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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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Sunday, 13 October 13
API 8 CFR SOUTH CHINA COAL - AVERAGE Q4 2013 DELIVERY FELL 0.30 PERCEPT ON WEEK
COALspot.com : API 8 CFR South China Coal swaps for average Q4 2013 delivery fell 0.30 percept week on week on Friday 11 October 2013. The CFR South ...
Saturday, 12 October 13
PANAMAX: OWNERS ARE AT US$ 17-18.5K PER DAY; CHARTERERS ARE AT US$ 15.5-16K - CAPT. REDDY
COALspot.com - The futures market was heavily down on the cape size vessels and the physical average charterer rates on cape size vessels dropped by ...
Friday, 11 October 13
DRY BULK FREIGHT RATE POSITIVE MOMENTUM TO BE SUPPORTED BY HIGHER DEMAND SAYS BIMCO - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
BIMCO released its latest short term research on the shipping markets, estimating that the elevated level of Capesize TC average rates i ...
Friday, 11 October 13
US COAL PRODUCTION FALLS 7.70% IN SEPTEMBER
COALspot.com – United States the world’s second largest coal producer produced approximately 17.70 million short tons (mmst) of coal in ...
Thursday, 10 October 13
NPC AUSTRALIA SHIPPED 2.99 MILLION TONS OF COAL W-O-W
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port up 12.04 per cent week on week to 2.99 million mt for ...
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- Bhatia International Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
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- Commonwealth Bank - Australia
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- Eastern Coal Council - USA
- Power Finance Corporation Ltd., India
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Offshore Bulk Terminal Pte Ltd, Singapore
- PetroVietnam Power Coal Import and Supply Company
- Maharashtra Electricity Regulatory Commission - India
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- Bhushan Steel Limited - India
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- Indonesian Coal Mining Association
- Economic Council, Georgia
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- Parliament of New Zealand
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- Asia Pacific Energy Resources Ventures Inc, Philippines
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- Wood Mackenzie - Singapore
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- Marubeni Corporation - India
- Baramulti Group, Indonesia
- Indian Energy Exchange, India
- Toyota Tsusho Corporation, Japan
- Orica Australia Pty. Ltd.
- Kideco Jaya Agung - Indonesia
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- Indika Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Trasteel International SA, Italy
- Minerals Council of Australia
- Semirara Mining and Power Corporation, Philippines
- Goldman Sachs - Singapore
- Ambuja Cements Ltd - India
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Tamil Nadu electricity Board
- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- Cigading International Bulk Terminal - Indonesia
- Central Electricity Authority - India
- Siam City Cement PLC, Thailand
- Globalindo Alam Lestari - Indonesia
- The University of Queensland
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Jindal Steel & Power Ltd - India
- Merrill Lynch Commodities Europe
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhoruka Overseas - Indonesia
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- Interocean Group of Companies - India
- Karbindo Abesyapradhi - Indoneisa
- Singapore Mercantile Exchange
- Iligan Light & Power Inc, Philippines
- Grasim Industreis Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- ASAPP Information Group - India
- Bayan Resources Tbk. - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Sakthi Sugars Limited - India
- Semirara Mining Corp, Philippines
- Energy Development Corp, Philippines
- PowerSource Philippines DevCo
- Ministry of Transport, Egypt
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- Port Waratah Coal Services - Australia
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- CIMB Investment Bank - Malaysia
- Electricity Authority, New Zealand
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- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
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- White Energy Company Limited
- Karaikal Port Pvt Ltd - India
- Malabar Cements Ltd - India
- India Bulls Power Limited - India
- Antam Resourcindo - Indonesia
- Barasentosa Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- PTC India Limited - India
- Formosa Plastics Group - Taiwan
- Timah Investasi Mineral - Indoneisa
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- GVK Power & Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Sidhee Cement - India
- McConnell Dowell - Australia
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Indian Oil Corporation Limited
- Bahari Cakrawala Sebuku - Indonesia
- Coal and Oil Company - UAE
- Agrawal Coal Company - India
- Mjunction Services Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Samtan Co., Ltd - South Korea
- Posco Energy - South Korea
- Therma Luzon, Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Heidelberg Cement - Germany
- Dalmia Cement Bharat India
- Sree Jayajothi Cements Limited - India
- Kepco SPC Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Jaiprakash Power Ventures ltd
- Cement Manufacturers Association - India
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- Vijayanagar Sugar Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- London Commodity Brokers - England
- Sarangani Energy Corporation, Philippines
- Attock Cement Pakistan Limited
- Billiton Holdings Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Binh Thuan Hamico - Vietnam
- VISA Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement - Thailand
- Krishnapatnam Port Company Ltd. - India
- Medco Energi Mining Internasional
- Ministry of Finance - Indonesia
- Eastern Energy - Thailand
- Anglo American - United Kingdom
- Sical Logistics Limited - India
- Chamber of Mines of South Africa
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- Videocon Industries ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercator Lines Limited - India
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- Rio Tinto Coal - Australia
- Rashtriya Ispat Nigam Limited - India
- Holcim Trading Pte Ltd - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- Miang Besar Coal Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- CNBM International Corporation - China
- Maheswari Brothers Coal Limited - India
- The Treasury - Australian Government
- Madhucon Powers Ltd - India
- Petron Corporation, Philippines
- Meralco Power Generation, Philippines
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
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