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Monday, 09 May 16
DRY BULK SHIPPING TO WITNESS STEADY PROGRESS MOVING FORWARD ON THE BACK OF GROWING TRADE VOLUMES - BIMCO
 In its latest short-term analysis of the shipping markets, BIMCO reiterated its optimism on the prospects of the dry bulk market moving forward. According to BIMCO, transported volumes are expected to grow slowly – as they seasonally do – from the first quarter into the second. This ought to underpin the freight market.
“Notably, we expect a new record volume of combined grain and soybean exports this year from Argentina and Brazil. We do not anticipate a massive rise in freight rates for handysize, supramax and panamaxes on the back of this, as ships are already waiting around the main loading areas. Nevertheless, it should give a boost in confidence, a confidence that Moore Stephens in March assessed to be at a record low”, said BIMCO’s report.
Another positive indication of China not being as vulnerable as some may believe, which is supporting the soft landing trajectory, is the improving domestic steel prices, seen since mid-February. In the international markets, spot iron ore prices have also rebounded from USD 41 per MT at the beginning of 2016 to see USD 56 per MT in mid-April. Very different from the peaks of the past, but a positive indicator in the midst of all this surrounding uncertainty.
“We are still worried about the sustainability of freight rates in the years to come. Our main worry is that demolition activity will slow down as the BDI improves. If shipowners slow demolition of ships considerably, the fleet will keep growing. This will widen the fundamental imbalance further because we forecast the demand side to grow slowly in the coming years. In order to reverse several years of adding capacity in excess of demand growth, we need to develop a multi-year trend of negative fleet growth. BIMCO assess the current utilisation rate of the dry bulk fleet at the low end of the 70s”, said the report.
Looking further ahead, BIMCO noted that “coal imports into India may change. If the retained political vision of making India self-sufficient in thermal coal becomes reality. Surely the jury is still out on that. In November 2013 the then Indian Power Minister Goyal was “very confident”, when saying India may stop thermal coal imports in two to three years, as domestic production would increase. Mr. Goyal, now being India’s Energy Minister repeated the exactly the same words in April 2016. “We want to completely stop its import over the next two to three years”. India imported 171 million tonnes of thermal coal in 2015, slightly down from 176 million tonnes in 2014. SSY expects India to import 170 million tonnes of thermal coal in 2016”, it noted.
Supply
Meanwhile, “despite a record high volume of demolished dry bulk shipping capacity in the first three months of 2016, the total dry bulk fleet still grew. 16.7 million DWT of new capacity entered the fleet while 14 million DWT was sold for scrap. All in line with BIMCO’s forecast.
Not all of the dry bulk sub-segments saw an increase in fleet size. The capesize fleet, for instance, which has doubled over the past 6½ years, reduced in number (7 ships less) as well as capacity (-0.2%) in Q1-2016. For the full year, BIMCO holds unchanged expectations for deliveries and demolitions, which means we expect the fleet to grow by 1.1% or 10 million DWT in 2016. What has changed though from our January report is the slippage rate of deliveries, now at 50% up from 40%. Owners and investors are working hard to delay the delivery of new ships into a miserable freight market”, said the report.
According to BIMCO’s Chief Shipping Analyst, Mr. Peter Sand, “as deliveries offer traces of past optimism, most interestingly the appetite for signing new contracts for dry bulk ships at the world’s shipyards has ceased. Until the middle of March, only four new contracts had been signed, three at Japanese shipyards and one in China. During March and April, the long anticipated orders for 30 VLOCs with a capacity of 400,000 DWT each are now confirmed. Lifelong time charter contracts (27-years) appears to have been awarded to all of them already. This is the latest development that ties China and Vale closer to each other again, after their fallout following the disputes over the original batch of valemax VLOCs which were not allowed to call at Chinese ports for several years”.
He added that “without doubt this is bad news for international owners and operators. Each VLOC can carry an estimated 1.6m tons of iron ore from Tubarao, Brazil to Baoshan, China per annum. This new batch of VLOCs, will remove 48 million tons of iron ore from the “open market”. As the current fleet of 34 VLOCs (2011-2015) already carries a total of 54.4m tons of cargo, the best front-haul leg in dry bulk shipping is crippled even further by this industrialisation of trade. In 2015, Brazil exported 191.6 million tons of iron ore to China; the existing and new valemax between them will be able to carry over half Brazil’s current annual iron ore exports. The 30 new VLOCs are due for delivery in 2018-2019”.
Demand
In terms of demand, BIMCO said that “on 10 February 2016, the Baltic Dry Index (BDI) hit 290. At that point, a bulk carrier regardless of its size, age and fuel-efficient qualities earned a time charter average of USD 2,417-2,776 per day. Whereas the three smaller segments have seen higher earnings since then, Capesize earnings lost ground up until the end of March. By mid-April, the gap closed and capesizes are back on par with the pack. Despite the fact that earnings have doubled in those two months, they remain below OPEX levels for the largest part of the fleet. Despite the many attempts by steel mills around the world to fend off Chinese steel from their home market, China’s steel export volumes did not fall significantly in January and February. Export dropped by just 1.6% to 17.85 million tonnes. New data for March showed exports of 10 million tonnes. In 2015, China flooded the world market as 112 million tons were exported, bringing down scrap steel prices in the wake of it.”
It added that “global crude steel production for January and February combined was 5.6% lower than in the same period of 2015, according to Worldsteel. Crude steel production in China was down 6.5% at the same time. The three key items to watch out for in 2016 are Chinese imports of coal and iron ore, as well as how much dry bulk tonnage is going to be demolished. Nothing else really matters to an extent that can either improve or damage the fundamentals of the dry bulk shipping market. In the midst of doom, gloom and uncertainty for shipbuilding, China’s combined imports of the two key commodities in the first two months fared better than we thought. The trouble is, however, that it did not bring decisive support to the freight market. Chinese iron ore imports grew by 6.4% to 155.8 million tonnes over the first two months versus this time a year ago. While coal imports to China fell by 10% to 28.8 million tonnes over the same period. New data for March … all positive. Chinese iron ore imports were 85.8 million tonnes, while coal imports rose to 19.7 million tonnes. The strong coal imports over March all but levelled out the drop in January and February. Q1 coal import growth was down by 1.2% year on year”, BIMCO concluded.
Source: Nikos Roussanoglou, Hellenic Shipping News
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Tuesday, 17 May 16
INDONESIAN COAL PRICE REFERENCE DECLINE AGAIN
COALspot.com: The Indonesia Coal Benchmark Price declined in May 2016.
The Director General of Mineral and Coal of Indonesia, the regulator of ...
Tuesday, 17 May 16
CHINA THERMAL-POWER OVERSUPPLY TO WORSEN - FITCH
COALspot.com: The overcapacity in thermal-power generation in China is likely to worsen in 2016 to 2017, Fitch Ratings says in a new report.
F ...
Tuesday, 17 May 16
ON YOUR MARKS: TRACKING CHINESE TRADE - CLARKSONS
One of the major drivers behind the challenges currently facing many of the shipping markets has been slower demand growth. World seaborne trade gr ...
Monday, 16 May 16
INDONESIAN WEEKLY COAL INDICES AT POSITIVE LEVELS - CS (I) COAL INDEX
COALspot.com: Average 5000 GAR coal index of Indonesian origin up 0.31 percent week over week to averaging $38.94 per ton this past week, shows CS ...
Monday, 16 May 16
OPEC SEES RIVAL OIL PRODUCTION DECLINING
Crude Oil Price Movements
The OPEC Reference Basket averaged $37.86/b in April, a gain of $3.21 or 9.3%. This was 40% higher than the lows reache ...
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- Indogreen Group - Indonesia
- ASAPP Information Group - India
- PNOC Exploration Corporation - Philippines
- Indian Oil Corporation Limited
- Global Coal Blending Company Limited - Australia
- Kideco Jaya Agung - Indonesia
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- Tata Chemicals Ltd - India
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- Coal and Oil Company - UAE
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- Australian Commodity Traders Exchange
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- Electricity Authority, New Zealand
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Parliament of New Zealand
- The University of Queensland
- Semirara Mining and Power Corporation, Philippines
- Minerals Council of Australia
- Oldendorff Carriers - Singapore
- Altura Mining Limited, Indonesia
- Intertek Mineral Services - Indonesia
- IEA Clean Coal Centre - UK
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- Semirara Mining Corp, Philippines
- Larsen & Toubro Limited - India
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- Edison Trading Spa - Italy
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- Merrill Lynch Commodities Europe
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- Toyota Tsusho Corporation, Japan
- Global Business Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- India Bulls Power Limited - India
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- Power Finance Corporation Ltd., India
- Cement Manufacturers Association - India
- Sakthi Sugars Limited - India
- VISA Power Limited - India
- Lanco Infratech Ltd - India
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- Bulk Trading Sa - Switzerland
- Romanian Commodities Exchange
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- Sojitz Corporation - Japan
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- Interocean Group of Companies - India
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- Sindya Power Generating Company Private Ltd
- Formosa Plastics Group - Taiwan
- Bhoruka Overseas - Indonesia
- CIMB Investment Bank - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Aditya Birla Group - India
- Indika Energy - Indonesia
- Siam City Cement PLC, Thailand
- Economic Council, Georgia
- PowerSource Philippines DevCo
- Simpson Spence & Young - Indonesia
- MS Steel International - UAE
- Gujarat Mineral Development Corp Ltd - India
- Deloitte Consulting - India
- Baramulti Group, Indonesia
- Ambuja Cements Ltd - India
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- Global Green Power PLC Corporation, Philippines
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- Karbindo Abesyapradhi - Indoneisa
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- Planning Commission, India
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Antam Resourcindo - Indonesia
- European Bulk Services B.V. - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- Renaissance Capital - South Africa
- Directorate General of MIneral and Coal - Indonesia
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- Therma Luzon, Inc, Philippines
- Ministry of Mines - Canada
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- Timah Investasi Mineral - Indoneisa
- Heidelberg Cement - Germany
- Miang Besar Coal Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Electricity Generating Authority of Thailand
- Cigading International Bulk Terminal - Indonesia
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- Central Electricity Authority - India
- Wilmar Investment Holdings
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- Australian Coal Association
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- Ceylon Electricity Board - Sri Lanka
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- Latin American Coal - Colombia
- Eastern Energy - Thailand
- Siam City Cement - Thailand
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