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Thursday, 20 February 14
LENGTHY DELAYS TO PANAMA CANAL EXPANSION POSE GLOBAL TRADE RISKS; US COAL PRODUCERS TO GREATLY BENEFIT ONCE COMPLETE, SAYS WOOD MACKENZIE
 Wood Mackenzie expects the recent cost overrun disputes around the Panama Canal expansion to be resolved with limited disruption due to the significance of the Canal to global trade. Significant disruptions will crimp profitability for US LNG producers, create a tighter LNG shipping market and affect the US Gulf Coast petrochemical industry.
"Given the enormous strategic and financial importance of the Canal to Panama, we expect the gridlock to be resolved," says Andrew Buckland, Senior LNG Shipping Analyst at Wood Mackenzie. "If the delays last 6 –12 months, it will have limited impact, as trade will carry on much as it does now, but further delays threaten the investments of a significant number of groups that are set to benefit from expanded capacity on the waterway."
The expansion will benefit users depending on the position of their ports in relation to the canal, particularly the US, whose cargo accounts for 65% of total cargo moved through the canal.
"When completed, US coal suppliers will see some of the greatest benefits from the expansion as they will realise substantial cost and time savings, even when compared with Colombian and Venezuela suppliers. The shortening of the route to Asian markets will result in greater opportunities," added Jaime Correal, Senior Coal Markets Analyst at Wood Mackenzie.
Wood Mackenzie's cross-sector analysis highlights the possible impact of further delays for coal, gas and oil trade:
Coal Industry
- If the canal expansion is further delayed, Australia and Canada could grow its market share in the Asia Pacific, delaying the opportunity for US Gulf coal suppliers to benefit from the expansion.
- US Gulf coal suppliers can achieve savings of about US$4.72 per tonne ($/t) on ocean freight rates using capesize vessels through the Panama Canal when compared with a routing of the same size vessel via the Cape of Good Hope and Sunda Straits. The Canal will save 9.7 days and the cost savings will increase trade of thermal and metallurgical coal from the US to Japan, Vietnam and eventually China via US Gulf Coast ports.
- US suppliers will become more efficient into countries located in the Pacific Coast of South America, especially Chile where Colombian producers have traditionally dominated the coal market.
- Although the expanded canal will accommodate capesize vessels, cargo weight will be limited to less than 140,000 payable load tonnes, which will restrict the passage of fully loaded vessels.
- US coal exports from the US East coast to China will lose the opportunity of capturing additional market share in China and South America.
- The trip to China from the East coast via the Panama Canal cuts 6.2 days and can help to realize savings of US$0.89/t assuming time charter rates of US$60,000/day for a capesize vessel
LNG Industry
- LNG is not currently traded through the Panama Canal as most LNG vessels are too wide to fit through the locks. The expansion project will allow all but the very largest LNG ships to use the Panama Canal.
- A delay until early 2016 will impact the first US Gulf LNG exports from Sabine Pass. This will impose a higher shipping cost to target markets in Asia as ships will need to take a longer route via the Cape of Good Hope. However, the differential between US and Asian gas prices will still make the trade profitable and initial volumes will be small as the project ramps up.
- The LNG shipping market will be tighter (with higher spot-market freight rates) than it would otherwise have been as volumes from Trinidad and the USA will have to travel the long way round to Asia. The LNG shipping market is expected to weaken between now and 2016 as new ships are delivered to the market before new capacity comes on-stream.
Oil Industry
- We do not expect there to be any impact on Venezuelan crude exports to China: Trade will continue to be more cost effective in Very Large Container Carriers (VLCCs) that are too big to fit through the expanded canal.
- Supports higher product prices in Chile and exposes US exports to higher shipping costs.
- Supports product exports via alternate routes.
Editor’s notes:
Wood Mackenzie is a global leader in commercial intelligence for the energy, metals and mining industries. We provide objective analysis and advice on assets, companies and markets, giving clients the insights they need to make better strategic decisions. For more information visit: www.woodmac.com
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Friday, 06 September 24
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- Rio Tinto Coal - Australia
- Sree Jayajothi Cements Limited - India
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- Aditya Birla Group - India
- Coal and Oil Company - UAE
- Bangladesh Power Developement Board
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Global Green Power PLC Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- The Treasury - Australian Government
- Cement Manufacturers Association - India
- VISA Power Limited - India
- Larsen & Toubro Limited - India
- Power Finance Corporation Ltd., India
- India Bulls Power Limited - India
- Savvy Resources Ltd - HongKong
- Bharathi Cement Corporation - India
- Central Java Power - Indonesia
- SMC Global Power, Philippines
- Heidelberg Cement - Germany
- Kohat Cement Company Ltd. - Pakistan
- Indian Energy Exchange, India
- Ind-Barath Power Infra Limited - India
- Global Business Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Timah Investasi Mineral - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- New Zealand Coal & Carbon
- Jaiprakash Power Ventures ltd
- Vedanta Resources Plc - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Generating Authority of Thailand
- Oldendorff Carriers - Singapore
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Merrill Lynch Commodities Europe
- TNB Fuel Sdn Bhd - Malaysia
- Tata Chemicals Ltd - India
- Interocean Group of Companies - India
- Mercuria Energy - Indonesia
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ICICI Bank Limited - India
- Binh Thuan Hamico - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- Anglo American - United Kingdom
- Petron Corporation, Philippines
- Siam City Cement PLC, Thailand
- Sarangani Energy Corporation, Philippines
- Coalindo Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Intertek Mineral Services - Indonesia
- Mercator Lines Limited - India
- Videocon Industries ltd - India
- Straits Asia Resources Limited - Singapore
- Star Paper Mills Limited - India
- Bulk Trading Sa - Switzerland
- Energy Link Ltd, New Zealand
- LBH Netherlands Bv - Netherlands
- Kobexindo Tractors - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Africa Commodities Group - South Africa
- Grasim Industreis Ltd - India
- White Energy Company Limited
- Barasentosa Lestari - Indonesia
- Vizag Seaport Private Limited - India
- South Luzon Thermal Energy Corporation
- Xindia Steels Limited - India
- Independent Power Producers Association of India
- Sical Logistics Limited - India
- Metalloyd Limited - United Kingdom
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- CIMB Investment Bank - Malaysia
- Krishnapatnam Port Company Ltd. - India
- The State Trading Corporation of India Ltd
- Parliament of New Zealand
- Globalindo Alam Lestari - Indonesia
- Planning Commission, India
- Bhatia International Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Romanian Commodities Exchange
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Karaikal Port Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Medco Energi Mining Internasional
- Maharashtra Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Sakthi Sugars Limited - India
- Bhushan Steel Limited - India
- McConnell Dowell - Australia
- Central Electricity Authority - India
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Kapuas Tunggal Persada - Indonesia
- GAC Shipping (India) Pvt Ltd
- Simpson Spence & Young - Indonesia
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Renaissance Capital - South Africa
- Wilmar Investment Holdings
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Agrawal Coal Company - India
- Holcim Trading Pte Ltd - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- The University of Queensland
- Trasteel International SA, Italy
- Cigading International Bulk Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- ASAPP Information Group - India
- PNOC Exploration Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Australian Coal Association
- Ministry of Mines - Canada
- Wood Mackenzie - Singapore
- PowerSource Philippines DevCo
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- MS Steel International - UAE
- Salva Resources Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Latin American Coal - Colombia
- Sinarmas Energy and Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
- Singapore Mercantile Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mjunction Services Limited - India
- Billiton Holdings Pty Ltd - Australia
- Tamil Nadu electricity Board
- Kaltim Prima Coal - Indonesia
- Ministry of Finance - Indonesia
- Thai Mozambique Logistica
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- Altura Mining Limited, Indonesia
- Baramulti Group, Indonesia
- Mintek Dendrill Indonesia
- Siam City Cement - Thailand
- Bukit Makmur.PT - Indonesia
- Standard Chartered Bank - UAE
- Orica Mining Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Gujarat Mineral Development Corp Ltd - India
- PTC India Limited - India
- Kideco Jaya Agung - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Attock Cement Pakistan Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Directorate Of Revenue Intelligence - India
- Parry Sugars Refinery, India
- Iligan Light & Power Inc, Philippines
- Thiess Contractors Indonesia
- GVK Power & Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- Makarim & Taira - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Samtan Co., Ltd - South Korea
- GMR Energy Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Edison Trading Spa - Italy
- Pendopo Energi Batubara - Indonesia
- Meenaskhi Energy Private Limited - India
- Energy Development Corp, Philippines
- Indian Oil Corporation Limited
- Essar Steel Hazira Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- Borneo Indobara - Indonesia
- Manunggal Multi Energi - Indonesia
- Ministry of Transport, Egypt
- Riau Bara Harum - Indonesia
- Deloitte Consulting - India
- Economic Council, Georgia
- OPG Power Generation Pvt Ltd - India
- Madhucon Powers Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- Georgia Ports Authority, United States
- European Bulk Services B.V. - Netherlands
- Meralco Power Generation, Philippines
- Gujarat Sidhee Cement - India
- Malabar Cements Ltd - India
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