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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, 19 July 16
INDONESIAN THERMAL COAL INDEXES CONTINUALLY FIRM UP ON ROBUST BUYING INTEREST - CS COAL INDEX
COALspot.com: Average 5000 GAR coal index of Indonesian origin rose One percent week over week to averaging $40.38 per ton this past week, shows CS ...
Monday, 18 July 16
FROM PIT TO PORT: DRY BULK NEEDS A NEW PATH TO PROFITABILITY - TOC EUROPE
During the golden years for commodities, from 2005 to 2014, high demand and big profit margins pushed companies to produce more and more, sacrifici ...
Monday, 18 July 16
BALTIC DRY INDEX REMAIN FIRM, UP BY 5.97 WEEK OVER WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continued to remain firm with all segments ending in posi ...
Friday, 15 July 16
US COAL PRODUCTION DOWN 8.4% WEEK-OVER-WEEK
COALspot.com – U.S, world’s second largest coal producers has produced approximately totalled an estimated 12.9 million short tons (mms ...
Thursday, 14 July 16
SHIPPING'S HALF YEAR REPORT - 'MUST DO BETTER' - CLARKSONS
It’s the time of year, with the school holidays and end of term approaching, that many pupils will nervously take home their school reports t ...
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- Indian Oil Corporation Limited
- Anglo American - United Kingdom
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Metalloyd Limited - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Malabar Cements Ltd - India
- Chamber of Mines of South Africa
- Kalimantan Lumbung Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Borneo Indobara - Indonesia
- ASAPP Information Group - India
- International Coal Ventures Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Wood Mackenzie - Singapore
- GAC Shipping (India) Pvt Ltd
- Formosa Plastics Group - Taiwan
- Bharathi Cement Corporation - India
- The State Trading Corporation of India Ltd
- Bangladesh Power Developement Board
- Coal and Oil Company - UAE
- Power Finance Corporation Ltd., India
- Heidelberg Cement - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Authority, New Zealand
- Makarim & Taira - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Mercuria Energy - Indonesia
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- Economic Council, Georgia
- Banpu Public Company Limited - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Star Paper Mills Limited - India
- Sinarmas Energy and Mining - Indonesia
- PowerSource Philippines DevCo
- Maheswari Brothers Coal Limited - India
- The Treasury - Australian Government
- Madhucon Powers Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- GVK Power & Infra Limited - India
- SMC Global Power, Philippines
- Holcim Trading Pte Ltd - Singapore
- Bukit Baiduri Energy - Indonesia
- Agrawal Coal Company - India
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Australian Commodity Traders Exchange
- Petron Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Indika Energy - Indonesia
- Singapore Mercantile Exchange
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- Ceylon Electricity Board - Sri Lanka
- Parliament of New Zealand
- Tamil Nadu electricity Board
- Krishnapatnam Port Company Ltd. - India
- Port Waratah Coal Services - Australia
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- Mjunction Services Limited - India
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- Savvy Resources Ltd - HongKong
- Aboitiz Power Corporation - Philippines
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- Therma Luzon, Inc, Philippines
- Price Waterhouse Coopers - Russia
- Orica Mining Services - Indonesia
- Meralco Power Generation, Philippines
- Semirara Mining Corp, Philippines
- Gujarat Sidhee Cement - India
- Bahari Cakrawala Sebuku - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Central Java Power - Indonesia
- Commonwealth Bank - Australia
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- Tata Chemicals Ltd - India
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement - Thailand
- CNBM International Corporation - China
- Wilmar Investment Holdings
- Bhoruka Overseas - Indonesia
- European Bulk Services B.V. - Netherlands
- Romanian Commodities Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Sree Jayajothi Cements Limited - India
- Kumho Petrochemical, South Korea
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- Simpson Spence & Young - Indonesia
- Edison Trading Spa - Italy
- Jorong Barutama Greston.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- MS Steel International - UAE
- Indian Energy Exchange, India
- Directorate Of Revenue Intelligence - India
- Orica Australia Pty. Ltd.
- India Bulls Power Limited - India
- Ministry of Transport, Egypt
- Global Business Power Corporation, Philippines
- Eastern Energy - Thailand
- IHS Mccloskey Coal Group - USA
- Salva Resources Pvt Ltd - India
- Energy Development Corp, Philippines
- Dalmia Cement Bharat India
- Energy Link Ltd, New Zealand
- Trasteel International SA, Italy
- Sical Logistics Limited - India
- Karbindo Abesyapradhi - Indoneisa
- IEA Clean Coal Centre - UK
- GMR Energy Limited - India
- Thiess Contractors Indonesia
- Parry Sugars Refinery, India
- Ambuja Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Sarangani Energy Corporation, Philippines
- Mercator Lines Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Offshore Bulk Terminal Pte Ltd, Singapore
- ICICI Bank Limited - India
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Standard Chartered Bank - UAE
- Sakthi Sugars Limited - India
- Medco Energi Mining Internasional
- Iligan Light & Power Inc, Philippines
- Minerals Council of Australia
- PNOC Exploration Corporation - Philippines
- Merrill Lynch Commodities Europe
- Uttam Galva Steels Limited - India
- San Jose City I Power Corp, Philippines
- Indonesian Coal Mining Association
- Xindia Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- New Zealand Coal & Carbon
- Timah Investasi Mineral - Indoneisa
- Chettinad Cement Corporation Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- Kepco SPC Power Corporation, Philippines
- Planning Commission, India
- Central Electricity Authority - India
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Marubeni Corporation - India
- SMG Consultants - Indonesia
- Jindal Steel & Power Ltd - India
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Coalindo Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- Africa Commodities Group - South Africa
- Gujarat Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bayan Resources Tbk. - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Australian Coal Association
- Kapuas Tunggal Persada - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kobexindo Tractors - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- PTC India Limited - India
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- Neyveli Lignite Corporation Ltd, - India
- Manunggal Multi Energi - Indonesia
- Altura Mining Limited, Indonesia
- Independent Power Producers Association of India
- Binh Thuan Hamico - Vietnam
- LBH Netherlands Bv - Netherlands
- Ministry of Mines - Canada
- Aditya Birla Group - India
- Vedanta Resources Plc - India
- Jaiprakash Power Ventures ltd
- Georgia Ports Authority, United States
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
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