Panamax glut rises as China's hydropower output cuts coal shipping

2014-08-06

THE daily earnings for ships that get most spot cargoes from coal have plunged as much as 76 per cent as the Three Gorges and newer dams' hydro power displaces coal demand, reports Bloomberg.

Mainland hydro projects generated enough power to replace 26 million tonnes of coal - that's 370 shiploads. Extra power means fewer coal imports and weaker freight rates, says Morgan Stanley.

Efforts to curb air pollution will also cut imports of power-plant coal by 2.7 per cent this year, according to Goldman Sachs, following average increases of 29 per cent annually from 2010 to 2013.

"Because of reduced buying of coal domestically, the price has fallen, therefore there's less incentive to import," said Georgi Slavov, head of raw materials research at Marex Spectron Group, an energy and shipping derivatives brokerage.

Panamaxes were earning US$4,859 last week, according to data from the Baltic Exchange in London. Rates fell as low as $3,362 at the end of June. The record low was $3,336 in September 2012.

Mainland hydro projects generated enough power to replace 26 million tonnes of coal - that's 370 shiploads. Extra power means fewer coal imports and weaker freight rates, says Morgan Stanley.

Efforts to curb air pollution will also cut imports of power-plant coal by 2.7 per cent this year, according to Goldman Sachs, following average increases of 29 per cent annually from 2010 to 2013.

"Because of reduced buying of coal domestically, the price has fallen, therefore there's less incentive to import," said Georgi Slavov, head of raw materials research at Marex Spectron Group, an energy and shipping derivatives brokerage.

Panamaxes were earning US$4,859 on Friday, according to data from the Baltic Exchange in London. Rates fell as low as $3,362 at the end of June. The record low was $3,336 in September 2012.

Source from : shippingazette

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