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Tuesday, 14 October 14
KING COAL UNDER ATTACK? - EVA TZIMA
 With the last quarter of the year being well underway and with no strong signs that the Dry Bulk market could be ready for a big positive reversal, everyone is thirsty for market developments that could more clearly set out the path of freights in the following months. While most of the attention on the dry bulker side is usually placed on iron ore around this time of the year, coal recently made head-lines as well, following the new policies set in place by the Chinese government in relation to its trade. As the country remains the world’s biggest producer and consumer of coal, recently announced plans to set a floor on the quality of coal consumed domestically, has brought the Asia Pacific dry bulk trade to the spotlight.
The Chinese government has during the past years tried to pursue more environmentally friendly policies and coal consumption has been one of the main issues those policies have tried to tackle. Up until recently the pledge to reduce coal usage in the Chinese energy mix, without nevertheless setting a specific limit of coal consumption, has been the only solid promise by the government to intervene in the trade of the commodity. Earlier this year though the country’s administration started considering a ban on lower-quality coal imports and despite the fact that different versions of this policy were being drafted since 2013, it was only a few weeks ago that the final regulation was set out. So what is the impact on imports and most importantly; are dry bulk rates in the Pacific due for another hit?
As China ranks second amongst those countries with the biggest coal reserves internationally, the country’s need to import coal has been inextricably linked with its continuously growing appetite for the commodity, as well as the fact that importing coal would come cheaper compared to producing it and transporting it domestically, since the main coal producing provinces are located far from the major coal consuming city centres. While S. Africa also managed to get a piece of the pie in the most recent years, Indonesia and Australia have been traditionally those countries satisfying the largest portion of Chinese imports.
The new regulations, which are set to come into effect as soon as January 1st 2015, will restrict the import and local sale of coal with ash content over 16% and sulphur content over 1%, in main Chinese population centres, while a total ban will be imposed on the sale, transportation and import of coal in cases where ash and sulphur content exceed 40% and 3% respectively.
At a first glance, with the biggest chunk of Australian coal having an ash content of more than 20%, it seems that Chinese coal imports from the Land Down Under will be the ones that could take a hit. Panamax up to Capesize range vessels are usually the ones facilitating this trade, so pressure on rates for these segments is logically expected. Whether this pressure is going to last is still questionable at this stage though. We could well see sooner rather than later coal producers in Australia invest in upgrading the quality of their production to meet the new quality standards, while even in the case that they don’t, Australian production could most probably be directed towards countries like India that has been displaying growing appetite for coal.
At the same time, as quality restrictions also apply to Chinese domestic production, the time it will take for local producers to adjust to the new standards could also be a period during which imports will have to remain strong. Since the majority of Indonesian production is meeting the recently announced quality standards, China will most probably turn to Indonesia to increase its imports. Although there is a chance that Indonesia’s own recent regulations with regards to export permits could possibly delay some of the upside created by the squeeze out of Australian exports, once these issues are streamlined, we could soon see Supramax rates that facilitate this trade enjoying some nice upside, while Ultramax rates could also benefit as this segment is expected to get a piece of that trade as well in the near future.
So even though in the short to medium term Australian exports to China might take a hit, seaborne coal trade volumes in the Pacific could soon find their balance back. Australians might improve the quality of their production and lure back demand ex China, or they could shift their imports to countries like India limiting the downside on Panamax – Cape rates. On top of that, coal exports to China from other countries, like Indonesia, might intensify, boosting earnings for Supramax/Ultramax tonnage.
Some argue that what could actually hurt Chinese growth of coal usage is the growth rate of coal intensive sectors in the country. The growth in industries like those of crude steel, cement, and pig iron, which are heavily using coal as an energy source, has slowed down and that could also put pressure on coal volumes. But in my opinion, as these sectors are bound to continue operations, despite any short or longer term growth squeeze, they will still remain dependent on coal and the fact that their profit margins might stay under pressure, will be exactly what will support the usage of coal, which still re-mains one of the cheapest options for energy out there, a knowledge well adopted across the Asia Pacific region.
Compiled by:
Intermodal Research & Valuations
Analysts:
Mr. George Lazaridis
Ms. Eva Tzima
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no re-producing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
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Wednesday, 15 October 14
SHIPOWNER NOT LIABLE FOR CARGO DAMAGE RESULTING FROM POOR STOWAGE - CLYDE & CO
KNOWLEDGE TO ELEVATE
Russian metal trading company Yuzhny Zavod Metall Profil (YZMP), the holder of a CONGEN 1994 bill of lading, took delivery o ...
Wednesday, 15 October 14
NEWCASTLE SHIPPED 13.96 MILLION TONS OF COAL IN SEPTEMBER; UP 5.72%
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1,227.7 wor ...
Tuesday, 14 October 14
THE NEW CHINESE TRANSPORTATION TAX LAW: WHAT DOES IT MEAN FOR GREEK SHIPPING? - DELOITTE
China has recently promulgated a new law which imposes tax on profits from freights of inbound routes. The objective of the new tax law titled &ldq ...
Monday, 13 October 14
CHINESE COAL IMPORT TARIFFS YET ANOTHER BLOW TO AUSTRALIAN COAL EXPORTS - TIM BUCKLEY
COALspot.com: China’s unexpected move to reintroduce thermal coal import tariffs of 6% will have a materially negative impact on the viabilit ...
Monday, 13 October 14
NEWCASTLE COAL SWAP FOR Q1' 2015 DELIVERY CLOSED AT US$ 54.92, SGX DATA SHOWS
COALspot.com: API 5 FOB Newcastle Coal swap for delivery Q4' 2014 decreased US$ 0.80 (-1.46%) month over month and US$ 0.52 (-0.95%) week over ...
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- TeaM Sual Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Electricity Authority, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Riau Bara Harum - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Mercuria Energy - Indonesia
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- Therma Luzon, Inc, Philippines
- Coal and Oil Company - UAE
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- Tata Chemicals Ltd - India
- Sarangani Energy Corporation, Philippines
- Siam City Cement - Thailand
- Savvy Resources Ltd - HongKong
- Tamil Nadu electricity Board
- Kapuas Tunggal Persada - Indonesia
- Banpu Public Company Limited - Thailand
- Energy Development Corp, Philippines
- MS Steel International - UAE
- Holcim Trading Pte Ltd - Singapore
- Eastern Energy - Thailand
- Xindia Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- IEA Clean Coal Centre - UK
- Toyota Tsusho Corporation, Japan
- Sojitz Corporation - Japan
- Vijayanagar Sugar Pvt Ltd - India
- GMR Energy Limited - India
- Meenaskhi Energy Private Limited - India
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- Bukit Baiduri Energy - Indonesia
- Malabar Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Directorate General of MIneral and Coal - Indonesia
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Ambuja Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Kumho Petrochemical, South Korea
- Madhucon Powers Ltd - India
- Mercator Lines Limited - India
- Economic Council, Georgia
- European Bulk Services B.V. - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- Binh Thuan Hamico - Vietnam
- San Jose City I Power Corp, Philippines
- Merrill Lynch Commodities Europe
- Planning Commission, India
- ASAPP Information Group - India
- Bharathi Cement Corporation - India
- Siam City Cement PLC, Thailand
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- Standard Chartered Bank - UAE
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- Mintek Dendrill Indonesia
- Global Business Power Corporation, Philippines
- Latin American Coal - Colombia
- Ministry of Mines - Canada
- Coalindo Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Indonesian Coal Mining Association
- Bulk Trading Sa - Switzerland
- Bukit Makmur.PT - Indonesia
- Central Java Power - Indonesia
- Carbofer General Trading SA - India
- Kohat Cement Company Ltd. - Pakistan
- The University of Queensland
- Heidelberg Cement - Germany
- Gujarat Mineral Development Corp Ltd - India
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- Thiess Contractors Indonesia
- Larsen & Toubro Limited - India
- Posco Energy - South Korea
- Central Electricity Authority - India
- Deloitte Consulting - India
- Grasim Industreis Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- SMG Consultants - Indonesia
- Australian Commodity Traders Exchange
- CIMB Investment Bank - Malaysia
- Anglo American - United Kingdom
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indian Oil Corporation Limited
- Cigading International Bulk Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sical Logistics Limited - India
- Altura Mining Limited, Indonesia
- Trasteel International SA, Italy
- Makarim & Taira - Indonesia
- Lanco Infratech Ltd - India
- Agrawal Coal Company - India
- Indo Tambangraya Megah - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Romanian Commodities Exchange
- Intertek Mineral Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Timah Investasi Mineral - Indoneisa
- Minerals Council of Australia
- Kaltim Prima Coal - Indonesia
- Interocean Group of Companies - India
- PetroVietnam Power Coal Import and Supply Company
- LBH Netherlands Bv - Netherlands
- Indian Energy Exchange, India
- Goldman Sachs - Singapore
- Orica Mining Services - Indonesia
- Barasentosa Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Chamber of Mines of South Africa
- Edison Trading Spa - Italy
- Independent Power Producers Association of India
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Finance - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- Bhoruka Overseas - Indonesia
- Global Green Power PLC Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Thai Mozambique Logistica
- Bangladesh Power Developement Board
- Eastern Coal Council - USA
- TNB Fuel Sdn Bhd - Malaysia
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Attock Cement Pakistan Limited
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- Baramulti Group, Indonesia
- Mjunction Services Limited - India
- Ministry of Transport, Egypt
- Power Finance Corporation Ltd., India
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- Wood Mackenzie - Singapore
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- VISA Power Limited - India
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- PowerSource Philippines DevCo
- IHS Mccloskey Coal Group - USA
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Pipit Mutiara Jaya. PT, Indonesia
- ICICI Bank Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Renaissance Capital - South Africa
- Videocon Industries ltd - India
- Gujarat Sidhee Cement - India
- Cement Manufacturers Association - India
- Maheswari Brothers Coal Limited - India
- Pendopo Energi Batubara - Indonesia
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- Bayan Resources Tbk. - Indonesia
- International Coal Ventures Pvt Ltd - India
- Marubeni Corporation - India
- Singapore Mercantile Exchange
- Iligan Light & Power Inc, Philippines
- India Bulls Power Limited - India
- PTC India Limited - India
- Parliament of New Zealand
- Manunggal Multi Energi - Indonesia
- Petron Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- The State Trading Corporation of India Ltd
- Jaiprakash Power Ventures ltd
- Aditya Birla Group - India
- Australian Coal Association
- GAC Shipping (India) Pvt Ltd
- Metalloyd Limited - United Kingdom
- Price Waterhouse Coopers - Russia
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- Orica Australia Pty. Ltd.
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- London Commodity Brokers - England
- Kobexindo Tractors - Indoneisa
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
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