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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, 01 October 14
ASIAN THERMAL COAL PRICES TO REMAIN WEAK ON OVERSUPPLY - FITCH
COALspot.com: The thermal coal market in Asia will remain oversupplied in the next 12 months, in spite of on-going rationalisation of production, a ...
Wednesday, 01 October 14
PANAMAXES: DEFENSIVE, STRUGGLING TO KEEP ANY FURTHER DECREASES - INTERMODAL
COALspot.com: The Dry Bulk market seemed unable to shake off the trend of the week prior and the BDI remained on a downward slope for the bigger pa ...
Wednesday, 01 October 14
FITCH: GLOBAL ECONOMY FACES MULTI-SPEED RECOVERY, MULTIPLE RISKS
Fitch Ratings says in its latest Global Economic Outlook (GEO) that global growth will pick up in 2015 and 2016, but risks are weighted to the down ...
Tuesday, 30 September 14
COALVIEW TO PARTICIPATE AT MET COKE WORLD SUMMIT 2014 IN CHICAGO
COALspot.com: Coalview Ltd., LLC(“Coalview”) America's leading fully integrated coal technology and fine coal recovery company prov ...
Monday, 29 September 14
INDONESIAN COAL EXPORT VOLUME FALL IN AUGUST
COALspot.com: Indonesia, one of the world's largest coal producers and the global leading multi grade coal exporter shipped around $1.50 ...
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- Petron Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- European Bulk Services B.V. - Netherlands
- Uttam Galva Steels Limited - India
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- Miang Besar Coal Terminal - Indonesia
- Parry Sugars Refinery, India
- Ministry of Transport, Egypt
- Indian Energy Exchange, India
- Electricity Authority, New Zealand
- Independent Power Producers Association of India
- Cigading International Bulk Terminal - Indonesia
- Edison Trading Spa - Italy
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Goldman Sachs - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Commonwealth Bank - Australia
- Meenaskhi Energy Private Limited - India
- Intertek Mineral Services - Indonesia
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Singapore Mercantile Exchange
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
- Tamil Nadu electricity Board
- Toyota Tsusho Corporation, Japan
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Energy Link Ltd, New Zealand
- Riau Bara Harum - Indonesia
- Carbofer General Trading SA - India
- ASAPP Information Group - India
- SN Aboitiz Power Inc, Philippines
- Renaissance Capital - South Africa
- Asmin Koalindo Tuhup - Indonesia
- South Luzon Thermal Energy Corporation
- Bulk Trading Sa - Switzerland
- Indonesian Coal Mining Association
- Meralco Power Generation, Philippines
- Electricity Generating Authority of Thailand
- Rashtriya Ispat Nigam Limited - India
- Indo Tambangraya Megah - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- Mintek Dendrill Indonesia
- Gujarat Mineral Development Corp Ltd - India
- IEA Clean Coal Centre - UK
- San Jose City I Power Corp, Philippines
- Sakthi Sugars Limited - India
- Parliament of New Zealand
- Rio Tinto Coal - Australia
- Alfred C Toepfer International GmbH - Germany
- Samtan Co., Ltd - South Korea
- Bukit Baiduri Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Central Electricity Authority - India
- Oldendorff Carriers - Singapore
- Madhucon Powers Ltd - India
- White Energy Company Limited
- Essar Steel Hazira Ltd - India
- Manunggal Multi Energi - Indonesia
- Mjunction Services Limited - India
- Star Paper Mills Limited - India
- Medco Energi Mining Internasional
- Dalmia Cement Bharat India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wilmar Investment Holdings
- Bhoruka Overseas - Indonesia
- Grasim Industreis Ltd - India
- Kepco SPC Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- Xindia Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Sojitz Corporation - Japan
- CNBM International Corporation - China
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- Straits Asia Resources Limited - Singapore
- Lanco Infratech Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- Deloitte Consulting - India
- Australian Coal Association
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- Aditya Birla Group - India
- Kobexindo Tractors - Indoneisa
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Eastern Energy - Thailand
- International Coal Ventures Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Mines - Canada
- IHS Mccloskey Coal Group - USA
- Semirara Mining Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- VISA Power Limited - India
- The Treasury - Australian Government
- Sical Logistics Limited - India
- Maheswari Brothers Coal Limited - India
- Cement Manufacturers Association - India
- Salva Resources Pvt Ltd - India
- Romanian Commodities Exchange
- Gujarat Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Barasentosa Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Mercuria Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- McConnell Dowell - Australia
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- PetroVietnam Power Coal Import and Supply Company
- Kohat Cement Company Ltd. - Pakistan
- Petrochimia International Co. Ltd.- Taiwan
- TeaM Sual Corporation - Philippines
- Central Java Power - Indonesia
- Pendopo Energi Batubara - Indonesia
- Anglo American - United Kingdom
- Posco Energy - South Korea
- Global Green Power PLC Corporation, Philippines
- Economic Council, Georgia
- MS Steel International - UAE
- Malabar Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Jorong Barutama Greston.PT - Indonesia
- Altura Mining Limited, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Larsen & Toubro Limited - India
- The University of Queensland
- Vedanta Resources Plc - India
- Africa Commodities Group - South Africa
- Kalimantan Lumbung Energi - Indonesia
- PowerSource Philippines DevCo
- GN Power Mariveles Coal Plant, Philippines
- Coal and Oil Company - UAE
- Australian Commodity Traders Exchange
- Standard Chartered Bank - UAE
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- Antam Resourcindo - Indonesia
- Power Finance Corporation Ltd., India
- SMG Consultants - Indonesia
- Indian Oil Corporation Limited
- Price Waterhouse Coopers - Russia
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Ministry of Finance - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- Directorate Of Revenue Intelligence - India
- Energy Development Corp, Philippines
- Heidelberg Cement - Germany
- Indogreen Group - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Tata Chemicals Ltd - India
- Interocean Group of Companies - India
- Orica Australia Pty. Ltd.
- Globalindo Alam Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Makarim & Taira - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Attock Cement Pakistan Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Planning Commission, India
- Bhushan Steel Limited - India
- Siam City Cement PLC, Thailand
- Mercator Lines Limited - India
- Bhatia International Limited - India
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- Minerals Council of Australia
- Metalloyd Limited - United Kingdom
- Sarangani Energy Corporation, Philippines
- Bangladesh Power Developement Board
- Global Business Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Marubeni Corporation - India
- The State Trading Corporation of India Ltd
- GMR Energy Limited - India
- Kaltim Prima Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Ambuja Cements Ltd - India
- Thai Mozambique Logistica
- Port Waratah Coal Services - Australia
- Binh Thuan Hamico - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Agrawal Coal Company - India
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- Georgia Ports Authority, United States
- Chamber of Mines of South Africa
- Baramulti Group, Indonesia
- Vizag Seaport Private Limited - India
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
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