We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Monday, 06 October 14
THE IRON ORE SHIPPING BUSINESS IS FACING SOME ROUGH SEAS - EAST ASIA FORUM
 The impact of Chinese demand on global iron ore prices is well known. A less acknowledged consequence of China’s emergence is the transformation of incentive structures in the global shipping market. Dramatic increases in freight rates shifted global iron ore producers’ comparative advantage further in favour of Australian exporters to the detriment of the Brazilians. During the commodities boom, between 2002 and 2008, the freight differential between Brazil–China and Australia–China rates increased to around US$60 per tonne for 150,000–160,000 deadweight tonne (dwt) ships.
Japan’s tenure as dominant market player in the second half of the twentieth century was marked by a gradual evolution of the shipping pricing regime, much of it under Japanese control. In stark contrast, China’s impact on the shipping market has been much more concentrated in time, with an absence of long-term planning and coordination between the Chinese steelmakers and ship owners or operators.
In 2008, to compete with BHP and Rio Tinto over shipping costs, the shipping company Vale commissioned, at a cost of over US$2 billion, a new line of ‘Very Large Ore Carriers’ (VLOCs), dubbed the ‘Valemax’. The Valemax carrier is the largest bulk carrier ever built: over twice as big as Cape-size carriers (400,000 dwt). Current shipping costs from Australia to China stand at around US$10/tonne, whereas it currently costs around US$22/tonne to ship iron ore from Brazil to China. Direct Valemax trips from Brazil to China would bring shipping costs down to about US$15/tonne.
Vale had 24 out of 35 of these huge carriers built in China, and the rest in South Korea. China’s Export-Import Bank and the Bank of China even financed the project to the scale of US$1.3 billion, so Vale was confident that this step was in the interest of iron ore consumers in China and that these cargoes would be welcomed.
But, on 29 January 2012, the Chinese Ministry of Transport issued a notice specifying that cargo ships with a capacity greater than 350,000 dwt could not dock in Chinese ports, citing safety concerns. Interviews confirm that Vale was taken aback, alongside many Chinese iron ore industry insiders.
The blocking of the Valemax carriers was not the result of coordinated, state-led, revisionist behaviour. It was not a directive coming from the central government or the Chinese Iron ore and Steel Association, or even the large steel SOEs, all of whom favoured the Valemax since it would reduce the overall price of Brazilian iron ore. The opposition, and lobbying, came from Chinese ship owners/operators, led by COSCO (China Ocean Shipping Company), who stood to lose shipping business, and held enough sway with the Chinese Ship-owners Association, the port authorities and the Transport Ministry to make this happen. It is testament to China’s weight in global markets that a unilateral move by one Chinese interest group could have such destabilising consequences. The blocking of the Valemax was the result of the fragmentation of China’s iron ore industry, and the high jacking of policy-making by a particular interest group, against broader national priorities.
On 6 December 2011, Shouguo Zhang, Vice Executive Chairman of China Ship owners’ Association, said that ‘Vale is an iron ore producing corporation that obviously lacks experience in ship safety management, ship pollution prevention … [It] holds the cargo to itself and now intends to control shipping tonnage. It is a matter of monopoly and unfair competition which not only harms the shipping interest of mainland China but also that of South Korea, Japan and Taiwan’. It is worth noting that the president of the Chinese Ship-owners Association at the time was Wei Jiafu, also president of COSCO.
The Wall Street Journal has spoken to shipping engineers who said that safety concerns cited by the Chinese Transport Ministry were ‘insufficient to cast serious doubt on the safety of Valemax ships. Valemax vessels have docked at ports in such places as Japan, Italy, the Netherlands and the Philippines’. Ralph Leszczynski, head of research at shipping services firm Banchero Costa, said that COSCO’s reaction is natural as ‘the moment a company like Vale decides to build their own ships they are entering the “business turf” of companies like COSCO and they take those companies’ business away’. The ban has been extremely costly for Vale, as the company has had to transfer cargo to smaller carriers in the Philippines at an extra cost of between US$2 and US$7 a tonne.
Industry analysts have ventured that the only way out for Vale, as a concession to COSCO and other Chinese ship operators, would be for it to agree to a charter or sharing solution with the Chinese shipping companies, by transferring Valemax ships for Chinese ship-owners to operate.
In December 2013, news of one such five-year ‘bareboat charter arrangement’ with Shandong Shipping Alliance was announced by Vale’s Jose Carlos Martin.
On 10 February 2014, the Chinese Ministry of Transport issued a notice reframing coastal berthing regulations. From 1 July 2014, oversized cargo ships have been allowed to dock in Chinese ports with a capacity not exceeding 250,000 dwt, as long as they match their load with the port’s capacity. Some analysts say this new regulation slowly opens the door to Valemax cargoes docking in China, while the China Ship-owners Association reiterated its opposition to 400,000 dwt cargoes ever docking at Chinese ports.
Then on 12 September 2014, in a ground-breaking announcement, Vale revealed that it had reached a ‘framework agreement for strategic cooperation in iron ore shipping’ with COSCO. This is another step towards resolving the almost 3-year-old impasse between the two giants. Following the terms of the agreement, Vale will transfer 4 VLOCs to COSCO and charter them back from the shipping giant for the next 25 years. It also agreed to similar terms regarding 10 more VLOCs to be built by COSCO to transport iron ore from Brazil.
The new agreement between COSCO and Vale will presumably lead to the Chinese Ministry of Transport fully lifting the ban on the Valemax cargoes in the near future.
The Valemax story highlights the role of non-state actors as a determinant of Chinese international procurement behaviour. It also highlights the fact that despite China’s share of global demand, Chinese stakeholders feel powerless in global commodity markets whose rules were established long before Chinese re-emergence. The sheer reach of COSCO’s behaviour demonstrates how important it is to understand Chinese domestic market dynamics, and also points to broader patterns we can expect as China tries to carve itself a position commensurate with its global purchasing power. China’s domestic dynamics have now become a determining feature of the global economy.
Source: East Asia Forum / Hellenic Shipping News
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Wednesday, 08 October 14
OIL COULD FALL TO USD80 BEFORE SHALE SUPPLY RESPONSE - FITCH
COALspot.com: Brent oil could fall as low as USD80 a barrel before triggering a self-correcting supply response with shale-oil drillers cutting inv ...
Wednesday, 08 October 14
IS THERE ANY BRIGHT SIDE ON THE DRY BULK SEGMENT? - YANNIS OLZIERSKY
In the movie “Life Of Brian”, a character on a nearby cross was singing the famous “Always look on the bright side of life” ...
Tuesday, 07 October 14
TAIPOWER TO IMPORT 525K MT OF LOW ASH AND EXTRA LOW SULFUR SUB-BITUMINOUS COAL
COALspot.com: Taiwan Power Company intends to procure 525,000 metric tons of low ash and extra low sulfur sub-bituminous coal for Taipower thermal ...
Tuesday, 07 October 14
SUB-BIT FOB INDONESIA COAL SWAP SHOWS A FLAT TO WEAK TREND THIS PAST WEEK
COALspot.com: Indonesian coal swaps November 2014 delivery flat week on week and gained US$ 0.10 (-0.20%) per mt day on day. The swap also lost US$ ...
Tuesday, 07 October 14
THE RIO TINTO CONFIRMS THAT NO DISCUSSIONS ARE TAKING PLACE WITH GLENCORE
COALspot.com: The board of Rio Tinto notes the recent press speculation regarding a possible combination of Rio Tinto and Glencore.The Rio Tinto bo ...
|
|
|
Showing 3446 to 3450 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- PetroVietnam Power Coal Import and Supply Company
- Karaikal Port Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- New Zealand Coal & Carbon
- Sinarmas Energy and Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- Indian Oil Corporation Limited
- Coal and Oil Company - UAE
- Jindal Steel & Power Ltd - India
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- Chamber of Mines of South Africa
- Wood Mackenzie - Singapore
- Essar Steel Hazira Ltd - India
- Sakthi Sugars Limited - India
- Sojitz Corporation - Japan
- Central Electricity Authority - India
- Planning Commission, India
- Thiess Contractors Indonesia
- Global Green Power PLC Corporation, Philippines
- Orica Australia Pty. Ltd.
- Maharashtra Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- IHS Mccloskey Coal Group - USA
- Semirara Mining Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Electricity Authority, New Zealand
- Formosa Plastics Group - Taiwan
- Electricity Generating Authority of Thailand
- Straits Asia Resources Limited - Singapore
- Goldman Sachs - Singapore
- Aboitiz Power Corporation - Philippines
- Trasteel International SA, Italy
- Krishnapatnam Port Company Ltd. - India
- SMG Consultants - Indonesia
- GMR Energy Limited - India
- The Treasury - Australian Government
- LBH Netherlands Bv - Netherlands
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- Bukit Makmur.PT - Indonesia
- Sical Logistics Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jorong Barutama Greston.PT - Indonesia
- Africa Commodities Group - South Africa
- Lanco Infratech Ltd - India
- TeaM Sual Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Uttam Galva Steels Limited - India
- White Energy Company Limited
- The University of Queensland
- PowerSource Philippines DevCo
- Kapuas Tunggal Persada - Indonesia
- Economic Council, Georgia
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- Ministry of Finance - Indonesia
- Medco Energi Mining Internasional
- AsiaOL BioFuels Corp., Philippines
- Maheswari Brothers Coal Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- McConnell Dowell - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Development Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- MS Steel International - UAE
- Carbofer General Trading SA - India
- Madhucon Powers Ltd - India
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- Wilmar Investment Holdings
- Latin American Coal - Colombia
- Rio Tinto Coal - Australia
- Borneo Indobara - Indonesia
- Sree Jayajothi Cements Limited - India
- Australian Coal Association
- Singapore Mercantile Exchange
- Jaiprakash Power Ventures ltd
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
- Pendopo Energi Batubara - Indonesia
- Interocean Group of Companies - India
- Banpu Public Company Limited - Thailand
- Star Paper Mills Limited - India
- Toyota Tsusho Corporation, Japan
- Eastern Energy - Thailand
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Power Finance Corporation Ltd., India
- Meenaskhi Energy Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Binh Thuan Hamico - Vietnam
- Energy Link Ltd, New Zealand
- Cement Manufacturers Association - India
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- Bharathi Cement Corporation - India
- Dalmia Cement Bharat India
- European Bulk Services B.V. - Netherlands
- IEA Clean Coal Centre - UK
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Sidhee Cement - India
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- PTC India Limited - India
- Chettinad Cement Corporation Ltd - India
- Georgia Ports Authority, United States
- Port Waratah Coal Services - Australia
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- Kobexindo Tractors - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- ASAPP Information Group - India
- Altura Mining Limited, Indonesia
- Indogreen Group - Indonesia
- Merrill Lynch Commodities Europe
- Bhoruka Overseas - Indonesia
- Mintek Dendrill Indonesia
- Timah Investasi Mineral - Indoneisa
- Malabar Cements Ltd - India
- CNBM International Corporation - China
- Parry Sugars Refinery, India
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Independent Power Producers Association of India
- Tamil Nadu electricity Board
- Sarangani Energy Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- SMC Global Power, Philippines
- Kalimantan Lumbung Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- OPG Power Generation Pvt Ltd - India
- Edison Trading Spa - Italy
- Standard Chartered Bank - UAE
- Savvy Resources Ltd - HongKong
- Vijayanagar Sugar Pvt Ltd - India
- VISA Power Limited - India
- Mercator Lines Limited - India
- Manunggal Multi Energi - Indonesia
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- Orica Mining Services - Indonesia
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- Gujarat Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Grasim Industreis Ltd - India
- South Luzon Thermal Energy Corporation
- GAC Shipping (India) Pvt Ltd
- Barasentosa Lestari - Indonesia
- Heidelberg Cement - Germany
- GN Power Mariveles Coal Plant, Philippines
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Vizag Seaport Private Limited - India
- CIMB Investment Bank - Malaysia
- Deloitte Consulting - India
- Indo Tambangraya Megah - Indonesia
- Coastal Gujarat Power Limited - India
- Siam City Cement PLC, Thailand
- Miang Besar Coal Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Billiton Holdings Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Attock Cement Pakistan Limited
- Coalindo Energy - Indonesia
- Anglo American - United Kingdom
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- Xindia Steels Limited - India
- London Commodity Brokers - England
- Ministry of Mines - Canada
- Videocon Industries ltd - India
- Metalloyd Limited - United Kingdom
- Kumho Petrochemical, South Korea
- Simpson Spence & Young - Indonesia
|
| |
| |
|
