CAPES RATE FOR THE W. AUSTRALIA TO CHINA VOYAGE MOVED TO BELOW $8/MT - INTERMODAL
The Dry Bulk market remained under pressure last week, with rates for Capes remaining on the red while those for Panamaxes managed to outperform th ...
Wednesday, 08 October 14
OIL COULD FALL TO USD80 BEFORE SHALE SUPPLY RESPONSE - FITCH
COALspot.com: Brent oil could fall as low as USD80 a barrel before triggering a self-correcting supply response with shale-oil drillers cutting inv ...
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- Aditya Birla Group - India
- Rio Tinto Coal - Australia
- Aboitiz Power Corporation - Philippines
- Commonwealth Bank - Australia
- Eastern Energy - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- Sindya Power Generating Company Private Ltd
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- PTC India Limited - India
- Makarim & Taira - Indonesia
- Parry Sugars Refinery, India
- Eastern Coal Council - USA
- Petrochimia International Co. Ltd.- Taiwan
- Medco Energi Mining Internasional
- Therma Luzon, Inc, Philippines
- ICICI Bank Limited - India
- Tamil Nadu electricity Board
- PetroVietnam Power Coal Import and Supply Company
- Cement Manufacturers Association - India
- Port Waratah Coal Services - Australia
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- Billiton Holdings Pty Ltd - Australia
- Thai Mozambique Logistica
- Power Finance Corporation Ltd., India
- LBH Netherlands Bv - Netherlands
- Trasteel International SA, Italy
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- Indonesian Coal Mining Association
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PowerSource Philippines DevCo
- The University of Queensland
- VISA Power Limited - India
- The Treasury - Australian Government
- Interocean Group of Companies - India
- Ambuja Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Mintek Dendrill Indonesia
- PNOC Exploration Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- Karbindo Abesyapradhi - Indoneisa
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- Jindal Steel & Power Ltd - India
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- Straits Asia Resources Limited - Singapore
- GMR Energy Limited - India
- Sree Jayajothi Cements Limited - India
- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Kalimantan Lumbung Energi - Indonesia
- Indian Energy Exchange, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- Banpu Public Company Limited - Thailand
- Baramulti Group, Indonesia
- Thiess Contractors Indonesia
- Energy Link Ltd, New Zealand
- Maheswari Brothers Coal Limited - India
- Australian Commodity Traders Exchange
- Latin American Coal - Colombia
- Gujarat Mineral Development Corp Ltd - India
- Bharathi Cement Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coal and Oil Company - UAE
- McConnell Dowell - Australia
- Australian Coal Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Kapuas Tunggal Persada - Indonesia
- Central Java Power - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- Globalindo Alam Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- Binh Thuan Hamico - Vietnam
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- Dalmia Cement Bharat India
- Romanian Commodities Exchange
- Kumho Petrochemical, South Korea
- Lanco Infratech Ltd - India
- Meralco Power Generation, Philippines
- Sical Logistics Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Toyota Tsusho Corporation, Japan
- Kobexindo Tractors - Indoneisa
- Coalindo Energy - Indonesia
- Madhucon Powers Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement PLC, Thailand
- Deloitte Consulting - India
- AsiaOL BioFuels Corp., Philippines
- Xindia Steels Limited - India
- Barasentosa Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- Standard Chartered Bank - UAE
- Meenaskhi Energy Private Limited - India
- The State Trading Corporation of India Ltd
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Authority, New Zealand
- Sojitz Corporation - Japan
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Grasim Industreis Ltd - India
- Bhatia International Limited - India
- Iligan Light & Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Bukit Makmur.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- India Bulls Power Limited - India
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Parliament of New Zealand
- Indo Tambangraya Megah - Indonesia
- Anglo American - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Bangladesh Power Developement Board
- Bhushan Steel Limited - India
- Wilmar Investment Holdings
- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- Central Electricity Authority - India
- Indogreen Group - Indonesia
- Oldendorff Carriers - Singapore
- Semirara Mining and Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- Siam City Cement - Thailand
- Videocon Industries ltd - India
- Manunggal Multi Energi - Indonesia
- ASAPP Information Group - India
- SMG Consultants - Indonesia
- Essar Steel Hazira Ltd - India
- London Commodity Brokers - England
- San Jose City I Power Corp, Philippines
- Simpson Spence & Young - Indonesia
- New Zealand Coal & Carbon
- International Coal Ventures Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Uttam Galva Steels Limited - India
- South Luzon Thermal Energy Corporation
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- Chettinad Cement Corporation Ltd - India
- Marubeni Corporation - India
- SN Aboitiz Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petron Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Ceylon Electricity Board - Sri Lanka
- CNBM International Corporation - China
- Edison Trading Spa - Italy
- Antam Resourcindo - Indonesia
- Independent Power Producers Association of India
- Jorong Barutama Greston.PT - Indonesia
- MS Steel International - UAE
- Mjunction Services Limited - India
- Formosa Plastics Group - Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- GVK Power & Infra Limited - India
- Attock Cement Pakistan Limited
- Salva Resources Pvt Ltd - India
- Electricity Generating Authority of Thailand
- GN Power Mariveles Coal Plant, Philippines
- Star Paper Mills Limited - India
- Mercator Lines Limited - India
- Chamber of Mines of South Africa
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