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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, 23 February 24
STRONG OUTLOOK FOR THE TANKER MARKET IN 2024 AND BEYOND - DNV
Several factors have aligned over the past two years to create a robust and profitable market for tanker owners, which is expected to drive newbuil ...
Friday, 23 February 24
AUSTRALIAN COAL FLOWS TO ASIA HOVER ABOVE LAST YEAR’S VOLUME TONNES - SIGNAL GROUP
In the final days of February, the dry bulk freight market appeared to maintain a relatively stable momentum, particularly evident in the large ves ...
Friday, 23 February 24
RUSSIAN COAL SHIPMENTS FALL 14% AS SANCTIONS BITE - BIMCO
During the first seven weeks of 2024, Russian coal shipments have fallen 14% y/y. Volumes have gradually declined since October 2023 when logistica ...
Thursday, 22 February 24
BIMCO PUBLISHES SHIP FINANCING FORMS TO ENSURE UNINTERRUPTED USE OF SHIPS
BIMCO has published two standard Quiet Enjoyment Letters (QELs), the first standard form QELs available to the industry, to offer a tool that can e ...
Monday, 19 February 24
METALS INVESTMENT: THE DARKEST HOUR IS JUST BEFORE THE DAWN - WOOD MACKENZIE
Things often seem at their worst just before they get better. In terms of meeting our net zero 2050 scenario, we’ve reached a watershed momen ...
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- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- Intertek Mineral Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indonesian Coal Mining Association
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- Binh Thuan Hamico - Vietnam
- Sindya Power Generating Company Private Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Renaissance Capital - South Africa
- Latin American Coal - Colombia
- Petrochimia International Co. Ltd.- Taiwan
- ASAPP Information Group - India
- The University of Queensland
- Economic Council, Georgia
- PetroVietnam Power Coal Import and Supply Company
- Karaikal Port Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Riau Bara Harum - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Merrill Lynch Commodities Europe
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- Electricity Authority, New Zealand
- The State Trading Corporation of India Ltd
- Miang Besar Coal Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- Pendopo Energi Batubara - Indonesia
- Kaltim Prima Coal - Indonesia
- Orica Mining Services - Indonesia
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- Kideco Jaya Agung - Indonesia
- Dalmia Cement Bharat India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PTC India Limited - India
- Metalloyd Limited - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Tamil Nadu electricity Board
- Bhatia International Limited - India
- McConnell Dowell - Australia
- Banpu Public Company Limited - Thailand
- White Energy Company Limited
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Singapore Mercantile Exchange
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Karbindo Abesyapradhi - Indoneisa
- CNBM International Corporation - China
- Bhoruka Overseas - Indonesia
- Indogreen Group - Indonesia
- Iligan Light & Power Inc, Philippines
- Rio Tinto Coal - Australia
- PNOC Exploration Corporation - Philippines
- Wilmar Investment Holdings
- IEA Clean Coal Centre - UK
- Minerals Council of Australia
- Bukit Makmur.PT - Indonesia
- New Zealand Coal & Carbon
- Globalindo Alam Lestari - Indonesia
- Indika Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- Malabar Cements Ltd - India
- ICICI Bank Limited - India
- Indian Energy Exchange, India
- Kohat Cement Company Ltd. - Pakistan
- Samtan Co., Ltd - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Larsen & Toubro Limited - India
- Gujarat Electricity Regulatory Commission - India
- Parliament of New Zealand
- OPG Power Generation Pvt Ltd - India
- Interocean Group of Companies - India
- International Coal Ventures Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Chamber of Mines of South Africa
- Ministry of Mines - Canada
- Bahari Cakrawala Sebuku - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kumho Petrochemical, South Korea
- Sinarmas Energy and Mining - Indonesia
- GMR Energy Limited - India
- Central Java Power - Indonesia
- Videocon Industries ltd - India
- Lanco Infratech Ltd - India
- Indo Tambangraya Megah - Indonesia
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Timah Investasi Mineral - Indoneisa
- India Bulls Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Orica Australia Pty. Ltd.
- Ind-Barath Power Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petron Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Sical Logistics Limited - India
- Billiton Holdings Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Krishnapatnam Port Company Ltd. - India
- LBH Netherlands Bv - Netherlands
- Siam City Cement PLC, Thailand
- MS Steel International - UAE
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- Commonwealth Bank - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Power Finance Corporation Ltd., India
- Heidelberg Cement - Germany
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- Marubeni Corporation - India
- Ambuja Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- Goldman Sachs - Singapore
- SMG Consultants - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Parry Sugars Refinery, India
- Xindia Steels Limited - India
- Manunggal Multi Energi - Indonesia
- Eastern Energy - Thailand
- Agrawal Coal Company - India
- Kapuas Tunggal Persada - Indonesia
- Essar Steel Hazira Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Bulk Trading Sa - Switzerland
- Neyveli Lignite Corporation Ltd, - India
- Central Electricity Authority - India
- Tata Chemicals Ltd - India
- Edison Trading Spa - Italy
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- Price Waterhouse Coopers - Russia
- Madhucon Powers Ltd - India
- Grasim Industreis Ltd - India
- Coal and Oil Company - UAE
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- Mercuria Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Ministry of Transport, Egypt
- Global Green Power PLC Corporation, Philippines
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- Leighton Contractors Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Bhushan Steel Limited - India
- Barasentosa Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Vedanta Resources Plc - India
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- SMC Global Power, Philippines
- TeaM Sual Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- Oldendorff Carriers - Singapore
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- VISA Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- AsiaOL BioFuels Corp., Philippines
- Medco Energi Mining Internasional
- Australian Coal Association
- Antam Resourcindo - Indonesia
- Standard Chartered Bank - UAE
- Uttam Galva Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Energy Link Ltd, New Zealand
- Posco Energy - South Korea
- Formosa Plastics Group - Taiwan
- Vizag Seaport Private Limited - India
- Maheswari Brothers Coal Limited - India
- Holcim Trading Pte Ltd - Singapore
- Mjunction Services Limited - India
- Eastern Coal Council - USA
- Trasteel International SA, Italy
- Anglo American - United Kingdom
- CIMB Investment Bank - Malaysia
- Cement Manufacturers Association - India
- Mintek Dendrill Indonesia
- Kobexindo Tractors - Indoneisa
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- Siam City Cement - Thailand
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