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Monday, 09 January 12
2012: WHAT WILL IT BRING FOR THE DRY BULK MARKET? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
 A further increase in dry bulk demand could be the remedy for most of the industry's oversupply issues, together of course with the high level of scrapping activity, as observed during the course of 2011. According to the latest BIMCO report on 2012, a large part of this increase in demand could come from India and its coal needs. The report said that "the year 2011 had barely started before a series of unforeseen events took place across the globe. Most of them affected dry bulk shipping negatively and the large Capesize vessels were particularly under pressure. Amongst the events were the flooding in Australia and South Africa, the triple disaster in Japan and the “Arab Spring” that also affected the supply of oil into Europe.
Half a year down the road, during which many Capesize vessels had earned less than any other dry bulk vessel size, the unexpected happened again. Strong demand for iron ore and coal from China and the recovering Japan, sourced from Brazil and Australia, ignited freight rates for Capesize vessels. A tight tonnage situation in the Atlantic basin combined with increased congestion in loading and discharging ports pushed average rates above USD 30,000 per day.
A far cry from the peaks of the super cycle, but surely an indication of the peak levels we have in sight for the near- to mid-term future as the supply side remains a considerable burden for the industry. The demand side is set to be relatively stable in 2012 although it’s likely to grow somewhat slower than in 2011 – at least in volume terms. Overall iron ore demand is likely to slow. Still, a lower world market price as compared to the domestic costs of mining it within China holds the key to provide positive demand shocks for this valuable steel ingredient. Growing demand for thermal coal from large Asian consumers is said to be a steady demand driver" said BIMCO.
In a separate research report on the outlook of the dry bulk industry, DVB Bank said that the current dry bulk fleet now stands at 8,877 vessels (585.1mio dwt). The average age of the fleet is about 12 years and 59.1% of the fleet is less than 10 years of age. In addition, the average age of vessels less than 10 years old is merely 2.8 years – a very young fleet. Similarly, the orderbook stands at 2,371 vessels (196.3mio dwt) which equates to 33.6% of the current fleet. In dwt terms, large Capes constitute the largest portion of the current fleet while Panamax size vessels have the largest Orderbook. ULBC size range is expanding substantially. So far, three of the 34 Vale ULBCs of 400K+ dwt have delivered.DVB Bank said in its analysis that if the remaining 31 vessels actually deliver, this will have a huge negative impact on all large Cape asset values as well as T/C rates and impact earnings of other Sub-Sectors as well.
Looking at deliveries, a total of 366 vessels of 28.3 million dwt are still headed towards delivery, according to figures up to November of 2011. These vessels represent 14.4% of the orderbook. Given that for the most part these weren't expected to be delivered within 2011, the researcher said that they will be rolled over to 2012. So, it draws the conclusion that "even Even with 40% delays due to slippage, postponement and cancellation, we are poised to cross the 100mio dwt mark this year. In 2012, some 1,431 vessels (121.6mio dwt) are scheduled for delivery, which is about 62% of the current orderbook" said DVB Bank.
In total the dry bulk cargo demand is forecast to rise to approximatly 3.7 billion tons this year. But, as DVB states, the level of the orderbook is too much for it to be absorbed without problems and downward pressure both on ship values and freight rates. "Although scrapping picked up in 2011 to 21.4mio dwt (334 vessels) as of November, this figure is merely 3.5% of the existing fleet" said DVB Bank. It concluded that the vessels which were ordered at the peak of the market back in 2007-2008 should add to distressed asset sales, as their owners won't be able to repay them without huge losses. In essence, the researcher said that the current slowdown will see many ship owners out of the market and bankrupt, due to cash flow problems, as at the moment, they don't have the necessary cash reserves to survive the downturn, like they did back in 2008.
BIMCO's advice towards dry bulk ship owners they should expect the unexpected, as has been the lesson learned. "Maybe even India will begin to influence the market as a significant importer. This would fulfil the prophecy and release a vast potential that has been simmering for a very long time and provide a much-needed second major demand driver. Supplementing China as the dominant factor in the market would create a more sustainable freight market going forward. However, this will not happen in just one year; moreover it appears destined to remain a long and dusty road for several years to come. An optimist would surely name India as the best thing that could happen to the dry bulk shipping industry. In the meantime volatile iron ore exports and strong demand for thermal coal is likely to characterise India’s contribution to the dry bulk markets" concluded the organization.
Source: Nikos Roussanoglou, Hellenic Shipping
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Wednesday, 03 December 14
PROGRESSING SMELTER PROJECTS IN INDONESIA
Press Release: Indonesia’s ban on ‘raw mineral export’ that was designed to encouraging downstream investment in mineral processi ...
Wednesday, 03 December 14
SHIPPING MARKET INSIGHT - KONSTANTINOS KONTOMICHIS
The dry bulk market seems unable to turn sentiment round and is still looking for direction. The BCI's 887-point free fall last week had an obv ...
Wednesday, 03 December 14
CAPESIZE DRY BULK CARRIERS ENTER 2015 WITH MIXED FORTUNES, WITH A POSITIVE AND A NEGATIVE SCENARIO BOTH EMERGING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The future of the Capesize dry bulk market appears to be engulfed from mixed “feelings” among analysts and market participants, despite ...
Tuesday, 02 December 14
KEY PLAYERS SHED NEW PERSPECTIVES ON COAL MARKETS
Press Release: Singapore’s ONLY and longest established Coal Trade event. Whilst Coal prices remain challenging, there is widespread consensu ...
Tuesday, 02 December 14
KOMIPO INVITES BIDS FOR 585,000 METRIC TONS OF COAL FOR Q1'15
COALspot.com - Korea Midland Power Co. Ltd. (KOMIPO) is inviting bids for the supply of 585,000 Metric Tons of coal. According to invitation, 5700 ...
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- Kapuas Tunggal Persada - Indonesia
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- VISA Power Limited - India
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- Parliament of New Zealand
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- Merrill Lynch Commodities Europe
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- Ministry of Transport, Egypt
- Romanian Commodities Exchange
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- Posco Energy - South Korea
- Eastern Coal Council - USA
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- McConnell Dowell - Australia
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- Sakthi Sugars Limited - India
- IEA Clean Coal Centre - UK
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- Bayan Resources Tbk. - Indonesia
- GN Power Mariveles Coal Plant, Philippines
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- Meralco Power Generation, Philippines
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- Ministry of Mines - Canada
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- Australian Coal Association
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- Commonwealth Bank - Australia
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- SN Aboitiz Power Inc, Philippines
- GMR Energy Limited - India
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- Georgia Ports Authority, United States
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- SMC Global Power, Philippines
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Singapore Mercantile Exchange
- Renaissance Capital - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Goldman Sachs - Singapore
- The University of Queensland
- Siam City Cement PLC, Thailand
- Bhatia International Limited - India
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- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- Indian Energy Exchange, India
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- Orica Australia Pty. Ltd.
- Sindya Power Generating Company Private Ltd
- Attock Cement Pakistan Limited
- Economic Council, Georgia
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- Wilmar Investment Holdings
- Indian Oil Corporation Limited
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- Tamil Nadu electricity Board
- Edison Trading Spa - Italy
- Minerals Council of Australia
- Anglo American - United Kingdom
- GVK Power & Infra Limited - India
- Parry Sugars Refinery, India
- Manunggal Multi Energi - Indonesia
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- Bank of Tokyo Mitsubishi UFJ Ltd
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- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- Central Java Power - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Eastern Energy - Thailand
- Sojitz Corporation - Japan
- Larsen & Toubro Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Price Waterhouse Coopers - Russia
- Samtan Co., Ltd - South Korea
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
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- Antam Resourcindo - Indonesia
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- The State Trading Corporation of India Ltd
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- Kalimantan Lumbung Energi - Indonesia
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- Dalmia Cement Bharat India
- Bhushan Steel Limited - India
- Miang Besar Coal Terminal - Indonesia
- ICICI Bank Limited - India
- Altura Mining Limited, Indonesia
- Medco Energi Mining Internasional
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- SMG Consultants - Indonesia
- Coal and Oil Company - UAE
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- IHS Mccloskey Coal Group - USA
- Energy Link Ltd, New Zealand
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- PNOC Exploration Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Petron Corporation, Philippines
- PTC India Limited - India
- Neyveli Lignite Corporation Ltd, - India
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- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
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- Kideco Jaya Agung - Indonesia
- ASAPP Information Group - India
- Semirara Mining Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
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- Bangladesh Power Developement Board
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Independent Power Producers Association of India
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