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Monday, 21 November 11
CAPESIZES DRIVE MARKET LOWER, ANALYSTS DIVIDED ON DRY BULK OUTLOOK IN THE LONG RUN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
 The dry bulk market ended the week on a sour note, with the industry’s benchmark heading downwards to 1,895 points, which represented a slight fall of 0.16%. Capesizes were the main drivers of this trend, with the market falling by 0.71%. Still, the rest of the market segments were higher, with Panamaxes leading the pack, with an increase of 1.38%. In a recent report, consultant analysts PriceWaterHouseCoopers (PwC) said that the size of the Capesize fleet is forecast to rocket over the next three years at the same time as demand growth for seaborne iron ore is set to stagnate. In its report ‘Dry Bulk Shipping - Capes of no Hope?’, PwC said that there are currently 1,200 Capesize vessels worldwide at a value of $45billion but it is estimated that a further 450 more are on order over the next three years which will flood the market. While some of these orders may be delayed or cancelled, the global order book implies there will be rapid growth in seaborne transport of iron ore and coal, the main commodities carried by Capesizes.
David Smith, Assistant Director, PwC Strategy said that "as in other sectors of the shipping industry, dry bulk market participants are assuming that the next decade will look very much like the last in terms of patterns of trade flow growth. This has led to continued orders of new vessels on the assumption that Chinese demand for iron ore will continue to grow rapidly, but our estimates show that growth will be much lower in the future. The reality is that the ‘expected’ growth demand for iron ore is unlikely to materialise given the already high rate of infrastructure investment in China. This will leave a substantially increased number of vessels chasing a broadly unchanged level of cargo, with negative implications for rates. The situation, he added, will be exacerbated by the vessel building programmes being undertaken by the large mining companies. This will decrease the amount of cargo available on the spot market, at a time when the fleet is increasing dramatically, said Mr. Smith.
He went on to mention that "while rates in the Capesize sector have improved over the last three months, we see this as a temporary respite. Continued overcapacity is likely to push rates back towards operating costs, creating significant pressure for owners trading in the spot market.” “The worry, he said, is that these pressures will not be confined to the ship owning community. Low rates over a prolonged period will make it difficult for ship owners to keep up payments to the banks which have made substantial investments in the sector. Major sources of shipping finance include the UK, Germany, Greece, and Scandinavia, with UK banks alone having loans of over $50bn to the shipping sector” concluded Mr. Smith.
Meanwhile, in a separate report, shipowner Golden Ocean said that “most analysts agree that the dry bulk market does not have a demand problem. Iron ore and coal imports to China and coal imports to India are expected to grow at a steady pace over the next 5 years. A lot of new iron ore capacity will enter the market from 2013 onwards, which could put a downward pressure on international iron prices. This should support the freight market due to expensive, low quality Chinese iron ore production. However, the order book for the remainder of this year and 2012 is still a major concern and is the main reason why the forward freight assessment (FFA) is in backwardation.Despite the positive development in the freight market, asset values dropped further during third quarter. A five year old Capesize was priced at $39 million while a newbuilding resale was priced at approximately $50 million. There is a lot of uncertainty related to asset values going forward, but we observe that more forecasters state that they see limited downside” said Golden Ocean.
Analyzing the trade patterns noted during the third quarter, the company mentioned that “the third quarter of 2011 was yet another quarter which surpassed most analysts’ expectations. Given the large order book with record high deliveries both this year and next, it has been difficult to imagine a demand scenario which was able to cope with supply growth and maintain utilization at levels giving owners of dry bulk tonnage decent returns. Capesizes experienced a steady rise from bleak levels. Iron ore is the main commodity carried by Capesizes and China increased its import by more than 17 percent compared to same quarter previous year. Coal imports to China increased by almost 30 percent year-onyear.
In addition, other Asian countries contributed to the strong demand growth. Korea increased its iron ore imports by more than 20 percent and the rebuilding of Japan after the March 2011 earthquake and tsunami also contributed positively. These high growth numbers alone are still not sufficient to explain a utilization rate, which averaged 85 percent last quarter. Congestion remains as a positive factor for owners and between six to eight percent of vessel capacity was tied up in the third quarter” said Golden Ocean.
It further mentioned that “Chinese coastal trade increased by 17 percent during the third quarter and more than 300 million tons of dry bulk commodities was carried off the Chinese coast. On an annual basis, this represents 20 million dwt capacity. We have not seen the same focus on slow steaming in dry bulk as in other segments. However, analysis shows that average speed of the sailing fleet has dropped by more than two knots since 2008. This is not due to an effort to improve market conditions but rather a function of high bunker prices and optimizing earnings. Still, the focus has to be on the order book. So far this year approximately 205 vessels in the Capesize segment have been delivered, but at the same time almost 70 vessels of the same size have been scrapped. Delivery ratio compared to the official order book remains below 70 percent” concluded Golden Ocean.
Source: Nikos Roussanoglou, Hellenic Shipping
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Monday, 02 January 12
THE PROMISE OF INDIA: A BRIEF INTERRUPTION? - CLARKSONS / HELLENIC SHIPPING
Future growth in Indian seaborne coal imports has sometimes been considered as one of the largest potential upsides in the currently oversupplied dr ...
Sunday, 01 January 12
IS INDIA FOLLOWING INDONESIA TO STANDARDIZE COAL PRICES TO GET MAXIMUM BENEFITS?
COALspot.com - Coal India limited, an Indian state owned and world largest coal producer has introduced gross calorific value (GCV) based pricing me ...
Saturday, 31 December 11
GLOBALCOAL NEWC INDEX SURGED 2.32 PERCENT
COALspot.com - globalCOAL index in Newcastle Port, benchmark for Asian market, ended substantially higher, surged 2.32 percent to US$115.47 per ...
Saturday, 31 December 11
BORNEO LUMBUNG TO BUY BUMI STAKE, SWAP CEO - THE JAKARTA GLOBE
The Jakarta Globe, one of the leading english news paper in Indonesia reported yesterday, shareholders of Indonesian coking coal miner Borneo Lumbun ...
Friday, 30 December 11
CENTRAL GOVERNMENT SHOULD ISSUE PERMITS - THE JAKARTA POST
The Jakarta Post reported that, business associations from both the palm oil and mining sectors have suggested that the central government should re ...
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- TeaM Sual Corporation - Philippines
- Tamil Nadu electricity Board
- MS Steel International - UAE
- SN Aboitiz Power Inc, Philippines
- Posco Energy - South Korea
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- Edison Trading Spa - Italy
- Star Paper Mills Limited - India
- Samtan Co., Ltd - South Korea
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- Mjunction Services Limited - India
- White Energy Company Limited
- Miang Besar Coal Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Eastern Energy - Thailand
- Holcim Trading Pte Ltd - Singapore
- Kideco Jaya Agung - Indonesia
- Goldman Sachs - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- Intertek Mineral Services - Indonesia
- Xindia Steels Limited - India
- Eastern Coal Council - USA
- Bukit Baiduri Energy - Indonesia
- Commonwealth Bank - Australia
- Sarangani Energy Corporation, Philippines
- Orica Australia Pty. Ltd.
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Planning Commission, India
- Alfred C Toepfer International GmbH - Germany
- Australian Coal Association
- Ambuja Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- PTC India Limited - India
- Binh Thuan Hamico - Vietnam
- Parry Sugars Refinery, India
- Bangladesh Power Developement Board
- Renaissance Capital - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- Barasentosa Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Banpu Public Company Limited - Thailand
- Indian Energy Exchange, India
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- Globalindo Alam Lestari - Indonesia
- Baramulti Group, Indonesia
- Energy Link Ltd, New Zealand
- Wood Mackenzie - Singapore
- Kumho Petrochemical, South Korea
- Straits Asia Resources Limited - Singapore
- Maharashtra Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- Deloitte Consulting - India
- Merrill Lynch Commodities Europe
- Kalimantan Lumbung Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Therma Luzon, Inc, Philippines
- Rio Tinto Coal - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Carbofer General Trading SA - India
- Grasim Industreis Ltd - India
- Anglo American - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Antam Resourcindo - Indonesia
- Marubeni Corporation - India
- IEA Clean Coal Centre - UK
- Singapore Mercantile Exchange
- Chettinad Cement Corporation Ltd - India
- Siam City Cement - Thailand
- Coalindo Energy - Indonesia
- Indonesian Coal Mining Association
- Ministry of Transport, Egypt
- Bhoruka Overseas - Indonesia
- Bukit Makmur.PT - Indonesia
- Electricity Authority, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
- Asmin Koalindo Tuhup - Indonesia
- Price Waterhouse Coopers - Russia
- Orica Mining Services - Indonesia
- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- Bayan Resources Tbk. - Indonesia
- Indo Tambangraya Megah - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Mercuria Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Electricity Generating Authority of Thailand
- Madhucon Powers Ltd - India
- Indian Oil Corporation Limited
- AsiaOL BioFuels Corp., Philippines
- Central Java Power - Indonesia
- Power Finance Corporation Ltd., India
- Romanian Commodities Exchange
- Ministry of Finance - Indonesia
- GMR Energy Limited - India
- PetroVietnam Power Coal Import and Supply Company
- SMC Global Power, Philippines
- Central Electricity Authority - India
- Aditya Birla Group - India
- The University of Queensland
- Kohat Cement Company Ltd. - Pakistan
- Directorate General of MIneral and Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Coastal Gujarat Power Limited - India
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Australian Commodity Traders Exchange
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- European Bulk Services B.V. - Netherlands
- Makarim & Taira - Indonesia
- Semirara Mining Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Port Waratah Coal Services - Australia
- India Bulls Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Vedanta Resources Plc - India
- ICICI Bank Limited - India
- GVK Power & Infra Limited - India
- CNBM International Corporation - China
- McConnell Dowell - Australia
- Chamber of Mines of South Africa
- London Commodity Brokers - England
- Mercator Lines Limited - India
- ASAPP Information Group - India
- Pendopo Energi Batubara - Indonesia
- Bhatia International Limited - India
- OPG Power Generation Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Heidelberg Cement - Germany
- Leighton Contractors Pty Ltd - Australia
- Minerals Council of Australia
- Cement Manufacturers Association - India
- CIMB Investment Bank - Malaysia
- Wilmar Investment Holdings
- Bulk Trading Sa - Switzerland
- Videocon Industries ltd - India
- Global Business Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Timah Investasi Mineral - Indoneisa
- Tata Chemicals Ltd - India
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- Simpson Spence & Young - Indonesia
- Borneo Indobara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Thiess Contractors Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Dalmia Cement Bharat India
- Maheswari Brothers Coal Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- Formosa Plastics Group - Taiwan
- PowerSource Philippines DevCo
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- New Zealand Coal & Carbon
- Agrawal Coal Company - India
- San Jose City I Power Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Bhushan Steel Limited - India
- Toyota Tsusho Corporation, Japan
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Thai Mozambique Logistica
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Metalloyd Limited - United Kingdom
- Energy Development Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Economic Council, Georgia
- Manunggal Multi Energi - Indonesia
- Vizag Seaport Private Limited - India
- Attock Cement Pakistan Limited
- Savvy Resources Ltd - HongKong
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- Coal and Oil Company - UAE
- Medco Energi Mining Internasional
- Cigading International Bulk Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Parliament of New Zealand
- Gujarat Sidhee Cement - India
- Standard Chartered Bank - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Altura Mining Limited, Indonesia
- LBH Netherlands Bv - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
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