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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, 29 September 14
INDONESIAN COAL SWAPS LOST WEEK ON WEEK AND MONTH OVER MONTH
COALspot.com: Indonesian coal swaps for average November 2014 flat day on day and lost US$ 0.85 (-1.66%) per mt week on week. The swap also lost US ...
Monday, 29 September 14
CFR SOUTH CHINA COAL LOST AROUND 5% MONTH ON MONTH
COALspot.com: API 8 CFR South China Coal swap for delivery in November 2014 decreased US$ 3.55 (-5.10%) month over month and flat week over week.
...
Sunday, 28 September 14
FREIGHT RATES FROM INDONESIA TO INDIA IS EXPECTED TO BE FIRM NEXT WEEK - CAPT. REDDY
COALspot.com: The freight market shows a bit weak trend this week.
The BDI was lost 2.42% week on week and closed at 1049 points on 26 Se ...
Sunday, 28 September 14
BERAU AGREES DEAL WITH GOVT, MINING AREA REDUCED - THE JAKARTA POST
Coal miner PT Berau Coal, a subsidiary of Jakarta-listed PT Berau Coal Energy (BRAU), has signed a memorandum of understanding (MoU) with the gover ...
Saturday, 27 September 14
OIL MARKET CONTANGO: SPECULATION ON FUTURE PRICES CAN BE A RISKY MOVE, EVEN FOR TANKER OWNERS HELLENIC SHIPPING NEWS
Despite the fact that tanker owners can easily use their vessels as floating storage units for oil, in a bid to exploit the current oil market dyna ...
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- Makarim & Taira - Indonesia
- Samtan Co., Ltd - South Korea
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- Heidelberg Cement - Germany
- Indian Energy Exchange, India
- Manunggal Multi Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Ministry of Mines - Canada
- Binh Thuan Hamico - Vietnam
- Ambuja Cements Ltd - India
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Indika Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- New Zealand Coal & Carbon
- AsiaOL BioFuels Corp., Philippines
- PTC India Limited - India
- ASAPP Information Group - India
- Sarangani Energy Corporation, Philippines
- ICICI Bank Limited - India
- GVK Power & Infra Limited - India
- The Treasury - Australian Government
- Aboitiz Power Corporation - Philippines
- Australian Coal Association
- Interocean Group of Companies - India
- White Energy Company Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- Kaltim Prima Coal - Indonesia
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Electricity Authority, New Zealand
- Singapore Mercantile Exchange
- Larsen & Toubro Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Coalindo Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement PLC, Thailand
- Indogreen Group - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Australia Pty. Ltd.
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- Bangladesh Power Developement Board
- Renaissance Capital - South Africa
- Kartika Selabumi Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Sindya Power Generating Company Private Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Commodity Traders Exchange
- Altura Mining Limited, Indonesia
- The University of Queensland
- Georgia Ports Authority, United States
- Globalindo Alam Lestari - Indonesia
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Sical Logistics Limited - India
- Toyota Tsusho Corporation, Japan
- Rashtriya Ispat Nigam Limited - India
- Port Waratah Coal Services - Australia
- Chettinad Cement Corporation Ltd - India
- IEA Clean Coal Centre - UK
- Anglo American - United Kingdom
- VISA Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Electricity Generating Authority of Thailand
- Ministry of Finance - Indonesia
- Madhucon Powers Ltd - India
- Romanian Commodities Exchange
- Thiess Contractors Indonesia
- Pendopo Energi Batubara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- SMG Consultants - Indonesia
- Wilmar Investment Holdings
- SMC Global Power, Philippines
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- Meralco Power Generation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Grasim Industreis Ltd - India
- India Bulls Power Limited - India
- Uttam Galva Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Aditya Birla Group - India
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- Gujarat Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Cement Manufacturers Association - India
- Iligan Light & Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- Kideco Jaya Agung - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Wood Mackenzie - Singapore
- Salva Resources Pvt Ltd - India
- Coal and Oil Company - UAE
- Karaikal Port Pvt Ltd - India
- MS Steel International - UAE
- Star Paper Mills Limited - India
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- San Jose City I Power Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- Vedanta Resources Plc - India
- Mercuria Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- Mercator Lines Limited - India
- Commonwealth Bank - Australia
- Videocon Industries ltd - India
- Baramulti Group, Indonesia
- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Timah Investasi Mineral - Indoneisa
- London Commodity Brokers - England
- CNBM International Corporation - China
- Bhatia International Limited - India
- Global Green Power PLC Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- SN Aboitiz Power Inc, Philippines
- Africa Commodities Group - South Africa
- The State Trading Corporation of India Ltd
- Power Finance Corporation Ltd., India
- Dalmia Cement Bharat India
- Ministry of Transport, Egypt
- Vizag Seaport Private Limited - India
- Indian Oil Corporation Limited
- GMR Energy Limited - India
- Global Business Power Corporation, Philippines
- Independent Power Producers Association of India
- Economic Council, Georgia
- Eastern Coal Council - USA
- Savvy Resources Ltd - HongKong
- Krishnapatnam Port Company Ltd. - India
- Alfred C Toepfer International GmbH - Germany
- Goldman Sachs - Singapore
- Edison Trading Spa - Italy
- Directorate Of Revenue Intelligence - India
- Sree Jayajothi Cements Limited - India
- Straits Asia Resources Limited - Singapore
- Kapuas Tunggal Persada - Indonesia
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- Tata Chemicals Ltd - India
- Meenaskhi Energy Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
- PowerSource Philippines DevCo
- Ind-Barath Power Infra Limited - India
- Simpson Spence & Young - Indonesia
- Indonesian Coal Mining Association
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- CIMB Investment Bank - Malaysia
- Bhushan Steel Limited - India
- Ceylon Electricity Board - Sri Lanka
- Pipit Mutiara Jaya. PT, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Electricity Authority - India
- Carbofer General Trading SA - India
- Riau Bara Harum - Indonesia
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Rio Tinto Coal - Australia
- Bulk Trading Sa - Switzerland
- GN Power Mariveles Coal Plant, Philippines
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Marubeni Corporation - India
- Coastal Gujarat Power Limited - India
- Xindia Steels Limited - India
- South Luzon Thermal Energy Corporation
- Bharathi Cement Corporation - India
- Trasteel International SA, Italy
- Attock Cement Pakistan Limited
- Kepco SPC Power Corporation, Philippines
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Chamber of Mines of South Africa
- Jaiprakash Power Ventures ltd
- Oldendorff Carriers - Singapore
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