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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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Saturday, 27 September 14
MORE COAL MINERS AGREE TO AMEND CONTRACTS - THE JAKARTA POST
The Energy and Mineral Resources Ministry is in a rush to beat a deadline for the conclusion of numerous memorandums of understanding (MoUs) with t ...
Friday, 26 September 14
INDIA SUPREME COURT RULING TO HIT STEEL, UTILITY EARNINGS, SAYS FITCH
COALspot.com: The 24 September Supreme Court of India (SCI) decision to cancel almost every coal block allocation since 1993 will have a negative f ...
Friday, 26 September 14
U.S WEEKLY COAL PRODUCTION FELL 1.8% WEEK OVER WEEK, SAYS EIA
COALspot.com – United States the world's one of largest coal producers, produced approximately 18.80 million short tons (mmst) of c ...
Friday, 26 September 14
ORACLE SIGNS EPC FRAMEWORK AGREEMENT WITH SEPCO FOR COAL MINE AND POWER PLANT IN PAKISTAN
COALspot.com: Oracle Coalfields PLC, the UK developer of a lignite coal mine and power plant in the south-eastern Sindh Province, Pakistan, has ann ...
Friday, 26 September 14
NEWCASTLMAXES ARE THE MOST SOUGHT AFTER VESSELS BY SHIP OWNERS TODAY SAYS VESSELS VALUE
KNOWLEDGE TO ELEVATE
Determining a ship’s fair value can be a very tricky business, especially when you’re the one paying. As such ...
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- Bukit Makmur.PT - Indonesia
- Electricity Authority, New Zealand
- Global Green Power PLC Corporation, Philippines
- Renaissance Capital - South Africa
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Tamil Nadu electricity Board
- Orica Mining Services - Indonesia
- The Treasury - Australian Government
- Maheswari Brothers Coal Limited - India
- Larsen & Toubro Limited - India
- Intertek Mineral Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Indika Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- CNBM International Corporation - China
- Sical Logistics Limited - India
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- SMG Consultants - Indonesia
- Heidelberg Cement - Germany
- Mercuria Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Parliament of New Zealand
- Borneo Indobara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Kumho Petrochemical, South Korea
- Indonesian Coal Mining Association
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- Directorate General of MIneral and Coal - Indonesia
- Standard Chartered Bank - UAE
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- Grasim Industreis Ltd - India
- Semirara Mining Corp, Philippines
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- Deloitte Consulting - India
- Ministry of Transport, Egypt
- Manunggal Multi Energi - Indonesia
- Posco Energy - South Korea
- Pendopo Energi Batubara - Indonesia
- Metalloyd Limited - United Kingdom
- Jaiprakash Power Ventures ltd
- Bhatia International Limited - India
- Gujarat Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- White Energy Company Limited
- Kobexindo Tractors - Indoneisa
- Siam City Cement - Thailand
- Indogreen Group - Indonesia
- Bhoruka Overseas - Indonesia
- Baramulti Group, Indonesia
- GAC Shipping (India) Pvt Ltd
- Samtan Co., Ltd - South Korea
- Straits Asia Resources Limited - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Economic Council, Georgia
- Formosa Plastics Group - Taiwan
- Bharathi Cement Corporation - India
- IEA Clean Coal Centre - UK
- ICICI Bank Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- India Bulls Power Limited - India
- Madhucon Powers Ltd - India
- LBH Netherlands Bv - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- Lanco Infratech Ltd - India
- Siam City Cement PLC, Thailand
- Minerals Council of Australia
- Vizag Seaport Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Mjunction Services Limited - India
- Star Paper Mills Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Medco Energi Mining Internasional
- Ministry of Finance - Indonesia
- Latin American Coal - Colombia
- Kohat Cement Company Ltd. - Pakistan
- International Coal Ventures Pvt Ltd - India
- Eastern Coal Council - USA
- Sakthi Sugars Limited - India
- Barasentosa Lestari - Indonesia
- Mintek Dendrill Indonesia
- Savvy Resources Ltd - HongKong
- AsiaOL BioFuels Corp., Philippines
- San Jose City I Power Corp, Philippines
- Electricity Generating Authority of Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Aditya Birla Group - India
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
- Anglo American - United Kingdom
- Chamber of Mines of South Africa
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Sojitz Corporation - Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Wilmar Investment Holdings
- Indian Energy Exchange, India
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- South Luzon Thermal Energy Corporation
- McConnell Dowell - Australia
- Uttam Galva Steels Limited - India
- Essar Steel Hazira Ltd - India
- Interocean Group of Companies - India
- Port Waratah Coal Services - Australia
- Makarim & Taira - Indonesia
- Karaikal Port Pvt Ltd - India
- Energy Development Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Bhushan Steel Limited - India
- Eastern Energy - Thailand
- Africa Commodities Group - South Africa
- SN Aboitiz Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Jindal Steel & Power Ltd - India
- Global Coal Blending Company Limited - Australia
- Parry Sugars Refinery, India
- Globalindo Alam Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- Ministry of Mines - Canada
- Mercator Lines Limited - India
- Central Java Power - Indonesia
- Thiess Contractors Indonesia
- Goldman Sachs - Singapore
- Trasteel International SA, Italy
- Simpson Spence & Young - Indonesia
- Meenaskhi Energy Private Limited - India
- Ambuja Cements Ltd - India
- PTC India Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- The State Trading Corporation of India Ltd
- Romanian Commodities Exchange
- Miang Besar Coal Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Power Finance Corporation Ltd., India
- Edison Trading Spa - Italy
- Singapore Mercantile Exchange
- PowerSource Philippines DevCo
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Petron Corporation, Philippines
- London Commodity Brokers - England
- Bayan Resources Tbk. - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ind-Barath Power Infra Limited - India
- Australian Commodity Traders Exchange
- Central Electricity Authority - India
- SMC Global Power, Philippines
- Bangladesh Power Developement Board
- Vijayanagar Sugar Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- Indian Oil Corporation Limited
- Coal and Oil Company - UAE
- Directorate Of Revenue Intelligence - India
- Krishnapatnam Port Company Ltd. - India
- Vedanta Resources Plc - India
- Price Waterhouse Coopers - Russia
- Independent Power Producers Association of India
- VISA Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- European Bulk Services B.V. - Netherlands
- IHS Mccloskey Coal Group - USA
- The University of Queensland
- New Zealand Coal & Carbon
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kapuas Tunggal Persada - Indonesia
- Iligan Light & Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Kartika Selabumi Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thai Mozambique Logistica
- GVK Power & Infra Limited - India
- Oldendorff Carriers - Singapore
- TeaM Sual Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- Semirara Mining and Power Corporation, Philippines
- Commonwealth Bank - Australia
- Kaltim Prima Coal - Indonesia
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