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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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Wednesday, 05 October 16
SHIPPING MARKET INSIGHT
On September 27th the OPEC petroleum and energy ministers arrived in Algeria to attend the International Energy Forum, which brought together produ ...
Monday, 03 October 16
THERMAL COAL PRICE SHOOTS UP AND MADE THEIR VERTICAL MOVE IN 5 YEARS; PRICE RALLY 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 ...
Monday, 03 October 16
DRY-BULK SHIPPING FREIGHTS SLIDE IN SOFTENING SPOT MARKET
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities decline slightly and ending in a negative note this past ...
Friday, 30 September 16
U.S. WEEKLY COAL OUTPUT FELL 2.3% - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 15.7 million short ton ...
Friday, 30 September 16
OPEC CUT SUPPORTS SLOW OIL RECOVERY, NOT STRONG REBOUND - FITCH
OPEC's oil production target announced this week signals the potential for greater co-ordination among its members, but the target itself is la ...
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Medco Energi Mining Internasional
- Orica Australia Pty. Ltd.
- Singapore Mercantile Exchange
- Trasteel International SA, Italy
- TeaM Sual Corporation - Philippines
- Coalindo Energy - Indonesia
- Xindia Steels Limited - India
- Marubeni Corporation - India
- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- Malabar Cements Ltd - India
- The University of Queensland
- Banpu Public Company Limited - Thailand
- Indian Energy Exchange, India
- Ministry of Finance - Indonesia
- Miang Besar Coal Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Indian Oil Corporation Limited
- GAC Shipping (India) Pvt Ltd
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- Holcim Trading Pte Ltd - Singapore
- Riau Bara Harum - Indonesia
- Australian Coal Association
- Eastern Coal Council - USA
- LBH Netherlands Bv - Netherlands
- Aboitiz Power Corporation - Philippines
- Mjunction Services Limited - India
- Iligan Light & Power Inc, Philippines
- Ministry of Mines - Canada
- Globalindo Alam Lestari - Indonesia
- MS Steel International - UAE
- Chamber of Mines of South Africa
- PNOC Exploration Corporation - Philippines
- Wilmar Investment Holdings
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- Kapuas Tunggal Persada - Indonesia
- Essar Steel Hazira Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Tata Chemicals Ltd - India
- Agrawal Coal Company - India
- European Bulk Services B.V. - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- Videocon Industries ltd - India
- Global Business Power Corporation, Philippines
- Cement Manufacturers Association - India
- Timah Investasi Mineral - Indoneisa
- Gujarat Sidhee Cement - India
- Bukit Baiduri Energy - Indonesia
- Altura Mining Limited, Indonesia
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- International Coal Ventures Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Samtan Co., Ltd - South Korea
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- South Luzon Thermal Energy Corporation
- Mercuria Energy - Indonesia
- Latin American Coal - Colombia
- Electricity Authority, New Zealand
- Parry Sugars Refinery, India
- Kepco SPC Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Thiess Contractors Indonesia
- San Jose City I Power Corp, Philippines
- Rio Tinto Coal - Australia
- PTC India Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Power Finance Corporation Ltd., India
- Directorate Of Revenue Intelligence - India
- Grasim Industreis Ltd - India
- Carbofer General Trading SA - India
- Merrill Lynch Commodities Europe
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- Barasentosa Lestari - Indonesia
- Eastern Energy - Thailand
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Metalloyd Limited - United Kingdom
- Mercator Lines Limited - India
- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- Planning Commission, India
- Bangladesh Power Developement Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ind-Barath Power Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Binh Thuan Hamico - Vietnam
- Deloitte Consulting - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Larsen & Toubro Limited - India
- Baramulti Group, Indonesia
- The Treasury - Australian Government
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- Asmin Koalindo Tuhup - Indonesia
- Parliament of New Zealand
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- Indogreen Group - Indonesia
- Indo Tambangraya Megah - Indonesia
- IHS Mccloskey Coal Group - USA
- CNBM International Corporation - China
- Siam City Cement PLC, Thailand
- AsiaOL BioFuels Corp., Philippines
- Indika Energy - Indonesia
- Intertek Mineral Services - Indonesia
- SMG Consultants - Indonesia
- Bukit Makmur.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Jorong Barutama Greston.PT - Indonesia
- Madhucon Powers Ltd - India
- Indonesian Coal Mining Association
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- Wood Mackenzie - Singapore
- PetroVietnam Power Coal Import and Supply Company
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- Petron Corporation, Philippines
- ICICI Bank Limited - India
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- Price Waterhouse Coopers - Russia
- Bhatia International Limited - India
- Sindya Power Generating Company Private Ltd
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- Simpson Spence & Young - Indonesia
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- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- Billiton Holdings Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- White Energy Company Limited
- Independent Power Producers Association of India
- Sinarmas Energy and Mining - Indonesia
- Antam Resourcindo - Indonesia
- Karaikal Port Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Borneo Indobara - Indonesia
- Vizag Seaport Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Goldman Sachs - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Star Paper Mills Limited - India
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- Africa Commodities Group - South Africa
- Vedanta Resources Plc - India
- PowerSource Philippines DevCo
- Economic Council, Georgia
- Formosa Plastics Group - Taiwan
- GMR Energy Limited - India
- Coastal Gujarat Power Limited - India
- Global Coal Blending Company Limited - Australia
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- India Bulls Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Bhushan Steel Limited - India
- Ambuja Cements Ltd - India
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- Ministry of Transport, Egypt
- Commonwealth Bank - Australia
- Edison Trading Spa - Italy
- SN Aboitiz Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- Bharathi Cement Corporation - India
- Semirara Mining Corp, Philippines
- GVK Power & Infra Limited - India
- Meralco Power Generation, Philippines
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- Sree Jayajothi Cements Limited - India
- Savvy Resources Ltd - HongKong
- VISA Power Limited - India
- Coal and Oil Company - UAE
- The State Trading Corporation of India Ltd
- Standard Chartered Bank - UAE
- Gujarat Mineral Development Corp Ltd - India
- CIMB Investment Bank - Malaysia
- Attock Cement Pakistan Limited
- London Commodity Brokers - England
- Thai Mozambique Logistica
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Sojitz Corporation - Japan
- Australian Commodity Traders Exchange
- ASAPP Information Group - India
- Sical Logistics Limited - India
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- McConnell Dowell - Australia
- Tamil Nadu electricity Board
- Karbindo Abesyapradhi - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Straits Asia Resources Limited - Singapore
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