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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, 01 September 13
INDONESIA TO INDIA SPOT FREIGHT STAYS FIRM THIS WEEK - VISTAAR
COALspot.com: The freight market continued to be firm with even though the BDI and Cape index dropped by about 3 pct week on week.
The BDI was do ...
Friday, 30 August 13
US COAL PRODUCTION FELL 0.48 PERCENT WEEK ON WEEK - EIA
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.70 million short tons (mmst) of ...
Thursday, 29 August 13
HANDY: THE PACIFIC MARKET STARTED HEALTHY THIS WEEK - FEARNRESEARCH
Handy
The Pacific market started healthy this week. We have seen many bauxite, iron ore and few coal fixtures. Ships passing Singapore were able to ...
Thursday, 29 August 13
NO RATING IMPACT ON INDONESIAN ENERGY COMPANIES FROM RUPIAH DEPRECIATION - FITCH RATINGS
Fitch Ratings says the credit profiles of rated Indonesian energy and utilities companies, including thermal coal producers, will largely remain una ...
Wednesday, 28 August 13
THE BDI HAS MOVED TO LEVELS CONSIDERABLY STRONGER THAN THE BEGINNING OF THE YEAR - INTERMODAL
By George Bassakos
SnP Broker - Intermodal
We have already reached the end of August and whilst students are preparing themselves for another sc ...
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- Formosa Plastics Group - Taiwan
- Metalloyd Limited - United Kingdom
- Kobexindo Tractors - Indoneisa
- LBH Netherlands Bv - Netherlands
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- Bukit Baiduri Energy - Indonesia
- Tamil Nadu electricity Board
- Samtan Co., Ltd - South Korea
- Bharathi Cement Corporation - India
- Kepco SPC Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- PetroVietnam Power Coal Import and Supply Company
- Videocon Industries ltd - India
- GAC Shipping (India) Pvt Ltd
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- SN Aboitiz Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Commonwealth Bank - Australia
- Sical Logistics Limited - India
- Timah Investasi Mineral - Indoneisa
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
- GMR Energy Limited - India
- Sree Jayajothi Cements Limited - India
- Holcim Trading Pte Ltd - Singapore
- Globalindo Alam Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- New Zealand Coal & Carbon
- Karbindo Abesyapradhi - Indoneisa
- Global Coal Blending Company Limited - Australia
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Intertek Mineral Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Ministry of Finance - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- Indian Oil Corporation Limited
- Banpu Public Company Limited - Thailand
- MS Steel International - UAE
- South Luzon Thermal Energy Corporation
- Economic Council, Georgia
- Latin American Coal - Colombia
- Petron Corporation, Philippines
- Global Business Power Corporation, Philippines
- Indian Energy Exchange, India
- Energy Link Ltd, New Zealand
- European Bulk Services B.V. - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- Bhoruka Overseas - Indonesia
- Oldendorff Carriers - Singapore
- Orica Australia Pty. Ltd.
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PNOC Exploration Corporation - Philippines
- Merrill Lynch Commodities Europe
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- Semirara Mining Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Gujarat Sidhee Cement - India
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- SMC Global Power, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Coal and Oil Company - UAE
- Sakthi Sugars Limited - India
- CIMB Investment Bank - Malaysia
- Central Electricity Authority - India
- Billiton Holdings Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Agrawal Coal Company - India
- Altura Mining Limited, Indonesia
- Indo Tambangraya Megah - Indonesia
- Trasteel International SA, Italy
- Gujarat Mineral Development Corp Ltd - India
- Chettinad Cement Corporation Ltd - India
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- Independent Power Producers Association of India
- Wood Mackenzie - Singapore
- Africa Commodities Group - South Africa
- OPG Power Generation Pvt Ltd - India
- Larsen & Toubro Limited - India
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- IEA Clean Coal Centre - UK
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- ICICI Bank Limited - India
- Bulk Trading Sa - Switzerland
- Binh Thuan Hamico - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Eastern Coal Council - USA
- ASAPP Information Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ambuja Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Pendopo Energi Batubara - Indonesia
- Jindal Steel & Power Ltd - India
- Ind-Barath Power Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Australian Coal Association
- Chamber of Mines of South Africa
- Rashtriya Ispat Nigam Limited - India
- Indika Energy - Indonesia
- Electricity Authority, New Zealand
- Anglo American - United Kingdom
- Borneo Indobara - Indonesia
- Manunggal Multi Energi - Indonesia
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- Aboitiz Power Corporation - Philippines
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Siam City Cement PLC, Thailand
- Global Green Power PLC Corporation, Philippines
- Dalmia Cement Bharat India
- Electricity Generating Authority of Thailand
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Central Java Power - Indonesia
- Medco Energi Mining Internasional
- Marubeni Corporation - India
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- Singapore Mercantile Exchange
- SMG Consultants - Indonesia
- The University of Queensland
- Energy Development Corp, Philippines
- Minerals Council of Australia
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- GN Power Mariveles Coal Plant, Philippines
- Orica Mining Services - Indonesia
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- Vizag Seaport Private Limited - India
- Georgia Ports Authority, United States
- Bahari Cakrawala Sebuku - Indonesia
- Kartika Selabumi Mining - Indonesia
- PTC India Limited - India
- Mercuria Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Sojitz Corporation - Japan
- Malabar Cements Ltd - India
- Standard Chartered Bank - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Krishnapatnam Port Company Ltd. - India
- Interocean Group of Companies - India
- Petrochimia International Co. Ltd.- Taiwan
- Vedanta Resources Plc - India
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
- Antam Resourcindo - Indonesia
- Xindia Steels Limited - India
- Sindya Power Generating Company Private Ltd
- India Bulls Power Limited - India
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- GVK Power & Infra Limited - India
- Power Finance Corporation Ltd., India
- Bayan Resources Tbk. - Indonesia
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Bukit Makmur.PT - Indonesia
- Tata Chemicals Ltd - India
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Parliament of New Zealand
- Maheswari Brothers Coal Limited - India
- Price Waterhouse Coopers - Russia
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indogreen Group - Indonesia
- Goldman Sachs - Singapore
- TeaM Sual Corporation - Philippines
- Parry Sugars Refinery, India
- Port Waratah Coal Services - Australia
- Alfred C Toepfer International GmbH - Germany
- Thai Mozambique Logistica
- Siam City Cement - Thailand
- Mintek Dendrill Indonesia
- Kohat Cement Company Ltd. - Pakistan
- White Energy Company Limited
- VISA Power Limited - India
- McConnell Dowell - Australia
- Deloitte Consulting - India
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