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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, 06 October 14
' COAL-BY-WIRE' FROM SUMATRA TO JAVA - THE JAKARTA POST
Coal from the island of Sumatra accounts for most of Indonesia’s low-grade lignite, a low-quality coal that receives a poor price in internat ...
Monday, 06 October 14
THE IRON ORE SHIPPING BUSINESS IS FACING SOME ROUGH SEAS - EAST ASIA FORUM
The impact of Chinese demand on global iron ore prices is well known. A less acknowledged consequence of China’s emergence is the transformat ...
Sunday, 05 October 14
BALTIC DRY INDEX SLIPS 1.14%; BALTIC PANAMAX INDEX GAINED 9.91% WEEK ON WEEK
COALspot.com: The BDI was down by 1.14 pct and closed at 1037 points this Friday.
The Cape index was down significantly week on week or lost 5 ...
Friday, 03 October 14
U.S. WEEKLY COAL PRODUCTION UP 5.8% TO 19.9 MMST
COALspot.com – United States the world's one of largest coal producers, produced approximately 19.9 million short tons (mmst) of co ...
Thursday, 02 October 14
CAPESIZE - DULL AND WITHOUT MUCH DIRECTION AS IRON ORE AND COAL VOLUMES FAIL TO LIVE UP EXPECTATIONS
Handy
After the recent weeks´ rate increase in the Atlantic we see Panamaxes snapping up handymax and Supra cargoes at much lower levels, p ...
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- Semirara Mining and Power Corporation, Philippines
- Cement Manufacturers Association - India
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
- Semirara Mining Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- Miang Besar Coal Terminal - Indonesia
- Marubeni Corporation - India
- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- Kumho Petrochemical, South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Mercator Lines Limited - India
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Antam Resourcindo - Indonesia
- Kaltim Prima Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Aditya Birla Group - India
- Africa Commodities Group - South Africa
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- Ministry of Transport, Egypt
- Bukit Makmur.PT - Indonesia
- Sojitz Corporation - Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Commonwealth Bank - Australia
- Standard Chartered Bank - UAE
- Jorong Barutama Greston.PT - Indonesia
- South Luzon Thermal Energy Corporation
- Indian Energy Exchange, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sindya Power Generating Company Private Ltd
- Economic Council, Georgia
- Tamil Nadu electricity Board
- GN Power Mariveles Coal Plant, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Anglo American - United Kingdom
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- Latin American Coal - Colombia
- Central Java Power - Indonesia
- Carbofer General Trading SA - India
- The State Trading Corporation of India Ltd
- Kartika Selabumi Mining - Indonesia
- Sakthi Sugars Limited - India
- Energy Link Ltd, New Zealand
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- Ceylon Electricity Board - Sri Lanka
- Salva Resources Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- Formosa Plastics Group - Taiwan
- GVK Power & Infra Limited - India
- Agrawal Coal Company - India
- Krishnapatnam Port Company Ltd. - India
- Singapore Mercantile Exchange
- Baramulti Group, Indonesia
- Meralco Power Generation, Philippines
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- Romanian Commodities Exchange
- VISA Power Limited - India
- Star Paper Mills Limited - India
- Merrill Lynch Commodities Europe
- Ministry of Mines - Canada
- ICICI Bank Limited - India
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Jaiprakash Power Ventures ltd
- Madhucon Powers Ltd - India
- CIMB Investment Bank - Malaysia
- Metalloyd Limited - United Kingdom
- Bukit Baiduri Energy - Indonesia
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Petron Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Mjunction Services Limited - India
- Leighton Contractors Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- GMR Energy Limited - India
- Simpson Spence & Young - Indonesia
- Tata Chemicals Ltd - India
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Central Electricity Authority - India
- Altura Mining Limited, Indonesia
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- PNOC Exploration Corporation - Philippines
- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- Australian Coal Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- Barasentosa Lestari - Indonesia
- Planning Commission, India
- Oldendorff Carriers - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Port Waratah Coal Services - Australia
- MS Steel International - UAE
- Meenaskhi Energy Private Limited - India
- Attock Cement Pakistan Limited
- Asmin Koalindo Tuhup - Indonesia
- Xindia Steels Limited - India
- Bangladesh Power Developement Board
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- Wilmar Investment Holdings
- Rashtriya Ispat Nigam Limited - India
- Therma Luzon, Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Edison Trading Spa - Italy
- Interocean Group of Companies - India
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- Global Business Power Corporation, Philippines
- Bhushan Steel Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Essar Steel Hazira Ltd - India
- Chamber of Mines of South Africa
- Sinarmas Energy and Mining - Indonesia
- Malabar Cements Ltd - India
- Heidelberg Cement - Germany
- ASAPP Information Group - India
- Indo Tambangraya Megah - Indonesia
- Bhoruka Overseas - Indonesia
- Bharathi Cement Corporation - India
- International Coal Ventures Pvt Ltd - India
- Thai Mozambique Logistica
- Ind-Barath Power Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- India Bulls Power Limited - India
- Savvy Resources Ltd - HongKong
- Bayan Resources Tbk. - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kideco Jaya Agung - Indonesia
- Thiess Contractors Indonesia
- White Energy Company Limited
- Independent Power Producers Association of India
- Siam City Cement - Thailand
- European Bulk Services B.V. - Netherlands
- Directorate Of Revenue Intelligence - India
- IEA Clean Coal Centre - UK
- Vijayanagar Sugar Pvt Ltd - India
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- London Commodity Brokers - England
- Eastern Coal Council - USA
- SMC Global Power, Philippines
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Goldman Sachs - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bulk Trading Sa - Switzerland
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- PowerSource Philippines DevCo
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vedanta Resources Plc - India
- Dalmia Cement Bharat India
- AsiaOL BioFuels Corp., Philippines
- Minerals Council of Australia
- Coal and Oil Company - UAE
- Bhatia International Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IHS Mccloskey Coal Group - USA
- Ambuja Cements Ltd - India
- Coalindo Energy - Indonesia
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