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.
|
|
Monday, 22 September 14
CFR SOUTH CHINA COAL SWAPS LOST ON DAY, WEEK AND MONTH
COALspot.com: API 8 CFR South China Coal swap for delivery in October 2014 decreased US$ 3.10 (-4.50%) month over month and $ 0.95 PT MT week over ...
Monday, 22 September 14
INDONESIAN COAL SWAPS LOST WEEK ON WEEK AND MONTH OVER MONTH
COALspot.com: Indonesian coal swaps for average October 2014 increased US$ 0.35 (+0.69%) day on day and lost US$ 0.30 (-0.58%) per mt week on week. ...
Sunday, 21 September 14
CAPE INDEX LOST 17% W-O-W ; BALTIC DRY PLUNGES 106 POINTS
COALspot.com: This week the freight market softened a bit compared to last week.
BDI fell 8.97% week on week and closed BDI at 1075 points on ...
Friday, 19 September 14
U.S. WEEKLY COAL PRODUCTION RELATIVELY FLAT AT +0.1% - EIA
COALspot.com – United States the world's second largest coal producer, produced approximately 19.20 million short tons (mmst) of coal in ...
Friday, 19 September 14
PRICES FOR DRY BULK CARRIERS HAVEN'T CORRECTED ENOUGH, DESPITE LOWER THAN EXPECTED FREIGHT RATES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A lot has been said and written about the looming dry bulk market recovery over the past few months. However, even if this hasn’t been materi ...
|
|
|
Showing 3476 to 3480 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Bhatia International Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- Latin American Coal - Colombia
- Kalimantan Lumbung Energi - Indonesia
- Oldendorff Carriers - Singapore
- San Jose City I Power Corp, Philippines
- Energy Link Ltd, New Zealand
- Xindia Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Indogreen Group - Indonesia
- Australian Coal Association
- Economic Council, Georgia
- Globalindo Alam Lestari - Indonesia
- Mjunction Services Limited - India
- VISA Power Limited - India
- Straits Asia Resources Limited - Singapore
- Aboitiz Power Corporation - Philippines
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- Cement Manufacturers Association - India
- Eastern Energy - Thailand
- Energy Development Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bhushan Steel Limited - India
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- The University of Queensland
- Parliament of New Zealand
- India Bulls Power Limited - India
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- Pendopo Energi Batubara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- Indika Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Posco Energy - South Korea
- Sojitz Corporation - Japan
- Romanian Commodities Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Mercator Lines Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Bhoruka Overseas - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Jindal Steel & Power Ltd - India
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Global Coal Blending Company Limited - Australia
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- PowerSource Philippines DevCo
- Kepco SPC Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- White Energy Company Limited
- SMG Consultants - Indonesia
- Kideco Jaya Agung - Indonesia
- Borneo Indobara - Indonesia
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Salva Resources Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Agrawal Coal Company - India
- Global Green Power PLC Corporation, Philippines
- Coal and Oil Company - UAE
- Bukit Makmur.PT - Indonesia
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- Thiess Contractors Indonesia
- Heidelberg Cement - Germany
- Anglo American - United Kingdom
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Star Paper Mills Limited - India
- Chettinad Cement Corporation Ltd - India
- Parry Sugars Refinery, India
- Kaltim Prima Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Uttam Galva Steels Limited - India
- Formosa Plastics Group - Taiwan
- Samtan Co., Ltd - South Korea
- Vedanta Resources Plc - India
- Sree Jayajothi Cements Limited - India
- Planning Commission, India
- Singapore Mercantile Exchange
- Dalmia Cement Bharat India
- Simpson Spence & Young - Indonesia
- Therma Luzon, Inc, Philippines
- Attock Cement Pakistan Limited
- McConnell Dowell - Australia
- Orica Australia Pty. Ltd.
- European Bulk Services B.V. - Netherlands
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Billiton Holdings Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- Chamber of Mines of South Africa
- Semirara Mining Corp, Philippines
- GVK Power & Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Power Finance Corporation Ltd., India
- Independent Power Producers Association of India
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- Barasentosa Lestari - Indonesia
- Baramulti Group, Indonesia
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- South Luzon Thermal Energy Corporation
- The Treasury - Australian Government
- GN Power Mariveles Coal Plant, Philippines
- CNBM International Corporation - China
- Vijayanagar Sugar Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- Commonwealth Bank - Australia
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Tamil Nadu electricity Board
- Sinarmas Energy and Mining - Indonesia
- Meralco Power Generation, Philippines
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- Vizag Seaport Private Limited - India
- PTC India Limited - India
- Bayan Resources Tbk. - Indonesia
- Ambuja Cements Ltd - India
- Bangladesh Power Developement Board
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Makarim & Taira - Indonesia
- Banpu Public Company Limited - Thailand
- Bukit Baiduri Energy - Indonesia
- Thai Mozambique Logistica
- ASAPP Information Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Mintek Dendrill Indonesia
- Indian Energy Exchange, India
- IHS Mccloskey Coal Group - USA
- Mercuria Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karaikal Port Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Medco Energi Mining Internasional
- SMC Global Power, Philippines
- Metalloyd Limited - United Kingdom
- Siam City Cement - Thailand
- Lanco Infratech Ltd - India
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- Essar Steel Hazira Ltd - India
- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- Coalindo Energy - Indonesia
- Videocon Industries ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Business Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Mines - Canada
- Leighton Contractors Pty Ltd - Australia
- Renaissance Capital - South Africa
- Malabar Cements Ltd - India
- Bharathi Cement Corporation - India
- Gujarat Sidhee Cement - India
- Grasim Industreis Ltd - India
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
- Kapuas Tunggal Persada - Indonesia
|
| |
| |
|
