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Friday, 25 March 16
DRY BULK SHIPPING FLEET WILL GROW BY 1.3% DURING 2016 - BIMCO | HELLENIC SHIPPING NEWS
 The dry bulk market will keep on suffering, at least until the start of 2017 and possibly well after that, should the current balance of supply and demand remain without any significant change until then.
In an interview with Hellenic Shipping News Worldwide (www.hellenicshippingnews.com), BIMCO’s Chief Shipping Analyst, Mr. Peter Sand notes that with the BDI currently hovering around 400 points, the market is still far below a sustainable level. According to Mr. Sand, it’s worth noting that despite of the record amount of tonnage already scrapped since the start of the year, the overall fleet keeps on growing, as more and more newbuildings are being delivered.
Which factors have contributed to the rise of the dry bulk market over the past few weeks?
The poor condition of the dry bulk freight market in Q1-2016 is partly down to volumes coming down seasonally from Q4 to Q1 and partly due to the continuous growth of the dry bulk fleet. In spite of a new record high amount of tonnage being scrapped from start of the year, the fleet is still growing as even more new tonnage has been delivered.
Since the BDI reached the all-time-low level at 290 on 11 February 2016 a much welcome, but also modest and tepid rise has occurred. In part due to rising demand from China, as buyers of dry bulk commodities have returned from CNY-celebrations. Additionally the beginning of the South American grains season has lifted all ship sizes except for the Capesizes.
How far are we from determining that freight rates are at a viable level for most dry bulk owners, i.e. covering daily OPEX and leaving room for some profit as well?
There is a long way to go before we reach utilization levels around 85-90%. BIMCO estimates that levels like that are needed in order to bring sustainable freight rate levels around. Currently we estimate utilisation rates at the low 70’es. Sustainable freight rates, cover your OPEX, your financing cost, depreciation, overheads and includes profit margin on top of covering the cost. This will enable you to grow and run a business that provides the best service to your costumers every day. A BDI currently at 398 is far below a sustainable level.
BIMCO remains worried about the sustainability of freight rates in 2016. The demand side seems unable to buoy profits as both Chinese and Indian import growth cools off and the rest of the world is still importing smaller volumes than before the financial crisis of 2008.
Have we seen an increase of speeds, as a result of lower bunker rates and has this increased tonnage availability, thus further hampering the market’s recovery?
Yes we have, and it has proven toxic to an already ailing market. In particular speed went up in Q3 as freight rates rose. But the subsequent collapse was made increasingly hard and steeper by the rise in speed. The low fuel price level is welcome as it cut costs. But it remains of absolute importance to the market that the supply side growth rate is kept low or negative for years to come. Increasing speed, more newbuilding orders and idling instead of outright scrapping are all factors that push an eventual sustainable market further into the future.
How many ships were sold for demolition so far this year, compared to last year?
We have 144 ship on record as sold for demolition this year-to-date. 11.9m DWT. In the first quarter of 2015, 142 ships with a combined capacity of 9.9m DWT was scrapped.
Is this level of decommissioning enough to alleviate tonnage oversupply?
Only if that pace continues for at least two more years we will see a much needed cut in excess capacity in the market. BIMCO forecast 40m DWT to be scrapped in 2016, so it will be an unseen achievement if the industry can keep up the pace of scrapping going forward. As the demand side is moving forward a dead-slow speed, cutting down on capacity is the only way to a significant improvement of the fundamental market balance.
Are there enough “candidates” for demolition, in terms of the global fleet’s age profile?
If you go by a historical definition of how old ships once were when sold for demolition, “No” would be the reply. Only 20m DWT of dry bulk capacity is built in 1990 and earlier. Cutting a bit deeper, only taking age measures into account, 50m DWT of dry bulk capacity is built in 1994 and earlier.
But what’s the point of having a lot of ships around if they all lose money. Removing all ships built in 2000 and earlier would see 125m DWT go, such a number is likely to be needed should a sustainable freight rate level be brought back.
Can you give us an estimate of the current slippage rates?
As 2015 progressed BIMCO estimates that the slippage rate went from 30% to 40% where it currently sits.
Where do you see net fleet growth by the end of the year?
The dry bulk supply side has developed closely along the lines of BIMCO forecast. We estimate 50m DWT to be delivered and 40m DWT to be scrapped. This will leave the supply side to grow by 1.3% in 2016.
Where do you see the market by the start of the summer?
In a better place. But without any landmark changes. BIMCO estimate the supply side growth to ease a bit during Q2 while the demand side is supported by increased transportation demand for soya and iron ore.
Will China’s new policy plan help boost demand for dry bulk commodities?
China is in a phase of transition, which is good for the overall stability of the nation and the economy as such. But the transition is hurtful to dry bulk import demand. BIMCO estimate the demand for both key imported commodities, coal and iron ore will contract in 2016. Having said that, China’s “One belt, One road” does hold elements that is supportive to the dry bulk market. We expect this to provide for a “soft landing”, meaning that China will uphold significant import volumes going forward, despite the lack of growth – even some set back.
Will India emerge as a strong contender for coal imports, replacing – sort of speak – China, in that respect?
No, India is a completely different story to China. Most recently the political winds of change in India only seems to harm dry bulk demand. In 2015 imports of thermal coal into India dropped for the first time since 2003. Having said that Indian import of thermal coal has been higher than China’s since 2014. Future demand growth from India holds a lot of potential, but it is doubtful if it will ever be unleashed.
Source: Nikos Roussanoglou, Hellenic Shipping News
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Thursday, 31 March 16
CAPE: ANOTHER UNEVENTFUL WEEK WITH FIXTURES CONCLUDED AT LAST DONE LEVELS - FEARNLEYS
Cape
Another uneventful week with fixtures concluded at last done levels, CS levels remain around the USD 3 mark, whilst C3 is still just short o ...
Wednesday, 30 March 16
MINISTRY OF ENERGY AND MINERAL RESOURCES OF INDONESIA TO REVISE METHODOLOGY TO DETERMINE THE SELLING PRICE OF COAL TO MINE-MOUTH POWER PLANTS
COALspot.com: Ministry of Energy and Mineral Resources (ESDM) of Indonesia to review to revise methodology to determine the selling price of co ...
Wednesday, 30 March 16
VALEMAXES: THE BIGGEST NIGHTMARE OF TODAY'S DRY BULK MARKET - INTERMODAL
At a time that Europe is still dealing with the aftermath of the terrorist attacks in Brussels our society is daily bombarded with news of terroris ...
Tuesday, 29 March 16
BULK CARRIER VENTILATION - CAPTAIN PAUL R. WALTON
KNOWLEDGE TO ELEVATE
Moisture damage is a source of many cargo claims. Claimants allege that it is brought about by the ship’s failure t ...
Monday, 28 March 16
INDONESIAN WEEKLY CS50 COAL INDEX CLOSED SLIGHTLY FIRM; CS 57 INDEX CLOSED WEAK
COALspot.com: Average 5000 GAR coal index of Indonesian origin rose 0.03 percent week over week to averaging $38.91 per ton on this past Thursday, ...
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- Globalindo Alam Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Finance - Indonesia
- SMC Global Power, Philippines
- Deloitte Consulting - India
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- Coastal Gujarat Power Limited - India
- Cement Manufacturers Association - India
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- Bukit Baiduri Energy - Indonesia
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Eastern Energy - Thailand
- Semirara Mining Corp, Philippines
- Medco Energi Mining Internasional
- Bank of Tokyo Mitsubishi UFJ Ltd
- Merrill Lynch Commodities Europe
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- AsiaOL BioFuels Corp., Philippines
- Sindya Power Generating Company Private Ltd
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Formosa Plastics Group - Taiwan
- Sical Logistics Limited - India
- Manunggal Multi Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- Anglo American - United Kingdom
- Africa Commodities Group - South Africa
- Malabar Cements Ltd - India
- Thiess Contractors Indonesia
- Karaikal Port Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Edison Trading Spa - Italy
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Mines - Canada
- Therma Luzon, Inc, Philippines
- Mercator Lines Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- The University of Queensland
- Orica Mining Services - Indonesia
- Bhushan Steel Limited - India
- Independent Power Producers Association of India
- International Coal Ventures Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- Madhucon Powers Ltd - India
- Kaltim Prima Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- Toyota Tsusho Corporation, Japan
- Jaiprakash Power Ventures ltd
- Makarim & Taira - Indonesia
- Cigading International Bulk Terminal - Indonesia
- The State Trading Corporation of India Ltd
- PetroVietnam Power Coal Import and Supply Company
- Global Green Power PLC Corporation, Philippines
- South Luzon Thermal Energy Corporation
- SMG Consultants - Indonesia
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Commonwealth Bank - Australia
- Mintek Dendrill Indonesia
- Australian Coal Association
- GVK Power & Infra Limited - India
- Australian Commodity Traders Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Indogreen Group - Indonesia
- Ministry of Transport, Egypt
- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Savvy Resources Ltd - HongKong
- Central Electricity Authority - India
- Coal and Oil Company - UAE
- Wood Mackenzie - Singapore
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
- Kartika Selabumi Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- IEA Clean Coal Centre - UK
- Siam City Cement - Thailand
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Goldman Sachs - Singapore
- Videocon Industries ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Trasteel International SA, Italy
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- McConnell Dowell - Australia
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
- Krishnapatnam Port Company Ltd. - India
- Latin American Coal - Colombia
- Uttam Galva Steels Limited - India
- Meralco Power Generation, Philippines
- GAC Shipping (India) Pvt Ltd
- Bhoruka Overseas - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- Posco Energy - South Korea
- Baramulti Group, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Attock Cement Pakistan Limited
- Aditya Birla Group - India
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Orica Australia Pty. Ltd.
- Renaissance Capital - South Africa
- Coalindo Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Siam City Cement PLC, Thailand
- Kapuas Tunggal Persada - Indonesia
- Petron Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Vedanta Resources Plc - India
- Price Waterhouse Coopers - Russia
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Power Finance Corporation Ltd., India
- VISA Power Limited - India
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Essar Steel Hazira Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wilmar Investment Holdings
- Maharashtra Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- Gujarat Sidhee Cement - India
- Tata Chemicals Ltd - India
- Electricity Generating Authority of Thailand
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Lanco Infratech Ltd - India
- Vizag Seaport Private Limited - India
- Sojitz Corporation - Japan
- Kumho Petrochemical, South Korea
- Carbofer General Trading SA - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Eastern Coal Council - USA
- CNBM International Corporation - China
- GN Power Mariveles Coal Plant, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- London Commodity Brokers - England
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- Kideco Jaya Agung - Indonesia
- Port Waratah Coal Services - Australia
- Electricity Authority, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Parliament of New Zealand
- PTC India Limited - India
- GMR Energy Limited - India
- PowerSource Philippines DevCo
- OPG Power Generation Pvt Ltd - India
- Marubeni Corporation - India
- TeaM Sual Corporation - Philippines
- Romanian Commodities Exchange
- Tamil Nadu electricity Board
- Bhatia International Limited - India
- Planning Commission, India
- Sakthi Sugars Limited - India
- Semirara Mining and Power Corporation, Philippines
- Indian Oil Corporation Limited
- LBH Netherlands Bv - Netherlands
- Singapore Mercantile Exchange
- The Treasury - Australian Government
- Economic Council, Georgia
- Indo Tambangraya Megah - Indonesia
- Mjunction Services Limited - India
- IHS Mccloskey Coal Group - USA
- Banpu Public Company Limited - Thailand
- Energy Development Corp, Philippines
- India Bulls Power Limited - India
- Grasim Industreis Ltd - India
- Xindia Steels Limited - India
- Mercuria Energy - Indonesia
- Bangladesh Power Developement Board
- Bulk Trading Sa - Switzerland
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