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Tuesday, 01 October 13
DRY BULK MARKET POISED FOR RETREAT ON CHINA HOLIDAY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The start of a national weeklong in China as of Tuesday is expected to put a lid in the latest rally of the dry bulk freight market, as has always been the case in similar occasions. This trend has already been obvious, by tracking the latest couple of sessions of the industry's benchmark, the Baltic Dry Index. The BDI was down 43 points yesterday, to end at 2,003 points, still more than double than the level of this past summer. The Capesize market witnessed the widest losses, which again was to be expected, given that most of the Capesize business is coming out of China. The BCI (Baltic Capesize Index) was down by 114 points to 3,853. Marginal losses were again obvious in the Panamax market, while smaller ship classes fared better, with Supramaxes rising by 10 points and Handysizes by three points to 1,079 and 597 respectively.
Capt. Jitesh Jaipuriyar, Chief Operating officer with Emerald Maritime, Dubai, offered Hellenic Shipping News Worldwide (www.hellenicshippingnews.com) an insight, regarding this latest rally of the dry bulk market, which has been fuelled by factors both "upstream" and "downstream". In the upstream factors, Capt. Jaipuriyar, noted that "miners are not able to sell at higher costs as there are few “takers”. India and China, as one of the most prospective import economies, are unable to support high raw material prices due to currency devaluation and slow growth combined. However, a miner may not be able to feed supply at the same cost for long as it threatens the very survival. Thus, the importer is forced to pay for high raw material prices which eventually is directly correlated to BDI upswing and supports the rally", he stated.
Regarding downstream factors, Capt. said that "in the current scenario, any increase in prices of raw materials, shall force miners to pass on the rises to the end users, in order to maintain profit margins, especially if this trend continues for an extended period. For shipping to recover, then this period has to be extended. Does it mean that it would bring “Inflationary pressure” in emerging economies? Not necessary. This is because when pressure builds up on downstream, other “balancing factors” shall come into play" he says.
According to Capt. Jaipuriyar, at this stage "the following question arises, if the high raw materials cost shall be able to create a “derived demand” or not. What we see as of now may not be real derived demand but more of a “Pseudo Demand”. Pseudo demand emerges from the constraint of choices a company has when having contracted out spot rates. This will show increased demand through paying more for shipping of the materials. However, the fact remains that companies have to commit to long term contracts (LTCs) and soaring period rates would not allow them to contract ships at lesser Time-Charter equivalents. But LTCs can play ‘Wait and watch’ game. This again contributes to pool of “pseudo demand” to be capitalized later and would support the rally", he says.
BULLWHIP EFFECT & “DECOUPLING”
"Last month, A Capesize stem from Australia to China, cost USD 14 per MT whereas same when slit in two panamaxes, costs only USD 13 per MT. This is against the economy of scale. So, how does it happen? When the demand goes up, a producer goes for bigger volumes and Capes rate go high. Due to limited Capes, the demand for smaller sizes down the chain increases which in effect creates a ‘Bullwhip effect’ to drive the demand for ships and rallies BDI overall.
So, at some point of time, the economic principles “decouple” with existing demand and supply scenario and lead to speculations. This in turn brings in volatility in the market. But the end demand drives it in sustainable way in spite of creation of multiple peaks and troughs on the way.
ROAD AHEAD
There have been many attempts to forecast BDIs in past and will continued to be explored. However, interestingly, it appears that the accuracy of forecasts lies not in “correlation” but possible “negative correlations”. It is for the fact that a positive correlation is not mere a result of one factor but a combination of many. Under such circumstances, it may not be possible to substantiate a proper or perfect “weightage” to one factor or another. But, past shows that gold, CRB (Commodity research bureau index) and crude prices often indicate how the negative correlation is building up and may help forecast BDI for short runs, possibly.
Overall, market remains upbeat for positive growth as stockpiles of grains and coal and other major commodities remain high to be shipped across the geographies", he concluded.
Source: Nikos Roussanoglou, Hellenic Shipping News
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Friday, 25 October 13
U.S. YEAR-TO-DATE COAL PRODUCTION REACHED TOTALLED 803.1 MMST
COALspot.com – United States the world’s second largest coal producer produced approximately 19.10 million short tons (mmst) of coal in ...
Thursday, 24 October 13
PANAMAX: RATES SLIP ACROSS BOTH HEMISPHERES
Handy
We were back from holidays but still not much enquiries in the market. Overall future direction is uncertain. Currently, ships passing Singap ...
Thursday, 24 October 13
SHIP PRICES ARE INCREASING ON THE BACK OF IMPROVED MARKET SENTIMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept on retreating from its recent highs, ending yesterday at 1,786 points, down 61 points on the day, with Capesizes leadin ...
Wednesday, 23 October 13
DRY BULK MARKET HAS SHOWN SIGNS OF STABILITY - INTERMODAL
Chartering (Wet: Stable+ / Dry: Stable-)
The Dry Bulk market has shown signs of stability this past week, with the sole exception of Capes, rates f ...
Wednesday, 23 October 13
MARKET SENTIMENT IN THE DRY BULK SECTOR REMAINS POSITIVE - YANNIS OLZIERSKY
Market sentiment in the dry bulk sector remains positive despite the latest correction in freight rates for the Capesize sector, which are sliding f ...
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- Directorate General of MIneral and Coal - Indonesia
- Agrawal Coal Company - India
- TNB Fuel Sdn Bhd - Malaysia
- Billiton Holdings Pty Ltd - Australia
- The University of Queensland
- Madhucon Powers Ltd - India
- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- Bhushan Steel Limited - India
- Altura Mining Limited, Indonesia
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Price Waterhouse Coopers - Russia
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Goldman Sachs - Singapore
- Latin American Coal - Colombia
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- Chettinad Cement Corporation Ltd - India
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Pipit Mutiara Jaya. PT, Indonesia
- White Energy Company Limited
- Indika Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indogreen Group - Indonesia
- IHS Mccloskey Coal Group - USA
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- Uttam Galva Steels Limited - India
- Eastern Coal Council - USA
- Jaiprakash Power Ventures ltd
- Energy Development Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- ASAPP Information Group - India
- Posco Energy - South Korea
- Sakthi Sugars Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Borneo Indobara - Indonesia
- Star Paper Mills Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- London Commodity Brokers - England
- Sarangani Energy Corporation, Philippines
- Sojitz Corporation - Japan
- Romanian Commodities Exchange
- Attock Cement Pakistan Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhatia International Limited - India
- Independent Power Producers Association of India
- Petrochimia International Co. Ltd.- Taiwan
- CNBM International Corporation - China
- Economic Council, Georgia
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Semirara Mining and Power Corporation, Philippines
- Ministry of Finance - Indonesia
- SMC Global Power, Philippines
- VISA Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- GVK Power & Infra Limited - India
- Gujarat Sidhee Cement - India
- Kalimantan Lumbung Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Essar Steel Hazira Ltd - India
- Parliament of New Zealand
- Planning Commission, India
- Indian Energy Exchange, India
- Alfred C Toepfer International GmbH - Germany
- Aditya Birla Group - India
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Merrill Lynch Commodities Europe
- Coastal Gujarat Power Limited - India
- Samtan Co., Ltd - South Korea
- Savvy Resources Ltd - HongKong
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Medco Energi Mining Internasional
- Central Java Power - Indonesia
- Simpson Spence & Young - Indonesia
- Carbofer General Trading SA - India
- Miang Besar Coal Terminal - Indonesia
- Singapore Mercantile Exchange
- Ceylon Electricity Board - Sri Lanka
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- Petron Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- SMG Consultants - Indonesia
- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- Barasentosa Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Kaltim Prima Coal - Indonesia
- Orica Mining Services - Indonesia
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- India Bulls Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Interocean Group of Companies - India
- Chamber of Mines of South Africa
- MS Steel International - UAE
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- Indo Tambangraya Megah - Indonesia
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- Baramulti Group, Indonesia
- Cement Manufacturers Association - India
- AsiaOL BioFuels Corp., Philippines
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Tata Chemicals Ltd - India
- Karaikal Port Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Sree Jayajothi Cements Limited - India
- Manunggal Multi Energi - Indonesia
- Oldendorff Carriers - Singapore
- Mjunction Services Limited - India
- Maheswari Brothers Coal Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Mintek Dendrill Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Larsen & Toubro Limited - India
- Globalindo Alam Lestari - Indonesia
- Coal and Oil Company - UAE
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Antam Resourcindo - Indonesia
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- Dalmia Cement Bharat India
- Coalindo Energy - Indonesia
- Siam City Cement - Thailand
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Generating Authority of Thailand
- Sinarmas Energy and Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Grasim Industreis Ltd - India
- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ambuja Cements Ltd - India
- The Treasury - Australian Government
- European Bulk Services B.V. - Netherlands
- Meralco Power Generation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Indian Oil Corporation Limited
- Bukit Baiduri Energy - Indonesia
- PTC India Limited - India
- Kapuas Tunggal Persada - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parry Sugars Refinery, India
- Jorong Barutama Greston.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Renaissance Capital - South Africa
- Commonwealth Bank - Australia
- GAC Shipping (India) Pvt Ltd
- Iligan Light & Power Inc, Philippines
- Indonesian Coal Mining Association
- Lanco Infratech Ltd - India
- Vedanta Resources Plc - India
- Salva Resources Pvt Ltd - India
- Marubeni Corporation - India
- Kumho Petrochemical, South Korea
- Kideco Jaya Agung - Indonesia
- Bhoruka Overseas - Indonesia
- Aboitiz Power Corporation - Philippines
- Vizag Seaport Private Limited - India
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- Tamil Nadu electricity Board
- Thiess Contractors Indonesia
- Anglo American - United Kingdom
- Central Electricity Authority - India
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Sical Logistics Limited - India
- Edison Trading Spa - Italy
- Bangladesh Power Developement Board
- Rashtriya Ispat Nigam Limited - India
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