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Iron Ore & Coal Trade in India Impact of Shipping Markets
- 1. Iron Ore Exports & Coal Imports in India – Impact of Shipping Markets Mumbai, 27 Nov 2013
- 2. Agenda • • • • • • Introduction to Torvald Klaveness Iron Ore & Coal Trade in India – Total Picture A fine balance & then came the Ban The trade as it stands today Impact of this change on Shipping The future - Coal Imports – Standing tall and all alone! • Nothing is Impossible!
- 3. Torvald Klaveness A leading dry bulk company for more than 65 years • Founded in 1946 by Mr. Torvald Klaveness • Owned and managed by Trond Harald Klaveness • A history of partnerships and joint ventures • Industry focus with emphasis on transparency • Sharing our knowledge with our partners • Entrepreneurship and innovation in focus
- 4. Torvald Klaveness - taking the pulse on the global economy every day Norway Head office 90 employees Shanghai, China 6 employees Manila, Philippines 19 employees Singapore 29 employees More than 2000 transactions per year 4
- 5. Exports of Iron Ore from India Source: Bloomberg / Klaveness Research 5
- 6. Imports of Coal into India Source: Bloomberg / Klaveness Research 6
- 7. Impact of Thermal Coal Imports Source: Bloomberg / Klaveness Research 7
- 8. The Iron Ore – Coal Equation – Quarterly Source: Bloomberg / Klaveness Research 8
- 9. The Iron Ore – Coal Equation Annual Source: Bloomberg / Klaveness Research 9
- 10. The Trade Flows before the Iron Ore Export Ban • Healthy Balance between Coal Imports and Iron Ore Exports • The Golden Triangle – Iron Ore ex WC India to China – 28 days! – Ballast ex North China to Indonesia – 9 days! – Coal ex Indonesia to WC India – 25 days! – Perfect Trade Flow • Question: Which was the Front Haul??
- 11. The Trade Flows today – An Imperfect World! • Negligible Iron Ore movements and rising Coal imports! • The Not-So Golden Rectangle – Ballast ex North China to Indonesia – 9 days! – Coal ex Indonesia to WC India – 25 days! – What next after WC India?? Ballast back to Indonesia?? Other Possibilities?? • Breaking of the Symbiant Circle!
- 12. Diving Deeper into Coal Imports • Seasonality over the Quarters – Q2 is the busiest quarter • The Shipment Size for Coal Imports – Cape Size is the biggest beneficiary of improved port infrastructure • ECI v WCI – Seasonal Patterns – Ports v Anchorage – Influence on Parcel Size
- 13. Iron Ore Export – Seasonal Variation Source: Bloomberg / Klaveness Research 13
- 14. Coal Imports – Seasonal Variation Source: Bloomberg / Klaveness Research 14
- 15. Coal Imports – Parcel Sizes Source: Bloomberg / Klaveness Research 15
- 16. Impact of the breaking of the Symbiant Circle! • Front Haul became Back Haul and Vice Versa! • Impact on the counterparties – Survival of the fittest! • Importance of Minor Bulks – Salt, Bauxite & Grain! • Looking outward for return cargoes – PG, South Africa & even EC South America!
- 17. The Supramax Market & Routes Source: Baltic Exchange / Klaveness Research 17
- 18. The Supramax Routes – The Correlations Source: Baltic Exchange / Klaveness Research 18
- 19. The Counterparties! • Insane market fixtures ex India during the boom period – Port Melbourne! • Shock Therapy – Disappearance & Defaults • Minority players have emerged as Majority market movers • Switching between the commodities
- 20. After Iron Ore?? • Minor Bulks – Seasonal and biased towards Supramaxes • From WC India – Persian Gulf?? – Piracy?? – Regular Flow of cargoes – Not a Symbiant Circle • From EC India – South Africa – Reality – Ballast back to Indonesia!
- 21. Indian power generation increases steadily - Led by coal power growth • • Coal power growth – Avg. – 7.9% • Volatile hydro • Gas/oil non competitive • Source: Nena Total power growth – Avg. - 5.6% Power use per capita only 1/5 of China! 21
- 22. Tremendeous growth in Indian coal fired power plants • • Plants under construction – 90 GW mid 2012 – Probably some 88 GW mid 2013 – Equivalent to some • 200-250 Mt coal use • Advanced development – 40-50 GW • Source: Nena Tremendous growth 20072012 Growth set to continue 22
- 23. Nearly all new coal power plants run on imported coal Imported % of coal consumption Domestic coal output stalling – Uncertain future growth • Coal power capacities are increasing fast • Source: Nena • Import growth «must» continue ….or even accelerate in absolute terms – 20-30+ Mt/y (30 Mt last 12 mnths) 23
- 24. India Coal Imports to rebound sharply Source:Klaveness Research/Macquarie 24
- 25. The Future Ahead • Acceleration in Coal Imports • Differentials between East and West Coast India • More Seasonal Variance and Volatility • Minor Bulks – Price Sensitivity • A China in the making! – One way traffic! • Iron Ore coming back?? • A small step for man…
- 26. Thank You Punit Oza Torvald Klaveness www.klaveness.com
Notas do Editor
- Good Afternoon Ladies and Gentlemen. It is a pleasure to be invited to speak on the Impact on Shipping Markets of Iron Ore Exports and Coal Imports in the Indian Market. I would like to thank the organisers for giving me this opportunity.
- I would like to quickly go through the Agenda that I intend to follow during my presentation. I will start with a brief introduction to Torvald Klaveness, the company that I work for and which has been deeply involved with the Indian Shipping market. I want to then present a total picture of the Iron Ore Exports and the Coal Imports – the way they were and the way they are today. I will discuss the pre-iron ore ban scenario, where there was a good balance between Imports and Exports and then the Ban was put in place. I will then look at the trade as it stands today and look at the impact this change has on shipping and freight. I will illustrate the impact through predominantly example of supramax freight rates. Then we have to look at the future and see how we expect Coal imports to grow continuously and in huge volumes, dominating the Indian Bulk trade. Finally on a positive note, I hope the ban can be overturned soon and what seems impossible is absolutely possible – Nothing is impossible!
- Torvald Klaveness is a 67 year company and a well recognised one with a history of partnerships, JVs. The values are clear and transparent. It is still a family company with Mr Trond Klaveness being personally active in managing the company.
- Klaveness has offices in 4 countries with the head office in Oslo. Asian operations have expanded substantially with Singapore office growing from 3 employees in 2007 when it was started to 29 employees today. We are today active players in Supramaxes, Panamaxes and Post Panamaxes throughout the world.
- Let us start with looking at where the Iron Ore exports have gone over the last 7 years. The boom was already in place by 2007 and as you can see the export volumes continued to crow up until 2010 and then the ban came into place and we saw the volume disappearing as the exports plummeted from 33 Mill Mts in Q1 2010 to 3 Mill Mts on Q1 2013 – 91 percent drop over this period.
- During the same period, Coal imports have grown from 17 Mill mts in Q1 2009 to 40 Mill Mts in !Q 2013. Till the ban came into place, the imports and exports were quite finely balanced, if not biased towards exports. Things were going well both for importers and exporters.
- From being a minor importer of coal at the beginning of the new century, the country market share of the global market (specially for Thermal coal) has increase steadily from 3 percent to 17 percent.