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Wednesday, 21 August 13
DRY BULK SHIPPING - POSITIVE WINDOW FOR CAPESIZE OWNERS - PETER SAND
 By: Peter Sand, Chief Shipping Analyst, BIMCO
Demand:
“Expect the unexpected from the dry bulk market” was what we wrote last time around and what we got – but did not anticipate. As the Summer heat arrived, Capesize owners found themselves basking in the sun. Average earnings for Capesize vessels went from USD 6,000 per day to USD 12,000 per day in less than two weeks. The momentum lifted rates as high as USD 15,218 per day on 1 July. This was a sizeable and very welcome surprise as the combination, once again, of vessels being at the “right place at the right time” proved to be profitable. As Brazilian iron ore exports in particular jumped after some weaker months, congestion at load ports rose and charterers were left searching for prompt and available tonnage. At the same time, Australian iron ore ports were hit by heavy rainfall which also affected shipping. It is a little miracle that tight situations can still appear and push up freight rates, in spite of tonnage being abundant in the market. Since the 1 July peak, freight rates have slid slowly, as the imbalanced market is smoothed by ballasting tonnage returning to the Atlantic from the Far East. Some of the weakness in most of H1 is due to the fact that Brazil has been losing some of its share of the iron ore market to Australia.
Besides that, the market is affected by falling commodity prices (iron ore, steel and coal). This could, in theory, positively affect shipping demand if consumers and traders take advantage of it and stock up, but it may as well mirror a fundamental slowdown in demand.
No slowdown is seen in steel production fortunately, at Chinese steel production went up by 9.2% in the first half as compared to same period last year. Iron ore imports “only” went up by 4.8% in the same period of time. Both indicators are positive for shipping demand. Traditionally, Chinese iron ore demand is stronger in the second half of the year; this could build a case for stronger rates in the larger segments in Q3 and Q4 if this seasonality is repeated.
The larger production of steel and moderate consumption of same has put steel prices under pressure. Falling steel prices are normally quite worrying for the dry bulk sector. In the wake of several months with record high steel production, prices weakened continuously, getting quite close to the threateningly low levels of August/September 2012. But has the scare just evaporated with the latest pick up in prices toward the end of July? That is still too early to call despite the optimism in most recent “official” China manufacturing PMI report.
Supply:
During the past two months, 10 million DWT of new tonnage has joined the dry bulk fleet, which now totals at 704 million DWT. This is up by 3.6% since 1 January.
Looking at future delivery prospect, 70% of all new orders placed during the past two months have been for 2015 delivery. In addition to some postponements, this has pushed the projected orders for 2015 delivery up from 20 million to 25 million DWT.
For 2013, BIMCO projects new tonnage of 70 million to hit the water, a four-year low, and a gradual return to a lower supply pressure on the market.
While new orders have been fairly equally distributed for the past two months as a whole, June saw a flurry of Supramax orders whereas July was pretty biased towards Capesize vessels. As a lot of Panamax ships are currently being delivered into an oversupplied market, owners showed only little appetite for placing new orders for Panamax ships.
In total, the dry bulk order book has grown by 3.2 million DWT during the recent two months. It now stands at 126 million DWT. It’s the first time in more than two and a half years that the order book has increased, on its way down from 300 million DWT highs at the end of 2010.
As 29 million DWT of new vessels have been ordered so far in 2013, the total has already surpassed that of the full year 2012. This development seems to have stopped the slide of new building prices, which are now seen to be on a slow rise, with the exception of Panamax new building prices which are still flat, as demand does not support higher prices in this segment yet.
Outlook:
As the global and Chinese GDP are now seen lower than earlier in the year, we also have to settle for something that might be the sixth consecutive year of supply outpacing demand. But the race is still on, as supply is set for 5.7% and demand for 5-6%.
China’s import of agricultural products could provide some upside, as wheat and soybeans could end up falling short of demand due to adverse weather conditions. If imports of wheat are supplied predominantly by US producers, which is likely, this may bring some growth in demand due to long sailing distances. The same effect can be expected by increased Brazilian exports of soybeans in the second half of the year following a congestion-affected export level in the January-May period.
In recent months, Asian thermal coal prices have nose-dived, as plenty of coal is offered in the market. Utilities are no longer worried about running stocks low, as supply is excessive. During the second quarter, Russian, Columbian and American coal was also offered into the market, putting further pressure on traditional Indonesian and Australian coal markets. FOB thermal coal prices for “Newcastle 5500” or “Richards Bay 5500” were just above USD 66 per Mt coming down from USD 75 per Mt and USD 72 per Mt respectively. As we know, demand is healthy, the lower prices could prove a catalyst for higher freight rates as we move further into Q3. Further weakening of the Indian Rupee or the Japanese Yen could dampen the positive effect somewhat.
To sum up, our forecast for the coming 2 months:
BIMCO holds the view that Capesize TC average rates are expected around USD 8,000-13,000 per day.
Panamax is expected to stay in the USD 6,000-9,000 per day interval.
For the Supramax segment, BIMCO forecasts freight rates in the USD 8,000-11,000 per day interval,
whereas Handysize rates are forecast to show limited volatility in the interval of USD 6,500-9,000 per day.
Source: BIMCO Peter Sand Chief Shipping Analyst / Hellenic Shipping
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Friday, 25 October 13
U.S. YEAR-TO-DATE COAL PRODUCTION REACHED TOTALLED 803.1 MMST
COALspot.com – United States the world’s second largest coal producer produced approximately 19.10 million short tons (mmst) of coal in ...
Thursday, 24 October 13
PANAMAX: RATES SLIP ACROSS BOTH HEMISPHERES
Handy
We were back from holidays but still not much enquiries in the market. Overall future direction is uncertain. Currently, ships passing Singap ...
Thursday, 24 October 13
SHIP PRICES ARE INCREASING ON THE BACK OF IMPROVED MARKET SENTIMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept on retreating from its recent highs, ending yesterday at 1,786 points, down 61 points on the day, with Capesizes leadin ...
Wednesday, 23 October 13
DRY BULK MARKET HAS SHOWN SIGNS OF STABILITY - INTERMODAL
Chartering (Wet: Stable+ / Dry: Stable-)
The Dry Bulk market has shown signs of stability this past week, with the sole exception of Capes, rates f ...
Wednesday, 23 October 13
MARKET SENTIMENT IN THE DRY BULK SECTOR REMAINS POSITIVE - YANNIS OLZIERSKY
Market sentiment in the dry bulk sector remains positive despite the latest correction in freight rates for the Capesize sector, which are sliding f ...
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- Indogreen Group - Indonesia
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- GVK Power & Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Ind-Barath Power Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Goldman Sachs - Singapore
- Eastern Energy - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- San Jose City I Power Corp, Philippines
- Orica Mining Services - Indonesia
- Aditya Birla Group - India
- Global Coal Blending Company Limited - Australia
- Economic Council, Georgia
- New Zealand Coal & Carbon
- Bhatia International Limited - India
- Samtan Co., Ltd - South Korea
- Kideco Jaya Agung - Indonesia
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Bank of Tokyo Mitsubishi UFJ Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Formosa Plastics Group - Taiwan
- Globalindo Alam Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bayan Resources Tbk. - Indonesia
- Vizag Seaport Private Limited - India
- Renaissance Capital - South Africa
- Star Paper Mills Limited - India
- Energy Development Corp, Philippines
- Central Electricity Authority - India
- CIMB Investment Bank - Malaysia
- Sojitz Corporation - Japan
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- Karaikal Port Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Videocon Industries ltd - India
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Anglo American - United Kingdom
- Minerals Council of Australia
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- Billiton Holdings Pty Ltd - Australia
- Tamil Nadu electricity Board
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Larsen & Toubro Limited - India
- Power Finance Corporation Ltd., India
- Maheswari Brothers Coal Limited - India
- Ceylon Electricity Board - Sri Lanka
- Savvy Resources Ltd - HongKong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Madhucon Powers Ltd - India
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- White Energy Company Limited
- Ministry of Mines - Canada
- Baramulti Group, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Commonwealth Bank - Australia
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- Altura Mining Limited, Indonesia
- London Commodity Brokers - England
- Siam City Cement PLC, Thailand
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- Energy Link Ltd, New Zealand
- Mintek Dendrill Indonesia
- Mercuria Energy - Indonesia
- Wood Mackenzie - Singapore
- Therma Luzon, Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- South Luzon Thermal Energy Corporation
- Grasim Industreis Ltd - India
- Meralco Power Generation, Philippines
- PTC India Limited - India
- The University of Queensland
- Parry Sugars Refinery, India
- Gujarat Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- Bukit Baiduri Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Ministry of Finance - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- SN Aboitiz Power Inc, Philippines
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- IHS Mccloskey Coal Group - USA
- Barasentosa Lestari - Indonesia
- The Treasury - Australian Government
- Gujarat Mineral Development Corp Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Kobexindo Tractors - Indoneisa
- Indian Energy Exchange, India
- Carbofer General Trading SA - India
- VISA Power Limited - India
- Chamber of Mines of South Africa
- Coal and Oil Company - UAE
- Kepco SPC Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Directorate Of Revenue Intelligence - India
- Indonesian Coal Mining Association
- Kaltim Prima Coal - Indonesia
- CNBM International Corporation - China
- PNOC Exploration Corporation - Philippines
- Dalmia Cement Bharat India
- Bukit Asam (Persero) Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Siam City Cement - Thailand
- Independent Power Producers Association of India
- Bahari Cakrawala Sebuku - Indonesia
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- Rio Tinto Coal - Australia
- Port Waratah Coal Services - Australia
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- Straits Asia Resources Limited - Singapore
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Electricity Generating Authority of Thailand
- Sindya Power Generating Company Private Ltd
- Mercator Lines Limited - India
- Thiess Contractors Indonesia
- Latin American Coal - Colombia
- Coalindo Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Interocean Group of Companies - India
- Attock Cement Pakistan Limited
- Eastern Coal Council - USA
- SMG Consultants - Indonesia
- Standard Chartered Bank - UAE
- Cement Manufacturers Association - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- Ministry of Transport, Egypt
- Petron Corporation, Philippines
- Romanian Commodities Exchange
- Marubeni Corporation - India
- Manunggal Multi Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- Mjunction Services Limited - India
- Singapore Mercantile Exchange
- Trasteel International SA, Italy
- Simpson Spence & Young - Indonesia
- Jindal Steel & Power Ltd - India
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- Jaiprakash Power Ventures ltd
- Karbindo Abesyapradhi - Indoneisa
- Central Java Power - Indonesia
- Vedanta Resources Plc - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- European Bulk Services B.V. - Netherlands
- Chettinad Cement Corporation Ltd - India
- Aboitiz Power Corporation - Philippines
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indika Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Sakthi Sugars Limited - India
- Banpu Public Company Limited - Thailand
- Sarangani Energy Corporation, Philippines
- MS Steel International - UAE
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- Edison Trading Spa - Italy
- Electricity Authority, New Zealand
- Australian Coal Association
- Intertek Mineral Services - Indonesia
- McConnell Dowell - Australia
- ICICI Bank Limited - India
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Krishnapatnam Port Company Ltd. - India
- Indian Oil Corporation Limited
- Neyveli Lignite Corporation Ltd, - India
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