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Punit Oza - Iron Ore Exports & Coal Imports in India - Impact of Shipping Markets

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Punit Oza - Iron Ore Exports & Coal Imports in India - Impact of Shipping Markets

  1. 1. Iron Ore Exports & Coal Imports in India – Impact of Shipping Markets Mumbai, 27 Nov 2013
  2. 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. 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. 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. 5. Exports of Iron Ore from India Source: Bloomberg / Klaveness Research 5
  6. 6. Imports of Coal into India Source: Bloomberg / Klaveness Research 6
  7. 7. Impact of Thermal Coal Imports Source: Bloomberg / Klaveness Research 7
  8. 8. The Iron Ore – Coal Equation – Quarterly Source: Bloomberg / Klaveness Research 8
  9. 9. The Iron Ore – Coal Equation Annual Source: Bloomberg / Klaveness Research 9
  10. 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. 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. 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. 13. Iron Ore Export – Seasonal Variation Source: Bloomberg / Klaveness Research 13
  14. 14. Coal Imports – Seasonal Variation Source: Bloomberg / Klaveness Research 14
  15. 15. Coal Imports – Parcel Sizes Source: Bloomberg / Klaveness Research 15
  16. 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. 17. The Supramax Market & Routes Source: Baltic Exchange / Klaveness Research 17
  18. 18. The Supramax Routes – The Correlations Source: Baltic Exchange / Klaveness Research 18
  19. 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. 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. 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. 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. 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. 24. India Coal Imports to rebound sharply Source:Klaveness Research/Macquarie 24
  25. 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. 26. Thank You Punit Oza Torvald Klaveness www.klaveness.com

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