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Monday, 12 October 15
DRY BULK SHIPPING: MARKETS ARE SLOWLY IMPROVING FROM A VERY LOW LEVEL AS THE DEMAND SIDE FALTERS - HELLENIC SHIPPING NEWS
 The dry bulk market is in the midst of a shift in demand patterns, which coupled with a tonnage supply overhang, has been facing headwinds over the past few years. In its latest short-term outlook, BIMCO noted that “when traditional demand growth is not increasing, we need to look harder for future growth. Here the glut of high-iron-content ore in the international markets and the following low prices may finally bring around a sizeable substitution in consumption by Chinese steel mills, away from the domestically produced low-iron-content ore, in favour of imports”.
“Calculations done by BIMCO show that monthly imports into China could be 20mt higher per month (+26%). A total of an extra 240 million tons on an annual basis could bring deployment for around 155 Capesizes, assuming an unchanged distribution between Australian and Brazilian imports (75%/25%). Last year, Australia grew its share significantly as 90% of Chinese incremental demand came from Australia.
As Brazilian miner Vale is expecting to grow its output over the next year, this would improve the prospects. Working against would be more Brazilian ore transported on 400,000-DWT Valemax class ships operated by the miner itself or related parties”, BIMCO noted in its report.
As such, it concludes that “for the coming months: September-November, BIMCO expects the supply of new ships to stay subdued and slow paced towards the end of the year. The deteriorating demand-side conditions are expected to be somewhat reversed as we move into the stronger months of the year. The vital commodities, coal and iron ore, are both expected to be in higher demand in coming months, enhancing owners’ and operators’ opportunities to find employment for their ships. Altogether this should support the freight rates although no large-scale improvement to the fundamental balance is likely to develop”.
According to BIMCO’s Chief Shipping Analyst, Peter Sand, “the shipping market and underlying profitability can only improve if the fundamental conditions (supply and demand) also improve. Therefore transportation of larger volumes, longer sailing distances in general or a lower increase of dry-bulk fleet size is a prerequisite for better markets to arrive. On the first issue about more commodities, we have seen coal as the primary culprit so far, with grains potentially also sinking into the red before the end of the year. Volumes of steam coal and coking coal are both contracting notably, and our forecast is for an annual decline in transport driven by the lack of demand from China (-51 million mt) in the East and the UK (-13mt) in the West cushioned by increased appetite for imported steam coal in India (+16mt). Prospects for the latter have declined somewhat over the summer as domestic production and power-plant stocks both have risen”.
At the same time, “the coal-exporting nations suffering from this decline in demand are the two giants, Indonesia and Australia, while US exports are down on lower UK imports. On the positive side, the longer-than-normal grain season in South America has benefited primarily the Supramaxes, which apparently defy gravity as being the segment with the highest freight rates, while also facing the biggest increase in fleet size in the dry-bulk sector. Additionally, strong steel exports out of China have contributed to higher Supramax fleet use”.
BIMCO’s report also noted that “the second issue about ton–miles has also come into play this year as a part of the decline in coal has cut off the longer trades at the expense of the shorter hauls. The complete absence of South African thermal coal exports to China for more than a year now is a devastating example of this, especially when it is substituted by non-seaborne imports. In 2014 South Africa supplied China with 5.2mt of thermal down from 12.4mt in 2013.
Meanwhile, “the freight rates for all dry-bulk segments have been low throughout 2015, the July/August spike for Capesize ships being the short-lived exception. Averages for the first eight months of 2015 range from USD 5,605 per day for a Handysize to USD 8,163 per day for a Capesize. The poorest freight market on record is due to a combination of demand weakness and capacity abundance. Unfortunately, there are no easy ways to escape this. As China is going through a period of transition that does not favour the dry-bulk shipping industry, the prime driver is out of the picture. Capacity has been abundant for years, so it’s the change to the demand side, the variable that the industry cannot impact, which is at the epicentre in 2015”.
Supply-wise, BIMCO said that “speaking of the contributing factors to an improved shipping market, the dry-bulk fleet has grown only marginally during the first nine months. The inflow of 39.7 million DWT, which has been offset by demolition of 23.8 million DWT, means a fleet growth of just 2.1%. Continuance of a low fleet growth is vital to achieving an eventual recovery and a return of sustainable earnings for the industry. A central element in that equation is a low level of new orders. This has been accomplished by a landslide margin. In Clarksons orderbook statistics, there were only 84 new contracts recorded at the end of August. Such a cautious attitude is quite the opposite of what happened less than two years ago, when capacity equal to the year-to-date amount in 2015 (4.7 million DWT) was contracted in just 16 days!”
According to Mr. Sand, “demolition also holds a key position in today’s and tomorrow’s fleet-growth level. Although 306 ships have left the fleet so far in 2015, owners’ interest in making use of the demolition “tool” to limit supply growth seems to have evaporated completely over the summer. In early July, BIMCO cautioned that a new full year record level of demolished capacity would not arrive in spite of a record first half of the year. Unfortunately, our expectations have proven to be all too right. Spiking Capesize rates immediately cooled owners’ interest in the hope that a market rebound was around the corner”.
Furthermore, the strong Chinese steel export at discount prices to the countries that used to prefer scrap steel to new steel means that scrap prices keep heading lower and lower as volumes decrease. “Only 37 ships were sent to the blow torch in July and August. As trading conditions continue to challenge all shipowners and operators, everything that can be done to delay the delivery of the next ship has been done within the legally binding nature of a newbuilding contract. It is not easy to discuss terms with shipyards at a late stage in the building process, but the result is now clear. 2015 is about to receive “only” 49 million DWT, which will bring fleet growth down to a 10-year low at 2.5%”, BIMCO concluded.
Source: Nikos Roussanoglou, Hellenic Shipping News
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Sunday, 18 October 15
THE BDI AND OTHER INDICES CLOSED OFF ON NEGATIVE NOTE THIS FRIDAY
COALspot.com: The BDI closed off on negative note this Friday compared to previous Friday's closing.
The BDI closed this Friday (16 Octobe ...
Friday, 16 October 15
MAJOR REVISION OF NYPE TIME CHAPTER PARTY - BIMCO
Major revision of NYPE time charter party promises to be both balanced and comprehensive
BIMCO has today jointly issued the first revision of ...
Friday, 16 October 15
FOB INDONESIA COAL SWAP FOR Q4'15 DELIVERY FLAT WEEK OVER WEEK; DOWN 5.5 PER CENT M-M
COALspot.com: Indonesian coal swap for delivery Q4 2015 declined month on month and flat week over week.
The Q4 swap declined $ 2.23 (-5.51%) ...
Friday, 16 October 15
COAL PRODUCTION IN THE UNITED STATES DECREASED THIS WEEK; DOWN 11.3 PER CENT Y-Y, DOWN 3.5 PERCENT W-W
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.1 million shor ...
Friday, 16 October 15
INDONESIA REJOINING OPEC DESPITE BEING A NET IMPORTER OF PETROLEUM - EIA
The Organization of the Petroleum Exporting Countries (OPEC) notified Indonesia that it plans to accept the country's request to reactivate its ...
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- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
- ICICI Bank Limited - India
- Energy Link Ltd, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Georgia Ports Authority, United States
- Alfred C Toepfer International GmbH - Germany
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- Medco Energi Mining Internasional
- Romanian Commodities Exchange
- MS Steel International - UAE
- Kideco Jaya Agung - Indonesia
- Bhoruka Overseas - Indonesia
- Parry Sugars Refinery, India
- Indogreen Group - Indonesia
- Pendopo Energi Batubara - Indonesia
- Savvy Resources Ltd - HongKong
- Ambuja Cements Ltd - India
- Australian Coal Association
- Petrochimia International Co. Ltd.- Taiwan
- ASAPP Information Group - India
- Binh Thuan Hamico - Vietnam
- Oldendorff Carriers - Singapore
- Electricity Generating Authority of Thailand
- Antam Resourcindo - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- GVK Power & Infra Limited - India
- Ministry of Mines - Canada
- Siam City Cement PLC, Thailand
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- Miang Besar Coal Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indonesian Coal Mining Association
- Kohat Cement Company Ltd. - Pakistan
- Eastern Coal Council - USA
- Banpu Public Company Limited - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Salva Resources Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Globalindo Alam Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- VISA Power Limited - India
- PowerSource Philippines DevCo
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chettinad Cement Corporation Ltd - India
- Straits Asia Resources Limited - Singapore
- Africa Commodities Group - South Africa
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- White Energy Company Limited
- Deloitte Consulting - India
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Attock Cement Pakistan Limited
- Siam City Cement - Thailand
- Toyota Tsusho Corporation, Japan
- Agrawal Coal Company - India
- Thai Mozambique Logistica
- Iligan Light & Power Inc, Philippines
- Larsen & Toubro Limited - India
- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- Grasim Industreis Ltd - India
- Kartika Selabumi Mining - Indonesia
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Wilmar Investment Holdings
- Planning Commission, India
- Coastal Gujarat Power Limited - India
- OPG Power Generation Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- Lanco Infratech Ltd - India
- Independent Power Producers Association of India
- Coalindo Energy - Indonesia
- Bhatia International Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- IHS Mccloskey Coal Group - USA
- Borneo Indobara - Indonesia
- Heidelberg Cement - Germany
- Ministry of Transport, Egypt
- SMC Global Power, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rashtriya Ispat Nigam Limited - India
- Minerals Council of Australia
- Karaikal Port Pvt Ltd - India
- Electricity Authority, New Zealand
- GMR Energy Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bangladesh Power Developement Board
- Global Coal Blending Company Limited - Australia
- Ceylon Electricity Board - Sri Lanka
- Singapore Mercantile Exchange
- Mercator Lines Limited - India
- Indian Oil Corporation Limited
- San Jose City I Power Corp, Philippines
- Central Electricity Authority - India
- Maheswari Brothers Coal Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- McConnell Dowell - Australia
- Chamber of Mines of South Africa
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Gujarat Mineral Development Corp Ltd - India
- Indo Tambangraya Megah - Indonesia
- LBH Netherlands Bv - Netherlands
- Ind-Barath Power Infra Limited - India
- Riau Bara Harum - Indonesia
- Indian Energy Exchange, India
- Merrill Lynch Commodities Europe
- Simpson Spence & Young - Indonesia
- Trasteel International SA, Italy
- Port Waratah Coal Services - Australia
- Mercuria Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Aditya Birla Group - India
- PTC India Limited - India
- Eastern Energy - Thailand
- Sree Jayajothi Cements Limited - India
- Jindal Steel & Power Ltd - India
- Tata Chemicals Ltd - India
- SN Aboitiz Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Petron Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Makarim & Taira - Indonesia
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- Barasentosa Lestari - Indonesia
- Dalmia Cement Bharat India
- Mintek Dendrill Indonesia
- Bulk Trading Sa - Switzerland
- Sical Logistics Limited - India
- Uttam Galva Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- European Bulk Services B.V. - Netherlands
- CNBM International Corporation - China
- TNB Fuel Sdn Bhd - Malaysia
- India Bulls Power Limited - India
- New Zealand Coal & Carbon
- Maharashtra Electricity Regulatory Commission - India
- Economic Council, Georgia
- Carbofer General Trading SA - India
- Karbindo Abesyapradhi - Indoneisa
- Baramulti Group, Indonesia
- Global Green Power PLC Corporation, Philippines
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- Meenaskhi Energy Private Limited - India
- Marubeni Corporation - India
- Intertek Mineral Services - Indonesia
- Samtan Co., Ltd - South Korea
- Orica Australia Pty. Ltd.
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
- Star Paper Mills Limited - India
- Australian Commodity Traders Exchange
- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- Jaiprakash Power Ventures ltd
- International Coal Ventures Pvt Ltd - India
- Mjunction Services Limited - India
- London Commodity Brokers - England
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- Bayan Resources Tbk. - Indonesia
- Vizag Seaport Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- Interocean Group of Companies - India
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- Semirara Mining Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Commonwealth Bank - Australia
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Billiton Holdings Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Standard Chartered Bank - UAE
- Anglo American - United Kingdom
- Renaissance Capital - South Africa
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- Parliament of New Zealand
- Bhushan Steel Limited - India
- Orica Mining Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
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