trades affect Capesize and Panamax markets while the smaller Panamax and

Trades affect capesize and panamax markets while the

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trades affect Capesize and Panamax markets, while the smaller Panamax and Handysize rates are affected by the seaborne demand for other commodities such as grain, other agricultural dry bulk and steel products. Increased trade over longer distances tends to lead to higher freight rates (on a per tonne basis). Ship charters between Pacific and Atlantic markets are limited compared with trade within these markets, but are not uncommon and may increase if the price of coal is high and the cost of freight is low. South Africa is perfectly poised to supply both the Atlantic and Pacific markets due to its location, 17 Impacts of seaborne trade on coal importing countries – global summary Increasing role of international trade Figure 8 Freight rates, FOB coal and Brent crude trends since 2000 (BP, 2011; MCIS, 2011) 0 20 40 60 80 100 120 140 0 20 40 60 80 100 120 140 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 average Capesize average Panamax RBCT FOB $/t $/bbl Freight and coal FOB, $/t Brent crude, $/bbl
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being almost equidistant at 7000–7500 nautical miles from each of the major coal import locations in Japan and ARA Europe. The price of coal in each market naturally determines which market South African exporters will choose to settle their business with; increasingly this appears to be the Pacific for now. In a global context, China’s switch away from being a net exporter of coal to being a net importer has major implications with regard to the direction of trade flow in the Asia-Pacific region, boosting demand for seaborne-traded coal while demand weakens in Europe. This additional demand from China, India, Vietnam, Chinese Taipei, and Korea adds pressure on export countries to develop capacity in both rail and port facilities. Conveniently, Indonesia stepped in to exploit this growth potential, to become the world’s leading exporter of steam coal in the world; Australia remains the lead exporter when including coking coal exports. Force majeure or industrial action occasionally create short-term shortages. Depleting stockpiles due to high demand can add pressure to supplies, trimming the surplus stocks that normally buffer against shortages in deliveries. Coal prices tend to rise during periods when supplies tighten, suggesting the capacity to mine, convey/rail, and export coal is still lagging behind demand in some countries. However, if demand destruction occurs as a result of the high prices, then prices will settle ultimately at a lower level. Port and inland transportation does not always benefit from high coal prices as port and rail rates are priced separately, often inflation linked or similar, but not usually a direct function of the market FOB or CIF cost of coal. 18 IEA CLEAN COAL CENTRE Increasing role of international trade
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5 Trade trends in major importing countries 19 Impacts of seaborne trade on coal importing countries – global summary While the pattern of coal exports has changed since the 1970s ( see Figure 4), a similar shift occurred amongst the importers; import demand shifted away from the Atlantic market towards the Pacific market. Figure 9 illustrates the share of major coal importers (by country) since 1971. The dashed line
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