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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, 08 October 14
IS THERE ANY BRIGHT SIDE ON THE DRY BULK SEGMENT? - YANNIS OLZIERSKY
In the movie “Life Of Brian”, a character on a nearby cross was singing the famous “Always look on the bright side of life” ...
Tuesday, 07 October 14
TAIPOWER TO IMPORT 525K MT OF LOW ASH AND EXTRA LOW SULFUR SUB-BITUMINOUS COAL
COALspot.com: Taiwan Power Company intends to procure 525,000 metric tons of low ash and extra low sulfur sub-bituminous coal for Taipower thermal ...
Tuesday, 07 October 14
SUB-BIT FOB INDONESIA COAL SWAP SHOWS A FLAT TO WEAK TREND THIS PAST WEEK
COALspot.com: Indonesian coal swaps November 2014 delivery flat week on week and gained US$ 0.10 (-0.20%) per mt day on day. The swap also lost US$ ...
Tuesday, 07 October 14
THE RIO TINTO CONFIRMS THAT NO DISCUSSIONS ARE TAKING PLACE WITH GLENCORE
COALspot.com: The board of Rio Tinto notes the recent press speculation regarding a possible combination of Rio Tinto and Glencore.The Rio Tinto bo ...
Tuesday, 07 October 14
API 8 CFR SOUTH CHINA COAL SWAP HEADED SOUTH
COALspot.com: API 8 CFR South China Coal swap for delivery in November 2014 decreased US$ 1.10 (-1.64%) month over month and US$ 0.25 (-0.38%) ...
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- Cigading International Bulk Terminal - Indonesia
- SMG Consultants - Indonesia
- Renaissance Capital - South Africa
- Banpu Public Company Limited - Thailand
- Coalindo Energy - Indonesia
- Romanian Commodities Exchange
- India Bulls Power Limited - India
- Simpson Spence & Young - Indonesia
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Central Java Power - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Karaikal Port Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Uttam Galva Steels Limited - India
- Larsen & Toubro Limited - India
- Riau Bara Harum - Indonesia
- The Treasury - Australian Government
- Bayan Resources Tbk. - Indonesia
- Ministry of Transport, Egypt
- Indika Energy - Indonesia
- Eastern Coal Council - USA
- Leighton Contractors Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Ceylon Electricity Board - Sri Lanka
- Metalloyd Limited - United Kingdom
- ASAPP Information Group - India
- Kepco SPC Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- Sakthi Sugars Limited - India
- Edison Trading Spa - Italy
- IEA Clean Coal Centre - UK
- Bukit Makmur.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Marubeni Corporation - India
- Parry Sugars Refinery, India
- Directorate Of Revenue Intelligence - India
- European Bulk Services B.V. - Netherlands
- Bhatia International Limited - India
- Manunggal Multi Energi - Indonesia
- Mjunction Services Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Star Paper Mills Limited - India
- Coal and Oil Company - UAE
- Minerals Council of Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- Central Electricity Authority - India
- PowerSource Philippines DevCo
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Kobexindo Tractors - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Jindal Steel & Power Ltd - India
- ICICI Bank Limited - India
- Sree Jayajothi Cements Limited - India
- Vizag Seaport Private Limited - India
- The State Trading Corporation of India Ltd
- Madhucon Powers Ltd - India
- Heidelberg Cement - Germany
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- OPG Power Generation Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- Medco Energi Mining Internasional
- Merrill Lynch Commodities Europe
- Pipit Mutiara Jaya. PT, Indonesia
- Borneo Indobara - Indonesia
- Attock Cement Pakistan Limited
- Ind-Barath Power Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Planning Commission, India
- GN Power Mariveles Coal Plant, Philippines
- Anglo American - United Kingdom
- SMC Global Power, Philippines
- Rio Tinto Coal - Australia
- Power Finance Corporation Ltd., India
- The University of Queensland
- Samtan Co., Ltd - South Korea
- Sical Logistics Limited - India
- Therma Luzon, Inc, Philippines
- Parliament of New Zealand
- Tata Chemicals Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhoruka Overseas - Indonesia
- Meralco Power Generation, Philippines
- Xindia Steels Limited - India
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- Kaltim Prima Coal - Indonesia
- Agrawal Coal Company - India
- Australian Commodity Traders Exchange
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Aboitiz Power Corporation - Philippines
- Port Waratah Coal Services - Australia
- Malabar Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Thai Mozambique Logistica
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- PTC India Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- MS Steel International - UAE
- London Commodity Brokers - England
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mintek Dendrill Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Orica Mining Services - Indonesia
- Standard Chartered Bank - UAE
- GVK Power & Infra Limited - India
- PNOC Exploration Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- Timah Investasi Mineral - Indoneisa
- Videocon Industries ltd - India
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Barasentosa Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Baramulti Group, Indonesia
- Oldendorff Carriers - Singapore
- Global Business Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- SN Aboitiz Power Inc, Philippines
- Deloitte Consulting - India
- Carbofer General Trading SA - India
- Tamil Nadu electricity Board
- Independent Power Producers Association of India
- Grasim Industreis Ltd - India
- Electricity Authority, New Zealand
- Thiess Contractors Indonesia
- Mercator Lines Limited - India
- Eastern Energy - Thailand
- CNBM International Corporation - China
- Kapuas Tunggal Persada - Indonesia
- Indonesian Coal Mining Association
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- Indian Energy Exchange, India
- Electricity Generating Authority of Thailand
- Siam City Cement PLC, Thailand
- McConnell Dowell - Australia
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Kideco Jaya Agung - Indonesia
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- Ministry of Finance - Indonesia
- Vedanta Resources Plc - India
- Sinarmas Energy and Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Georgia Ports Authority, United States
- Bhushan Steel Limited - India
- Coastal Gujarat Power Limited - India
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- Ministry of Mines - Canada
- Essar Steel Hazira Ltd - India
- VISA Power Limited - India
- Price Waterhouse Coopers - Russia
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- Chettinad Cement Corporation Ltd - India
- Bukit Baiduri Energy - Indonesia
- Commonwealth Bank - Australia
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- White Energy Company Limited
- Posco Energy - South Korea
- Cement Manufacturers Association - India
- Maheswari Brothers Coal Limited - India
- Toyota Tsusho Corporation, Japan
- Gujarat Sidhee Cement - India
- TeaM Sual Corporation - Philippines
- Singapore Mercantile Exchange
- Indo Tambangraya Megah - Indonesia
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
- Sojitz Corporation - Japan
- Kohat Cement Company Ltd. - Pakistan
- Chamber of Mines of South Africa
- Interocean Group of Companies - India
- Jorong Barutama Greston.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Ambuja Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- Siam City Cement - Thailand
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