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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, 28 January 16
WHAT ARE THE PROSPECTS FOR COAL IN LIGHT OF THE PARIS CLIMATE AGREEMENT? - GERMAN COAL IMPORTERS ASSOCIATION
This depends – says the VDKi – to a very great extent on who you want to believe more, the United Nations or the International Energy A ...
Thursday, 28 January 16
RICHARDS BAY COAL SWAPS FOR Q1,Q2 AND Q3 DELIVERIES FIRM THIS PAST WEEK
COALspot.com: Q1’ 2016 API4 FOB Richards Bay Coal swap rose month over month and week over week.
The Q1’ 2016 FOB Richards Bay Coa ...
Wednesday, 27 January 16
API 5 FOB NEWCASTLE COAL SWAPS CLOSE MIXED
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery rose another $1.17 per ton (3.13%) this past week compared to the sam ...
Wednesday, 27 January 16
CHINA'S STALLING ECONOMY HAS HAD A GREAT EFFECT ON VARIOUS COMMODITIES; DECREASED DEMAND DRIVING COMMODITY PRICES LOWER AND LOWER - LINOS ALEXANDROS KOGEVINAS
Having gone through the first few weeks of 2016, it’s starting to look like another challenging year is ahead of us. Hopes for a recovery in ...
Wednesday, 27 January 16
WORLD HARD COAL PRODUCTION AND CONSUMPTION DECLINE IN 2015 FOR THE FIRST TIME IN OVER A DECADE - VDKI
COALspot.com: Seaborne hard coal trade and the changes in this area were decisively affected by China and India - VDKi.
China bears the g ...
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- Altura Mining Limited, Indonesia
- Cement Manufacturers Association - India
- Bayan Resources Tbk. - Indonesia
- Meenaskhi Energy Private Limited - India
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Orica Australia Pty. Ltd.
- Bhushan Steel Limited - India
- Sakthi Sugars Limited - India
- Mercuria Energy - Indonesia
- MS Steel International - UAE
- Planning Commission, India
- Singapore Mercantile Exchange
- SMC Global Power, Philippines
- Indo Tambangraya Megah - Indonesia
- CIMB Investment Bank - Malaysia
- Malabar Cements Ltd - India
- Central Java Power - Indonesia
- Price Waterhouse Coopers - Russia
- CNBM International Corporation - China
- Jaiprakash Power Ventures ltd
- Asmin Koalindo Tuhup - Indonesia
- Pendopo Energi Batubara - Indonesia
- Power Finance Corporation Ltd., India
- Siam City Cement PLC, Thailand
- Kapuas Tunggal Persada - Indonesia
- Energy Link Ltd, New Zealand
- Latin American Coal - Colombia
- Jindal Steel & Power Ltd - India
- Vizag Seaport Private Limited - India
- Ministry of Finance - Indonesia
- Mintek Dendrill Indonesia
- Commonwealth Bank - Australia
- Ambuja Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- White Energy Company Limited
- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- Holcim Trading Pte Ltd - Singapore
- ASAPP Information Group - India
- Bukit Baiduri Energy - Indonesia
- The University of Queensland
- Indian Energy Exchange, India
- Grasim Industreis Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PTC India Limited - India
- Merrill Lynch Commodities Europe
- Riau Bara Harum - Indonesia
- Thai Mozambique Logistica
- Economic Council, Georgia
- VISA Power Limited - India
- Kaltim Prima Coal - Indonesia
- India Bulls Power Limited - India
- Indika Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Coal Association
- Anglo American - United Kingdom
- Posco Energy - South Korea
- Globalindo Alam Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Coastal Gujarat Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Electricity Generating Authority of Thailand
- Larsen & Toubro Limited - India
- Straits Asia Resources Limited - Singapore
- New Zealand Coal & Carbon
- Mercator Lines Limited - India
- Toyota Tsusho Corporation, Japan
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- PNOC Exploration Corporation - Philippines
- Lanco Infratech Ltd - India
- SN Aboitiz Power Inc, Philippines
- Dalmia Cement Bharat India
- Sarangani Energy Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Videocon Industries ltd - India
- Coalindo Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Star Paper Mills Limited - India
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Bangladesh Power Developement Board
- Agrawal Coal Company - India
- Port Waratah Coal Services - Australia
- Iligan Light & Power Inc, Philippines
- Indogreen Group - Indonesia
- Romanian Commodities Exchange
- Timah Investasi Mineral - Indoneisa
- Bulk Trading Sa - Switzerland
- Global Green Power PLC Corporation, Philippines
- Central Electricity Authority - India
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Thiess Contractors Indonesia
- Edison Trading Spa - Italy
- LBH Netherlands Bv - Netherlands
- Barasentosa Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Eastern Coal Council - USA
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- Formosa Plastics Group - Taiwan
- Renaissance Capital - South Africa
- Vedanta Resources Plc - India
- Leighton Contractors Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Essar Steel Hazira Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rashtriya Ispat Nigam Limited - India
- Sical Logistics Limited - India
- Energy Development Corp, Philippines
- Attock Cement Pakistan Limited
- Gujarat Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- Indonesian Coal Mining Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Independent Power Producers Association of India
- GMR Energy Limited - India
- Meralco Power Generation, Philippines
- Intertek Mineral Services - Indonesia
- Kobexindo Tractors - Indoneisa
- McConnell Dowell - Australia
- Antam Resourcindo - Indonesia
- Sindya Power Generating Company Private Ltd
- The State Trading Corporation of India Ltd
- Madhucon Powers Ltd - India
- Marubeni Corporation - India
- Mjunction Services Limited - India
- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- Bharathi Cement Corporation - India
- Carbofer General Trading SA - India
- Heidelberg Cement - Germany
- Georgia Ports Authority, United States
- Indian Oil Corporation Limited
- Billiton Holdings Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- Parry Sugars Refinery, India
- Kalimantan Lumbung Energi - Indonesia
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- PowerSource Philippines DevCo
- Salva Resources Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Trasteel International SA, Italy
- Jorong Barutama Greston.PT - Indonesia
- Bhatia International Limited - India
- GAC Shipping (India) Pvt Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tata Chemicals Ltd - India
- Ind-Barath Power Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Eastern Energy - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Xindia Steels Limited - India
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Karaikal Port Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- Cigading International Bulk Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Directorate Of Revenue Intelligence - India
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Medco Energi Mining Internasional
- Ceylon Electricity Board - Sri Lanka
- Kumho Petrochemical, South Korea
- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Wilmar Investment Holdings
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
- Krishnapatnam Port Company Ltd. - India
- Samtan Co., Ltd - South Korea
- TeaM Sual Corporation - Philippines
- Minerals Council of Australia
- Interocean Group of Companies - India
- Maharashtra Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Sidhee Cement - India
- The Treasury - Australian Government
- Tamil Nadu electricity Board
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