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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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Sunday, 07 September 14
SHIPMANAGERS SUPERVISION CONTRACT FOR NEWBUILDS - BIMCO
Shipmanagers are frequently called upon by their owner clients to supervise newbuilding projects on their behalf. The scope of the manager’s ...
Saturday, 06 September 14
SLOW COAL EXPORT REGISTRATION RAISES CONCERNS - THE JAKARTA POST
Several coal mining companies have yet to receive the go-ahead from the Energy and Mineral Resources Ministry to obtain exporting licenses, leading ...
Saturday, 06 September 14
DRY BULK MARKET'S PROSPECTS ARE IMPROVING, DESPITE WEAK SECOND QUARTER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been rebounding during the past month, with the Baltic Dry Index (BDI) ended the week on a high note, reaching 1,155 points ...
Saturday, 06 September 14
INDONESIA WANTS TO REGULATE COAL DEALS - THE TELEGRAPH INDIA
Indonesia has raised concerns about suspected coal deals struck between overseas buyers and its unregistered domestic miners, the telegraph India r ...
Friday, 05 September 14
U.S. PRODUCED 19.2 MMST OF COAL LAST WEEK
COALspot.com – United States the world's second largest coal producer, produced approximately 19.20 million short tons (mmst) of coal in ...
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- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Mines - Canada
- Posco Energy - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Carbofer General Trading SA - India
- Bahari Cakrawala Sebuku - Indonesia
- Timah Investasi Mineral - Indoneisa
- GVK Power & Infra Limited - India
- White Energy Company Limited
- India Bulls Power Limited - India
- Lanco Infratech Ltd - India
- Electricity Generating Authority of Thailand
- New Zealand Coal & Carbon
- Power Finance Corporation Ltd., India
- Bhoruka Overseas - Indonesia
- Kobexindo Tractors - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Bharathi Cement Corporation - India
- Africa Commodities Group - South Africa
- Eastern Energy - Thailand
- Borneo Indobara - Indonesia
- Straits Asia Resources Limited - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Oldendorff Carriers - Singapore
- Videocon Industries ltd - India
- Alfred C Toepfer International GmbH - Germany
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
- Sarangani Energy Corporation, Philippines
- Port Waratah Coal Services - Australia
- Georgia Ports Authority, United States
- Central Java Power - Indonesia
- Samtan Co., Ltd - South Korea
- Bulk Trading Sa - Switzerland
- Star Paper Mills Limited - India
- Siam City Cement PLC, Thailand
- Vedanta Resources Plc - India
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- Goldman Sachs - Singapore
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- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- Leighton Contractors Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Metalloyd Limited - United Kingdom
- Bukit Makmur.PT - Indonesia
- Riau Bara Harum - Indonesia
- PowerSource Philippines DevCo
- Binh Thuan Hamico - Vietnam
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- VISA Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Mining Services - Indonesia
- MS Steel International - UAE
- Central Electricity Authority - India
- Bukit Baiduri Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Ind-Barath Power Infra Limited - India
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- Australian Coal Association
- Larsen & Toubro Limited - India
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- PNOC Exploration Corporation - Philippines
- Attock Cement Pakistan Limited
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Romanian Commodities Exchange
- Miang Besar Coal Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- Meralco Power Generation, Philippines
- Coalindo Energy - Indonesia
- Trasteel International SA, Italy
- Aditya Birla Group - India
- Parliament of New Zealand
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Meenaskhi Energy Private Limited - India
- Siam City Cement - Thailand
- LBH Netherlands Bv - Netherlands
- Indogreen Group - Indonesia
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Petron Corporation, Philippines
- Indian Oil Corporation Limited
- Tamil Nadu electricity Board
- Kepco SPC Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercuria Energy - Indonesia
- SMG Consultants - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- Barasentosa Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Energy Exchange, India
- Thiess Contractors Indonesia
- Globalindo Alam Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Billiton Holdings Pty Ltd - Australia
- Commonwealth Bank - Australia
- Cement Manufacturers Association - India
- Sical Logistics Limited - India
- Energy Link Ltd, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CNBM International Corporation - China
- Chamber of Mines of South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- Karaikal Port Pvt Ltd - India
- Medco Energi Mining Internasional
- The University of Queensland
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
- Sojitz Corporation - Japan
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- Chettinad Cement Corporation Ltd - India
- International Coal Ventures Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Madhucon Powers Ltd - India
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- CIMB Investment Bank - Malaysia
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Indonesian Coal Mining Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- ICICI Bank Limited - India
- Kideco Jaya Agung - Indonesia
- Singapore Mercantile Exchange
- Banpu Public Company Limited - Thailand
- Indika Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Maharashtra Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Mintek Dendrill Indonesia
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- London Commodity Brokers - England
- Bangladesh Power Developement Board
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Commodity Traders Exchange
- Mjunction Services Limited - India
- Minerals Council of Australia
- Edison Trading Spa - Italy
- Dalmia Cement Bharat India
- SMC Global Power, Philippines
- Salva Resources Pvt Ltd - India
- Planning Commission, India
- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
- Semirara Mining and Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Makarim & Taira - Indonesia
- Sree Jayajothi Cements Limited - India
- Thai Mozambique Logistica
- Kumho Petrochemical, South Korea
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- PTC India Limited - India
- Ministry of Finance - Indonesia
- Global Green Power PLC Corporation, Philippines
- Antam Resourcindo - Indonesia
- GMR Energy Limited - India
- Vizag Seaport Private Limited - India
- Bhatia International Limited - India
- Bhushan Steel Limited - India
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- Therma Luzon, Inc, Philippines
- Jindal Steel & Power Ltd - India
- South Luzon Thermal Energy Corporation
- McConnell Dowell - Australia
- Interocean Group of Companies - India
- Wilmar Investment Holdings
- The State Trading Corporation of India Ltd
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Uttam Galva Steels Limited - India
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- The Treasury - Australian Government
- OPG Power Generation Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Anglo American - United Kingdom
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