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.
|
|
Tuesday, 20 January 15
INDONESIAN COAL OUTPUT SEEN RISING, DESPITE FALL IN ITS PRICE
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 declined month on month and week over week, but Indonesian Coal Output Seen Rising. T ...
Tuesday, 20 January 15
NEWCASTLE COAL SWAP FOR Q1' 2015 DELIVERY DECLINED 2.83% M-O-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery declined US$ 1.45 per MT (-2.83%) month over month and US$ 0.50 (-0.99%) we ...
Monday, 19 January 15
HBA FALL TO FRESH LOWS; COAL OVERSUPPLY WILL CONTINUE TO PUSH PRICE DOWN
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down Indonesian coal bench mark price this month to US$ 63.84. T ...
Monday, 19 January 15
CFR SOUTH CHINA COAL SWAPS REMAIN WEAK
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined US$ 3.37 (-5.63%) per MT month over month and US$ 0.74 (-1.29%) ...
Monday, 19 January 15
FOB RICHARDS BAY COAL SWAP FOR Q4 DELIVERY CLOSED 4% LOWER THAN Q1 DELIVERY PRICE
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 declined month over month and week over week.
The Q1 swap has f ...
|
|
|
Showing 3246 to 3250 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Siam City Cement PLC, Thailand
- Romanian Commodities Exchange
- Karaikal Port Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Orica Mining Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- Australian Commodity Traders Exchange
- Indian Oil Corporation Limited
- Power Finance Corporation Ltd., India
- The Treasury - Australian Government
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Energy Development Corp, Philippines
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- Indo Tambangraya Megah - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- SMC Global Power, Philippines
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- Lanco Infratech Ltd - India
- Larsen & Toubro Limited - India
- Eastern Energy - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Madhucon Powers Ltd - India
- Bangladesh Power Developement Board
- Ceylon Electricity Board - Sri Lanka
- Tata Chemicals Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- McConnell Dowell - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining and Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Ministry of Transport, Egypt
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- GMR Energy Limited - India
- Billiton Holdings Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- Rio Tinto Coal - Australia
- Straits Asia Resources Limited - Singapore
- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- Sarangani Energy Corporation, Philippines
- Australian Coal Association
- IHS Mccloskey Coal Group - USA
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- Standard Chartered Bank - UAE
- TeaM Sual Corporation - Philippines
- South Luzon Thermal Energy Corporation
- MS Steel International - UAE
- New Zealand Coal & Carbon
- GVK Power & Infra Limited - India
- IEA Clean Coal Centre - UK
- Sinarmas Energy and Mining - Indonesia
- The State Trading Corporation of India Ltd
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Carbofer General Trading SA - India
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- Bharathi Cement Corporation - India
- Chamber of Mines of South Africa
- Marubeni Corporation - India
- CIMB Investment Bank - Malaysia
- Malabar Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- Medco Energi Mining Internasional
- Edison Trading Spa - Italy
- Neyveli Lignite Corporation Ltd, - India
- Riau Bara Harum - Indonesia
- Orica Australia Pty. Ltd.
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- VISA Power Limited - India
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- SMG Consultants - Indonesia
- Anglo American - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Georgia Ports Authority, United States
- Manunggal Multi Energi - Indonesia
- Africa Commodities Group - South Africa
- Coalindo Energy - Indonesia
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- Posco Energy - South Korea
- Bayan Resources Tbk. - Indonesia
- Indian Energy Exchange, India
- Electricity Authority, New Zealand
- Formosa Plastics Group - Taiwan
- Banpu Public Company Limited - Thailand
- Intertek Mineral Services - Indonesia
- CNBM International Corporation - China
- Meenaskhi Energy Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- Central Java Power - Indonesia
- Deloitte Consulting - India
- Cement Manufacturers Association - India
- White Energy Company Limited
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- Ambuja Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- PTC India Limited - India
- Agrawal Coal Company - India
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Simpson Spence & Young - Indonesia
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- Sakthi Sugars Limited - India
- Oldendorff Carriers - Singapore
- Timah Investasi Mineral - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Bhatia International Limited - India
- Sree Jayajothi Cements Limited - India
- Latin American Coal - Colombia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Global Business Power Corporation, Philippines
- Indonesian Coal Mining Association
- PNOC Exploration Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Gujarat Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Electricity Generating Authority of Thailand
- Ministry of Finance - Indonesia
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- Videocon Industries ltd - India
- Economic Council, Georgia
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- Cigading International Bulk Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- Iligan Light & Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Directorate General of MIneral and Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Makarim & Taira - Indonesia
- India Bulls Power Limited - India
- GAC Shipping (India) Pvt Ltd
- The University of Queensland
- Tamil Nadu electricity Board
- Minerals Council of Australia
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Sical Logistics Limited - India
- Central Electricity Authority - India
- Mercator Lines Limited - India
- Interocean Group of Companies - India
- Aditya Birla Group - India
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Wilmar Investment Holdings
- Bukit Baiduri Energy - Indonesia
- Antam Resourcindo - Indonesia
- Dalmia Cement Bharat India
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- Borneo Indobara - Indonesia
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- Semirara Mining Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Heidelberg Cement - Germany
|
| |
| |
|
