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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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Thursday, 08 December 11
INDIA MAY SEE 41% ANNUAL GROWTH OF ITS COAL DEMAND DURING THE NEXT 5 YEARS - ICAP SHIPPING
India’s Ministry of Coal expects that India’s coal demand may face an annual 41% rise during the next 5 years, while its coal deficit is ...
Thursday, 08 December 11
HAREDA KRIDA GETS CONTRACT FROM BAYAN - INSIDER STORIES
Insider Stories reported that, coal miner PT Bayan Resources Tbk (BYAN), through its subsidiary dubbed PT Gunungbayan Pratamacoal (GPB), has signed ...
Thursday, 08 December 11
CAPESIZES LIFT DRY BULK MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Capesize vessels yesterday helped lift the dry bulk market which had been falling since the start of the week on lower cargo demand. As a result the ...
Wednesday, 07 December 11
ABM INVESTAMA EYES RP6.3 TRIO REVENUE - INSIDER STORIES
Insider Stories reported that, an energy integrated company PT ABM Investama Tbk is eyeing a 1.5 folds increase in revenue this year from Rp4. ...
Tuesday, 06 December 11
DRY BULK MARKET ENDS RALLY, STARTS WEEK WITH FALL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
After a series of increases which saw the dry bulk market’s benchmark, the Baltic Dry Index (BDI) increasing close to 1,900 points and rates o ...
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- CNBM International Corporation - China
- Eastern Energy - Thailand
- Parry Sugars Refinery, India
- Rashtriya Ispat Nigam Limited - India
- Merrill Lynch Commodities Europe
- TNB Fuel Sdn Bhd - Malaysia
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- Toyota Tsusho Corporation, Japan
- Kapuas Tunggal Persada - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bhushan Steel Limited - India
- Savvy Resources Ltd - HongKong
- AsiaOL BioFuels Corp., Philippines
- Ceylon Electricity Board - Sri Lanka
- Sakthi Sugars Limited - India
- Antam Resourcindo - Indonesia
- Meralco Power Generation, Philippines
- Renaissance Capital - South Africa
- South Luzon Thermal Energy Corporation
- Africa Commodities Group - South Africa
- Parliament of New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Rio Tinto Coal - Australia
- Tamil Nadu electricity Board
- Bukit Makmur.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- TeaM Sual Corporation - Philippines
- Chamber of Mines of South Africa
- PetroVietnam Power Coal Import and Supply Company
- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- Kumho Petrochemical, South Korea
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Planning Commission, India
- Jindal Steel & Power Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Business Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Bharathi Cement Corporation - India
- Salva Resources Pvt Ltd - India
- Deloitte Consulting - India
- Tata Chemicals Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Bayan Resources Tbk. - Indonesia
- Wilmar Investment Holdings
- ICICI Bank Limited - India
- Independent Power Producers Association of India
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Malabar Cements Ltd - India
- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Grasim Industreis Ltd - India
- Interocean Group of Companies - India
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Ministry of Transport, Egypt
- Australian Coal Association
- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Baramulti Group, Indonesia
- Larsen & Toubro Limited - India
- London Commodity Brokers - England
- Central Java Power - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Indonesian Coal Mining Association
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- Vedanta Resources Plc - India
- PNOC Exploration Corporation - Philippines
- Xindia Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- White Energy Company Limited
- Iligan Light & Power Inc, Philippines
- Latin American Coal - Colombia
- Gujarat Sidhee Cement - India
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Singapore Mercantile Exchange
- Ministry of Finance - Indonesia
- ASAPP Information Group - India
- Indian Energy Exchange, India
- Posco Energy - South Korea
- Thiess Contractors Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Makarim & Taira - Indonesia
- European Bulk Services B.V. - Netherlands
- Orica Mining Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Coastal Gujarat Power Limited - India
- Riau Bara Harum - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- Eastern Coal Council - USA
- LBH Netherlands Bv - Netherlands
- Intertek Mineral Services - Indonesia
- Petron Corporation, Philippines
- Edison Trading Spa - Italy
- Sree Jayajothi Cements Limited - India
- Indogreen Group - Indonesia
- Global Coal Blending Company Limited - Australia
- Metalloyd Limited - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Chettinad Cement Corporation Ltd - India
- Electricity Generating Authority of Thailand
- Leighton Contractors Pty Ltd - Australia
- Sojitz Corporation - Japan
- CIMB Investment Bank - Malaysia
- McConnell Dowell - Australia
- Altura Mining Limited, Indonesia
- Agrawal Coal Company - India
- The Treasury - Australian Government
- New Zealand Coal & Carbon
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Georgia Ports Authority, United States
- GAC Shipping (India) Pvt Ltd
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
- Pendopo Energi Batubara - Indonesia
- Manunggal Multi Energi - Indonesia
- VISA Power Limited - India
- Maheswari Brothers Coal Limited - India
- Ambuja Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- GMR Energy Limited - India
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- Sindya Power Generating Company Private Ltd
- MS Steel International - UAE
- Bangladesh Power Developement Board
- Bukit Asam (Persero) Tbk - Indonesia
- Star Paper Mills Limited - India
- Minerals Council of Australia
- Mercator Lines Limited - India
- Bhoruka Overseas - Indonesia
- Australian Commodity Traders Exchange
- India Bulls Power Limited - India
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cement Manufacturers Association - India
- Central Electricity Authority - India
- Marubeni Corporation - India
- Kideco Jaya Agung - Indonesia
- Indo Tambangraya Megah - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- PTC India Limited - India
- Mercuria Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Heidelberg Cement - Germany
- Attock Cement Pakistan Limited
- Bhatia International Limited - India
- Timah Investasi Mineral - Indoneisa
- Commonwealth Bank - Australia
- IEA Clean Coal Centre - UK
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Ministry of Mines - Canada
- Thai Mozambique Logistica
- Standard Chartered Bank - UAE
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- PowerSource Philippines DevCo
- Meenaskhi Energy Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Ind-Barath Power Infra Limited - India
- Barasentosa Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Directorate General of MIneral and Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Kartika Selabumi Mining - Indonesia
- GVK Power & Infra Limited - India
- Videocon Industries ltd - India
- Power Finance Corporation Ltd., India
- Uttam Galva Steels Limited - India
- Kobexindo Tractors - Indoneisa
- The University of Queensland
- Romanian Commodities Exchange
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Global Green Power PLC Corporation, Philippines
- SMG Consultants - Indonesia
- Billiton Holdings Pty Ltd - Australia
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