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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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Monday, 08 January 24
KOSPO TO BUY 80000 MT OF INDONESIAN LOW CALORIFIC VALUE COAL FOR FEB 2024
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for the supply of Indonesian Low Calorific Value Coal from qualified suppliers for Korean ...
Monday, 08 January 24
SEABORNE TRADE REACHES 12.4BN TONNES - CLARKSONS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
Monday, 08 January 24
CAPESIZES START THE NEW YEAR ON POSITIVE NOTE - BALTIC EXCHANGE
Capesize
This week the capsize market has been marked by a mix of activities and challenges. Despite a slow start following the Christmas and N ...
Friday, 05 January 24
MORGAN STANLEY SEES LOWER OIL PRICES IN 2024 ON OVERSUPPLY CONCERNS - REUTERS
Morgan Stanley sees Brent crude prices anchored near $80 per barrel in the first half in 2024 before declining towards the end of the year as it ex ...
Friday, 05 January 24
INDIA'S COAL OUTPUT RISES NEARLY 11 PC IN DEC TO 92.87 MT - PTI
India’s coal production increased by 10.75 per cent to 92.87 million tonne in December 2023 as compared to the year-ago period, an official s ...
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- Bayan Resources Tbk. - Indonesia
- Ind-Barath Power Infra Limited - India
- Coastal Gujarat Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Timah Investasi Mineral - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- GMR Energy Limited - India
- Riau Bara Harum - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Trasteel International SA, Italy
- Ministry of Finance - Indonesia
- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- Thiess Contractors Indonesia
- New Zealand Coal & Carbon
- Medco Energi Mining Internasional
- SN Aboitiz Power Inc, Philippines
- Wilmar Investment Holdings
- Bhushan Steel Limited - India
- Indogreen Group - Indonesia
- Merrill Lynch Commodities Europe
- Gujarat Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- Kobexindo Tractors - Indoneisa
- Standard Chartered Bank - UAE
- SMC Global Power, Philippines
- Lanco Infratech Ltd - India
- PTC India Limited - India
- Indo Tambangraya Megah - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Marubeni Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mintek Dendrill Indonesia
- Miang Besar Coal Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- Essar Steel Hazira Ltd - India
- Bulk Trading Sa - Switzerland
- Singapore Mercantile Exchange
- Bhoruka Overseas - Indonesia
- Salva Resources Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Vijayanagar Sugar Pvt Ltd - India
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Altura Mining Limited, Indonesia
- Carbofer General Trading SA - India
- Global Green Power PLC Corporation, Philippines
- Global Business Power Corporation, Philippines
- The Treasury - Australian Government
- Aboitiz Power Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- White Energy Company Limited
- Semirara Mining Corp, Philippines
- Iligan Light & Power Inc, Philippines
- London Commodity Brokers - England
- Electricity Authority, New Zealand
- Bhatia International Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Heidelberg Cement - Germany
- International Coal Ventures Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Asmin Koalindo Tuhup - Indonesia
- Xindia Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Mines - Canada
- Makarim & Taira - Indonesia
- Sojitz Corporation - Japan
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- ICICI Bank Limited - India
- Central Electricity Authority - India
- Vizag Seaport Private Limited - India
- Parry Sugars Refinery, India
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
- Pendopo Energi Batubara - Indonesia
- Straits Asia Resources Limited - Singapore
- LBH Netherlands Bv - Netherlands
- Bharathi Cement Corporation - India
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- Intertek Mineral Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- Indika Energy - Indonesia
- Latin American Coal - Colombia
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ceylon Electricity Board - Sri Lanka
- Planning Commission, India
- The State Trading Corporation of India Ltd
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- Samtan Co., Ltd - South Korea
- Bangladesh Power Developement Board
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
- MS Steel International - UAE
- Renaissance Capital - South Africa
- Karaikal Port Pvt Ltd - India
- ASAPP Information Group - India
- Independent Power Producers Association of India
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Sidhee Cement - India
- Siam City Cement - Thailand
- Parliament of New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The University of Queensland
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- Economic Council, Georgia
- Romanian Commodities Exchange
- McConnell Dowell - Australia
- Tata Chemicals Ltd - India
- Goldman Sachs - Singapore
- Indian Oil Corporation Limited
- Commonwealth Bank - Australia
- Banpu Public Company Limited - Thailand
- CIMB Investment Bank - Malaysia
- Star Paper Mills Limited - India
- Bukit Baiduri Energy - Indonesia
- Sakthi Sugars Limited - India
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Thai Mozambique Logistica
- GVK Power & Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Meralco Power Generation, Philippines
- Antam Resourcindo - Indonesia
- San Jose City I Power Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Madhucon Powers Ltd - India
- Deloitte Consulting - India
- Directorate General of MIneral and Coal - Indonesia
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- Sical Logistics Limited - India
- Kepco SPC Power Corporation, Philippines
- Videocon Industries ltd - India
- Tamil Nadu electricity Board
- Leighton Contractors Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Coal and Oil Company - UAE
- Orica Australia Pty. Ltd.
- Agrawal Coal Company - India
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- Barasentosa Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Cement Manufacturers Association - India
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- Metalloyd Limited - United Kingdom
- Rio Tinto Coal - Australia
- Dalmia Cement Bharat India
- Kumho Petrochemical, South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IHS Mccloskey Coal Group - USA
- Simpson Spence & Young - Indonesia
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Africa Commodities Group - South Africa
- Coalindo Energy - Indonesia
- Australian Coal Association
- Sindya Power Generating Company Private Ltd
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Eastern Coal Council - USA
- European Bulk Services B.V. - Netherlands
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Minerals Council of Australia
- Chamber of Mines of South Africa
- South Luzon Thermal Energy Corporation
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- Central Java Power - Indonesia
- Price Waterhouse Coopers - Russia
- Energy Link Ltd, New Zealand
- Interocean Group of Companies - India
- PowerSource Philippines DevCo
- Ambuja Cements Ltd - India
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Binh Thuan Hamico - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kideco Jaya Agung - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- TeaM Sual Corporation - Philippines
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