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Monday, 25 January 16
DRY BULK SHIPPING: A MISERABLE START TO A NEW YEAR, WHERE THE MARKET STRUGGLES TO GROW AT ALL - BIMCO
 The global production of steel dropped in 2015 compared to 2014, to a larger extent outside China, as China exported its surplus of steel to destinations across the globe; it is too complex to single out whether this is positive or negative for the seaborne dry bulk transport demand. Going forward, the Chinese steel industry is set to grow its global market share, currently at 50%. Depending on domestic steel consumption in China, use of domestically mined iron ore and profitability in the steel industry, the dry bulk market will be impacted. Chinese steel prices have risen since mid-December and currently, sit at the highest level since October 2015. International iron ore prices could slide further during 2016 as supply exceeds demand.
Since August 2015, dry bulk freight rates have continuously been eroded by deteriorating market conditions. As of 11 January 2016, daily freight rates ranged from USD 3,361 per day for a panamax ship to USD 4,416 per day for a supramax.
The brief lift in capesize rates at the end of November may be explained by the record-high import of relatively cheap iron ore into China. More shipments from Brazil contributed to this lift, squeezing out more domestically produced ore. No less than 96.3 million tons of iron ore were discharged in China in December 2015. This brought the full year total up to 952.7 million tons, 2.2% more than in 2014.
Whereas total transported volumes in 2015 are estimated to have stayed unchanged from 2014, some commodities set new records, while others dropped in significant volume. One of the highlights was soybeans, which also saw a new record high of imports into China in 2015. While soybean import into any other country hasn’t grown for two decades, Chinese imports went from barely anything to 81.7 million tons. China took 9.1 million in December alone, primarily for animal feed.
Despite these record numbers of imported commodities, dry bulk freight rates remain very low. This demonstrates the serious problem of the current market conditions for dry bulk shipping.
Supply
The prices offered to owners who wanted to sell their ship for demolition in the past year were very disappointing. All of the shipbreaking nations have been offered cheap new Chinese steel and accepted the offers. This floored the prices for scrap steel in nations that used to rely on it for around 80% of their steel demand.
Nevertheless, the freight market remains the most significant factor behind the decision to scrap a ship or continue trading. During 2016, BIMCO forecasts that dry bulk shipping capacity of 40 million DWT will be sold for demolition, making 2016 the busiest year on record for shipbreaking.
Despite devastating market conditions in 2015, “only” 30 million DWT were demolished. Considering the factors mentioned above, this illustrates that the pool of ready-to-break ships is not vast, but even a modest improvement in the freight rates causes demolition to halt.
Limiting the inflow of new capacity into the market going forward also requires a low level of new orders to be placed. In that sense, 1.4 million DWT of new capacity ordered during Q4-2015 is just what is needed. For 2015 as a whole, 17.7 million DWT was ordered. The lowest amount since 2001. Hopefully, 2016 will see even lower dry bulk tonnage being ordered.
For 2016, BIMCO expects new deliveries of 50 million DWT despite extensive postponements, delays and rescheduling. On record for scheduled deliveries, Clarksons report 92 million DWT for 2016. BIMCO assess that 40% of the scheduled deliveries will be delayed by one year. Moreover, the majority of the capacity will be delivered in first half of the year.
The distribution of new capacity is likely to remain unchanged from 2015. In round numbers that mean: 40% of the new capacity will be delivered into the capesize segment, 20% into panamax, 30 % into handymax and 10% into the handysize segment.
Outlook
If the CISA (China Iron & Steel Assoc.) forecast for a drop in steel production from 806 million tons to 783 million tons in China becomes reality, less iron ore is needed. Depending on the required mix of domestic/imported ore, shipping will be affected. China remains the key driver of the dry bulk market, for better or worse. Volumes are still huge but growth rates are likely to be very low and probably negative for some commodities.
BIMCO forecasts coal imports into both India and China will go down in 2016, following the trend of 2015.Volume losses into India in 2015 were not originally predicted. This went against a multiyear growth trend over the previous years. But, the domestic coal production rose on the back of some political decisions, which seem to work against dry bulk imports.
2016 is also likely to see a return of India to the iron ore export market – something that will be a positive for seaborne demand if market share is taken from Australian exporters, but a negative if it limits Brazilian Asia-bound exports.
For the coming months: January-April, BIMCO expects transported volumes to diminish as they traditionally do from the fourth quarter to the first. This increases a fundamental imbalance as the delivery of new ships in recent years has followed the opposite pattern. That is more new ships are being delivered early in a new year rather than late in the year just about to end, achieving the newest “year of built” for the record. As we move into the second quarter the downward pressure should ease somewhat.
BIMCO remains worried about the sustainability of freight rates in 2016. The demand side seems unable to buoy profits as both Chinese and Indian growth cools off and the rest of the world is still importing smaller volumes than before the financial crisis of 2008.
A new record of shipbreaking volumes in 2016 could limit fleet growth to just 10 million DWT, so in fact “all we need” is an increase in transported volumes to around 60 million tons to balance out the inflow. As little as this may seem, growing from a base of 4,700 million tons – it can prove to be a high bar to jump before we start eating into the significant oversupply of ships.
Source: BIMCO
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Thursday, 04 February 16
CAPESIZE: WEST AUSTRALIAN TO CHINA HAS BEEN CONCLUDED AT US$ 2.85 PMT AND THE C3 MARKET REMAINS INACTIVE - FEARNLEYS
Capesize
As everyone is getting ready for the Chinese new year, already depressed rates are under further pressure.
According to Fearnleys, ...
Wednesday, 03 February 16
DRY BULK MARKET CONTINUES TO BE UNDER PRESSURE - INTERMODAL
The Dry Bulk market continues to be under pressure, with the BDI remaining in search of even the slightest support, which seems to be delaying more ...
Tuesday, 02 February 16
RECORD EXPORTS THROUGH SOUTH AFRICA'S RICHARDS BAY COAL TERMINAL MADE AT EXPENSE OF SMALLER RIVALS, IHS SAYS
Five percent increase in coal exports through South Africa’s dominant Richards Bay Coal Terminal in 2015 unlikely to accelerate country&rsquo ...
Tuesday, 02 February 16
SETTING ASIDE, STRIKING OUT AND APPEALS TO THE COURT OF APPEAL IN SHIP ARRESTS - RAJAH & TANN ASIA LLP
KNOWLEDGE TO ELEVATE
The Singapore Court of Appeal once again has had to grapple with ship arrest, setting aside and appeals to the Court unde ...
Monday, 01 February 16
DRY BULK SUFFERS FROM POSEIDON'S POTENT PRONGS - CLARKSONS
It has been a grim start to 2016 for the bulkcarrier market, with the Baltic Dry Index sliding to new record lows on almost every day of the year s ...
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- New Zealand Coal & Carbon
- Kobexindo Tractors - Indoneisa
- Salva Resources Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Aboitiz Power Corporation - Philippines
- Malabar Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- Parliament of New Zealand
- Sarangani Energy Corporation, Philippines
- VISA Power Limited - India
- Ministry of Mines - Canada
- Banpu Public Company Limited - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
- Jorong Barutama Greston.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Anglo American - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- Karaikal Port Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- International Coal Ventures Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- The State Trading Corporation of India Ltd
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- LBH Netherlands Bv - Netherlands
- PTC India Limited - India
- India Bulls Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Mercuria Energy - Indonesia
- GVK Power & Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
- Mjunction Services Limited - India
- Borneo Indobara - Indonesia
- Sree Jayajothi Cements Limited - India
- Agrawal Coal Company - India
- ASAPP Information Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Energy Exchange, India
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- Posco Energy - South Korea
- Coal and Oil Company - UAE
- Rashtriya Ispat Nigam Limited - India
- Sakthi Sugars Limited - India
- European Bulk Services B.V. - Netherlands
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- Bukit Baiduri Energy - Indonesia
- Bhatia International Limited - India
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
- Sical Logistics Limited - India
- Toyota Tsusho Corporation, Japan
- MS Steel International - UAE
- Videocon Industries ltd - India
- White Energy Company Limited
- Renaissance Capital - South Africa
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- Intertek Mineral Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Goldman Sachs - Singapore
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Eastern Energy - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- London Commodity Brokers - England
- Bayan Resources Tbk. - Indonesia
- Antam Resourcindo - Indonesia
- Star Paper Mills Limited - India
- Uttam Galva Steels Limited - India
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Power Finance Corporation Ltd., India
- GAC Shipping (India) Pvt Ltd
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Commonwealth Bank - Australia
- The University of Queensland
- Eastern Coal Council - USA
- Vedanta Resources Plc - India
- Sinarmas Energy and Mining - Indonesia
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- Barasentosa Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Romanian Commodities Exchange
- Semirara Mining and Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sindya Power Generating Company Private Ltd
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- Independent Power Producers Association of India
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- Bangladesh Power Developement Board
- Chettinad Cement Corporation Ltd - India
- Globalindo Alam Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Planning Commission, India
- Price Waterhouse Coopers - Russia
- Global Business Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- Coalindo Energy - Indonesia
- Port Waratah Coal Services - Australia
- Asmin Koalindo Tuhup - Indonesia
- Attock Cement Pakistan Limited
- McConnell Dowell - Australia
- Karbindo Abesyapradhi - Indoneisa
- Bukit Makmur.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Oldendorff Carriers - Singapore
- Bulk Trading Sa - Switzerland
- Thai Mozambique Logistica
- Pendopo Energi Batubara - Indonesia
- South Luzon Thermal Energy Corporation
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- Chamber of Mines of South Africa
- Jindal Steel & Power Ltd - India
- Formosa Plastics Group - Taiwan
- Billiton Holdings Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Meralco Power Generation, Philippines
- Electricity Authority, New Zealand
- Bhoruka Overseas - Indonesia
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- Maharashtra Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Latin American Coal - Colombia
- Gujarat Mineral Development Corp Ltd - India
- GMR Energy Limited - India
- Electricity Generating Authority of Thailand
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Development Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Merrill Lynch Commodities Europe
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Siam City Cement PLC, Thailand
- Indian Oil Corporation Limited
- Georgia Ports Authority, United States
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tamil Nadu electricity Board
- Bhushan Steel Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Baramulti Group, Indonesia
- Ministry of Transport, Egypt
- Indika Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- CNBM International Corporation - China
- Indo Tambangraya Megah - Indonesia
- Deloitte Consulting - India
- Kaltim Prima Coal - Indonesia
- ICICI Bank Limited - India
- Kepco SPC Power Corporation, Philippines
- PowerSource Philippines DevCo
- SMG Consultants - Indonesia
- IHS Mccloskey Coal Group - USA
- Singapore Mercantile Exchange
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- Trasteel International SA, Italy
- Bharathi Cement Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Madhucon Powers Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Medco Energi Mining Internasional
- Kapuas Tunggal Persada - Indonesia
- Timah Investasi Mineral - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Central Electricity Authority - India
- Australian Coal Association
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- Minerals Council of Australia
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- Mercator Lines Limited - India
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