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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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Tuesday, 23 August 16
4200 GAR COAL INDEX CLIMB 15.96% YEAR TO DATE - CS COAL INDEX
COALspot.com: Average 4200 GAR coal index of Indonesian origin rose 1.65 % week over week to averaging $31.46 per ton this past week, shows CS (i) ...
Tuesday, 23 August 16
KOMIPO TO IMPORT 250K OF 5,700 KCAL/KG NAR COAL FOR Q4' 16
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a new tender for total 250,000 Metric Tons of Bituminous Coal for ...
Monday, 22 August 16
INDONESIA'S CS 5000 GAR THERMAL COAL INDEX, ROSE TO A 57-WEEKS HIGH TO TOP $43.47 A TON
COALspot.com: Indonesia’s CS 5000 GAR thermal coal index, rose to a 57-weeks high to top $US43. 47 a ton in the latest week, extending a 18-w ...
Monday, 22 August 16
THE FREIGHT MARKET WAS STEADY THIS PAST WEEK; CAPE INDEX DECLINE 5.38%
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose and ending in a positive note this past week except ...
Friday, 19 August 16
U.S. YEAR-TO-DATE COAL PRODUCTION TOTALLED AN ESTIMATED 421.6 MMST
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 15.8 million short ton ...
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- Global Green Power PLC Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Malabar Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- Sree Jayajothi Cements Limited - India
- Aditya Birla Group - India
- Binh Thuan Hamico - Vietnam
- Ministry of Transport, Egypt
- Rashtriya Ispat Nigam Limited - India
- PNOC Exploration Corporation - Philippines
- Mercuria Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Georgia Ports Authority, United States
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Indian Energy Exchange, India
- Metalloyd Limited - United Kingdom
- Central Electricity Authority - India
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Antam Resourcindo - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- GMR Energy Limited - India
- Intertek Mineral Services - Indonesia
- The Treasury - Australian Government
- Sical Logistics Limited - India
- Power Finance Corporation Ltd., India
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ind-Barath Power Infra Limited - India
- Anglo American - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- IHS Mccloskey Coal Group - USA
- Banpu Public Company Limited - Thailand
- Carbofer General Trading SA - India
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Salva Resources Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Billiton Holdings Pty Ltd - Australia
- McConnell Dowell - Australia
- GN Power Mariveles Coal Plant, Philippines
- Jindal Steel & Power Ltd - India
- Riau Bara Harum - Indonesia
- Chamber of Mines of South Africa
- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- Star Paper Mills Limited - India
- Kideco Jaya Agung - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Lanco Infratech Ltd - India
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- Simpson Spence & Young - Indonesia
- New Zealand Coal & Carbon
- SMG Consultants - Indonesia
- PTC India Limited - India
- India Bulls Power Limited - India
- SMC Global Power, Philippines
- Electricity Authority, New Zealand
- Bhatia International Limited - India
- ASAPP Information Group - India
- Singapore Mercantile Exchange
- Jaiprakash Power Ventures ltd
- Indika Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Holcim Trading Pte Ltd - Singapore
- Borneo Indobara - Indonesia
- Economic Council, Georgia
- Thiess Contractors Indonesia
- Uttam Galva Steels Limited - India
- Petron Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Straits Asia Resources Limited - Singapore
- International Coal Ventures Pvt Ltd - India
- Rio Tinto Coal - Australia
- Indian Oil Corporation Limited
- Kobexindo Tractors - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Marubeni Corporation - India
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bulk Trading Sa - Switzerland
- Tamil Nadu electricity Board
- Gujarat Mineral Development Corp Ltd - India
- Trasteel International SA, Italy
- Kartika Selabumi Mining - Indonesia
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- Sakthi Sugars Limited - India
- GVK Power & Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Mercator Lines Limited - India
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- Heidelberg Cement - Germany
- Kaltim Prima Coal - Indonesia
- Medco Energi Mining Internasional
- Videocon Industries ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Minerals Council of Australia
- Australian Commodity Traders Exchange
- Semirara Mining Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Oldendorff Carriers - Singapore
- Interocean Group of Companies - India
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- Port Waratah Coal Services - Australia
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- Formosa Plastics Group - Taiwan
- Cigading International Bulk Terminal - Indonesia
- Latin American Coal - Colombia
- Agrawal Coal Company - India
- Jorong Barutama Greston.PT - Indonesia
- Mintek Dendrill Indonesia
- Barasentosa Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Bharathi Cement Corporation - India
- Samtan Co., Ltd - South Korea
- Renaissance Capital - South Africa
- Australian Coal Association
- Romanian Commodities Exchange
- Dalmia Cement Bharat India
- Therma Luzon, Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Standard Chartered Bank - UAE
- Coal and Oil Company - UAE
- Toyota Tsusho Corporation, Japan
- IEA Clean Coal Centre - UK
- Kumho Petrochemical, South Korea
- Merrill Lynch Commodities Europe
- Sojitz Corporation - Japan
- LBH Netherlands Bv - Netherlands
- Sarangani Energy Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Coastal Gujarat Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- Sindya Power Generating Company Private Ltd
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- San Jose City I Power Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Siam City Cement - Thailand
- Energy Development Corp, Philippines
- Price Waterhouse Coopers - Russia
- Globalindo Alam Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Planning Commission, India
- VISA Power Limited - India
- Meralco Power Generation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Kohat Cement Company Ltd. - Pakistan
- Baramulti Group, Indonesia
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
- Makarim & Taira - Indonesia
- Posco Energy - South Korea
- Orica Mining Services - Indonesia
- Wilmar Investment Holdings
- PowerSource Philippines DevCo
- Eastern Coal Council - USA
- Timah Investasi Mineral - Indoneisa
- Ministry of Finance - Indonesia
- Bangladesh Power Developement Board
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- TeaM Sual Corporation - Philippines
- Indonesian Coal Mining Association
- Aboitiz Power Corporation - Philippines
- The University of Queensland
- Bhushan Steel Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mjunction Services Limited - India
- Deloitte Consulting - India
- Independent Power Producers Association of India
- Asmin Koalindo Tuhup - Indonesia
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- White Energy Company Limited
- Wood Mackenzie - Singapore
- Cement Manufacturers Association - India
- Vedanta Resources Plc - India
- Offshore Bulk Terminal Pte Ltd, Singapore
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