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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, 18 September 14
INDONESIA'S JULY COAL EXPORT VOLUME DROPPED 5.13% M-O-M
COALspot.com: Indonesia, one of the world's largest coal producer and the global leading multi grade coal exporter shipped around $1.65* ...
Thursday, 18 September 14
PANAMAX : US GULF/CHINA FRONTHAUL ARE NOW PAYING TYPICALLY 14.5K + 450K BB - FEARNRESEARCH
Handy
We still see a firming tendency in the Atlantic and it is still ECSA and USG leading on. USG/Cont now up in about USD 17/18k for a Smax whi ...
Thursday, 18 September 14
ELECTRONIC BILLS OF LADING: A GUIDE TO PAPERLESS TRADING WHICH HAS TAKEN THE SHIPPING INDUSTRY BY STORM
Bimco has recently developed and published a charter party clause that specifically addresses the use of electronic bills of lading. Increasing use ...
Wednesday, 17 September 14
PANAMAX: LIMITED INTEREST IN BOTH BASINS; RISING TONNAGE - INTERMODAL
With the week starting off at a fast pace and with the positive momentum from the previous Friday seemingly sticking around for a bit longer, most ...
Wednesday, 17 September 14
SHIPPING MARKET INSIGHT - GEORGE LAZARIDIS
Since the onslaught of 2013 the rising tide of asset prices had been primarily driven by the increasing freight market conditions and the improving ...
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- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- Lanco Infratech Ltd - India
- Central Electricity Authority - India
- Jorong Barutama Greston.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Development Corp, Philippines
- Australian Coal Association
- Kartika Selabumi Mining - Indonesia
- Eastern Energy - Thailand
- Gujarat Sidhee Cement - India
- Independent Power Producers Association of India
- San Jose City I Power Corp, Philippines
- SMG Consultants - Indonesia
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- Minerals Council of Australia
- Krishnapatnam Port Company Ltd. - India
- Kohat Cement Company Ltd. - Pakistan
- PowerSource Philippines DevCo
- Ministry of Finance - Indonesia
- Sree Jayajothi Cements Limited - India
- Rio Tinto Coal - Australia
- Bahari Cakrawala Sebuku - Indonesia
- New Zealand Coal & Carbon
- Marubeni Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- Chamber of Mines of South Africa
- The Treasury - Australian Government
- Global Coal Blending Company Limited - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Meralco Power Generation, Philippines
- Manunggal Multi Energi - Indonesia
- White Energy Company Limited
- Altura Mining Limited, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Authority, New Zealand
- Ministry of Mines - Canada
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- Gujarat Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Goldman Sachs - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thiess Contractors Indonesia
- Planning Commission, India
- Indian Oil Corporation Limited
- Kumho Petrochemical, South Korea
- VISA Power Limited - India
- Banpu Public Company Limited - Thailand
- Thai Mozambique Logistica
- Grasim Industreis Ltd - India
- LBH Netherlands Bv - Netherlands
- Africa Commodities Group - South Africa
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- The University of Queensland
- Semirara Mining Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Miang Besar Coal Terminal - Indonesia
- Ministry of Transport, Egypt
- Toyota Tsusho Corporation, Japan
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- Ambuja Cements Ltd - India
- Economic Council, Georgia
- Meenaskhi Energy Private Limited - India
- Singapore Mercantile Exchange
- Pendopo Energi Batubara - Indonesia
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Jindal Steel & Power Ltd - India
- Orica Australia Pty. Ltd.
- MS Steel International - UAE
- India Bulls Power Limited - India
- Kaltim Prima Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Therma Luzon, Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- GMR Energy Limited - India
- Star Paper Mills Limited - India
- Bukit Makmur.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Metalloyd Limited - United Kingdom
- Power Finance Corporation Ltd., India
- Cement Manufacturers Association - India
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Georgia Ports Authority, United States
- Samtan Co., Ltd - South Korea
- Directorate Of Revenue Intelligence - India
- Indika Energy - Indonesia
- Indian Energy Exchange, India
- Interocean Group of Companies - India
- Carbofer General Trading SA - India
- South Luzon Thermal Energy Corporation
- Sical Logistics Limited - India
- Simpson Spence & Young - Indonesia
- Bhoruka Overseas - Indonesia
- Bhatia International Limited - India
- Commonwealth Bank - Australia
- Ind-Barath Power Infra Limited - India
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kideco Jaya Agung - Indonesia
- Mintek Dendrill Indonesia
- Anglo American - United Kingdom
- Indonesian Coal Mining Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Makarim & Taira - Indonesia
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- Parliament of New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Globalindo Alam Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Deloitte Consulting - India
- Agrawal Coal Company - India
- CNBM International Corporation - China
- Global Business Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Timah Investasi Mineral - Indoneisa
- OPG Power Generation Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- Formosa Plastics Group - Taiwan
- Siam City Cement - Thailand
- Madhucon Powers Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- Malabar Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Electricity Generating Authority of Thailand
- European Bulk Services B.V. - Netherlands
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- Standard Chartered Bank - UAE
- Bayan Resources Tbk. - Indonesia
- Australian Commodity Traders Exchange
- Indogreen Group - Indonesia
- Siam City Cement PLC, Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Port Waratah Coal Services - Australia
- Sojitz Corporation - Japan
- Xindia Steels Limited - India
- Borneo Indobara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Trasteel International SA, Italy
- Cigading International Bulk Terminal - Indonesia
- Edison Trading Spa - Italy
- Petrochimia International Co. Ltd.- Taiwan
- Vizag Seaport Private Limited - India
- McConnell Dowell - Australia
- Uttam Galva Steels Limited - India
- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- Energy Link Ltd, New Zealand
- Wood Mackenzie - Singapore
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- PTC India Limited - India
- ASAPP Information Group - India
- Straits Asia Resources Limited - Singapore
- Merrill Lynch Commodities Europe
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- Romanian Commodities Exchange
- ICICI Bank Limited - India
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- GVK Power & Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Attock Cement Pakistan Limited
- Ceylon Electricity Board - Sri Lanka
- Global Green Power PLC Corporation, Philippines
- Parry Sugars Refinery, India
- Sakthi Sugars Limited - India
- Antam Resourcindo - Indonesia
- Jaiprakash Power Ventures ltd
- Mjunction Services Limited - India
- Coal and Oil Company - UAE
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
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