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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, 22 September 14
CFR SOUTH CHINA COAL SWAPS LOST ON DAY, WEEK AND MONTH
COALspot.com: API 8 CFR South China Coal swap for delivery in October 2014 decreased US$ 3.10 (-4.50%) month over month and $ 0.95 PT MT week over ...
Monday, 22 September 14
INDONESIAN COAL SWAPS LOST WEEK ON WEEK AND MONTH OVER MONTH
COALspot.com: Indonesian coal swaps for average October 2014 increased US$ 0.35 (+0.69%) day on day and lost US$ 0.30 (-0.58%) per mt week on week. ...
Sunday, 21 September 14
CAPE INDEX LOST 17% W-O-W ; BALTIC DRY PLUNGES 106 POINTS
COALspot.com: This week the freight market softened a bit compared to last week.
BDI fell 8.97% week on week and closed BDI at 1075 points on ...
Friday, 19 September 14
U.S. WEEKLY COAL PRODUCTION RELATIVELY FLAT AT +0.1% - EIA
COALspot.com – United States the world's second largest coal producer, produced approximately 19.20 million short tons (mmst) of coal in ...
Friday, 19 September 14
PRICES FOR DRY BULK CARRIERS HAVEN'T CORRECTED ENOUGH, DESPITE LOWER THAN EXPECTED FREIGHT RATES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A lot has been said and written about the looming dry bulk market recovery over the past few months. However, even if this hasn’t been materi ...
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- Eastern Energy - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Altura Mining Limited, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Petron Corporation, Philippines
- Indian Oil Corporation Limited
- Intertek Mineral Services - Indonesia
- CNBM International Corporation - China
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- ICICI Bank Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Indogreen Group - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- AsiaOL BioFuels Corp., Philippines
- New Zealand Coal & Carbon
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Binh Thuan Hamico - Vietnam
- Riau Bara Harum - Indonesia
- Xindia Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- Toyota Tsusho Corporation, Japan
- Energy Link Ltd, New Zealand
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- The University of Queensland
- Maharashtra Electricity Regulatory Commission - India
- Australian Coal Association
- Ministry of Mines - Canada
- Siam City Cement PLC, Thailand
- Gujarat Mineral Development Corp Ltd - India
- Sojitz Corporation - Japan
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- IEA Clean Coal Centre - UK
- London Commodity Brokers - England
- Mercator Lines Limited - India
- Tamil Nadu electricity Board
- Coal and Oil Company - UAE
- Ceylon Electricity Board - Sri Lanka
- Bhushan Steel Limited - India
- PTC India Limited - India
- Cement Manufacturers Association - India
- Kalimantan Lumbung Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Ministry of Transport, Egypt
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- Bukit Makmur.PT - Indonesia
- Uttam Galva Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Singapore Mercantile Exchange
- Borneo Indobara - Indonesia
- Kideco Jaya Agung - Indonesia
- Port Waratah Coal Services - Australia
- Antam Resourcindo - Indonesia
- European Bulk Services B.V. - Netherlands
- SMC Global Power, Philippines
- Essar Steel Hazira Ltd - India
- Mintek Dendrill Indonesia
- Indo Tambangraya Megah - Indonesia
- Marubeni Corporation - India
- PowerSource Philippines DevCo
- Global Business Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Australian Commodity Traders Exchange
- Parliament of New Zealand
- Bangladesh Power Developement Board
- Minerals Council of Australia
- South Luzon Thermal Energy Corporation
- Bhoruka Overseas - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- Kumho Petrochemical, South Korea
- Carbofer General Trading SA - India
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- GAC Shipping (India) Pvt Ltd
- Sical Logistics Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Coalindo Energy - Indonesia
- Romanian Commodities Exchange
- Therma Luzon, Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Makarim & Taira - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- MS Steel International - UAE
- SN Aboitiz Power Inc, Philippines
- Madhucon Powers Ltd - India
- Maheswari Brothers Coal Limited - India
- Kapuas Tunggal Persada - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Videocon Industries ltd - India
- Sarangani Energy Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Oldendorff Carriers - Singapore
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- GVK Power & Infra Limited - India
- Samtan Co., Ltd - South Korea
- India Bulls Power Limited - India
- Bhatia International Limited - India
- Eastern Coal Council - USA
- Coastal Gujarat Power Limited - India
- Straits Asia Resources Limited - Singapore
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Anglo American - United Kingdom
- ASAPP Information Group - India
- Indonesian Coal Mining Association
- Bahari Cakrawala Sebuku - Indonesia
- Rio Tinto Coal - Australia
- Miang Besar Coal Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Bulk Trading Sa - Switzerland
- Economic Council, Georgia
- Price Waterhouse Coopers - Russia
- Georgia Ports Authority, United States
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Gujarat Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Orica Mining Services - Indonesia
- Grasim Industreis Ltd - India
- Commonwealth Bank - Australia
- Baramulti Group, Indonesia
- Africa Commodities Group - South Africa
- McConnell Dowell - Australia
- Dalmia Cement Bharat India
- CIMB Investment Bank - Malaysia
- Attock Cement Pakistan Limited
- Standard Chartered Bank - UAE
- White Energy Company Limited
- Interocean Group of Companies - India
- Malabar Cements Ltd - India
- Semirara Mining Corp, Philippines
- SMG Consultants - Indonesia
- Thiess Contractors Indonesia
- Parry Sugars Refinery, India
- Deloitte Consulting - India
- Jindal Steel & Power Ltd - India
- Karaikal Port Pvt Ltd - India
- Agrawal Coal Company - India
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ambuja Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- OPG Power Generation Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meralco Power Generation, Philippines
- San Jose City I Power Corp, Philippines
- VISA Power Limited - India
- Banpu Public Company Limited - Thailand
- Electricity Authority, New Zealand
- Savvy Resources Ltd - HongKong
- Merrill Lynch Commodities Europe
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- Medco Energi Mining Internasional
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- Trasteel International SA, Italy
- Kepco SPC Power Corporation, Philippines
- Vedanta Resources Plc - India
- Independent Power Producers Association of India
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- IHS Mccloskey Coal Group - USA
- Gujarat Sidhee Cement - India
- Electricity Generating Authority of Thailand
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- Larsen & Toubro Limited - India
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- Star Paper Mills Limited - India
- Pendopo Energi Batubara - Indonesia
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Latin American Coal - Colombia
- Wood Mackenzie - Singapore
- Holcim Trading Pte Ltd - Singapore
- TeaM Sual Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Lanco Infratech Ltd - India
- Global Green Power PLC Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- Mjunction Services Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chamber of Mines of South Africa
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