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, 16 March 15
API 5 FOB NEWCASTLE COAL SWAPS: DECLINED
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 2.48 per MT (-4.77%) month over month and US$ 0.93 (-1.84%) we ...
Monday, 16 March 15
CFR SOUTH CHINA THERMAL COAL SWAP DECLINED 3.74% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 2.17 (-3.74%) per MT month over month and US$ 0.67 (-1 ...
Sunday, 15 March 15
BDI DECLINED LESSER THAN 1% WEEK OVER WEEK; INDO-INDIA FIRM
COALspot.com: The most of indices, including bulk dry index were falling this week. The BDI has been down by just 0.53 points and closing at 562 po ...
Saturday, 14 March 15
CAPESIZE DRY BULKERS TO AVERAGE BETWEEN $3,000 AND $9,000/DAY IN THE COMING WEEKS SAYS BIMCO
BIMCO issued its latest short-term estimates for the dry bulk market. For March/May: BIMCO assesses that the Capesize time charter (T/C) average ra ...
Friday, 13 March 15
U.S. COAL PRODUCTION UP 2.3% WEEK OVER WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.5 million short tons (mmst) of coal ...
|
|
|
Showing 3136 to 3140 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Kaltim Prima Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Iligan Light & Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Bangladesh Power Developement Board
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- Altura Mining Limited, Indonesia
- Ministry of Mines - Canada
- Barasentosa Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
- Karbindo Abesyapradhi - Indoneisa
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- Deloitte Consulting - India
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- Makarim & Taira - Indonesia
- Australian Commodity Traders Exchange
- Gujarat Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Billiton Holdings Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Neyveli Lignite Corporation Ltd, - India
- The University of Queensland
- Karaikal Port Pvt Ltd - India
- Thai Mozambique Logistica
- VISA Power Limited - India
- Latin American Coal - Colombia
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- SN Aboitiz Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Indian Oil Corporation Limited
- Anglo American - United Kingdom
- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- Mercuria Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Tata Chemicals Ltd - India
- Bukit Baiduri Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- PNOC Exploration Corporation - Philippines
- Thiess Contractors Indonesia
- IHS Mccloskey Coal Group - USA
- Antam Resourcindo - Indonesia
- Binh Thuan Hamico - Vietnam
- Vizag Seaport Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Formosa Plastics Group - Taiwan
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Aditya Birla Group - India
- Jorong Barutama Greston.PT - Indonesia
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- Georgia Ports Authority, United States
- Straits Asia Resources Limited - Singapore
- Bayan Resources Tbk. - Indonesia
- Carbofer General Trading SA - India
- Krishnapatnam Port Company Ltd. - India
- White Energy Company Limited
- Savvy Resources Ltd - HongKong
- GAC Shipping (India) Pvt Ltd
- Dalmia Cement Bharat India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- PowerSource Philippines DevCo
- Global Coal Blending Company Limited - Australia
- Minerals Council of Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Larsen & Toubro Limited - India
- Central Java Power - Indonesia
- Price Waterhouse Coopers - Russia
- Kepco SPC Power Corporation, Philippines
- CNBM International Corporation - China
- Port Waratah Coal Services - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- Vijayanagar Sugar Pvt Ltd - India
- The State Trading Corporation of India Ltd
- ICICI Bank Limited - India
- Uttam Galva Steels Limited - India
- Malabar Cements Ltd - India
- Grasim Industreis Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Romanian Commodities Exchange
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
- Madhucon Powers Ltd - India
- Sarangani Energy Corporation, Philippines
- SMC Global Power, Philippines
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- Parry Sugars Refinery, India
- Directorate Of Revenue Intelligence - India
- Pendopo Energi Batubara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- Economic Council, Georgia
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- AsiaOL BioFuels Corp., Philippines
- Oldendorff Carriers - Singapore
- Jindal Steel & Power Ltd - India
- Singapore Mercantile Exchange
- Planning Commission, India
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- Sical Logistics Limited - India
- GMR Energy Limited - India
- Siam City Cement PLC, Thailand
- Alfred C Toepfer International GmbH - Germany
- MS Steel International - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rio Tinto Coal - Australia
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- IEA Clean Coal Centre - UK
- Ministry of Finance - Indonesia
- Independent Power Producers Association of India
- European Bulk Services B.V. - Netherlands
- TeaM Sual Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chamber of Mines of South Africa
- Marubeni Corporation - India
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- Australian Coal Association
- Bahari Cakrawala Sebuku - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Generating Authority of Thailand
- Ambuja Cements Ltd - India
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- Maheswari Brothers Coal Limited - India
- Interocean Group of Companies - India
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- Borneo Indobara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Eastern Coal Council - USA
- ASAPP Information Group - India
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Baramulti Group, Indonesia
- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
- Kobexindo Tractors - Indoneisa
- Gujarat Sidhee Cement - India
- Intertek Mineral Services - Indonesia
- Tamil Nadu electricity Board
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- Global Business Power Corporation, Philippines
- Medco Energi Mining Internasional
- Power Finance Corporation Ltd., India
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- Gujarat Mineral Development Corp Ltd - India
- PTC India Limited - India
- Miang Besar Coal Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Mintek Dendrill Indonesia
- Central Electricity Authority - India
- Petron Corporation, Philippines
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- Riau Bara Harum - Indonesia
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- International Coal Ventures Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- Vedanta Resources Plc - India
- Renaissance Capital - South Africa
- Bhatia International Limited - India
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Kalimantan Lumbung Energi - Indonesia
- Lanco Infratech Ltd - India
- Holcim Trading Pte Ltd - Singapore
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
- Timah Investasi Mineral - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- Trasteel International SA, Italy
- Attock Cement Pakistan Limited
- Bukit Makmur.PT - Indonesia
|
| |
| |
|
