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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, 18 October 13
WOOD MACKENZIE FORECASTS CHINA WILL OUTWEIGH THE REST OF THE WORLD FOR BASE METALS DEMAND BY 2017
China set to account for 52% of 117mt base metals market by 2017
China is on track to exceed rest of the World demand by 2017, becoming the singl ...
Friday, 18 October 13
DRY BULK MARKET ON "PAUSE" MODE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been on "pause" mode over the past week, after China's return from the week long holidays. The industry's benchm ...
Friday, 18 October 13
US PRODUCED 6.7% MORE COAL W-W
COALspot.com – United States the world’s second largest coal producer produced approximately 18.9 million short tons (mmst) of coal in a ...
Thursday, 17 October 13
CAPESIZE: RATES ARE AGAIN MOVING UPWARDS - FEARNRESEARCH
Handy
Activities were obviously slowed down in the Pacific basin. There were only few coal movements which fixed around USD 15-16k for ships in Sin ...
Thursday, 17 October 13
SGX TO LAUNCH "SGX THERMAL COAL FUTURES" NEXT MONDAY
COALspot.com: SGX is to launch two thermal coal futures contracts, SGX API 8 CFR China Coal Index Futures and SGX IHS McCloskey Indonesian Sub-bit F ...
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- LBH Netherlands Bv - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- TeaM Sual Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Anglo American - United Kingdom
- Standard Chartered Bank - UAE
- Agrawal Coal Company - India
- Bulk Trading Sa - Switzerland
- Chettinad Cement Corporation Ltd - India
- Chamber of Mines of South Africa
- Sical Logistics Limited - India
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Petron Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Directorate Of Revenue Intelligence - India
- San Jose City I Power Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Xindia Steels Limited - India
- ASAPP Information Group - India
- Siam City Cement - Thailand
- VISA Power Limited - India
- Kaltim Prima Coal - Indonesia
- Videocon Industries ltd - India
- Samtan Co., Ltd - South Korea
- IHS Mccloskey Coal Group - USA
- Rashtriya Ispat Nigam Limited - India
- Global Business Power Corporation, Philippines
- Dalmia Cement Bharat India
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- Georgia Ports Authority, United States
- Asmin Koalindo Tuhup - Indonesia
- Vizag Seaport Private Limited - India
- Baramulti Group, Indonesia
- Ministry of Transport, Egypt
- Thiess Contractors Indonesia
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- Kepco SPC Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Parry Sugars Refinery, India
- Port Waratah Coal Services - Australia
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Oldendorff Carriers - Singapore
- Central Electricity Authority - India
- Grasim Industreis Ltd - India
- Posco Energy - South Korea
- Toyota Tsusho Corporation, Japan
- Meralco Power Generation, Philippines
- Heidelberg Cement - Germany
- London Commodity Brokers - England
- Cigading International Bulk Terminal - Indonesia
- SMG Consultants - Indonesia
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- CNBM International Corporation - China
- Orica Mining Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Merrill Lynch Commodities Europe
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Sidhee Cement - India
- Indika Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Sarangani Energy Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Mercator Lines Limited - India
- Kobexindo Tractors - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Uttam Galva Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Indonesian Coal Mining Association
- Commonwealth Bank - Australia
- Makarim & Taira - Indonesia
- Karaikal Port Pvt Ltd - India
- Medco Energi Mining Internasional
- Deloitte Consulting - India
- Malabar Cements Ltd - India
- Australian Commodity Traders Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- The State Trading Corporation of India Ltd
- Sree Jayajothi Cements Limited - India
- Indogreen Group - Indonesia
- Bukit Makmur.PT - Indonesia
- The University of Queensland
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- Mercuria Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- International Coal Ventures Pvt Ltd - India
- Goldman Sachs - Singapore
- India Bulls Power Limited - India
- Metalloyd Limited - United Kingdom
- Barasentosa Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Wilmar Investment Holdings
- TNB Fuel Sdn Bhd - Malaysia
- Coal and Oil Company - UAE
- Meenaskhi Energy Private Limited - India
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Carbofer General Trading SA - India
- Sinarmas Energy and Mining - Indonesia
- Thai Mozambique Logistica
- Bhushan Steel Limited - India
- Parliament of New Zealand
- Bayan Resources Tbk. - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Coal Council - USA
- McConnell Dowell - Australia
- Semirara Mining and Power Corporation, Philippines
- Mjunction Services Limited - India
- GMR Energy Limited - India
- The Treasury - Australian Government
- Savvy Resources Ltd - HongKong
- Timah Investasi Mineral - Indoneisa
- Marubeni Corporation - India
- Indian Energy Exchange, India
- Planning Commission, India
- GN Power Mariveles Coal Plant, Philippines
- GVK Power & Infra Limited - India
- Sakthi Sugars Limited - India
- Tamil Nadu electricity Board
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- Banpu Public Company Limited - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Finance - Indonesia
- Ambuja Cements Ltd - India
- Edison Trading Spa - Italy
- Minerals Council of Australia
- Altura Mining Limited, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Renaissance Capital - South Africa
- South Luzon Thermal Energy Corporation
- Power Finance Corporation Ltd., India
- SMC Global Power, Philippines
- Latin American Coal - Colombia
- Central Java Power - Indonesia
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Coalindo Energy - Indonesia
- Trasteel International SA, Italy
- Vijayanagar Sugar Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Economic Council, Georgia
- Global Green Power PLC Corporation, Philippines
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Wood Mackenzie - Singapore
- Interocean Group of Companies - India
- Gujarat Mineral Development Corp Ltd - India
- Star Paper Mills Limited - India
- Krishnapatnam Port Company Ltd. - India
- Therma Luzon, Inc, Philippines
- Singapore Mercantile Exchange
- AsiaOL BioFuels Corp., Philippines
- Mintek Dendrill Indonesia
- Vedanta Resources Plc - India
- Ministry of Mines - Canada
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Price Waterhouse Coopers - Russia
- Simpson Spence & Young - Indonesia
- GAC Shipping (India) Pvt Ltd
- Eastern Energy - Thailand
- Riau Bara Harum - Indonesia
- Australian Coal Association
- Bhatia International Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- Cement Manufacturers Association - India
- Formosa Plastics Group - Taiwan
- Aditya Birla Group - India
- ICICI Bank Limited - India
- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Sindya Power Generating Company Private Ltd
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Ind-Barath Power Infra Limited - India
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