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Tuesday, 20 May 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, 26 May 14
SUB-BIT FOB INDO COAL SWAP Q1' 15 DELIVERIES CLOSED AT US$ 59.40 PER MT
COALspot.com: Indonesian coal swaps for average Q3’ 2014 lost on day, week and on month according to AsiaClear OTC coal swap's reports re ...
Monday, 26 May 14
Q3 14 CFR SOUTH CHINA COAL SWAPS LOST 2.24% MONTH ON MONTH
COALspot.com: API 8 CFR South China Coal swaps for average Q3 14 deliveries lost 2.24 percent month on month and closed at US$ 73.88 per mt as on F ...
Monday, 26 May 14
NEWBUILDING ORDERING ACTIVITY RISES BY 78% IN DWT TONNAGE OVER THE FIRST 4 MONTHS OF THE YEARS, AS OWNERS INVEST$40.5 BN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Ship owners have plunged into newbuilding orders during the first four months of the year, as overall newbuilding business ended for the first four ...
Sunday, 25 May 14
FREIGHT RATES FROM SOUTH KALIMANTAN TO EAST COAST INDIAN PORTS WERE ASSESSED AT $9.50/MT
COALspot.com: The BDI was closed at 964 points down by 6.13 pct week on week. The Cape Index was lost 172 points or 11.24% week on week and closing ...
Saturday, 24 May 14
DRY BULK MARKET'S RECOVERY IS JUST AROUND THE CORNER SAYS SHIPOWNER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite the weaker than expected market sentiment in the dry bulk market over the course of the past few months, analysts and shipowners alike appe ...
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- Cement Manufacturers Association - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Madhucon Powers Ltd - India
- Aditya Birla Group - India
- Marubeni Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Xindia Steels Limited - India
- South Luzon Thermal Energy Corporation
- International Coal Ventures Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- GMR Energy Limited - India
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Indo Tambangraya Megah - Indonesia
- Singapore Mercantile Exchange
- Kumho Petrochemical, South Korea
- AsiaOL BioFuels Corp., Philippines
- Bhushan Steel Limited - India
- Global Green Power PLC Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Anglo American - United Kingdom
- Riau Bara Harum - Indonesia
- Siam City Cement - Thailand
- Jaiprakash Power Ventures ltd
- Heidelberg Cement - Germany
- Latin American Coal - Colombia
- Meenaskhi Energy Private Limited - India
- Bukit Makmur.PT - Indonesia
- Australian Coal Association
- Formosa Plastics Group - Taiwan
- Borneo Indobara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- MS Steel International - UAE
- TeaM Sual Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- Kepco SPC Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- PNOC Exploration Corporation - Philippines
- Renaissance Capital - South Africa
- Edison Trading Spa - Italy
- Goldman Sachs - Singapore
- Oldendorff Carriers - Singapore
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- Central Java Power - Indonesia
- Posco Energy - South Korea
- Sakthi Sugars Limited - India
- Global Coal Blending Company Limited - Australia
- Medco Energi Mining Internasional
- Sical Logistics Limited - India
- Bhoruka Overseas - Indonesia
- ASAPP Information Group - India
- Chamber of Mines of South Africa
- The Treasury - Australian Government
- Holcim Trading Pte Ltd - Singapore
- CNBM International Corporation - China
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Directorate Of Revenue Intelligence - India
- Agrawal Coal Company - India
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Mercator Lines Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- Eastern Coal Council - USA
- Vedanta Resources Plc - India
- GVK Power & Infra Limited - India
- Sojitz Corporation - Japan
- Standard Chartered Bank - UAE
- Coastal Gujarat Power Limited - India
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Metalloyd Limited - United Kingdom
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- Toyota Tsusho Corporation, Japan
- Kartika Selabumi Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- London Commodity Brokers - England
- Bangladesh Power Developement Board
- Georgia Ports Authority, United States
- Billiton Holdings Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- India Bulls Power Limited - India
- Price Waterhouse Coopers - Russia
- Chettinad Cement Corporation Ltd - India
- Karaikal Port Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Malabar Cements Ltd - India
- Attock Cement Pakistan Limited
- Merrill Lynch Commodities Europe
- Parliament of New Zealand
- GAC Shipping (India) Pvt Ltd
- Sarangani Energy Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Central Electricity Authority - India
- Grasim Industreis Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- LBH Netherlands Bv - Netherlands
- Orica Australia Pty. Ltd.
- VISA Power Limited - India
- Ministry of Finance - Indonesia
- Indika Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Maheswari Brothers Coal Limited - India
- Orica Mining Services - Indonesia
- Salva Resources Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- ICICI Bank Limited - India
- Trasteel International SA, Italy
- Parry Sugars Refinery, India
- Indian Energy Exchange, India
- Bukit Baiduri Energy - Indonesia
- Larsen & Toubro Limited - India
- Uttam Galva Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- The State Trading Corporation of India Ltd
- Eastern Energy - Thailand
- San Jose City I Power Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Power Finance Corporation Ltd., India
- Electricity Authority, New Zealand
- European Bulk Services B.V. - Netherlands
- Coalindo Energy - Indonesia
- Electricity Generating Authority of Thailand
- Wood Mackenzie - Singapore
- Ceylon Electricity Board - Sri Lanka
- Independent Power Producers Association of India
- Indogreen Group - Indonesia
- Bhatia International Limited - India
- Carbofer General Trading SA - India
- The University of Queensland
- Maharashtra Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- PTC India Limited - India
- Baramulti Group, Indonesia
- Iligan Light & Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Straits Asia Resources Limited - Singapore
- SN Aboitiz Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Romanian Commodities Exchange
- PowerSource Philippines DevCo
- Kobexindo Tractors - Indoneisa
- Petron Corporation, Philippines
- Bharathi Cement Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Star Paper Mills Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Antam Resourcindo - Indonesia
- Thiess Contractors Indonesia
- Tata Chemicals Ltd - India
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- Minerals Council of Australia
- SMC Global Power, Philippines
- Leighton Contractors Pty Ltd - Australia
- SMG Consultants - Indonesia
- Tamil Nadu electricity Board
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Economic Council, Georgia
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Energy Development Corp, Philippines
- Ministry of Transport, Egypt
- Deloitte Consulting - India
- Altura Mining Limited, Indonesia
- Coal and Oil Company - UAE
- Miang Besar Coal Terminal - Indonesia
- Thai Mozambique Logistica
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Kapuas Tunggal Persada - Indonesia
- Mercuria Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Indian Oil Corporation Limited
- Rio Tinto Coal - Australia
- Simpson Spence & Young - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Videocon Industries ltd - India
- Barasentosa Lestari - Indonesia
- White Energy Company Limited
- Vizag Seaport Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Commonwealth Bank - Australia
- Dalmia Cement Bharat India
- Kaltim Prima Coal - Indonesia
- Interocean Group of Companies - India
- Siam City Cement PLC, Thailand
- Intertek Mineral Services - Indonesia
- Ministry of Mines - Canada
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