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Monday, 05 September 16
POOR FREIGHT RATES DESPITE STRONG DEMAND GROWTH FROM CHINA - BIMCO
 Demand
The dry bulk commodity imports into and exports out of China we have seen in the first half of 2016 are very positive – and nothing short of extraordinary. But, putting it into perspective, compared to the devastating freight rate levels over the same period, it highlights that something is very wrong in the dry bulk market. The market is nowhere near balanced.
BIMCO’s data on seaborne iron ore imports into China, shows a growth of 9.6% for H1-2016 as compared to H1-2015. With seaborne coal volumes shipped into China during H1-2016 being on par with H2-2015, this represents a 5.0% growth on H1-2015. A continued surge in thermal coal imports seems limited, as hydropower electricity generation due to heavy rainfall is likely to squeeze coal consumption (used for power generation) yet again.
Among the minor seaborne commodities, Chinese steel product exports continue to support its high steel production – and therefore also the elevated imports of iron ore. Exports are up by 9.4% in H1-2016 compared to the same period last year. Trade barriers being set up against Chinese steel, primarily in the Western hemisphere, have little impact as most steel is exported to other Asian countries. Steel exports have been a steady and solid trade compared to Chinese coal imports, which were down in Jan/Feb but very strong in May/June.
Also as expected we saw a new record of grain exports out of Argentina during H1-2016. Up by 42.1% year on year.
At the same time, we witnessed appalling freight rates during the worst quarter ever (Q1-2016) making it a terrible first half of 2016. Year to date, the Baltic Dry Index is down by 26% on last year’s performance, which was already dreadful.
On 10 August, freight rate levels are merely covering operational expenditures (OPEX), with no contribution to cover overhead and financing costs. BIMCO expects the industry to be loss making for the full year.
The devastating freight rates have left asset values for dry bulk ships battered. A 2010-built cape size ship was valued by VesselsValue.com on 1 August 2014 at USD 49.75 million. Two years later, that same ship had lost 57.3% of its value and is now worth only USD 21.25 million. The pain is felt across the fleet; worse for older ships and slightly less severe a drop in value for newer ships.
Outlook
Positive demand growth rates across the board for dry bulk commodities are high, and there is one that is ruling them all - iron ore. In H1-2016 we saw a volume growth of 42 million tonnes of iron ore going into China, compared to a combined volume growth of 12 million tonnes for coal, soybeans and steel products on other Chinese trades.
Increasing demand for iron ore is strong on the best trade lane of them all - Brazil to China. Shipments on that trade were up by 24% to reach 98 million tonnes in H1-2016 compared to H1-2015. Such a development used to mean much higher freight rates, but as 2015 passed, spot rates for capesize ships were only modestly buoyed by volume growth on this trade. BIMCO believes that a significant part of the iron ore has been transported on “Vale’s conveyor belt of Chinese-owned VLOCs”. If this continues to remove cargoes from the open market, volume growth on the Brazil to China iron ore trade - once the greatest driver of freight rates in the spot market - will no longer affect the spot market on this trade nor the general freight market significantly.
Handymax ships, on the other hand, have seen a flurry of new ships delivered and have fared well due to the broad-based demand growth outside the iron ore market. They will continue to do so. The fast growing handymax fleet, however, will also going forward put a lid on shipowners and operators’ chances of lifting freight rates into really profitable levels.
Growing iron ore imports have not meant higher steel production in China. We can conclude that some of the much-needed substitution away from domestically mined, poor quality ore towards the import of higher iron content quality ores, and is happening at a fair pace.
This has stirred a surprising move by the Metallurgical Miners' Association of China (MMAC) who say the big three iron ore producers are “using low-priced dumping to crowd out higher-cost producers [in China]”. They claim 329 mines were shut last year and another 793 closed in the first five months of 2016. The MMAC crying foul is unprecedented. But for the dry bulk shipping industry, substituting the higher cost produced ore in China delivers much-needed volume growth at sea.
For the coming months: September-November, BIMCO expects transported volumes to stay put - as the high volumes transported in recent months may have run ahead of underlying demand. Expect the freight rates to move up, down and sideways before moving up again in the fourth quarter of the year.
Source: BIMCO
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Thursday, 27 October 16
PANAMAX: FIRM ATLANTIC; TOPPISH PACIFIC - FEARNLEYS
Supramax
The trend from last week is passed on. ECSA still strong with Supras from N Brazil to Med fixed at $9,000 to $9,500 daily.
Accordin ...
Wednesday, 26 October 16
SHIPPING MARKET INSIGHT - KONSTANTINOS KONTOMICHIS
If the finale of a thriller movie finds the leading actor successfully surviving after all the sacrifices he has made, the audience presumes this t ...
Tuesday, 25 October 16
INDONESIAN COAL PRICES MARCH HIGHER CONTINUES
COALspot.com: A rally in thermal coal prices over the past few months, after years of decline, is still continuing and it is expected to rally at l ...
Tuesday, 25 October 16
THINGS ARE SLOWLY STARTING TO IMPROVE AS CORRECTIONS ARE MADE - ALLIED
It seems as though left, right and centre, all we see nowadays is the word “restructuring”.
There is restructuring amongst bankers ...
Monday, 24 October 16
KOMIPO INVITES BIDS FOR 0.78 MILLION TONS OF BITUMINOUS COAL
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a new tender for 780,000 Metric Tons of Bituminous Coal for its B ...
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- PetroVietnam Power Coal Import and Supply Company
- Sojitz Corporation - Japan
- Economic Council, Georgia
- OPG Power Generation Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Romanian Commodities Exchange
- Karaikal Port Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Mercuria Energy - Indonesia
- Meralco Power Generation, Philippines
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Mjunction Services Limited - India
- Energy Link Ltd, New Zealand
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kepco SPC Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- GN Power Mariveles Coal Plant, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Mines - Canada
- Georgia Ports Authority, United States
- Antam Resourcindo - Indonesia
- Eastern Energy - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- Parry Sugars Refinery, India
- Banpu Public Company Limited - Thailand
- India Bulls Power Limited - India
- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Ind-Barath Power Infra Limited - India
- Ministry of Transport, Egypt
- Alfred C Toepfer International GmbH - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Anglo American - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Development Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thiess Contractors Indonesia
- Lanco Infratech Ltd - India
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- Jorong Barutama Greston.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Global Green Power PLC Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- Sree Jayajothi Cements Limited - India
- ASAPP Information Group - India
- Bhoruka Overseas - Indonesia
- Wood Mackenzie - Singapore
- Sarangani Energy Corporation, Philippines
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- Bayan Resources Tbk. - Indonesia
- Globalindo Alam Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Bhatia International Limited - India
- Barasentosa Lestari - Indonesia
- The University of Queensland
- Price Waterhouse Coopers - Russia
- Carbofer General Trading SA - India
- Formosa Plastics Group - Taiwan
- AsiaOL BioFuels Corp., Philippines
- Vizag Seaport Private Limited - India
- Thai Mozambique Logistica
- SN Aboitiz Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Timah Investasi Mineral - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Coal Association
- Central Electricity Authority - India
- Standard Chartered Bank - UAE
- Rio Tinto Coal - Australia
- Electricity Generating Authority of Thailand
- Bhushan Steel Limited - India
- Edison Trading Spa - Italy
- Therma Luzon, Inc, Philippines
- Power Finance Corporation Ltd., India
- Petron Corporation, Philippines
- Deloitte Consulting - India
- Rashtriya Ispat Nigam Limited - India
- Coastal Gujarat Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- Indonesian Coal Mining Association
- Australian Commodity Traders Exchange
- Cigading International Bulk Terminal - Indonesia
- Minerals Council of Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Tata Chemicals Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Interocean Group of Companies - India
- SMC Global Power, Philippines
- Intertek Mineral Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement - Thailand
- San Jose City I Power Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Merrill Lynch Commodities Europe
- Samtan Co., Ltd - South Korea
- SMG Consultants - Indonesia
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- Madhucon Powers Ltd - India
- Mintek Dendrill Indonesia
- Straits Asia Resources Limited - Singapore
- Medco Energi Mining Internasional
- Essar Steel Hazira Ltd - India
- Posco Energy - South Korea
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- Marubeni Corporation - India
- CNBM International Corporation - China
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- The Treasury - Australian Government
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Pendopo Energi Batubara - Indonesia
- Dalmia Cement Bharat India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- PTC India Limited - India
- VISA Power Limited - India
- Savvy Resources Ltd - HongKong
- Jaiprakash Power Ventures ltd
- Global Business Power Corporation, Philippines
- Indian Oil Corporation Limited
- Maheswari Brothers Coal Limited - India
- Grasim Industreis Ltd - India
- Larsen & Toubro Limited - India
- Bukit Baiduri Energy - Indonesia
- Eastern Coal Council - USA
- Heidelberg Cement - Germany
- Altura Mining Limited, Indonesia
- Toyota Tsusho Corporation, Japan
- Vedanta Resources Plc - India
- LBH Netherlands Bv - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Aditya Birla Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- McConnell Dowell - Australia
- Parliament of New Zealand
- Meenaskhi Energy Private Limited - India
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- Planning Commission, India
- ICICI Bank Limited - India
- Ceylon Electricity Board - Sri Lanka
- Ambuja Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Central Java Power - Indonesia
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Ministry of Finance - Indonesia
- Bharathi Cement Corporation - India
- Jindal Steel & Power Ltd - India
- London Commodity Brokers - England
- New Zealand Coal & Carbon
- Bangladesh Power Developement Board
- Commonwealth Bank - Australia
- Trasteel International SA, Italy
- South Luzon Thermal Energy Corporation
- Orica Mining Services - Indonesia
- Renaissance Capital - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Chamber of Mines of South Africa
- Krishnapatnam Port Company Ltd. - India
- Coalindo Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Indian Energy Exchange, India
- Xindia Steels Limited - India
- Singapore Mercantile Exchange
- Bukit Makmur.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
- Uttam Galva Steels Limited - India
- Borneo Indobara - Indonesia
- Bulk Trading Sa - Switzerland
- The State Trading Corporation of India Ltd
- PowerSource Philippines DevCo
- Kartika Selabumi Mining - Indonesia
- Latin American Coal - Colombia
- Iligan Light & Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- GVK Power & Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- Maharashtra Electricity Regulatory Commission - India
- White Energy Company Limited
- MS Steel International - UAE
- Global Coal Blending Company Limited - Australia
- IEA Clean Coal Centre - UK
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