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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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Thursday, 15 October 15
INDONESIA COAL PRICE REFERENCE FALLS FOR SEVEN STRAIGHT MONTH IN OCTOBER
COALspot.com - The Director General of Mineral and Coal of Indonesia once a again revised down Indonesian coal benchmark price this month.
The ...
Thursday, 15 October 15
Q1' 16 FOB RICHARDS BAY COAL SWAP ADVANCED 2 PER CENT WEEK OVER WEEK
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q4' 2015 gain week over week and declined month over month.
The Q4 swap was dow ...
Tuesday, 13 October 15
DRY BULK SHIPPING FLEET NET EXPANSION WAS 1.3% DURING THIRD QUARTER, BUT ORDERBOOK REDUCED TO 17% OF THE TRADING FLEET
If the dry bulk market is to rebound on a sustainable level, it needs to limit the tonnage expansion, at least until demand picks up again, as Chin ...
Tuesday, 13 October 15
FOB NEWCASTLE COAL SWAP DECLINED 2 PER CENT MONTH OVER MONTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery decreased $0.46 per ton (1.08%) month over month to US$ 42.17 per ton. The ...
Monday, 12 October 15
CFR SOUTH CHINA COAL SWAPS GAIN W-W; SLIGHTLY DOWN M-M
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery down just US cents 3 (0.06 %) per ton month over month.
A commodity ...
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- Sindya Power Generating Company Private Ltd
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- Eastern Coal Council - USA
- Metalloyd Limited - United Kingdom
- Sakthi Sugars Limited - India
- Bayan Resources Tbk. - Indonesia
- Bhatia International Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Goldman Sachs - Singapore
- Ministry of Finance - Indonesia
- Videocon Industries ltd - India
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- Latin American Coal - Colombia
- Xindia Steels Limited - India
- GMR Energy Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- Kideco Jaya Agung - Indonesia
- Wilmar Investment Holdings
- Chamber of Mines of South Africa
- Manunggal Multi Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Java Power - Indonesia
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- The University of Queensland
- Mercator Lines Limited - India
- Planning Commission, India
- Thiess Contractors Indonesia
- Interocean Group of Companies - India
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- Maheswari Brothers Coal Limited - India
- London Commodity Brokers - England
- Oldendorff Carriers - Singapore
- Anglo American - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- OPG Power Generation Pvt Ltd - India
- Dalmia Cement Bharat India
- San Jose City I Power Corp, Philippines
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- Price Waterhouse Coopers - Russia
- PNOC Exploration Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bangladesh Power Developement Board
- Kartika Selabumi Mining - Indonesia
- MS Steel International - UAE
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- Bharathi Cement Corporation - India
- ICICI Bank Limited - India
- VISA Power Limited - India
- SMC Global Power, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Eastern Energy - Thailand
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Uttam Galva Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sojitz Corporation - Japan
- Jorong Barutama Greston.PT - Indonesia
- Madhucon Powers Ltd - India
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- Directorate Of Revenue Intelligence - India
- Miang Besar Coal Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Formosa Plastics Group - Taiwan
- Malabar Cements Ltd - India
- Thai Mozambique Logistica
- Singapore Mercantile Exchange
- Barasentosa Lestari - Indonesia
- Independent Power Producers Association of India
- Jindal Steel & Power Ltd - India
- SN Aboitiz Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- Coal and Oil Company - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Essar Steel Hazira Ltd - India
- LBH Netherlands Bv - Netherlands
- Indika Energy - Indonesia
- White Energy Company Limited
- Vizag Seaport Private Limited - India
- Coalindo Energy - Indonesia
- Siam City Cement - Thailand
- CNBM International Corporation - China
- Salva Resources Pvt Ltd - India
- Mintek Dendrill Indonesia
- Central Electricity Authority - India
- Kapuas Tunggal Persada - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- PowerSource Philippines DevCo
- Carbofer General Trading SA - India
- Orica Mining Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- Indogreen Group - Indonesia
- New Zealand Coal & Carbon
- Kalimantan Lumbung Energi - Indonesia
- Bulk Trading Sa - Switzerland
- Pendopo Energi Batubara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- Medco Energi Mining Internasional
- Posco Energy - South Korea
- Cigading International Bulk Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- Sical Logistics Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Kaltim Prima Coal - Indonesia
- Indian Oil Corporation Limited
- Coastal Gujarat Power Limited - India
- IEA Clean Coal Centre - UK
- Global Business Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- The Treasury - Australian Government
- GVK Power & Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Grasim Industreis Ltd - India
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Aditya Birla Group - India
- Edison Trading Spa - Italy
- Larsen & Toubro Limited - India
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- Georgia Ports Authority, United States
- Vijayanagar Sugar Pvt Ltd - India
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- Makarim & Taira - Indonesia
- Standard Chartered Bank - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tata Chemicals Ltd - India
- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- Meenaskhi Energy Private Limited - India
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- Economic Council, Georgia
- Antam Resourcindo - Indonesia
- Binh Thuan Hamico - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Neyveli Lignite Corporation Ltd, - India
- Alfred C Toepfer International GmbH - Germany
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- Karbindo Abesyapradhi - Indoneisa
- Ind-Barath Power Infra Limited - India
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- PTC India Limited - India
- Minerals Council of Australia
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- Marubeni Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Petron Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- AsiaOL BioFuels Corp., Philippines
- Iligan Light & Power Inc, Philippines
- Romanian Commodities Exchange
- Australian Coal Association
- Trasteel International SA, Italy
- Rio Tinto Coal - Australia
- Deloitte Consulting - India
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- Ministry of Transport, Egypt
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