We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Monday, 30 March 15
WORST IS OVER FOR THE DRY BULK MARKET, BUT THE PAIN WILL REMAIN FOR YEARS TO COME, SAYS BIMCO CHIEF ANALYST - HELLENIC SHIPPING
 The current demise of the dry bulk market isn’t one to go away anytime soon. That doesn’t mean that it can’t improve, with all ship classes expected to cover their operating costs by May. Meanwhile, demolition activity isn’t enough, at least thus far, to offset oversupply of tonnage in the dry bulk market. It’s one of the reasons behind the downfall of the market in the past few months.
In an exclusive interview with Hellenic Shipping News Worldwide, BIMCO’s Chief Shipping Analyst, Mr. Peter Sand, said that the organization expects a fleet growth of 19m DWT for 2015, while already 8m DWT of bulkers have been scrapped. However, the market fundamentals remain negative, despite increasing demand during the current quarter. As Mr. Sand puts it, “we need multiple years of demand outstripping supply to turn the tables. The fact that demand may be fading somewhat now with China in an economical transition phase is not making prospects any better”.
Traditionally, the second quarter of the year signals the rebound of the dry bulk market, at least in terms of demand, with the grain/soya trades of South America kicking in. What’s your estimates about the demand side of the equation in the market going forward?
BIMCO is comfortable that demand for dry bulk ships is improving in Q2 as compared to Q1. Primarily due to increased volumes of soya and iron ore getting seaborne out of South America. Most focus will be on Brazil, with Argentina in a supporting role as soya exporter. It is positive for shipping volumes that Argentina is on track for a record harvest with 5% gathered already and the combined soybean production for Argentina and Brazil, as estimated by USDA, is to hit an all-time high at 150 million tonnes.
Nevertheless, we have to remain patient as regards to increased iron ore exports out of Brazil. In our recently published dry bulk market report we stated that Australia “won the battle” of increased sales to the Chinese in 2014. Additionally, “BIMCO expects that they will not let go of the lead in 2015, at the expense of long-haul shipping demand from Brazil.” Insight provided by Commodore Research & Consultancy supports this view – unfortunately.
For the full year, BIMCO expects demand a bit lower than estimated at the end of 2014. We are currently looking at 3-4% growth down from 4-5%. Key importer, China, is the main culprit behind this revision.
With the market plunging to all-time lows during February, do you think that the worst is behind us? Would you say that this time around, the main reason behind the dry bulk market’s demise is low demand or tonnage oversupply, which was deemed as the main “culprit” in the past?
The pain will stick around for a number of years even though the worst is behind us. The second dry bulk recovery in recent years from the trough in 2012 lasted until the autumn of 2014 where it became apparent how fragile it was. Mostly brought down by overcapacity, but also a tendency that the demand side would not remain as strong as it had been for the past decade or two. Key trigger behind this is of course the decline in coal imports from China, the still lack of nickel ore and bauxite imports and the fact that most importers (excl. China) is still not back at levels reached in 2007-2008!
If you try to look back on the big fleet growth years of 2009-2012, it grew by an annual average of 13.1%. All of those years the overcapacity increased. In 2013-2014, the fleet grew by an annual average of 5.1%, which is much more balanced, but it does not change the fact that the overcapacity is still here. We need multiple years of demand outstripping supply to turn the tables. The fact that demand may be fading somewhat now with China in an economical transition phase is not making prospects any better.
Can India support the market in a few years’ time, much like China did since the early 2000’s?
India is becoming more and more important to the dry bulk market, but they are still not to be seen as “a new China”. The two nations are very different and their development paths not alike. Unleashing the potential of India will be done at slower pace providing a solid level of demand growth going forward.
Given the challenging conditions which have prevailed so far in the market, when do you expect to see rates back above operating expenses, if not for all, at least for the majority of vessels?
BIMCO forecast freight rates for all dry bulk ships to remain below USD 9,000 per day for March-May. The trend is seen up – meaning that they should all be above OPEX cost levels in May. That is if we assume OPEX between USD 4,500 per day for the Handies going up to USD 7,500 for the Capes.
Looking at OPEX alone means Handies, which is making USD 5,766 per day in the current market, and Supras, which is making USD 6,772 per day, is getting OPEX covered. Panamaxes and Capesizes are not.
Beyond OPEX, you need to look at capital costs too. Interests, repayments, and/or depreciations on the fleet often means more to profitability than OPEX does. So in order to be “back into the black” all costs must be covered – freight rates must reach OPEX times two or three, as a rule of thumb, to earn money for supporting a going concern.
How important has the fall in bunker prices been for shipping companies, given the reduction of their operating costs? Would we have seen more bankruptcies in the segment, according to your view?
Cutting the bunker costs in halves is definitely a sizeable cost reduction on the voyage related expenditures. A cost reduction for the one paying for the fuel, that is. So who does that?
Mostly the spot operators working on a USD per tonnes basis, paying the fuel themselves, reap the benefits. So reaping the benefits of a falling cost item is a matter of negation skills too. In case your ship is out on charter, the charterer gets the cost reduction, as the owner is not paying voyage related expenditures. OPEX is only impacted to a minor extent as the price for lubricants may follow the oil price down somewhat.
Will the Capesize segment lead the way “out of the mud” once more?
Without doubt. Why? Because the demand picture as we see at BIMCO is very much biased towards the larger ship sizes of Panamax and Capesizes, whereas the demand situation for the two smaller segments is more slow growing. Bear in mind though that the current drop in rates was also lead by Capes, indicating a “normalized” market condition, but as Capes also took the deepest dive it becomes clear that overcapacity is still significant also for Capesize segment.
In this market environment, which options have ship owners to cut their losses? Out of demolition, slow steaming, or lay ups, which is the preferable choice at the moment?
All options are open, but the only significant one and most widely applied is slow steaming. Fortunately also the most effective one to counterbalance oversupply. Downside however is that is has a temporary nature as compared to demolition of a ship, which has a permanent effect on fleet growth, nominal and actual.
Demolition is also being used as a tool to turn around fortunes. The poor condition of the markets means BIMCO is forecasting total volume of dry bulk ship capacity to go higher than in 2014. Our estimate is 19m DWT for 2015 with some 8m DWT scrapped already.
In terms of investments, have asset prices adjusted accordingly either in the S&P or the newbuilding markets? Is it a good time to invest in modern tonnage, price-wise?
Newbuilding prices have not hit the floor yet; they are still by some distance higher than in 2012. Second hand prices have tumbled the most with all but Capesizes now below the 2012-lows. Capes being on par. Second hand prices has gone down by 40% over the past year, with older ships taking the biggest hits. Is now a time to invest, price-wise? Well, the return on investment seems to be potentially higher elsewhere. Despite many reasons to pick a newbuilt instead of a second hand – the eventual arrival of a more balanced market would all other things being equal be postponed by adding more tonnage to the market without removing the equivalent capacity. Should you be in need of extra tonnage, the market would be better off if those ships are found in the second hand market.
Source: Nikos Roussanoglou, Hellenic Shipping News
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Monday, 23 March 15
SEABORNE WORLD COAL TRADE: GROWTH +5% - GERMAN COAL IMPORTER ASSOCIATION
Hard Coal Market 2014: Despite The Energy Turnaround, Hard Coal Imports To Germany Rise By More Than 6%, Although Hard Coal-Fired Power Generation ...
Sunday, 22 March 15
DRY BULK RATES CONTINUED TO RISE THIS WEEK
COALspot.com: The freight market was steady this week as all the segments increased after many weeks of weak trend.
The Baltic Dry Index (BDI) ...
Friday, 20 March 15
HARD COAL MARKET 2014: DESPITE THE ENERGY TURNAROUND, HARD COAL IMPORTS TO GERMANY RISE BY MORE THAN 6% (PART 1)
Hard Coal Market 2014: Despite The Energy Turnaround, Hard Coal Imports To Germany Rise By More Than 6%, Although Hard Coal-Fired Power Generation ...
Friday, 20 March 15
U.S. WEEKLY COAL PRODUCTION SHOWS 5.9% INCREASE WEEK OVER WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.5 million short tons (mmst) of coal ...
Thursday, 19 March 15
HANDY: INDO COAL CARGOS DESTINED FOR INDIA BEING FIXED IN REGION OF $ 7-8K - FEARNLEYS
Handy
The Handy and Supra market has had a week with mixed signals. Although we see more activity in both hemispheres the rates are only up about ...
|
|
|
Showing 3121 to 3125 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Neyveli Lignite Corporation Ltd, - India
- Parliament of New Zealand
- Cement Manufacturers Association - India
- Power Finance Corporation Ltd., India
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Metalloyd Limited - United Kingdom
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- Bhushan Steel Limited - India
- IEA Clean Coal Centre - UK
- Coastal Gujarat Power Limited - India
- ASAPP Information Group - India
- Aditya Birla Group - India
- Wood Mackenzie - Singapore
- Aboitiz Power Corporation - Philippines
- McConnell Dowell - Australia
- Planning Commission, India
- VISA Power Limited - India
- Baramulti Group, Indonesia
- IHS Mccloskey Coal Group - USA
- Singapore Mercantile Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Economic Council, Georgia
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- Sical Logistics Limited - India
- Kobexindo Tractors - Indoneisa
- Commonwealth Bank - Australia
- Kartika Selabumi Mining - Indonesia
- Vedanta Resources Plc - India
- Meralco Power Generation, Philippines
- Grasim Industreis Ltd - India
- Anglo American - United Kingdom
- Barasentosa Lestari - Indonesia
- Medco Energi Mining Internasional
- Price Waterhouse Coopers - Russia
- Ceylon Electricity Board - Sri Lanka
- Global Business Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- PTC India Limited - India
- Gujarat Mineral Development Corp Ltd - India
- White Energy Company Limited
- Sinarmas Energy and Mining - Indonesia
- Bharathi Cement Corporation - India
- Bukit Makmur.PT - Indonesia
- Indogreen Group - Indonesia
- Port Waratah Coal Services - Australia
- Semirara Mining and Power Corporation, Philippines
- Ministry of Transport, Egypt
- TNB Fuel Sdn Bhd - Malaysia
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- Standard Chartered Bank - UAE
- Formosa Plastics Group - Taiwan
- LBH Netherlands Bv - Netherlands
- MS Steel International - UAE
- Dalmia Cement Bharat India
- Semirara Mining Corp, Philippines
- Attock Cement Pakistan Limited
- Posco Energy - South Korea
- Mjunction Services Limited - India
- GMR Energy Limited - India
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- Videocon Industries ltd - India
- Straits Asia Resources Limited - Singapore
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Simpson Spence & Young - Indonesia
- Edison Trading Spa - Italy
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- Binh Thuan Hamico - Vietnam
- Indian Oil Corporation Limited
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Electricity Generating Authority of Thailand
- SMC Global Power, Philippines
- Indian Energy Exchange, India
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Sakthi Sugars Limited - India
- Borneo Indobara - Indonesia
- Antam Resourcindo - Indonesia
- Sree Jayajothi Cements Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Thai Mozambique Logistica
- Uttam Galva Steels Limited - India
- Oldendorff Carriers - Singapore
- CIMB Investment Bank - Malaysia
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- Trasteel International SA, Italy
- Salva Resources Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- The Treasury - Australian Government
- GVK Power & Infra Limited - India
- New Zealand Coal & Carbon
- Bayan Resources Tbk. - Indonesia
- Thiess Contractors Indonesia
- Directorate Of Revenue Intelligence - India
- Xindia Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- SMG Consultants - Indonesia
- Kideco Jaya Agung - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indonesian Coal Mining Association
- Vizag Seaport Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kumho Petrochemical, South Korea
- CNBM International Corporation - China
- Mintek Dendrill Indonesia
- Tamil Nadu electricity Board
- Gujarat Sidhee Cement - India
- Makarim & Taira - Indonesia
- Australian Commodity Traders Exchange
- Globalindo Alam Lestari - Indonesia
- Sojitz Corporation - Japan
- Chettinad Cement Corporation Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Madhucon Powers Ltd - India
- Bhoruka Overseas - Indonesia
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
- Therma Luzon, Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Independent Power Producers Association of India
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Heidelberg Cement - Germany
- Bhatia International Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercator Lines Limited - India
- The University of Queensland
- Bulk Trading Sa - Switzerland
- Kepco SPC Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Central Electricity Authority - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- International Coal Ventures Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Maheswari Brothers Coal Limited - India
- Samtan Co., Ltd - South Korea
- Latin American Coal - Colombia
- London Commodity Brokers - England
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- GAC Shipping (India) Pvt Ltd
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Mercuria Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Siam City Cement - Thailand
- Indika Energy - Indonesia
- San Jose City I Power Corp, Philippines
- ICICI Bank Limited - India
- Energy Link Ltd, New Zealand
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Bukit Asam (Persero) Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Marubeni Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Goldman Sachs - Singapore
- Agrawal Coal Company - India
- Global Green Power PLC Corporation, Philippines
- Altura Mining Limited, Indonesia
- Ministry of Mines - Canada
- PowerSource Philippines DevCo
- The State Trading Corporation of India Ltd
- Petron Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Eastern Coal Council - USA
- SN Aboitiz Power Inc, Philippines
- Renaissance Capital - South Africa
- Coalindo Energy - Indonesia
- Australian Coal Association
- Indo Tambangraya Megah - Indonesia
- Sarangani Energy Corporation, Philippines
- Georgia Ports Authority, United States
- Asmin Koalindo Tuhup - Indonesia
- Minerals Council of Australia
- GN Power Mariveles Coal Plant, Philippines
- Larsen & Toubro Limited - India
- Central Java Power - Indonesia
- Coal and Oil Company - UAE
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
|
| |
| |
|
