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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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Friday, 18 November 11
MMTC SEEKS 1.365 MMT OF IMPORTED COAL
COALspot.com - India's MMTC, the largest trading company of India and a major trading company of Asia, has issued a term supply tender for 1.365Mt ...
Friday, 18 November 11
KPC, ARUTMIN OUTPUT REACHED 47.1 MIO TONS - INSIDER STORIES
PT Kaltim Prima Coal (KPC) and PT Arutmin Indonesia, reported 47.1 million tons of coal production in 9M 2011, according to Indiser Stories.
Insi ...
Friday, 18 November 11
THE ATLANTIC SUPRAMAX MARKET EXPERIENCED A STEADY AND FIRM TENDENCY
Handy
The Atlantic Supramax market experienced a steady and firm tendency this week. Especially the North Atlantic and Mediterranean position ...
Friday, 18 November 11
BERAU COAL 9M PROFIT SOARS 194.46% - INSIDER STORIES
Insider Stories reported that, PT Berau Coal Energy Tbk (BRAU), which is 84.7% owned by Bumi Plc, reported a 194.46% jump in net profit by end of Se ...
Thursday, 17 November 11
DRY BULK MARKET INCHES FORWARD AND INTO HIGHER GROUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market edged higher yesterday, on the back of stronger demand for Capesize vessels and general improvement of sentiment on most of the ...
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- Larsen & Toubro Limited - India
- Altura Mining Limited, Indonesia
- Meralco Power Generation, Philippines
- GMR Energy Limited - India
- Global Coal Blending Company Limited - Australia
- Ind-Barath Power Infra Limited - India
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- Kapuas Tunggal Persada - Indonesia
- Bhoruka Overseas - Indonesia
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- The University of Queensland
- Iligan Light & Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wood Mackenzie - Singapore
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- IHS Mccloskey Coal Group - USA
- Sinarmas Energy and Mining - Indonesia
- Bhushan Steel Limited - India
- Deloitte Consulting - India
- LBH Netherlands Bv - Netherlands
- International Coal Ventures Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Makarim & Taira - Indonesia
- Edison Trading Spa - Italy
- CNBM International Corporation - China
- CIMB Investment Bank - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- PNOC Exploration Corporation - Philippines
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Sarangani Energy Corporation, Philippines
- Uttam Galva Steels Limited - India
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- Videocon Industries ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Petron Corporation, Philippines
- Sical Logistics Limited - India
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- Simpson Spence & Young - Indonesia
- Bangladesh Power Developement Board
- Agrawal Coal Company - India
- Miang Besar Coal Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- Interocean Group of Companies - India
- Port Waratah Coal Services - Australia
- Manunggal Multi Energi - Indonesia
- Planning Commission, India
- Kohat Cement Company Ltd. - Pakistan
- Indogreen Group - Indonesia
- Commonwealth Bank - Australia
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- Orica Australia Pty. Ltd.
- Power Finance Corporation Ltd., India
- Bhatia International Limited - India
- Minerals Council of Australia
- PetroVietnam Power Coal Import and Supply Company
- Baramulti Group, Indonesia
- Chettinad Cement Corporation Ltd - India
- McConnell Dowell - Australia
- Bulk Trading Sa - Switzerland
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- Eastern Energy - Thailand
- Goldman Sachs - Singapore
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Electricity Authority, New Zealand
- Mercator Lines Limited - India
- Krishnapatnam Port Company Ltd. - India
- Leighton Contractors Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Heidelberg Cement - Germany
- Orica Mining Services - Indonesia
- Barasentosa Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Mjunction Services Limited - India
- Ceylon Electricity Board - Sri Lanka
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Xindia Steels Limited - India
- Anglo American - United Kingdom
- MS Steel International - UAE
- Jindal Steel & Power Ltd - India
- Straits Asia Resources Limited - Singapore
- Central Java Power - Indonesia
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- Dalmia Cement Bharat India
- Gujarat Mineral Development Corp Ltd - India
- Directorate Of Revenue Intelligence - India
- IEA Clean Coal Centre - UK
- Maharashtra Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Aditya Birla Group - India
- Samtan Co., Ltd - South Korea
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- Malabar Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Gujarat Sidhee Cement - India
- Energy Development Corp, Philippines
- Star Paper Mills Limited - India
- Ministry of Mines - Canada
- Eastern Coal Council - USA
- Kaltim Prima Coal - Indonesia
- Central Electricity Authority - India
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Lanco Infratech Ltd - India
- Posco Energy - South Korea
- Latin American Coal - Colombia
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- GVK Power & Infra Limited - India
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- Rashtriya Ispat Nigam Limited - India
- VISA Power Limited - India
- Sindya Power Generating Company Private Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Electricity Regulatory Commission - India
- Parliament of New Zealand
- OPG Power Generation Pvt Ltd - India
- Riau Bara Harum - Indonesia
- PTC India Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Trasteel International SA, Italy
- Oldendorff Carriers - Singapore
- Vedanta Resources Plc - India
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- Grasim Industreis Ltd - India
- Electricity Generating Authority of Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wilmar Investment Holdings
- The State Trading Corporation of India Ltd
- Bukit Baiduri Energy - Indonesia
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- Energy Link Ltd, New Zealand
- Essar Steel Hazira Ltd - India
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- Ambuja Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Indian Energy Exchange, India
- Georgia Ports Authority, United States
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indika Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Pendopo Energi Batubara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Antam Resourcindo - Indonesia
- Standard Chartered Bank - UAE
- SN Aboitiz Power Inc, Philippines
- Economic Council, Georgia
- Sojitz Corporation - Japan
- India Bulls Power Limited - India
- PowerSource Philippines DevCo
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Price Waterhouse Coopers - Russia
- Coal and Oil Company - UAE
- Parry Sugars Refinery, India
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- Romanian Commodities Exchange
- Mercuria Energy - Indonesia
- Vizag Seaport Private Limited - India
- Ministry of Finance - Indonesia
- Madhucon Powers Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tata Chemicals Ltd - India
- Independent Power Producers Association of India
- Global Green Power PLC Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
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