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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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Wednesday, 30 September 15
Q1'16 FOB INDONESIA COAL SWAP FALLS $1.25 A TON AS SLIDE CONTINUES
COALspot.com: Indonesian coal swap for delivery Q4 2015 declined month on month and week over week.
The Q4 swap declined $ 0.72 (-1.78%) per t ...
Wednesday, 30 September 15
NEW BUILDING MARKET INSIGHT
COALspot.com: This year has been, beyond any doubt, a rather strenuous one for the newbuilding market. Ordering activity with regards to Dry Bulker ...
Tuesday, 29 September 15
FOB RICHARDS BAY COAL SWAPS ARE SLIDING
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q4' 2015 declined week over week and month over month.
The Q4 swap was down US$ ...
Monday, 28 September 15
API 5 FOB NEWCASTLE COAL SWAPS UP $2.15 IN ONE MONTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery increased $2.10 per ton (5.15%) month over month to US$ 42.93 per ton. The ...
Monday, 28 September 15
CAPESIZE FLEET INCREASES BY JUST 1 VESSEL DURING LAST 12 MONTHS, IN POSITIVE SIGN FOR DRY BULK SHIPPING MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
After a rather tumultuous period, the shipping industry and more particular the dry bulk market has started to adjust to the new realities of globa ...
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- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Georgia Ports Authority, United States
- Samtan Co., Ltd - South Korea
- Banpu Public Company Limited - Thailand
- GMR Energy Limited - India
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- CNBM International Corporation - China
- Uttam Galva Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- ASAPP Information Group - India
- PetroVietnam Power Coal Import and Supply Company
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement PLC, Thailand
- Posco Energy - South Korea
- Straits Asia Resources Limited - Singapore
- Gujarat Sidhee Cement - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Energy - Thailand
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Economic Council, Georgia
- Essar Steel Hazira Ltd - India
- Price Waterhouse Coopers - Russia
- Coal and Oil Company - UAE
- India Bulls Power Limited - India
- New Zealand Coal & Carbon
- Coalindo Energy - Indonesia
- Meralco Power Generation, Philippines
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
- Global Business Power Corporation, Philippines
- Parliament of New Zealand
- Sree Jayajothi Cements Limited - India
- Vizag Seaport Private Limited - India
- Kideco Jaya Agung - Indonesia
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- Eastern Coal Council - USA
- Tata Chemicals Ltd - India
- Standard Chartered Bank - UAE
- IEA Clean Coal Centre - UK
- Anglo American - United Kingdom
- Maheswari Brothers Coal Limited - India
- Power Finance Corporation Ltd., India
- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
- Thai Mozambique Logistica
- Mjunction Services Limited - India
- Orica Mining Services - Indonesia
- Australian Commodity Traders Exchange
- PTC India Limited - India
- Manunggal Multi Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- Mintek Dendrill Indonesia
- Central Java Power - Indonesia
- The Treasury - Australian Government
- Ministry of Transport, Egypt
- Petrochimia International Co. Ltd.- Taiwan
- Sarangani Energy Corporation, Philippines
- Bulk Trading Sa - Switzerland
- London Commodity Brokers - England
- Xindia Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Ambuja Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Central Electricity Authority - India
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- Interocean Group of Companies - India
- Kartika Selabumi Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Sojitz Corporation - Japan
- Borneo Indobara - Indonesia
- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- Oldendorff Carriers - Singapore
- Renaissance Capital - South Africa
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- Electricity Authority, New Zealand
- Bayan Resources Tbk. - Indonesia
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- PNOC Exploration Corporation - Philippines
- Attock Cement Pakistan Limited
- Malabar Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Riau Bara Harum - Indonesia
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- OPG Power Generation Pvt Ltd - India
- Deloitte Consulting - India
- SMC Global Power, Philippines
- Semirara Mining and Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Vedanta Resources Plc - India
- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- Jaiprakash Power Ventures ltd
- Bhatia International Limited - India
- Indika Energy - Indonesia
- MS Steel International - UAE
- Coastal Gujarat Power Limited - India
- Independent Power Producers Association of India
- Thiess Contractors Indonesia
- Planning Commission, India
- Indian Oil Corporation Limited
- Formosa Plastics Group - Taiwan
- Australian Coal Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- Ministry of Mines - Canada
- Karaikal Port Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- Commonwealth Bank - Australia
- Altura Mining Limited, Indonesia
- Pendopo Energi Batubara - Indonesia
- The University of Queensland
- Minerals Council of Australia
- Bhushan Steel Limited - India
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement - Thailand
- Bhoruka Overseas - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Romanian Commodities Exchange
- Grasim Industreis Ltd - India
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Tamil Nadu electricity Board
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- Ind-Barath Power Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Petron Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Marubeni Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Sindya Power Generating Company Private Ltd
- Gujarat Mineral Development Corp Ltd - India
- SMG Consultants - Indonesia
- Dalmia Cement Bharat India
- Africa Commodities Group - South Africa
- San Jose City I Power Corp, Philippines
- Heidelberg Cement - Germany
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- Bangladesh Power Developement Board
- Goldman Sachs - Singapore
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Mercuria Energy - Indonesia
- Baramulti Group, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- LBH Netherlands Bv - Netherlands
- Latin American Coal - Colombia
- Jorong Barutama Greston.PT - Indonesia
- Star Paper Mills Limited - India
- VISA Power Limited - India
- CIMB Investment Bank - Malaysia
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
- ICICI Bank Limited - India
- Mercator Lines Limited - India
- Aboitiz Power Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- Madhucon Powers Ltd - India
- Global Coal Blending Company Limited - Australia
- Directorate Of Revenue Intelligence - India
- Meenaskhi Energy Private Limited - India
- Edison Trading Spa - Italy
- Sical Logistics Limited - India
- Kumho Petrochemical, South Korea
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