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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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Monday, 23 September 13
AUSTRALIA'S NEWCASTLE PORT SHIPPED 3 PERCENT LESS COAL WEEK ON WEEK
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port fell 3 per cent week on week to 2.92 million mt for t ...
Sunday, 22 September 13
BDI STRENGTHENS FURTHER AS CAPESIZE FREIGHT RATES JUMP - CAPT. REDDY
COALspot.com: The freight market continued its upward trend and maintaining the moment with BDI and Cape index up by 16 pct week on week. The Capesi ...
Sunday, 22 September 13
API 8 CFR SOUTH CHINA COAL SWAPS ADVANCE
COALspot.com : SGX has launched API 8 CFR South China Coal Swap on 29 April 2013 and SGX replaced the previous swap.
API 8 CFR South China Coal s ...
Sunday, 22 September 13
SUB-BIT INDONESIA COAL SWAPS REMAIN UNDER PRESSURE
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q4 2013 delivery down 2.09 percept month on month on Friday 20 September 2 ...
Friday, 20 September 13
SHIP OWNERS INVEST MORE THAN $9.2 BILLION ON NEW BUILDING VESSELS DURING AUGUST - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Despite the fact that August is traditionally a slow month in terms of ships investment activity, ship owners have grasped this year the opportunity ...
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- PetroVietnam Power Coal Import and Supply Company
- GVK Power & Infra Limited - India
- PNOC Exploration Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Africa Commodities Group - South Africa
- Kapuas Tunggal Persada - Indonesia
- Sical Logistics Limited - India
- Carbofer General Trading SA - India
- Altura Mining Limited, Indonesia
- Energy Link Ltd, New Zealand
- PowerSource Philippines DevCo
- Kartika Selabumi Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- Maheswari Brothers Coal Limited - India
- Savvy Resources Ltd - HongKong
- Simpson Spence & Young - Indonesia
- Posco Energy - South Korea
- Binh Thuan Hamico - Vietnam
- White Energy Company Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Borneo Indobara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Chamber of Mines of South Africa
- Maharashtra Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Bayan Resources Tbk. - Indonesia
- Deloitte Consulting - India
- Indian Oil Corporation Limited
- Directorate Of Revenue Intelligence - India
- Price Waterhouse Coopers - Russia
- Ind-Barath Power Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Port Waratah Coal Services - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Global Business Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Larsen & Toubro Limited - India
- Medco Energi Mining Internasional
- Banpu Public Company Limited - Thailand
- Edison Trading Spa - Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Mines - Canada
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- Interocean Group of Companies - India
- OPG Power Generation Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Economic Council, Georgia
- The Treasury - Australian Government
- Siam City Cement - Thailand
- Australian Commodity Traders Exchange
- The University of Queensland
- London Commodity Brokers - England
- Singapore Mercantile Exchange
- Standard Chartered Bank - UAE
- Toyota Tsusho Corporation, Japan
- Bukit Baiduri Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Formosa Plastics Group - Taiwan
- SMC Global Power, Philippines
- Agrawal Coal Company - India
- Chettinad Cement Corporation Ltd - India
- Sojitz Corporation - Japan
- Grasim Industreis Ltd - India
- Merrill Lynch Commodities Europe
- Independent Power Producers Association of India
- Bhatia International Limited - India
- Wilmar Investment Holdings
- Coastal Gujarat Power Limited - India
- Ministry of Transport, Egypt
- Iligan Light & Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- PTC India Limited - India
- Georgia Ports Authority, United States
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- Goldman Sachs - Singapore
- Parliament of New Zealand
- Energy Development Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Indogreen Group - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Mercuria Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- MS Steel International - UAE
- Therma Luzon, Inc, Philippines
- SMG Consultants - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Meenaskhi Energy Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- ICICI Bank Limited - India
- CNBM International Corporation - China
- Heidelberg Cement - Germany
- Indian Energy Exchange, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Star Paper Mills Limited - India
- Coal and Oil Company - UAE
- Miang Besar Coal Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Barasentosa Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- McConnell Dowell - Australia
- Intertek Mineral Services - Indonesia
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Sree Jayajothi Cements Limited - India
- SN Aboitiz Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- India Bulls Power Limited - India
- Antam Resourcindo - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Tamil Nadu electricity Board
- Makarim & Taira - Indonesia
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- Sarangani Energy Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Kideco Jaya Agung - Indonesia
- Eastern Energy - Thailand
- Vizag Seaport Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Romanian Commodities Exchange
- Kaltim Prima Coal - Indonesia
- Meralco Power Generation, Philippines
- Pendopo Energi Batubara - Indonesia
- Manunggal Multi Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- ASAPP Information Group - India
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- Lanco Infratech Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- Mintek Dendrill Indonesia
- Anglo American - United Kingdom
- Renaissance Capital - South Africa
- Australian Coal Association
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- Videocon Industries ltd - India
- Mjunction Services Limited - India
- Minerals Council of Australia
- Electricity Authority, New Zealand
- GMR Energy Limited - India
- Rashtriya Ispat Nigam Limited - India
- Dalmia Cement Bharat India
- Global Coal Blending Company Limited - Australia
- Uttam Galva Steels Limited - India
- Tata Chemicals Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Madhucon Powers Ltd - India
- Bharathi Cement Corporation - India
- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- Xindia Steels Limited - India
- Planning Commission, India
- Trasteel International SA, Italy
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
- Krishnapatnam Port Company Ltd. - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Marubeni Corporation - India
- The State Trading Corporation of India Ltd
- Global Green Power PLC Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Central Java Power - Indonesia
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- Semirara Mining Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Ambuja Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Samtan Co., Ltd - South Korea
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- International Coal Ventures Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Orica Mining Services - Indonesia
- Rio Tinto Coal - Australia
- Commonwealth Bank - Australia
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