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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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Thursday, 25 September 14
LACK OF COAL BUSINESS PUSHING DOWN PANAMAX EARNINGS IN PACIFIC
Handy
In the Atlantic we see rates steady climbing upwards. More coal cargoes out of USG and USEC are helping the TA market which is up some USD ...
Wednesday, 24 September 14
ADARO AGREED TO REDUCE ITS CONCESSION AREA TO 31,379.8 HECTARES
COALspot.com: PT Adaro Energy Tbk (Adaro Energy) today announced that, PT Adaro Indonesia (AI), its wholly owned subsidiary, entered into a M ...
Wednesday, 24 September 14
CAPESIZE: ACTIVITY IN BOTH BASINS WAS UNIMPRESSIVE
COALspot.com: The end of the week prior seems to have marked the tone for the days that followed, with the Dry Bulk market giving up a significant ...
Tuesday, 23 September 14
MEDCO TO INCREASE ITS COAL PRODUCTION NEXT YEAR
COALspot.com: PT Medco Energi Internasional is looking to increase its coal production next year, supported by the launch of operations at its Duta ...
Monday, 22 September 14
COAL SECTOR CHAOS - GENESIS TO REVELATION - DIPESH DIPU
COALspot.com: “Let there be light”, intends the government of India but the fuel side of the story paints a blackout. The recent Suprem ...
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- Formosa Plastics Group - Taiwan
- Sarangani Energy Corporation, Philippines
- SMC Global Power, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Sindya Power Generating Company Private Ltd
- SMG Consultants - Indonesia
- Bangladesh Power Developement Board
- Chettinad Cement Corporation Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- London Commodity Brokers - England
- IHS Mccloskey Coal Group - USA
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- PTC India Limited - India
- Leighton Contractors Pty Ltd - Australia
- White Energy Company Limited
- Dalmia Cement Bharat India
- Lanco Infratech Ltd - India
- Coalindo Energy - Indonesia
- Cement Manufacturers Association - India
- Port Waratah Coal Services - Australia
- Gujarat Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Rashtriya Ispat Nigam Limited - India
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Chamber of Mines of South Africa
- Kohat Cement Company Ltd. - Pakistan
- Interocean Group of Companies - India
- Goldman Sachs - Singapore
- Bhatia International Limited - India
- Gujarat Sidhee Cement - India
- Standard Chartered Bank - UAE
- Energy Development Corp, Philippines
- Posco Energy - South Korea
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Kaltim Prima Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Petrochimia International Co. Ltd.- Taiwan
- Grasim Industreis Ltd - India
- Commonwealth Bank - Australia
- Aditya Birla Group - India
- Metalloyd Limited - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Sojitz Corporation - Japan
- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- SN Aboitiz Power Inc, Philippines
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- Romanian Commodities Exchange
- Indian Oil Corporation Limited
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Africa Commodities Group - South Africa
- Ministry of Mines - Canada
- Mercuria Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Rio Tinto Coal - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wilmar Investment Holdings
- CNBM International Corporation - China
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- IEA Clean Coal Centre - UK
- PNOC Exploration Corporation - Philippines
- Australian Coal Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Global Coal Blending Company Limited - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Neyveli Lignite Corporation Ltd, - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Uttam Galva Steels Limited - India
- Tamil Nadu electricity Board
- Therma Luzon, Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Savvy Resources Ltd - HongKong
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Ambuja Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Planning Commission, India
- Vizag Seaport Private Limited - India
- Renaissance Capital - South Africa
- Altura Mining Limited, Indonesia
- GMR Energy Limited - India
- Thai Mozambique Logistica
- Price Waterhouse Coopers - Russia
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- MS Steel International - UAE
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Kideco Jaya Agung - Indonesia
- Power Finance Corporation Ltd., India
- Carbofer General Trading SA - India
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- McConnell Dowell - Australia
- Wood Mackenzie - Singapore
- Riau Bara Harum - Indonesia
- Attock Cement Pakistan Limited
- Singapore Mercantile Exchange
- Gujarat Mineral Development Corp Ltd - India
- New Zealand Coal & Carbon
- Oldendorff Carriers - Singapore
- Georgia Ports Authority, United States
- Krishnapatnam Port Company Ltd. - India
- Tata Chemicals Ltd - India
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- Australian Commodity Traders Exchange
- Coal and Oil Company - UAE
- Indogreen Group - Indonesia
- Anglo American - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Electricity Authority, New Zealand
- Larsen & Toubro Limited - India
- Meralco Power Generation, Philippines
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- Baramulti Group, Indonesia
- Electricity Generating Authority of Thailand
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement PLC, Thailand
- The Treasury - Australian Government
- Simpson Spence & Young - Indonesia
- San Jose City I Power Corp, Philippines
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- Marubeni Corporation - India
- ASAPP Information Group - India
- Central Electricity Authority - India
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Bharathi Cement Corporation - India
- Miang Besar Coal Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Madhucon Powers Ltd - India
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- Petron Corporation, Philippines
- Merrill Lynch Commodities Europe
- Coastal Gujarat Power Limited - India
- India Bulls Power Limited - India
- Makarim & Taira - Indonesia
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- LBH Netherlands Bv - Netherlands
- Sree Jayajothi Cements Limited - India
- The University of Queensland
- Timah Investasi Mineral - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Xindia Steels Limited - India
- Ministry of Transport, Egypt
- Edison Trading Spa - Italy
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- Sakthi Sugars Limited - India
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Borneo Indobara - Indonesia
- Central Java Power - Indonesia
- Bukit Makmur.PT - Indonesia
- VISA Power Limited - India
- Malabar Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- Indian Energy Exchange, India
- Bukit Asam (Persero) Tbk - Indonesia
- Videocon Industries ltd - India
- Bhoruka Overseas - Indonesia
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- Maheswari Brothers Coal Limited - India
- Mjunction Services Limited - India
- Minerals Council of Australia
- Jindal Steel & Power Ltd - India
- Iligan Light & Power Inc, Philippines
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