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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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Tuesday, 16 September 14
INDONESIAN GOVERNMENT DECLARED HBA SUFFERED ANOTHER SETBACK IN SEPTEMBER
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down the coal bench mark price once again in September. HBA for ...
Tuesday, 16 September 14
INDONESIAN COAL OUTPUT WON'T EXCEED 421M TONS: GOVT - JP
The government is optimistic that it will meet its coal production target for this year, which caps nationwide production at a flat number compared ...
Monday, 15 September 14
CHINA'S COAL PROPOSALS LEAVE SOME HOPE FOR EXPORTERS - DAILY NEWS
When the best thing you can say about new policies is that they aren’t as bad as they could have been, then you know your industry is in deep ...
Monday, 15 September 14
SUB-BIT FOB INDONESIA COAL SWAP, JANUARY 2015 DELIVERY GAINED DAY ON DAY AND WEEK ON WEEK
COALspot.com: Indonesian coal swaps for average October 2014 increased US$ 0.40 (+0.78%) day on day and US$ 0.55 (+1.08%) per mt week on week. The ...
Monday, 15 September 14
CFR SOUTH CHINA COAL SWAP GAINED DAY ON DAY AND WEEK ON WEEK
COALspot.com: API 8 CFR South China Coal swap for delivery in October 2014 decreased US$ 2.30 (-3.36%) month over month, but increased day on day a ...
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- Australian Commodity Traders Exchange
- Bukit Makmur.PT - Indonesia
- Borneo Indobara - Indonesia
- Malabar Cements Ltd - India
- Romanian Commodities Exchange
- Timah Investasi Mineral - Indoneisa
- Coalindo Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Planning Commission, India
- Australian Coal Association
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sindya Power Generating Company Private Ltd
- SMG Consultants - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Ambuja Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- Parry Sugars Refinery, India
- Aboitiz Power Corporation - Philippines
- Carbofer General Trading SA - India
- Banpu Public Company Limited - Thailand
- New Zealand Coal & Carbon
- Larsen & Toubro Limited - India
- Jorong Barutama Greston.PT - Indonesia
- The Treasury - Australian Government
- Bhushan Steel Limited - India
- Star Paper Mills Limited - India
- San Jose City I Power Corp, Philippines
- Mercuria Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- Formosa Plastics Group - Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vedanta Resources Plc - India
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Ind-Barath Power Infra Limited - India
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- White Energy Company Limited
- European Bulk Services B.V. - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- The State Trading Corporation of India Ltd
- Edison Trading Spa - Italy
- Oldendorff Carriers - Singapore
- Minerals Council of Australia
- Krishnapatnam Port Company Ltd. - India
- Ministry of Transport, Egypt
- Maheswari Brothers Coal Limited - India
- Riau Bara Harum - Indonesia
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Petron Corporation, Philippines
- Bangladesh Power Developement Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Trasteel International SA, Italy
- Bharathi Cement Corporation - India
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Global Green Power PLC Corporation, Philippines
- Coastal Gujarat Power Limited - India
- PTC India Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jindal Steel & Power Ltd - India
- Uttam Galva Steels Limited - India
- Central Electricity Authority - India
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Alfred C Toepfer International GmbH - Germany
- South Luzon Thermal Energy Corporation
- Marubeni Corporation - India
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- Chettinad Cement Corporation Ltd - India
- Tata Chemicals Ltd - India
- PNOC Exploration Corporation - Philippines
- CNBM International Corporation - China
- Kideco Jaya Agung - Indonesia
- Sojitz Corporation - Japan
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Gujarat Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Sidhee Cement - India
- Deloitte Consulting - India
- IHS Mccloskey Coal Group - USA
- Eastern Coal Council - USA
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- SMC Global Power, Philippines
- Wood Mackenzie - Singapore
- Electricity Authority, New Zealand
- Manunggal Multi Energi - Indonesia
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Orica Australia Pty. Ltd.
- Straits Asia Resources Limited - Singapore
- Latin American Coal - Colombia
- GMR Energy Limited - India
- Miang Besar Coal Terminal - Indonesia
- Medco Energi Mining Internasional
- Heidelberg Cement - Germany
- Semirara Mining and Power Corporation, Philippines
- Interocean Group of Companies - India
- Madhucon Powers Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- Global Coal Blending Company Limited - Australia
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Vijayanagar Sugar Pvt Ltd - India
- ASAPP Information Group - India
- Toyota Tsusho Corporation, Japan
- Sakthi Sugars Limited - India
- Ministry of Finance - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- India Bulls Power Limited - India
- Indian Energy Exchange, India
- Ministry of Mines - Canada
- PowerSource Philippines DevCo
- ICICI Bank Limited - India
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Tamil Nadu electricity Board
- Energy Link Ltd, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sarangani Energy Corporation, Philippines
- Agrawal Coal Company - India
- Jaiprakash Power Ventures ltd
- Directorate Of Revenue Intelligence - India
- International Coal Ventures Pvt Ltd - India
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- Sree Jayajothi Cements Limited - India
- Baramulti Group, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Mercator Lines Limited - India
- Kaltim Prima Coal - Indonesia
- Lanco Infratech Ltd - India
- Aditya Birla Group - India
- GAC Shipping (India) Pvt Ltd
- Thai Mozambique Logistica
- Holcim Trading Pte Ltd - Singapore
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indogreen Group - Indonesia
- Central Java Power - Indonesia
- Metalloyd Limited - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Power Finance Corporation Ltd., India
- Economic Council, Georgia
- Singapore Mercantile Exchange
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Parliament of New Zealand
- Bhatia International Limited - India
- Kepco SPC Power Corporation, Philippines
- Commonwealth Bank - Australia
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- Semirara Mining Corp, Philippines
- Mjunction Services Limited - India
- Electricity Generating Authority of Thailand
- Meenaskhi Energy Private Limited - India
- Orica Mining Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- The University of Queensland
- Anglo American - United Kingdom
- Siam City Cement - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Indika Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Leighton Contractors Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- Salva Resources Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Indian Oil Corporation Limited
- Thiess Contractors Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Xindia Steels Limited - India
- Indonesian Coal Mining Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Attock Cement Pakistan Limited
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