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Monday, 24 February 14
DRY BULK MARKET TO IMPROVE OVER THE COURSE OF 2014, BUT OVERSUPPLY STILL AN ISSUE SAYS BIMCO'S CHIEF SHIPPING ANALYST
As a gruelling first quarter edges closer to the end, dry bulk ship owners are looking at an improved second quarter demand, which, coupled with slow steaming and other cost saving measures, will lead to the market's rebound. Speaking with Hellenic Shipping News Worldwide in an exclusive interview, BIMCO's Chief Shipping Analyst, Mr. Peter Sand, noted that lower freight rates over the first couple of months of 2014, were to be expected, but as 2014 moves forward, things will begin to improve. "On the average freight rates levels we have already seen 2013 was better than 2012. BIMCO expect 2014 to become better than 2013 in that sense", Sand said. But, oversupply is still an issue, while demolition activity is expected to be lower this year, on the back of improved freight rates.
Since the start of 2014, dry bulk rates have plunged close to the level they were prior to last year's rally. Is this development attributed solely on low seasonal demand, or have there been other factors in play as well?
The development in dry bulk rates are more or less in line with BIMCO expectations as expressed in our recent reports on the shipping market. The combination of the strongest Q4 ever on record and the recurring seasonal low demand in Q1 multiplied by the weakness in demand during Chinese New Year always test the market with a downward correction. Sometimes high volatility results in rates undershooting when a new lower balance is settling in, this time around is not much different but the rebound is not likely to be especially strong in the short run as can also be seen in the freight rates forecasts that BIMCO has released in early-February for the coming two months.
How crucial has been slow steaming to helping sustain freight rates?
Slow steaming is a very vital tool in today’s markets. Without that, the full force of oversupply would weight heavy on the rates, causing miserable returns on investments.
Most recently, the combination of a slower pace of newbuilding tonnage flowing into the market and widely applied slow steaming has lifted earnings.
The way back to an improved utilization of the fleet is paved with patience and “supply management”. The latter includes keeping slow steaming around, continue the scrapping of the less efficient part of the fleet, making retrofits/repairs works now rather than later, an carefully considering the future expansion of the fleet.
In this sense, it is important to remember that slow steaming has a larger impact on the supply side as compared to demolition, but the temporary nature of slow steaming makes it all more volatile as the market conditions improve.
In its recent report, BIMCO reiterated its view that, beginning April and throughout the remainder of the year, the dry bulk market's prospects are rosier, at least demand-wise. Why is this?
A lot of seasonality plays into this forecast. If you e.g. look at exports of iron ore out of Brazil and Australia the pace and volumes increase throughout the year as it progresses – with Q1 being the low quarter. Demand for steam coal and iron ore is expected to rebound during Q2. Moreover, BIMCO do not expect the support from grains to kick in before we enter Q3 and Q4. This is how we expect 2014 will play out on the big scale.
Do you expect the recovery scenario to fully materialize over the course of the year, in terms of freight rate levels and how sustainable will this rebound be?
We see a winding and potentially long road back to a fully sustainable market where the fleet is once again steaming at “new normal” service speed also on the ballast legs to some extent. Our “new normal” service speed is one that is lower than the norm of the past decade – due to higher bunker costs, increased fuel efficiency and the fact that slow steaming is applied whenever possible. But the way back also holds many “windows of opportunity” where rates will firm and spike as demand picks up strongly or weather-related factors lend a hand.
On the average freight rates levels we have already seen 2013 was better than 2012. BIMCO expect 2014 to become better than 2013 in that sense. But as we are only just about to see the demand side outstripping the supply side, following multiple years of the opposite, the fundamental market balance is also likely only to improve slowly and bring around higher levels of fleet utilization. Going forward BIMCO expect higher volatility as the market get tighter.
Is the supply overhang alleviated at the moment, compared to a year ago?
We have to consider slow steaming an integral part of our industry to handle the oversupply and improve industry economics. The overhang has come down over the past half year, but we still estimate oversupply of 20-25%.
Are you worried about the level of newbuilding ordering over the past year, a dynamic which has spilled over into 2014, even more aggressively?
As regards to the placing of new orders, I am confident that the individual industry players knows exactly what they are doing. Nevertheless, if you look at it from a pure industry point of view you could argue that if there is an overhang of capacity you should scrap more vessels than enters into the active fleet in order to bring back a balance – but that’s not how it works.
In terms of demolition activity we've seen a drop over the past few months, as owners found it more financially wise to retain or resell their older vessels. Will this trend change, or will we see a substantial drop over the course of 2014, thus offsetting the rise in demand?
There is no real big surprise in the recent development and we rely on the trend to go on. BIMCO expect 14m DWT to be scrapped in 2014, this a drop of 33% as compared to 2013. When rates go up – fewer chose to cut capacity. The increased in secondhand prices too, spells it out – a resale is much more likely than a sale to cash buyer. It also tells us that more buyers than sellers are in the market now. This is pushing prices up. Different types of ships, in size, gear, draft and operational capabilities simple cater for different demand. This is why ships are not sold for demolition due to the age criteria only.
Taking into account the aforementioned development in terms of tonnage supply, do you think that the projected recovery this year could be shortlived, or is there "enough gas in the tank", to see the market up the hills of 2015 and 2016 newbuilding deliveries?
Our supply forecast for 2014 and 2015 certainly looks manageable. Any additional new orders can still absorbed by yards for 2016-2017 delivery without jeopardizing the recovery. BIMCO do not see the improving trend derailed by anything that we can see in the market today. Only unforeseen major game changers can do that. Even though China is slowing down and transforming its economy toward a higher dependency on services (rather than manufacturing) and private consumption, we trust a soft landing will continue to support the dry bulk market.
Will the market ever shake the effect of China in cargo demand, at least offset it, through the rise of other countries in dry bulk trade? If so, which countries could those be?
China is the elephant in the dry bulk room. The wise buyer of commodities at the right prices and heavy weight player providing the market with massive amounts of demand. China means the world to dry bulk shipping and the nation holds the key to a strong market going forward. We have not seen a single nation being so dominant in the global market before and I doubt we will see something like this duplicated in the near term perhaps never. It is natural to mention India in this context, as the nation holds a giant potential as an importer but also as an exporter of dry bulk commodities. However, it would be premature to compare the two nations today to forecast the development of India, as they are fundamentally very different.
Source: Nikos Roussanoglou, Hellenic Shipping News
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Monday, 10 February 14
SUPRAMAX STILL AT AROUND US$ 5K + BB 50K DELIVERY KALIMANTAN FOR A TRIP TO INDIA - CAPT. REDDY
COALspot.com: The BDI was down by 1.71 pct and closed at 1091 points week ended 7 February 2014. The BDI seemed to reach the bottom as the cape inde ...
Saturday, 08 February 14
U.S PRODUCED 84.5 MMMST OF COAL IN JANUARY; 2.05% UP MONTH ON MONTH, EIA SAYS
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.8 million short tons (mmst) of coal in ...
Friday, 07 February 14
DRY BULK MARKET ON ' REVERSE' MODE DUE TO CHINESE HOLIDAYS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept its uninspiring mood throughout yet another week, with the Baltic Dry Index (BDI) hovering slightly above the 1,000-poi ...
Thursday, 06 February 14
INDONESIA'S BAN ON THE EXPORT OF RAW MINERAL ORES COMES INTO FORCE - INCE & CO
COALspot.com: On 12 January 2014, the ban on the export of unprocessed mineral ores came into effect in Indonesia. This ban enforces the Mining Law ...
Thursday, 06 February 14
THE WORLD LARGEST COAL EXPORTER SHIPPED AROUND 35.90 MMT OF COAL IN DECEMBER 2013
COALspot.com: Indonesia, the world 4th largest coal producer and the Global largest multi grade coal exporter shipped around $2* billion worth ...
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- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Bukit Makmur.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Romanian Commodities Exchange
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- Xindia Steels Limited - India
- Gujarat Sidhee Cement - India
- Baramulti Group, Indonesia
- Attock Cement Pakistan Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- London Commodity Brokers - England
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- Trasteel International SA, Italy
- Thiess Contractors Indonesia
- Simpson Spence & Young - Indonesia
- The University of Queensland
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- Metalloyd Limited - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Singapore Mercantile Exchange
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- SMC Global Power, Philippines
- Central Java Power - Indonesia
- Petron Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
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- Riau Bara Harum - Indonesia
- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tata Chemicals Ltd - India
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- Semirara Mining Corp, Philippines
- Indian Energy Exchange, India
- AsiaOL BioFuels Corp., Philippines
- ICICI Bank Limited - India
- IEA Clean Coal Centre - UK
- Merrill Lynch Commodities Europe
- Altura Mining Limited, Indonesia
- Bhoruka Overseas - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mintek Dendrill Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- Petrochimia International Co. Ltd.- Taiwan
- Aditya Birla Group - India
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- PNOC Exploration Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- McConnell Dowell - Australia
- GN Power Mariveles Coal Plant, Philippines
- Orica Mining Services - Indonesia
- Barasentosa Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Ministry of Mines - Canada
- PowerSource Philippines DevCo
- Chettinad Cement Corporation Ltd - India
- Parry Sugars Refinery, India
- Therma Luzon, Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- European Bulk Services B.V. - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Deloitte Consulting - India
- Orica Australia Pty. Ltd.
- Dalmia Cement Bharat India
- Siam City Cement - Thailand
- Global Business Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- Jindal Steel & Power Ltd - India
- Iligan Light & Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Eastern Energy - Thailand
- Savvy Resources Ltd - HongKong
- Pendopo Energi Batubara - Indonesia
- Mercuria Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sojitz Corporation - Japan
- Coal and Oil Company - UAE
- Economic Council, Georgia
- PTC India Limited - India
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- Energy Development Corp, Philippines
- Energy Link Ltd, New Zealand
- Ambuja Cements Ltd - India
- Mjunction Services Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Makarim & Taira - Indonesia
- Agrawal Coal Company - India
- CIMB Investment Bank - Malaysia
- Wood Mackenzie - Singapore
- VISA Power Limited - India
- Samtan Co., Ltd - South Korea
- Global Coal Blending Company Limited - Australia
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- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- Aboitiz Power Corporation - Philippines
- Chamber of Mines of South Africa
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- Wilmar Investment Holdings
- Ceylon Electricity Board - Sri Lanka
- Sinarmas Energy and Mining - Indonesia
- Medco Energi Mining Internasional
- Meenaskhi Energy Private Limited - India
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- International Coal Ventures Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- Meralco Power Generation, Philippines
- Mercator Lines Limited - India
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- Pipit Mutiara Jaya. PT, Indonesia
- MS Steel International - UAE
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- Parliament of New Zealand
- CNBM International Corporation - China
- Directorate General of MIneral and Coal - Indonesia
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- The Treasury - Australian Government
- Formosa Plastics Group - Taiwan
- Standard Chartered Bank - UAE
- Larsen & Toubro Limited - India
- Krishnapatnam Port Company Ltd. - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Edison Trading Spa - Italy
- Heidelberg Cement - Germany
- Gujarat Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Ind-Barath Power Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- New Zealand Coal & Carbon
- White Energy Company Limited
- Goldman Sachs - Singapore
- Kaltim Prima Coal - Indonesia
- Interocean Group of Companies - India
- GVK Power & Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Coalindo Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- Sarangani Energy Corporation, Philippines
- Power Finance Corporation Ltd., India
- Ministry of Finance - Indonesia
- Rio Tinto Coal - Australia
- Bhatia International Limited - India
- Australian Coal Association
- TeaM Sual Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Commonwealth Bank - Australia
- Sical Logistics Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Oldendorff Carriers - Singapore
- Georgia Ports Authority, United States
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Planning Commission, India
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- SN Aboitiz Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Borneo Indobara - Indonesia
- Ministry of Transport, Egypt
- Lanco Infratech Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Authority, New Zealand
- Timah Investasi Mineral - Indoneisa
- Salva Resources Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Sree Jayajothi Cements Limited - India
- Banpu Public Company Limited - Thailand
- Port Waratah Coal Services - Australia
- Karaikal Port Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Alfred C Toepfer International GmbH - Germany
- San Jose City I Power Corp, Philippines
- Thai Mozambique Logistica
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- Sindya Power Generating Company Private Ltd
- Kalimantan Lumbung Energi - Indonesia
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