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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, 20 February 14
LENGTHY DELAYS TO PANAMA CANAL EXPANSION POSE GLOBAL TRADE RISKS; US COAL PRODUCERS TO GREATLY BENEFIT ONCE COMPLETE, SAYS WOOD MACKENZIE
Wood Mackenzie expects the recent cost overrun disputes around the Panama Canal expansion to be resolved with limited disruption due to the signific ...
Thursday, 20 February 14
SUPRAMAX: IN ASIA IS IMPROVING SIGNIFICANTLY AND TURNED FROM APS TO DOP MARKET
Handy
The activity is back in the market after Chinese holidays. Supramax in Asia is improving significantly and turned from APS to DOP market. We ...
Wednesday, 19 February 14
NEWCASTLE PORT SHIPPED 30% MORE COAL WEEK ON WEEK
COALspot.com: In the week ended 17 February 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled ...
Tuesday, 18 February 14
PERUVIAN HIGH COMMISSIONER FOR MINING AFFAIRS WILL BE KEY NOTE SPEAKER AT THE COLOMBIAN COAL CONFERENCE 2014
Press Release: The High Commissioner for Mining Affairs in the Presidency of the Peruvian Council of Ministers, General (R) Daniel Urresti Elera, ha ...
Monday, 17 February 14
US COAL PRODUCTION IN 2013 FELL TO ITS LOWEST LEVEL IN 20 YEARS
COALspot.com: U.S coal production for 2013 totaled an estimated 996 million short tons (MMst), 21 MMst (2%) lower than in 2012. It is the first time ...
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- Therma Luzon, Inc, Philippines
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- The State Trading Corporation of India Ltd
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- Kumho Petrochemical, South Korea
- Economic Council, Georgia
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- Planning Commission, India
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- Commonwealth Bank - Australia
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- Power Finance Corporation Ltd., India
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- Samtan Co., Ltd - South Korea
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- MS Steel International - UAE
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- Goldman Sachs - Singapore
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- Videocon Industries ltd - India
- Baramulti Group, Indonesia
- London Commodity Brokers - England
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- The University of Queensland
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- IHS Mccloskey Coal Group - USA
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- White Energy Company Limited
- Indonesian Coal Mining Association
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- GAC Shipping (India) Pvt Ltd
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- Wilmar Investment Holdings
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- Tamil Nadu electricity Board
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- Bukit Asam (Persero) Tbk - Indonesia
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- Mintek Dendrill Indonesia
- Global Business Power Corporation, Philippines
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- Minerals Council of Australia
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- Alfred C Toepfer International GmbH - Germany
- Bharathi Cement Corporation - India
- SMC Global Power, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Banpu Public Company Limited - Thailand
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- Miang Besar Coal Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Posco Energy - South Korea
- Parry Sugars Refinery, India
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- Timah Investasi Mineral - Indoneisa
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- McConnell Dowell - Australia
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- Petron Corporation, Philippines
- Energy Development Corp, Philippines
- Africa Commodities Group - South Africa
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
- Essar Steel Hazira Ltd - India
- Medco Energi Mining Internasional
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
- Krishnapatnam Port Company Ltd. - India
- Attock Cement Pakistan Limited
- Ind-Barath Power Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- Meenaskhi Energy Private Limited - India
- Singapore Mercantile Exchange
- Sinarmas Energy and Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Jorong Barutama Greston.PT - Indonesia
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- Thai Mozambique Logistica
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- Price Waterhouse Coopers - Russia
- Iligan Light & Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Riau Bara Harum - Indonesia
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- Intertek Mineral Services - Indonesia
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- Kepco SPC Power Corporation, Philippines
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Altura Mining Limited, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Agrawal Coal Company - India
- Electricity Authority, New Zealand
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
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- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- TeaM Sual Corporation - Philippines
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bulk Trading Sa - Switzerland
- Binh Thuan Hamico - Vietnam
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- Coal and Oil Company - UAE
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- Bhoruka Overseas - Indonesia
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- Eastern Energy - Thailand
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- Global Green Power PLC Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
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- CNBM International Corporation - China
- Pipit Mutiara Jaya. PT, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Eastern Coal Council - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
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