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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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Tuesday, 26 January 16
Q3'16 CFR SOUTH CHINA COAL SWAP DROPPED BELOW $41 A TON
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery rose US$ 0.82 (1.94%) per ton month over month.
A commodity swap is ...
Tuesday, 26 January 16
OUTLOOK FOR GLOBAL OIL MARKETS - OPEC SECRETARY GENERAL
Opening address by HE Abdalla S. El-Badri, OPEC Secretary General, at the Chatham House Conference: Middle East and North Africa Energy 2016, Theme ...
Monday, 25 January 16
5700 GAR COAL INDEX CLOSED $ 50.08 PER TON, $0.20 LOWER FROM LAST WEEK
COALspot.com: Average 5000 GAR coal index of Indonesian origin decline 1.35 percent week over week to averaging $39.39 per ton on this past Friday, ...
Monday, 25 January 16
SHOULD A DEFAULTING PARTY BE ENTITLED TO AN INNOCENT PARTY'S SAVING, FOLLOWING THEIR BREACH OF CONTRACT? - THE NEW FLAMENCO REVISITED
KNOWLEDGE TO ELEVATE
This case was addressed by the club in our of January 2015, when the High Court decision became available. The background ...
Sunday, 24 January 16
PANAMAX MARKET WEAKENS ACROSS THE BOARD
COALspot.com: The Baltic Dry Index, which gauges the cost of shipping dry bulk including iron ore, cement, grain, coal and fertiliser, fell ninetee ...
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- Medco Energi Mining Internasional
- Formosa Plastics Group - Taiwan
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- Thai Mozambique Logistica
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- Bhoruka Overseas - Indonesia
- Bharathi Cement Corporation - India
- Lanco Infratech Ltd - India
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- Star Paper Mills Limited - India
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- Simpson Spence & Young - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petrochimia International Co. Ltd.- Taiwan
- ASAPP Information Group - India
- Coastal Gujarat Power Limited - India
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Deloitte Consulting - India
- Standard Chartered Bank - UAE
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Indian Energy Exchange, India
- IHS Mccloskey Coal Group - USA
- Xindia Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
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- Rio Tinto Coal - Australia
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- Videocon Industries ltd - India
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- Petron Corporation, Philippines
- Eastern Energy - Thailand
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Carbofer General Trading SA - India
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- Semirara Mining Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Global Coal Blending Company Limited - Australia
- Mintek Dendrill Indonesia
- Madhucon Powers Ltd - India
- San Jose City I Power Corp, Philippines
- Renaissance Capital - South Africa
- Interocean Group of Companies - India
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- Attock Cement Pakistan Limited
- Tata Chemicals Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Goldman Sachs - Singapore
- Rashtriya Ispat Nigam Limited - India
- Trasteel International SA, Italy
- Salva Resources Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- New Zealand Coal & Carbon
- Sindya Power Generating Company Private Ltd
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Vedanta Resources Plc - India
- Timah Investasi Mineral - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- Price Waterhouse Coopers - Russia
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Kohat Cement Company Ltd. - Pakistan
- Sical Logistics Limited - India
- LBH Netherlands Bv - Netherlands
- Bhatia International Limited - India
- Energy Link Ltd, New Zealand
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
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- Coalindo Energy - Indonesia
- Vizag Seaport Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Kobexindo Tractors - Indoneisa
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- Malabar Cements Ltd - India
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- Kepco SPC Power Corporation, Philippines
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- Binh Thuan Hamico - Vietnam
- Africa Commodities Group - South Africa
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- Bahari Cakrawala Sebuku - Indonesia
- Agrawal Coal Company - India
- Bukit Baiduri Energy - Indonesia
- Larsen & Toubro Limited - India
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- Aboitiz Power Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Power Finance Corporation Ltd., India
- Edison Trading Spa - Italy
- Electricity Generating Authority of Thailand
- ICICI Bank Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Uttam Galva Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Indonesian Coal Mining Association
- Ceylon Electricity Board - Sri Lanka
- Merrill Lynch Commodities Europe
- Leighton Contractors Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
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- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
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- GN Power Mariveles Coal Plant, Philippines
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sakthi Sugars Limited - India
- Kaltim Prima Coal - Indonesia
- McConnell Dowell - Australia
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Siam City Cement - Thailand
- White Energy Company Limited
- Chamber of Mines of South Africa
- Australian Commodity Traders Exchange
- Central Java Power - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- Planning Commission, India
- TNB Fuel Sdn Bhd - Malaysia
- SMC Global Power, Philippines
- Dalmia Cement Bharat India
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- Gujarat Mineral Development Corp Ltd - India
- Chettinad Cement Corporation Ltd - India
- Coal and Oil Company - UAE
- The Treasury - Australian Government
- MS Steel International - UAE
- Therma Luzon, Inc, Philippines
- Ministry of Mines - Canada
- Singapore Mercantile Exchange
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Semirara Mining and Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Bangladesh Power Developement Board
- Central Electricity Authority - India
- Australian Coal Association
- Independent Power Producers Association of India
- Mjunction Services Limited - India
- AsiaOL BioFuels Corp., Philippines
- Parry Sugars Refinery, India
- Makarim & Taira - Indonesia
- VISA Power Limited - India
- Samtan Co., Ltd - South Korea
- Gujarat Sidhee Cement - India
- Orica Australia Pty. Ltd.
- Eastern Coal Council - USA
- Commonwealth Bank - Australia
- Barasentosa Lestari - Indonesia
- Indika Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- IEA Clean Coal Centre - UK
- Ministry of Transport, Egypt
- Marubeni Corporation - India
- The State Trading Corporation of India Ltd
- Indian Oil Corporation Limited
- Heidelberg Cement - Germany
- Global Business Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Anglo American - United Kingdom
- Essar Steel Hazira Ltd - India
- Oldendorff Carriers - Singapore
- Mercator Lines Limited - India
- Borneo Indobara - Indonesia
- GMR Energy Limited - India
- Straits Asia Resources Limited - Singapore
- Grasim Industreis Ltd - India
- Cement Manufacturers Association - India
- Krishnapatnam Port Company Ltd. - India
- GAC Shipping (India) Pvt Ltd
- GVK Power & Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Aditya Birla Group - India
- Minerals Council of Australia
- Orica Mining Services - Indonesia
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