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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, 08 September 13
BALTIC INDEX UP ON HIGHER CAPESIZE, PANAMAX RATES
COALspot.com : The freight market continued saw one of the biggest rally last week with Cape Size taking the lead followed by Panamax.
The BDI wa ...
Friday, 06 September 13
DRY BULK MARKET REACHES NEW YEAR-HIGHS ON THE BACK OF INCREASED CAPESIZE DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has been on the rise once again, but this time around any new increase of freight rates translates into new year-highs, thus bri ...
Friday, 06 September 13
US PRODUCED APPROXIMATELY 90.80 MMST OF COAL IN AUGUST
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.90 million short tons (mmst) of ...
Thursday, 05 September 13
INDONESIAN COAL EXPORTS UP BY 6.72 PERCENT IN JULY
COALspot.com: Indonesia, the world's largest multi grade coal exporter shipped 35.268* million tons of coal in July 2013. Indonesian coal exp ...
Thursday, 05 September 13
HANDY: NICKEL ORE WAS PUSHING THE FAR EAST MARKET - FEARNLEYS
Handy
Nickel Ore was pushing the Feast market, several ships were fixed from low teens to $14k. Indo/India was still supported by bauxite, while th ...
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- Uttam Galva Steels Limited - India
- Romanian Commodities Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Sarangani Energy Corporation, Philippines
- Indian Energy Exchange, India
- Globalindo Alam Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Bulk Trading Sa - Switzerland
- San Jose City I Power Corp, Philippines
- South Luzon Thermal Energy Corporation
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Mercuria Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Independent Power Producers Association of India
- Deloitte Consulting - India
- Neyveli Lignite Corporation Ltd, - India
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Mining Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- PetroVietnam Power Coal Import and Supply Company
- Kartika Selabumi Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- Toyota Tsusho Corporation, Japan
- Aboitiz Power Corporation - Philippines
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Holcim Trading Pte Ltd - Singapore
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- Edison Trading Spa - Italy
- Mercator Lines Limited - India
- Sakthi Sugars Limited - India
- Grasim Industreis Ltd - India
- Kaltim Prima Coal - Indonesia
- Rio Tinto Coal - Australia
- Iligan Light & Power Inc, Philippines
- Heidelberg Cement - Germany
- Banpu Public Company Limited - Thailand
- Kideco Jaya Agung - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- Standard Chartered Bank - UAE
- GVK Power & Infra Limited - India
- Therma Luzon, Inc, Philippines
- Dalmia Cement Bharat India
- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- Asmin Koalindo Tuhup - Indonesia
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- Semirara Mining Corp, Philippines
- Parry Sugars Refinery, India
- Timah Investasi Mineral - Indoneisa
- European Bulk Services B.V. - Netherlands
- Marubeni Corporation - India
- Indika Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement - Thailand
- Coalindo Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Videocon Industries ltd - India
- Posco Energy - South Korea
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jaiprakash Power Ventures ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Altura Mining Limited, Indonesia
- LBH Netherlands Bv - Netherlands
- Electricity Authority, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Malabar Cements Ltd - India
- Indian Oil Corporation Limited
- GAC Shipping (India) Pvt Ltd
- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Central Java Power - Indonesia
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- Karaikal Port Pvt Ltd - India
- Eastern Coal Council - USA
- Wood Mackenzie - Singapore
- AsiaOL BioFuels Corp., Philippines
- Ministry of Mines - Canada
- Minerals Council of Australia
- Jorong Barutama Greston.PT - Indonesia
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- Borneo Indobara - Indonesia
- Interocean Group of Companies - India
- MS Steel International - UAE
- Madhucon Powers Ltd - India
- Ministry of Transport, Egypt
- Commonwealth Bank - Australia
- India Bulls Power Limited - India
- Antam Resourcindo - Indonesia
- SMG Consultants - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Indo Tambangraya Megah - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
- Chamber of Mines of South Africa
- Gujarat Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Petron Corporation, Philippines
- GMR Energy Limited - India
- Samtan Co., Ltd - South Korea
- Latin American Coal - Colombia
- Salva Resources Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- New Zealand Coal & Carbon
- Renaissance Capital - South Africa
- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- Kohat Cement Company Ltd. - Pakistan
- Jindal Steel & Power Ltd - India
- Global Coal Blending Company Limited - Australia
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aditya Birla Group - India
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- The Treasury - Australian Government
- Savvy Resources Ltd - HongKong
- Binh Thuan Hamico - Vietnam
- Anglo American - United Kingdom
- Thiess Contractors Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Trasteel International SA, Italy
- Bhatia International Limited - India
- CIMB Investment Bank - Malaysia
- Sical Logistics Limited - India
- Merrill Lynch Commodities Europe
- Baramulti Group, Indonesia
- Intertek Mineral Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Attock Cement Pakistan Limited
- Siam City Cement PLC, Thailand
- ASAPP Information Group - India
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- SN Aboitiz Power Inc, Philippines
- Planning Commission, India
- Meralco Power Generation, Philippines
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
- Straits Asia Resources Limited - Singapore
- Electricity Generating Authority of Thailand
- Chettinad Cement Corporation Ltd - India
- CNBM International Corporation - China
- Vizag Seaport Private Limited - India
- Coastal Gujarat Power Limited - India
- Riau Bara Harum - Indonesia
- Global Green Power PLC Corporation, Philippines
- PowerSource Philippines DevCo
- Lanco Infratech Ltd - India
- Vedanta Resources Plc - India
- Ind-Barath Power Infra Limited - India
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- The University of Queensland
- Pendopo Energi Batubara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Indogreen Group - Indonesia
- Maheswari Brothers Coal Limited - India
- White Energy Company Limited
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- Goldman Sachs - Singapore
- Medco Energi Mining Internasional
- Tata Chemicals Ltd - India
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- VISA Power Limited - India
- Cement Manufacturers Association - India
- Energy Development Corp, Philippines
- Ministry of Finance - Indonesia
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- PNOC Exploration Corporation - Philippines
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- Gujarat Sidhee Cement - India
- Bangladesh Power Developement Board
- Krishnapatnam Port Company Ltd. - India
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