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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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Tuesday, 27 August 13
AUSTRALIA NEWCASTLE COAL EXPORTS JUMPED 15.59 PERCENT ON WEEK
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port up 15.59 per cent week on week to 2.76 million mt for ...
Monday, 26 August 13
CARRIAGE OF COAL CARGOES FROM KALIMANTAN, INDONESIA - WEST OF ENGLAND P&I CLUB
The Club has recently been advised by consulting scientists and engineers Dr J H Burgoyne and Partners (International) Limited that the number of in ...
Sunday, 25 August 13
API 8 CFR SOUTH CHINA COAL: HEADING TO NORTH
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average Q4 2013 delivery US$ 2.39 up month on month. The swap was moved positive ...
Sunday, 25 August 13
THE FREIGHT MARKET S7 & S8 SECTOR IS EXPECTED TO BE STEADY/FIRM NEXT WEEK - VISTAAR
COALspot.com - The freight market continued to be firm with all indices moved positive except for Panamax which was slightly down (2 pct down).
T ...
Friday, 23 August 13
US PRODUCED MORE COAL WEEK ON WEEK - EIA
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.80 million short tons (mmst) of ...
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- GVK Power & Infra Limited - India
- London Commodity Brokers - England
- CNBM International Corporation - China
- Medco Energi Mining Internasional
- Thai Mozambique Logistica
- Sakthi Sugars Limited - India
- Kideco Jaya Agung - Indonesia
- Thiess Contractors Indonesia
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- Bharathi Cement Corporation - India
- Larsen & Toubro Limited - India
- Planning Commission, India
- Karbindo Abesyapradhi - Indoneisa
- Riau Bara Harum - Indonesia
- Independent Power Producers Association of India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pendopo Energi Batubara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Minerals Council of Australia
- VISA Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
- ICICI Bank Limited - India
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- Wilmar Investment Holdings
- Port Waratah Coal Services - Australia
- Rio Tinto Coal - Australia
- Electricity Generating Authority of Thailand
- Eastern Coal Council - USA
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- Eastern Energy - Thailand
- Ceylon Electricity Board - Sri Lanka
- Aboitiz Power Corporation - Philippines
- Ambuja Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- TeaM Sual Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Kobexindo Tractors - Indoneisa
- SMG Consultants - Indonesia
- South Luzon Thermal Energy Corporation
- Carbofer General Trading SA - India
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- Rashtriya Ispat Nigam Limited - India
- PowerSource Philippines DevCo
- Goldman Sachs - Singapore
- Orica Mining Services - Indonesia
- Sojitz Corporation - Japan
- SN Aboitiz Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Xindia Steels Limited - India
- Energy Development Corp, Philippines
- Star Paper Mills Limited - India
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- Oldendorff Carriers - Singapore
- The Treasury - Australian Government
- Africa Commodities Group - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- San Jose City I Power Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Parliament of New Zealand
- Wood Mackenzie - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kumho Petrochemical, South Korea
- Bukit Baiduri Energy - Indonesia
- Trasteel International SA, Italy
- Bhushan Steel Limited - India
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
- Metalloyd Limited - United Kingdom
- Aditya Birla Group - India
- Power Finance Corporation Ltd., India
- Bangladesh Power Developement Board
- Neyveli Lignite Corporation Ltd, - India
- Global Coal Blending Company Limited - Australia
- Price Waterhouse Coopers - Russia
- Leighton Contractors Pty Ltd - Australia
- Agrawal Coal Company - India
- Essar Steel Hazira Ltd - India
- PNOC Exploration Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- Miang Besar Coal Terminal - Indonesia
- Edison Trading Spa - Italy
- Borneo Indobara - Indonesia
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- Sarangani Energy Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Marubeni Corporation - India
- Mintek Dendrill Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Straits Asia Resources Limited - Singapore
- Uttam Galva Steels Limited - India
- Ministry of Transport, Egypt
- Ind-Barath Power Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- Deloitte Consulting - India
- Standard Chartered Bank - UAE
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- Parry Sugars Refinery, India
- Savvy Resources Ltd - HongKong
- GAC Shipping (India) Pvt Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Merrill Lynch Commodities Europe
- Indian Oil Corporation Limited
- Formosa Plastics Group - Taiwan
- Attock Cement Pakistan Limited
- Mjunction Services Limited - India
- Bayan Resources Tbk. - Indonesia
- Maheswari Brothers Coal Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- International Coal Ventures Pvt Ltd - India
- Indonesian Coal Mining Association
- PTC India Limited - India
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- Cement Manufacturers Association - India
- Renaissance Capital - South Africa
- Madhucon Powers Ltd - India
- Singapore Mercantile Exchange
- Economic Council, Georgia
- LBH Netherlands Bv - Netherlands
- Australian Commodity Traders Exchange
- PetroVietnam Power Coal Import and Supply Company
- Billiton Holdings Pty Ltd - Australia
- Posco Energy - South Korea
- Australian Coal Association
- Interocean Group of Companies - India
- Intertek Mineral Services - Indonesia
- Central Electricity Authority - India
- Cigading International Bulk Terminal - Indonesia
- Chamber of Mines of South Africa
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement - Thailand
- Anglo American - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Bhoruka Overseas - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- Grasim Industreis Ltd - India
- Latin American Coal - Colombia
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kepco SPC Power Corporation, Philippines
- Ministry of Finance - Indonesia
- The University of Queensland
- Lanco Infratech Ltd - India
- Antam Resourcindo - Indonesia
- Jaiprakash Power Ventures ltd
- Petrochimia International Co. Ltd.- Taiwan
- Banpu Public Company Limited - Thailand
- Altura Mining Limited, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Commonwealth Bank - Australia
- Ministry of Mines - Canada
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- SMC Global Power, Philippines
- White Energy Company Limited
- Gujarat Sidhee Cement - India
- Global Business Power Corporation, Philippines
- New Zealand Coal & Carbon
- Petron Corporation, Philippines
- The State Trading Corporation of India Ltd
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Global Green Power PLC Corporation, Philippines
- Salva Resources Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Coal and Oil Company - UAE
- IHS Mccloskey Coal Group - USA
- Heidelberg Cement - Germany
- Electricity Authority, New Zealand
- Simpson Spence & Young - Indonesia
- Bukit Makmur.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- MS Steel International - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Mercator Lines Limited - India
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