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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, 09 September 14
PORT OF NEWCASTLE SHIPPED 13.207 MTN OF COAL IN AUGUST; TRADE VALUE AROUND $1.17 BILLION
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.17 billio ...
Monday, 08 September 14
SUB-BIT FOB INDONESIA COAL SWAP UNDERPERFORMED LAST WEEK
COALspot.com: Indonesian coal swaps for average October 2014 decreased US$ 0.20 (-0.39%) day on day and US$ 1.60 (-3.04%) per mt week on week. The ...
Monday, 08 September 14
API 8 CFR SOUTH CHINA COAL SWAP FOR DELIVERY JAN'15 CLOSED AT US$ 66.30 PMT W/E 5 SEPTEMBER 2014; LOST 5.15% M-O-M
COALspot.com: API 8 CFR South China Coal swap for delivery in October 2014 decreased US$ 0.15 (-0.23%) day on day and US$ 2.05 (-3.04%) week on wee ...
Monday, 08 September 14
CHINESE IRON ORE IMPORT DEMAND VERY STRONG - COMMODORE
COALspot.com: 30 dry bulk vessels were chartered in the spot iron ore market last week to haul iron ore import cargoes to Chinese buyers.
Acco ...
Sunday, 07 September 14
FREIGHT MARKET CONTINUED TO BE FIRM IN SPITE OF CAPE'S THIS WEEK'S WEAK PERFORMANCE
COALspot.com: BDI up by 0.7 pct week on week and closed at 1155 points this week. The Baltic Dry Index is a composite of three sub-indexes that mea ...
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- PetroVietnam Power Coal Import and Supply Company
- Romanian Commodities Exchange
- Straits Asia Resources Limited - Singapore
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- AsiaOL BioFuels Corp., Philippines
- Parliament of New Zealand
- Meralco Power Generation, Philippines
- Latin American Coal - Colombia
- Xindia Steels Limited - India
- SMG Consultants - Indonesia
- Aditya Birla Group - India
- Orica Mining Services - Indonesia
- Energy Development Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Star Paper Mills Limited - India
- Global Business Power Corporation, Philippines
- Coal and Oil Company - UAE
- Orica Australia Pty. Ltd.
- Oldendorff Carriers - Singapore
- PowerSource Philippines DevCo
- Asmin Koalindo Tuhup - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Mercator Lines Limited - India
- Intertek Mineral Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Malabar Cements Ltd - India
- Carbofer General Trading SA - India
- Kepco SPC Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Directorate General of MIneral and Coal - Indonesia
- Vedanta Resources Plc - India
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Cement Manufacturers Association - India
- Kaltim Prima Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Bukit Asam (Persero) Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Ministry of Transport, Egypt
- Billiton Holdings Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Karaikal Port Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Global Coal Blending Company Limited - Australia
- Semirara Mining Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- Central Electricity Authority - India
- Formosa Plastics Group - Taiwan
- Grasim Industreis Ltd - India
- CNBM International Corporation - China
- Commonwealth Bank - Australia
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- London Commodity Brokers - England
- Singapore Mercantile Exchange
- GN Power Mariveles Coal Plant, Philippines
- Bukit Makmur.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Thai Mozambique Logistica
- Makarim & Taira - Indonesia
- Medco Energi Mining Internasional
- International Coal Ventures Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Indian Energy Exchange, India
- Pendopo Energi Batubara - Indonesia
- Bangladesh Power Developement Board
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Port Waratah Coal Services - Australia
- Planning Commission, India
- Mjunction Services Limited - India
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- Essar Steel Hazira Ltd - India
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Ministry of Finance - Indonesia
- Kumho Petrochemical, South Korea
- The University of Queensland
- Indika Energy - Indonesia
- ICICI Bank Limited - India
- Jaiprakash Power Ventures ltd
- Siam City Cement PLC, Thailand
- Salva Resources Pvt Ltd - India
- Wood Mackenzie - Singapore
- Tata Chemicals Ltd - India
- Indo Tambangraya Megah - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- SMC Global Power, Philippines
- Petron Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Economic Council, Georgia
- Bhatia International Limited - India
- ASAPP Information Group - India
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- India Bulls Power Limited - India
- Sical Logistics Limited - India
- Samtan Co., Ltd - South Korea
- Rio Tinto Coal - Australia
- Attock Cement Pakistan Limited
- Mintek Dendrill Indonesia
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- CIMB Investment Bank - Malaysia
- Merrill Lynch Commodities Europe
- IEA Clean Coal Centre - UK
- Mercuria Energy - Indonesia
- Electricity Generating Authority of Thailand
- Anglo American - United Kingdom
- MS Steel International - UAE
- Indogreen Group - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Binh Thuan Hamico - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Link Ltd, New Zealand
- Dalmia Cement Bharat India
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- White Energy Company Limited
- Iligan Light & Power Inc, Philippines
- Trasteel International SA, Italy
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- IHS Mccloskey Coal Group - USA
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- Bharathi Cement Corporation - India
- Indian Oil Corporation Limited
- Indonesian Coal Mining Association
- Vizag Seaport Private Limited - India
- TeaM Sual Corporation - Philippines
- Edison Trading Spa - Italy
- Chamber of Mines of South Africa
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Coastal Gujarat Power Limited - India
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Antam Resourcindo - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Agrawal Coal Company - India
- VISA Power Limited - India
- Aboitiz Power Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- Eastern Coal Council - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Mineral Development Corp Ltd - India
- Bhushan Steel Limited - India
- Uttam Galva Steels Limited - India
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Eastern Energy - Thailand
- Kapuas Tunggal Persada - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Interocean Group of Companies - India
- Riau Bara Harum - Indonesia
- The State Trading Corporation of India Ltd
- Standard Chartered Bank - UAE
- New Zealand Coal & Carbon
- Madhucon Powers Ltd - India
- Wilmar Investment Holdings
- Metalloyd Limited - United Kingdom
- Posco Energy - South Korea
- Lanco Infratech Ltd - India
- Kartika Selabumi Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Semirara Mining and Power Corporation, Philippines
- GMR Energy Limited - India
- Central Java Power - Indonesia
- Gujarat Sidhee Cement - India
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- SN Aboitiz Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- PNOC Exploration Corporation - Philippines
- Ambuja Cements Ltd - India
- PTC India Limited - India
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Thiess Contractors Indonesia
- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Coal Association
- Sojitz Corporation - Japan
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