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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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Thursday, 17 October 13
CHINA'S COAL IMPORTS DOWN 9.4% TO 25.96 MMT IN AUGUST
COALspot.com: China's August Imported coal volumes down 9.4% m-m but up 27% y-y, BNP said in its latest China Coal & Power report released on 1 ...
Wednesday, 16 October 13
NEW STRATEGIES AND OPPORTUNITIES IN A RAPIDLY EVOLVING COAL INDUSTRY
The 12th Annual Coal Markets assumes even more significance as the industry seeks more market information, inputs on trade strategies, supply and de ...
Wednesday, 16 October 13
CAPES: RATES DROPPED; PANAMAX: ADVANCED - INTERMODAL
After a month and a half of straight weekly positive closings, the BDI has finished the week in the red. Monday started slow as holidays in the East ...
Wednesday, 16 October 13
WILL THIS LATEST DRY BULK MARKET UPTREND PROVE TO BE AS LONG-LIVED OR JUST ANOTHER MOMENTARY SPIKE? - CHRISTOS MANZTIOS
COALspot.com: So here we are again facing the same old question: Will this latest market uptrend prove to be as long-lived as all owners hope or jus ...
Wednesday, 16 October 13
KOSEP TO IMPORT 0.49 MILLION TONS OF 4600 NAR COAL FOR JAN - FEB '14
COALspot.com - Korea South-East Power Co., a Korean generator and distributor of electricity on behalf of five Korean Gencos intends to procure 490, ...
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- Kalimantan Lumbung Energi - Indonesia
- Salva Resources Pvt Ltd - India
- New Zealand Coal & Carbon
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Commonwealth Bank - Australia
- Siam City Cement PLC, Thailand
- Cement Manufacturers Association - India
- San Jose City I Power Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Standard Chartered Bank - UAE
- Interocean Group of Companies - India
- Ministry of Transport, Egypt
- Meenaskhi Energy Private Limited - India
- Sarangani Energy Corporation, Philippines
- Energy Link Ltd, New Zealand
- Mintek Dendrill Indonesia
- Central Electricity Authority - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- VISA Power Limited - India
- Malabar Cements Ltd - India
- Madhucon Powers Ltd - India
- The Treasury - Australian Government
- Global Coal Blending Company Limited - Australia
- Bangladesh Power Developement Board
- TeaM Sual Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Business Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jindal Steel & Power Ltd - India
- Ministry of Finance - Indonesia
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- Barasentosa Lestari - Indonesia
- Indonesian Coal Mining Association
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- Edison Trading Spa - Italy
- Attock Cement Pakistan Limited
- Mjunction Services Limited - India
- Chettinad Cement Corporation Ltd - India
- Mercuria Energy - Indonesia
- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Bhushan Steel Limited - India
- IEA Clean Coal Centre - UK
- Alfred C Toepfer International GmbH - Germany
- Iligan Light & Power Inc, Philippines
- Sakthi Sugars Limited - India
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Tata Chemicals Ltd - India
- White Energy Company Limited
- Merrill Lynch Commodities Europe
- Sree Jayajothi Cements Limited - India
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- Bulk Trading Sa - Switzerland
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Latin American Coal - Colombia
- Thiess Contractors Indonesia
- Electricity Authority, New Zealand
- ICICI Bank Limited - India
- Indika Energy - Indonesia
- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- Xindia Steels Limited - India
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- Wilmar Investment Holdings
- Maharashtra Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Planning Commission, India
- Bukit Baiduri Energy - Indonesia
- Kumho Petrochemical, South Korea
- PTC India Limited - India
- Timah Investasi Mineral - Indoneisa
- Simpson Spence & Young - Indonesia
- Savvy Resources Ltd - HongKong
- Independent Power Producers Association of India
- Parry Sugars Refinery, India
- McConnell Dowell - Australia
- Baramulti Group, Indonesia
- Indian Energy Exchange, India
- Dalmia Cement Bharat India
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- Rashtriya Ispat Nigam Limited - India
- Global Green Power PLC Corporation, Philippines
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Gujarat Sidhee Cement - India
- Australian Coal Association
- Makarim & Taira - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Romanian Commodities Exchange
- Intertek Mineral Services - Indonesia
- Mercator Lines Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Ambuja Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Banpu Public Company Limited - Thailand
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Wood Mackenzie - Singapore
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Bahari Cakrawala Sebuku - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Krishnapatnam Port Company Ltd. - India
- OPG Power Generation Pvt Ltd - India
- Heidelberg Cement - Germany
- Kideco Jaya Agung - Indonesia
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Economic Council, Georgia
- Goldman Sachs - Singapore
- Jorong Barutama Greston.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- Ind-Barath Power Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- Lanco Infratech Ltd - India
- Anglo American - United Kingdom
- GMR Energy Limited - India
- Leighton Contractors Pty Ltd - Australia
- Eastern Coal Council - USA
- Aboitiz Power Corporation - Philippines
- The State Trading Corporation of India Ltd
- Ceylon Electricity Board - Sri Lanka
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Manunggal Multi Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Indo Tambangraya Megah - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ministry of Mines - Canada
- Bharathi Cement Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- PetroVietnam Power Coal Import and Supply Company
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Electricity Generating Authority of Thailand
- Gujarat Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- Kobexindo Tractors - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Tamil Nadu electricity Board
- Australian Commodity Traders Exchange
- Samtan Co., Ltd - South Korea
- Rio Tinto Coal - Australia
- CNBM International Corporation - China
- Medco Energi Mining Internasional
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- Coal and Oil Company - UAE
- London Commodity Brokers - England
- Eastern Energy - Thailand
- Singapore Mercantile Exchange
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- South Luzon Thermal Energy Corporation
- Miang Besar Coal Terminal - Indonesia
- Renaissance Capital - South Africa
- SN Aboitiz Power Inc, Philippines
- Bhatia International Limited - India
- Formosa Plastics Group - Taiwan
- Orica Mining Services - Indonesia
- LBH Netherlands Bv - Netherlands
- MS Steel International - UAE
- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- Deloitte Consulting - India
- Bukit Asam (Persero) Tbk - Indonesia
- Parliament of New Zealand
- Bayan Resources Tbk. - Indonesia
- Sojitz Corporation - Japan
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Sical Logistics Limited - India
- Coastal Gujarat Power Limited - India
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