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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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Sunday, 25 December 11
THERMAL COAL PRICES GAINED UP TO 4.32 PERCENT
COALspot.com - globalCOAL index gained 4.32 percent to US$106.36 per ton in RBCT, benchmark for South Asia and West Europe markets, for the week end ...
Saturday, 24 December 11
CHINAS LEVEL OF GROWTH TO DETERMINE COURSE OF DRY BULK MARKET IN 2012 SAYS SHIPBROKER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In its latest report, shipbroker Intermodal attempted to find a silver lining in the tough year that was 2011, as well as what one could expect from ...
Friday, 23 December 11
SPOT PACIFIC CAPESIZE VESSELS HAVE COMMANDED HIGH PREMIUMS - FEARNLEYS
Handy
Rates in the Atlantic kept stable from last week, with a touch of negativity closer to the end. Less spot cargoes seen, and owners are ...
Friday, 23 December 11
CONTENTIOUS ISSUES IN CONTRACT RENEGOTIATION - THE JAKARTA POST
The government has been renegotiating mining contracts, especially those 30-40 years old, with almost all mining companies, including PT Freeport In ...
Friday, 23 December 11
LANCO JOINS HANDS WITH BUKIT ASAM FOR INDONESIAN POWER PROJECT
COALspot.com - PT Tambang Batubara Bukit Asam, Indonesia's state owned coal miner and Indian based Lanco Infratech Ltd plans to build steam power p ...
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- Mjunction Services Limited - India
- Pendopo Energi Batubara - Indonesia
- MS Steel International - UAE
- Lanco Infratech Ltd - India
- VISA Power Limited - India
- Coalindo Energy - Indonesia
- Indian Energy Exchange, India
- Energy Link Ltd, New Zealand
- Goldman Sachs - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Carbofer General Trading SA - India
- New Zealand Coal & Carbon
- Ministry of Mines - Canada
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Metalloyd Limited - United Kingdom
- Iligan Light & Power Inc, Philippines
- Commonwealth Bank - Australia
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bukit Makmur.PT - Indonesia
- CNBM International Corporation - China
- Globalindo Alam Lestari - Indonesia
- Makarim & Taira - Indonesia
- OPG Power Generation Pvt Ltd - India
- PowerSource Philippines DevCo
- Bhushan Steel Limited - India
- Directorate Of Revenue Intelligence - India
- Petron Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Aboitiz Power Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Samtan Co., Ltd - South Korea
- Dalmia Cement Bharat India
- PTC India Limited - India
- Sinarmas Energy and Mining - Indonesia
- Minerals Council of Australia
- SMG Consultants - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
- Kobexindo Tractors - Indoneisa
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- CIMB Investment Bank - Malaysia
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Central Electricity Authority - India
- Planning Commission, India
- ICICI Bank Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kartika Selabumi Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Aditya Birla Group - India
- Billiton Holdings Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- Indian Oil Corporation Limited
- Toyota Tsusho Corporation, Japan
- Merrill Lynch Commodities Europe
- Agrawal Coal Company - India
- ASAPP Information Group - India
- PNOC Exploration Corporation - Philippines
- Mercuria Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- India Bulls Power Limited - India
- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- Energy Development Corp, Philippines
- Standard Chartered Bank - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Antam Resourcindo - Indonesia
- Parry Sugars Refinery, India
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
- Australian Commodity Traders Exchange
- Sojitz Corporation - Japan
- PetroVietnam Power Coal Import and Supply Company
- Mercator Lines Limited - India
- Australian Coal Association
- The University of Queensland
- Kumho Petrochemical, South Korea
- Gujarat Mineral Development Corp Ltd - India
- Ceylon Electricity Board - Sri Lanka
- GMR Energy Limited - India
- Vizag Seaport Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Coastal Gujarat Power Limited - India
- Sree Jayajothi Cements Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Sakthi Sugars Limited - India
- Indonesian Coal Mining Association
- Price Waterhouse Coopers - Russia
- Romanian Commodities Exchange
- Rashtriya Ispat Nigam Limited - India
- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Miang Besar Coal Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
- Kepco SPC Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Attock Cement Pakistan Limited
- Coal and Oil Company - UAE
- Eastern Energy - Thailand
- Chettinad Cement Corporation Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Thai Mozambique Logistica
- Global Business Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Indika Energy - Indonesia
- Rio Tinto Coal - Australia
- Cigading International Bulk Terminal - Indonesia
- Parliament of New Zealand
- Economic Council, Georgia
- Wood Mackenzie - Singapore
- Orica Australia Pty. Ltd.
- Star Paper Mills Limited - India
- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Xindia Steels Limited - India
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- Bhoruka Overseas - Indonesia
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- Electricity Authority, New Zealand
- Bayan Resources Tbk. - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sical Logistics Limited - India
- IEA Clean Coal Centre - UK
- Independent Power Producers Association of India
- Eastern Coal Council - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- Malabar Cements Ltd - India
- Port Waratah Coal Services - Australia
- Karbindo Abesyapradhi - Indoneisa
- Baramulti Group, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Central Java Power - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Georgia Ports Authority, United States
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- Karaikal Port Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Ambuja Cements Ltd - India
- SMC Global Power, Philippines
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- Ministry of Finance - Indonesia
- Intertek Mineral Services - Indonesia
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- The Treasury - Australian Government
- White Energy Company Limited
- Latin American Coal - Colombia
- Vijayanagar Sugar Pvt Ltd - India
- Interocean Group of Companies - India
- Simpson Spence & Young - Indonesia
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- Leighton Contractors Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Singapore Mercantile Exchange
- Riau Bara Harum - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Renaissance Capital - South Africa
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Gujarat Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Borneo Indobara - Indonesia
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Tamil Nadu electricity Board
- Thiess Contractors Indonesia
- South Luzon Thermal Energy Corporation
- Posco Energy - South Korea
- Anglo American - United Kingdom
- Sindya Power Generating Company Private Ltd
- Videocon Industries ltd - India
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- European Bulk Services B.V. - Netherlands
- Heidelberg Cement - Germany
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- San Jose City I Power Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Uttam Galva Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Bharathi Cement Corporation - India
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
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