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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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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 ...
Thursday, 22 August 13
PANAMAX : PERIOD MARKET IS STILL BEING LED BY STRONGER SENTIMENT IN THE FFA'S - FEARNRESEARCH
Handy
This week started slowly as expected. Indo biz now rate APS around 7k +60k to china and around 8k+80k to India. However, there are some ships ...
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- Kohat Cement Company Ltd. - Pakistan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- Antam Resourcindo - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Binh Thuan Hamico - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- Salva Resources Pvt Ltd - India
- SMG Consultants - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Minerals Council of Australia
- Wood Mackenzie - Singapore
- Electricity Generating Authority of Thailand
- Mjunction Services Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- Commonwealth Bank - Australia
- Global Coal Blending Company Limited - Australia
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- Trasteel International SA, Italy
- Global Green Power PLC Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bayan Resources Tbk. - Indonesia
- Coalindo Energy - Indonesia
- Vizag Seaport Private Limited - India
- Bukit Makmur.PT - Indonesia
- Carbofer General Trading SA - India
- GAC Shipping (India) Pvt Ltd
- Simpson Spence & Young - Indonesia
- Anglo American - United Kingdom
- Bhushan Steel Limited - India
- Madhucon Powers Ltd - India
- White Energy Company Limited
- Semirara Mining Corp, Philippines
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- Borneo Indobara - Indonesia
- Attock Cement Pakistan Limited
- Siam City Cement PLC, Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Heidelberg Cement - Germany
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Ind-Barath Power Infra Limited - India
- Sarangani Energy Corporation, Philippines
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- Interocean Group of Companies - India
- Pipit Mutiara Jaya. PT, Indonesia
- Xindia Steels Limited - India
- Grasim Industreis Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Bukit Asam (Persero) Tbk - Indonesia
- CNBM International Corporation - China
- OPG Power Generation Pvt Ltd - India
- Star Paper Mills Limited - India
- Holcim Trading Pte Ltd - Singapore
- Africa Commodities Group - South Africa
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- Coal and Oil Company - UAE
- Kideco Jaya Agung - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Agrawal Coal Company - India
- New Zealand Coal & Carbon
- Coastal Gujarat Power Limited - India
- Meenaskhi Energy Private Limited - India
- Metalloyd Limited - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Rio Tinto Coal - Australia
- Sakthi Sugars Limited - India
- London Commodity Brokers - England
- Planning Commission, India
- Formosa Plastics Group - Taiwan
- Thai Mozambique Logistica
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- Cement Manufacturers Association - India
- Bharathi Cement Corporation - India
- The Treasury - Australian Government
- San Jose City I Power Corp, Philippines
- Goldman Sachs - Singapore
- Uttam Galva Steels Limited - India
- Medco Energi Mining Internasional
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Gujarat Sidhee Cement - India
- Dalmia Cement Bharat India
- Kobexindo Tractors - Indoneisa
- ASAPP Information Group - India
- Mercuria Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- TeaM Sual Corporation - Philippines
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- ICICI Bank Limited - India
- Tata Chemicals Ltd - India
- PNOC Exploration Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Eastern Coal Council - USA
- Indogreen Group - Indonesia
- IHS Mccloskey Coal Group - USA
- Savvy Resources Ltd - HongKong
- Economic Council, Georgia
- Ministry of Transport, Egypt
- VISA Power Limited - India
- Pendopo Energi Batubara - Indonesia
- India Bulls Power Limited - India
- Indian Energy Exchange, India
- Intertek Mineral Services - Indonesia
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- Mercator Lines Limited - India
- Indonesian Coal Mining Association
- Sical Logistics Limited - India
- Kapuas Tunggal Persada - Indonesia
- SN Aboitiz Power Inc, Philippines
- Central Electricity Authority - India
- Malabar Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Edison Trading Spa - Italy
- Jindal Steel & Power Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Lanco Infratech Ltd - India
- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- Makarim & Taira - Indonesia
- Power Finance Corporation Ltd., India
- Kalimantan Lumbung Energi - Indonesia
- Merrill Lynch Commodities Europe
- Sree Jayajothi Cements Limited - India
- Bukit Baiduri Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Toyota Tsusho Corporation, Japan
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- Larsen & Toubro Limited - India
- Indo Tambangraya Megah - Indonesia
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- International Coal Ventures Pvt Ltd - India
- GMR Energy Limited - India
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Romanian Commodities Exchange
- Georgia Ports Authority, United States
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- Bangladesh Power Developement Board
- Straits Asia Resources Limited - Singapore
- Marubeni Corporation - India
- Ambuja Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Sojitz Corporation - Japan
- South Luzon Thermal Energy Corporation
- Central Java Power - Indonesia
- Essar Steel Hazira Ltd - India
- Videocon Industries ltd - India
- Jaiprakash Power Ventures ltd
- PTC India Limited - India
- Global Business Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- Krishnapatnam Port Company Ltd. - India
- Sindya Power Generating Company Private Ltd
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Siam City Cement - Thailand
- Chamber of Mines of South Africa
- McConnell Dowell - Australia
- MS Steel International - UAE
- Singapore Mercantile Exchange
- Riau Bara Harum - Indonesia
- Australian Commodity Traders Exchange
- Miang Besar Coal Terminal - Indonesia
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- Orica Australia Pty. Ltd.
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Port Waratah Coal Services - Australia
- Samtan Co., Ltd - South Korea
- The University of Queensland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wilmar Investment Holdings
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