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.
|
|
Saturday, 27 September 14
MORE COAL MINERS AGREE TO AMEND CONTRACTS - THE JAKARTA POST
The Energy and Mineral Resources Ministry is in a rush to beat a deadline for the conclusion of numerous memorandums of understanding (MoUs) with t ...
Friday, 26 September 14
INDIA SUPREME COURT RULING TO HIT STEEL, UTILITY EARNINGS, SAYS FITCH
COALspot.com: The 24 September Supreme Court of India (SCI) decision to cancel almost every coal block allocation since 1993 will have a negative f ...
Friday, 26 September 14
U.S WEEKLY COAL PRODUCTION FELL 1.8% WEEK OVER WEEK, SAYS EIA
COALspot.com – United States the world's one of largest coal producers, produced approximately 18.80 million short tons (mmst) of c ...
Friday, 26 September 14
ORACLE SIGNS EPC FRAMEWORK AGREEMENT WITH SEPCO FOR COAL MINE AND POWER PLANT IN PAKISTAN
COALspot.com: Oracle Coalfields PLC, the UK developer of a lignite coal mine and power plant in the south-eastern Sindh Province, Pakistan, has ann ...
Friday, 26 September 14
NEWCASTLMAXES ARE THE MOST SOUGHT AFTER VESSELS BY SHIP OWNERS TODAY SAYS VESSELS VALUE
KNOWLEDGE TO ELEVATE
Determining a ship’s fair value can be a very tricky business, especially when you’re the one paying. As such ...
|
|
|
Showing 3466 to 3470 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Kapuas Tunggal Persada - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Medco Energi Mining Internasional
- Malabar Cements Ltd - India
- The Treasury - Australian Government
- Interocean Group of Companies - India
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- Jaiprakash Power Ventures ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Madhucon Powers Ltd - India
- Orica Australia Pty. Ltd.
- Videocon Industries ltd - India
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- Kaltim Prima Coal - Indonesia
- Vedanta Resources Plc - India
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Metalloyd Limited - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- VISA Power Limited - India
- Meenaskhi Energy Private Limited - India
- Posco Energy - South Korea
- India Bulls Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Kalimantan Lumbung Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Tamil Nadu electricity Board
- Semirara Mining Corp, Philippines
- Cement Manufacturers Association - India
- Bukit Baiduri Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- Bangladesh Power Developement Board
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- SMG Consultants - Indonesia
- Borneo Indobara - Indonesia
- Edison Trading Spa - Italy
- Oldendorff Carriers - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Indian Oil Corporation Limited
- Energy Development Corp, Philippines
- Mjunction Services Limited - India
- New Zealand Coal & Carbon
- Minerals Council of Australia
- Formosa Plastics Group - Taiwan
- Altura Mining Limited, Indonesia
- SN Aboitiz Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Agrawal Coal Company - India
- Renaissance Capital - South Africa
- Deloitte Consulting - India
- Planning Commission, India
- Marubeni Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Georgia Ports Authority, United States
- Central Electricity Authority - India
- South Luzon Thermal Energy Corporation
- Bulk Trading Sa - Switzerland
- Tata Chemicals Ltd - India
- Bhushan Steel Limited - India
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Vizag Seaport Private Limited - India
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Larsen & Toubro Limited - India
- Ambuja Cements Ltd - India
- PowerSource Philippines DevCo
- Therma Luzon, Inc, Philippines
- Coalindo Energy - Indonesia
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- Baramulti Group, Indonesia
- Kideco Jaya Agung - Indonesia
- Mercator Lines Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Finance - Indonesia
- Sakthi Sugars Limited - India
- GVK Power & Infra Limited - India
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- Goldman Sachs - Singapore
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Leighton Contractors Pty Ltd - Australia
- Indonesian Coal Mining Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kobexindo Tractors - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Electricity Generating Authority of Thailand
- Binh Thuan Hamico - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- The State Trading Corporation of India Ltd
- Ind-Barath Power Infra Limited - India
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Star Paper Mills Limited - India
- Economic Council, Georgia
- Power Finance Corporation Ltd., India
- Thiess Contractors Indonesia
- Sical Logistics Limited - India
- Gujarat Sidhee Cement - India
- ASAPP Information Group - India
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- Simpson Spence & Young - Indonesia
- Rashtriya Ispat Nigam Limited - India
- PNOC Exploration Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Electricity Authority, New Zealand
- Dalmia Cement Bharat India
- Attock Cement Pakistan Limited
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Riau Bara Harum - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Holcim Trading Pte Ltd - Singapore
- CNBM International Corporation - China
- Salva Resources Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- PTC India Limited - India
- Trasteel International SA, Italy
- Price Waterhouse Coopers - Russia
- CIMB Investment Bank - Malaysia
- Antam Resourcindo - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Petron Corporation, Philippines
- Mintek Dendrill Indonesia
- The University of Queensland
- Bhoruka Overseas - Indonesia
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Ministry of Mines - Canada
- Parliament of New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Merrill Lynch Commodities Europe
- Heidelberg Cement - Germany
- Coal and Oil Company - UAE
- Australian Coal Association
- Iligan Light & Power Inc, Philippines
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- Mercuria Energy - Indonesia
- Indian Energy Exchange, India
- Energy Link Ltd, New Zealand
- Romanian Commodities Exchange
- Semirara Mining and Power Corporation, Philippines
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Essar Steel Hazira Ltd - India
- Barasentosa Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Indogreen Group - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- London Commodity Brokers - England
- Port Waratah Coal Services - Australia
- Intertek Mineral Services - Indonesia
- Jindal Steel & Power Ltd - India
- Lanco Infratech Ltd - India
- Thai Mozambique Logistica
- Orica Mining Services - Indonesia
- Latin American Coal - Colombia
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- Aditya Birla Group - India
- Indo Tambangraya Megah - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Samtan Co., Ltd - South Korea
- Eastern Energy - Thailand
- Savvy Resources Ltd - HongKong
- Coastal Gujarat Power Limited - India
- Ministry of Transport, Egypt
- Karaikal Port Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Kumho Petrochemical, South Korea
- SMC Global Power, Philippines
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Parry Sugars Refinery, India
- MS Steel International - UAE
- Africa Commodities Group - South Africa
- Commonwealth Bank - Australia
- Siam City Cement - Thailand
- AsiaOL BioFuels Corp., Philippines
- Anglo American - United Kingdom
- Aboitiz Power Corporation - Philippines
- Carbofer General Trading SA - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
|
| |
| |
|
