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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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Saturday, 12 November 11
DRY BULK MARKET REGAINS SOME OF THE LOST GROUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market managed to edge forward yesterday, putting an end and halting the losses accumulated over the course of the past weeks, which ha ...
Friday, 11 November 11
PETROCOM ENERGY PLANS $40M TO BUILD COAL PLANT IN CILEGON - JP
The Jakarta Post reported that, Hong Kong-based Petrocom Energy Ltd has unveiled plans to invest up to US$40 million on a proposed coal-blending fac ...
Friday, 11 November 11
GOVT WAITS LEGAL DECISION ON BUKIT ASAM, ADARO DISPUTE - JP
The Jakarta Post reported that, The government says that it will not interfere in the settlement process of the dispute between state coal miner PT ...
Thursday, 10 November 11
INDONESIAN REFERENCE COAL PRICE FELL AGAIN
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia has set the November 2011 Indonesian Coal Reference Price for thermal coal at U ...
Tuesday, 08 November 11
COAL MINER ABM INVESTAMA PLANS $290M PUBLIC OFFERING - JG
The Jakarta Globe reported that, ABM Investama, an Indonesian coal miner controlled by the Hamami family, plans to raise as much as Rp 2.6 trillion ...
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- Madhucon Powers Ltd - India
- Latin American Coal - Colombia
- Ministry of Finance - Indonesia
- Electricity Authority, New Zealand
- Tamil Nadu electricity Board
- Siam City Cement PLC, Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Meralco Power Generation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bhushan Steel Limited - India
- Power Finance Corporation Ltd., India
- Australian Coal Association
- Indika Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Mintek Dendrill Indonesia
- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- The Treasury - Australian Government
- Malabar Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Mercuria Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Medco Energi Mining Internasional
- Maheswari Brothers Coal Limited - India
- PTC India Limited - India
- Xindia Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Chettinad Cement Corporation Ltd - India
- Ministry of Transport, Egypt
- Larsen & Toubro Limited - India
- Minerals Council of Australia
- Bharathi Cement Corporation - India
- Bulk Trading Sa - Switzerland
- Essar Steel Hazira Ltd - India
- Bayan Resources Tbk. - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Barasentosa Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kaltim Prima Coal - Indonesia
- Borneo Indobara - Indonesia
- Commonwealth Bank - Australia
- Parliament of New Zealand
- Africa Commodities Group - South Africa
- Tata Chemicals Ltd - India
- Ministry of Mines - Canada
- Port Waratah Coal Services - Australia
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bhoruka Overseas - Indonesia
- Renaissance Capital - South Africa
- Krishnapatnam Port Company Ltd. - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The University of Queensland
- Georgia Ports Authority, United States
- Antam Resourcindo - Indonesia
- Intertek Mineral Services - Indonesia
- Salva Resources Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Wilmar Investment Holdings
- ASAPP Information Group - India
- Jaiprakash Power Ventures ltd
- Orica Australia Pty. Ltd.
- Maharashtra Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- The State Trading Corporation of India Ltd
- IHS Mccloskey Coal Group - USA
- Rashtriya Ispat Nigam Limited - India
- Leighton Contractors Pty Ltd - Australia
- Heidelberg Cement - Germany
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- Alfred C Toepfer International GmbH - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kalimantan Lumbung Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kumho Petrochemical, South Korea
- VISA Power Limited - India
- Toyota Tsusho Corporation, Japan
- Anglo American - United Kingdom
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining and Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- GVK Power & Infra Limited - India
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- Cement Manufacturers Association - India
- Star Paper Mills Limited - India
- London Commodity Brokers - England
- Goldman Sachs - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Videocon Industries ltd - India
- Independent Power Producers Association of India
- Baramulti Group, Indonesia
- Planning Commission, India
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- Electricity Generating Authority of Thailand
- Jindal Steel & Power Ltd - India
- Trasteel International SA, Italy
- Iligan Light & Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- Karbindo Abesyapradhi - Indoneisa
- PowerSource Philippines DevCo
- SMC Global Power, Philippines
- CNBM International Corporation - China
- Carbofer General Trading SA - India
- Karaikal Port Pvt Ltd - India
- Siam City Cement - Thailand
- Lanco Infratech Ltd - India
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- ICICI Bank Limited - India
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Sree Jayajothi Cements Limited - India
- Orica Mining Services - Indonesia
- Mjunction Services Limited - India
- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
- Vedanta Resources Plc - India
- TeaM Sual Corporation - Philippines
- McConnell Dowell - Australia
- Ceylon Electricity Board - Sri Lanka
- Coastal Gujarat Power Limited - India
- Makarim & Taira - Indonesia
- Economic Council, Georgia
- Petron Corporation, Philippines
- Indogreen Group - Indonesia
- Riau Bara Harum - Indonesia
- Global Business Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Grasim Industreis Ltd - India
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Sical Logistics Limited - India
- LBH Netherlands Bv - Netherlands
- Bukit Baiduri Energy - Indonesia
- Aditya Birla Group - India
- Rio Tinto Coal - Australia
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- Parry Sugars Refinery, India
- AsiaOL BioFuels Corp., Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Interocean Group of Companies - India
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- Chamber of Mines of South Africa
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Simpson Spence & Young - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- CIMB Investment Bank - Malaysia
- Sojitz Corporation - Japan
- New Zealand Coal & Carbon
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining Corp, Philippines
- Central Electricity Authority - India
- Central Java Power - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Eastern Coal Council - USA
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Posco Energy - South Korea
- Manunggal Multi Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- Bukit Makmur.PT - Indonesia
- Merrill Lynch Commodities Europe
- Mercator Lines Limited - India
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- Deloitte Consulting - India
- Billiton Holdings Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Edison Trading Spa - Italy
- SN Aboitiz Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Uttam Galva Steels Limited - India
- Energy Development Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Binh Thuan Hamico - Vietnam
- MS Steel International - UAE
- Attock Cement Pakistan Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- Altura Mining Limited, Indonesia
- Coal and Oil Company - UAE
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