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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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Thursday, 15 May 14
USA COAL CONFERENCE
Press Release: IHS Inc. (NYSE: IHS), the leading global source of information and analysis, will host the Coal USA Conference, June 18-20, 2014, ...
Wednesday, 14 May 14
COAL PRICES IN CHINA HAVE DROPPED TO THEIR LOWEST LEVELS SINCE END-2008
COALspot.com: Coal prices in China have dropped to their lowest levels since end-2008, Fitch says in its latest rating report on one of the coal ...
Wednesday, 14 May 14
ALMOST THROUGH THE HALF OF THE YEAR, THE DRY BULK INDEX SHOW SIGNS OF WEAKNESS; CREATING TO BOTH EXISTING SHIP OWNERS AND POTENTIAL INVESTORS A LOT OF INSECURITY - PANOS MAKRINOS
Almost through the half of the year, the overall shipping market and more specifically the Dry Bulk Index show signs of weakness, creating to bo ...
Tuesday, 13 May 14
NPC COAL EXPORT VOLUMES PLUNGE TO 2.48 MMT WEEK ON WEEK
COALspot.com: In the week ended 07:00 hours 12 May 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Quee ...
Tuesday, 13 May 14
YET ANOTHER POSIDONIA EXHIBITION IS ON ITS WAY - INTERMODAL
With less than a month to go before another Posidonia exhibition starts and all the parties and celebrations get under way we thought that it wo ...
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- Directorate General of MIneral and Coal - Indonesia
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- Alfred C Toepfer International GmbH - Germany
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- Energy Development Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Maharashtra Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
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- Anglo American - United Kingdom
- MS Steel International - UAE
- Gujarat Mineral Development Corp Ltd - India
- Sree Jayajothi Cements Limited - India
- Cement Manufacturers Association - India
- Coalindo Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Australian Commodity Traders Exchange
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- Global Coal Blending Company Limited - Australia
- Mjunction Services Limited - India
- Attock Cement Pakistan Limited
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Price Waterhouse Coopers - Russia
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- Rashtriya Ispat Nigam Limited - India
- OPG Power Generation Pvt Ltd - India
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indo Tambangraya Megah - Indonesia
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- Global Business Power Corporation, Philippines
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- Chamber of Mines of South Africa
- Banpu Public Company Limited - Thailand
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- Kobexindo Tractors - Indoneisa
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
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- Heidelberg Cement - Germany
- The University of Queensland
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- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
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- Bayan Resources Tbk. - Indonesia
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- Orica Australia Pty. Ltd.
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- Indika Energy - Indonesia
- Baramulti Group, Indonesia
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- Economic Council, Georgia
- Trasteel International SA, Italy
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Sical Logistics Limited - India
- PTC India Limited - India
- Indogreen Group - Indonesia
- European Bulk Services B.V. - Netherlands
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- Eastern Coal Council - USA
- Miang Besar Coal Terminal - Indonesia
- Eastern Energy - Thailand
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Intertek Mineral Services - Indonesia
- Kaltim Prima Coal - Indonesia
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- Ministry of Transport, Egypt
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- Agrawal Coal Company - India
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- Uttam Galva Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Global Green Power PLC Corporation, Philippines
- Goldman Sachs - Singapore
- Samtan Co., Ltd - South Korea
- Vizag Seaport Private Limited - India
- Altura Mining Limited, Indonesia
- Asmin Koalindo Tuhup - Indonesia
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- Indonesian Coal Mining Association
- Lanco Infratech Ltd - India
- Kideco Jaya Agung - Indonesia
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