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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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Tuesday, 29 November 11
DRY BULK MARKET BEGINS WEEK ON HIGHER NOTE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Contrary to what had been the case during the past few weeks, this one began on a high note for the dry bulk market, with the Capesize sector pullin ...
Monday, 28 November 11
CITING CONTRACTS, MINING FIRMS ARE NOT PAYING ROYALTIES UNDER LAW - THE JAKARTA POST
The Jakarta Post reported that, when the 2009 Law on Minerals and Coal was endorsed, hopes that Indonesia could maximize its revenue from the minera ...
Monday, 28 November 11
NEW ENVIRONMENTAL MARINE REGULATIONS TO IMPACT SHIPPING IN 2012 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
August of next year will see some major changes for marine navigation. It’s when the North American ECA will come into force, introducing a 1% ...
Sunday, 27 November 11
INDIA'S KPCL TO IMPORT 50 MMT OF COAL FOR 10 YEARS
COALspot.com - Karnataka Power Corporation Limited (KPCL) will buy 5 million metric tonnes of coal annually for 10 years starting from 2015.
In a ...
Saturday, 26 November 11
INDIAN PORTS ARE BECOME COAL STOCKPILES..!!
COALspot.com - The Indian coal stocks and power tariff situation is the hot topic among the world coal producers as well as Indian coal importers.&n ...
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Standard Chartered Bank - UAE
- San Jose City I Power Corp, Philippines
- Ambuja Cements Ltd - India
- Borneo Indobara - Indonesia
- Pendopo Energi Batubara - Indonesia
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Australian Commodity Traders Exchange
- GVK Power & Infra Limited - India
- Salva Resources Pvt Ltd - India
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- Karaikal Port Pvt Ltd - India
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- Savvy Resources Ltd - HongKong
- Latin American Coal - Colombia
- Chettinad Cement Corporation Ltd - India
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Australian Coal Association
- Kepco SPC Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Posco Energy - South Korea
- Indika Energy - Indonesia
- GMR Energy Limited - India
- Ministry of Transport, Egypt
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coalindo Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Barasentosa Lestari - Indonesia
- Electricity Authority, New Zealand
- Minerals Council of Australia
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Orica Mining Services - Indonesia
- The University of Queensland
- Iligan Light & Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
- Independent Power Producers Association of India
- ASAPP Information Group - India
- Marubeni Corporation - India
- Kumho Petrochemical, South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- CIMB Investment Bank - Malaysia
- Tamil Nadu electricity Board
- Ceylon Electricity Board - Sri Lanka
- PNOC Exploration Corporation - Philippines
- VISA Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- Indian Oil Corporation Limited
- Tata Chemicals Ltd - India
- Energy Development Corp, Philippines
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- Vedanta Resources Plc - India
- Sree Jayajothi Cements Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- McConnell Dowell - Australia
- Kaltim Prima Coal - Indonesia
- Vizag Seaport Private Limited - India
- Siam City Cement - Thailand
- Mintek Dendrill Indonesia
- Heidelberg Cement - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Parry Sugars Refinery, India
- Bhatia International Limited - India
- CNBM International Corporation - China
- Ministry of Mines - Canada
- Gujarat Sidhee Cement - India
- IEA Clean Coal Centre - UK
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Kideco Jaya Agung - Indonesia
- Coastal Gujarat Power Limited - India
- Intertek Mineral Services - Indonesia
- Aditya Birla Group - India
- SN Aboitiz Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Deloitte Consulting - India
- Asmin Koalindo Tuhup - Indonesia
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- PowerSource Philippines DevCo
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ICICI Bank Limited - India
- Semirara Mining Corp, Philippines
- Wilmar Investment Holdings
- Ministry of Finance - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- Kobexindo Tractors - Indoneisa
- Singapore Mercantile Exchange
- Global Coal Blending Company Limited - Australia
- Kartika Selabumi Mining - Indonesia
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- Coal and Oil Company - UAE
- Sojitz Corporation - Japan
- Electricity Generating Authority of Thailand
- Manunggal Multi Energi - Indonesia
- SMC Global Power, Philippines
- Renaissance Capital - South Africa
- Gujarat Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Romanian Commodities Exchange
- The Treasury - Australian Government
- Maharashtra Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Baramulti Group, Indonesia
- GAC Shipping (India) Pvt Ltd
- Thiess Contractors Indonesia
- Jaiprakash Power Ventures ltd
- Attock Cement Pakistan Limited
- Economic Council, Georgia
- MS Steel International - UAE
- Lanco Infratech Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Wood Mackenzie - Singapore
- Energy Link Ltd, New Zealand
- Central Electricity Authority - India
- Ind-Barath Power Infra Limited - India
- European Bulk Services B.V. - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Timah Investasi Mineral - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Riau Bara Harum - Indonesia
- Power Finance Corporation Ltd., India
- Medco Energi Mining Internasional
- Simpson Spence & Young - Indonesia
- Trasteel International SA, Italy
- Altura Mining Limited, Indonesia
- Anglo American - United Kingdom
- New Zealand Coal & Carbon
- Indian Energy Exchange, India
- Mercator Lines Limited - India
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- Binh Thuan Hamico - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- PTC India Limited - India
- Dalmia Cement Bharat India
- Jorong Barutama Greston.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Directorate Of Revenue Intelligence - India
- Global Green Power PLC Corporation, Philippines
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- Formosa Plastics Group - Taiwan
- Antam Resourcindo - Indonesia
- Carbofer General Trading SA - India
- Indonesian Coal Mining Association
- Therma Luzon, Inc, Philippines
- Metalloyd Limited - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- Bhushan Steel Limited - India
- Siam City Cement PLC, Thailand
- Cement Manufacturers Association - India
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- Indogreen Group - Indonesia
- Petron Corporation, Philippines
- Orica Australia Pty. Ltd.
- Cigading International Bulk Terminal - Indonesia
- Rio Tinto Coal - Australia
- LBH Netherlands Bv - Netherlands
- Eastern Coal Council - USA
- Agrawal Coal Company - India
- Merrill Lynch Commodities Europe
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- Bharathi Cement Corporation - India
- Maheswari Brothers Coal Limited - India
- Thai Mozambique Logistica
- The State Trading Corporation of India Ltd
- Aboitiz Power Corporation - Philippines
- Edison Trading Spa - Italy
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- Bahari Cakrawala Sebuku - Indonesia
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