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Tuesday, 07 November 17
DRY BULK SHIPPING: TAKE GOOD CARE OF THE RECOVERY SAYS PETER SAND
 Demand:
Even without much support from Brazilian iron ore exports during August, capesize rates went from $10,000 to $17,000 per day. In September, those gains were retained until Chinese Golden Week in early October reduced trip chartering interest, dampened demand and lowered the freight rates. Not dramatically, but noticeably, says Peter Sand, Chief Shipping Analyst at BIMCO.
Capesize ships have (as of 26 October) been in profitable territory (above $15,300 per day) since 11 August and panamaxes likewise, since 5 September (above $10,200 per day).
Handymax/supramax/ultramax owners and operators who fixed their ships after 21 August, have also seen freight rates covering, not just operational expenditures (OPEX) but also capital expenditures (CAPEX), leaving a slim return on investment. This has only happened three times- for more than two days in a row – in the past two years. Finally, the handy size segment has, for the first time since April 2014, reached a freight rate level above $9,000 per day.
According to Peter Sand, this ongoing recovery is still in a “fragile” state – demand has increased but so has supply. This means only a slight fundamental market improvement. The return to permanent profitable freight rates is still way off. The transport demand for dry bulk cargoes in Q1-2018 is considerably lower than the volumes transported in Q4-2017, and that’s the first hurdle to cross. Maintaining slow steaming is another prerequisite to hold onto the gains that have been achieved.
At the centre of dry bulk demand, as always, is China; growing its seaborne imports of coal during the first nine months of 2017 by 18.7%, and its seaborne imports of iron ore during the first eight months, by 6.9% year-on-year. In total, this is a demand growth of 79m tonnes (27 + 52 respectively) for the two commodities year-to-date. Setting a new world record in steel production for the month of August of 74.6m tonnes, resulted in total growth of 5.6% for eight months’ production in 2017, compared with the same period last year.
Another record was reached in September, when Chinese iron ore imports exceeded 100m tonnes for the first time.
While this is much needed by the dry bulk shipping industry to get out of the doldrums of recent years, there may be a limit as to how far this can go. Imagine if steel production stalls, then iron ore imports are likely only to grow at the expense of domestically mined ore.
BIMCO calculates that substitution of low-quality, domestically mined iron ore in China, for imported high-quality iron ore from Brazil or Australia, would have increased imports by 17m tonnes per month in the first eight months of 2017.
Regardless of recent reports, about one in three Chinese iron ore mines being at risk of losing their mining licenses due to environmental issues, the output from Chinese iron ore mines is still up by 5% in the first eight months, year-on-year. One of the key risk elements in the equation is actual steel consumption in China.
In addition to the strong growth that we have seen into China, US coal exports have certainly added to the panamax and capesize demand in the Atlantic since Q4 2016.
Peter Sand further noted in his report, from November 2016 to July 2017, we have seen a monthly average of 6.4m tonnes of coal being exported from the US to a vast number of destinations like Japan, Egypt, Turkey, South Korea, China, Guatemala, India, Spain and Morocco. This is up by 61% versus the same nine months of the year before. Key export ports, mostly on the Atlantic side, are Hampton Roads and Baltimore, where panamax and capesize ships are used to export 60% of the total volume. In the US Gulf, Mobile dominates exports with shipments of coal in panamax. On the Pacific side, US coal exports are handled via Vancouver.
The total tonne miles adjusted demand growth rate in 2017, is forecast to be 3.9%, the highest in three years.
Supply:
Commenting on supply side, Peter Sand, Chief Shipping Analyst at BIMCO said, the delivery pace has reduced significantly since H1-2017, but so has demolition activity. During H1-2017, 28m DWT was delivered, while 8.5m DWT was demolished. Whereas Q3-2017 has seen only 6m DWT delivered, and 3.6m DWT permanently leaving the active fleet.
Demolition of handymax tonnage, has been dominant this year – a natural reaction from owners operating in that segment, which has seen fleet growth around 5% pa for some time now, clearly outpacing all the other dry bulk segments.
Contracting activity for the year so far, has as expected, gone up from the extraordinarily low levels that we experienced in 2016. While Q1 2017 was still quiet in terms of actual orders, newbuild interest was growing in the background. The larger segments are popular. Panamax and very large ore carriers (VLOC) account for 15 out of the 17m DWT ordered in total, year- to- date (until 2 October). It’s worth noting that many of the VLOCs have been ordered against a long-term charter, most likely replacing existing long-term chartered VLOCs when they are retired. Later in October, another 5 VLOCs were ordered.
For the first nine months of the year, the dry bulk fleet has grown by 2.7%, already a three-year high. BIMCO expects the fleet will end up growing by 3.1% to 16m DWT as demolition expectations are lower than the previously anticipated 19m DWT.
In the future, expected fleet growth remains quite low based on the ships on order now – and does not include orders not yet placed. 2018 could see the fleet grow by less than 1%.
Outlook:
Should we look no further than China when it comes to dry bulk market demand?
No, is the short answer – at least not in relation to steel production ingredients – iron ore and coking coal. In 2008, global iron ore imports were at 841m tonnes, out of which China took 436m tonnes (52%). In 2017, the global seaborne market is at 1,478m tonnes, out of which China takes 1,075m tonnes (73%).
For thermal coal, a few other nations are worth taking note of, in addition to China. Those are India, South Korea and Malaysia. Additionally, the US seems to have re-established itself as an option in the seaborne coking coal market, providing long distance voyages into Asia. Ever since the outbreak of the global financial crisis in 2008, the dry bulk market has only had one growth area: Asia. All other regions of the world contribute with steady or declining imports.
Note that European imports of:
- Iron ore are down from 140m tonnes in 2008 to 117m tonnes in 2017
- Coking coal are down from 59m tonnes in 2008 to 46m tonnes in 2017
- Thermal coal are down from 156m tonnes in 2008 to 128m tonnes in 2017.
For the current time and Q4 2017, selected seaborne trades from major exporters including iron ore, coal, grains, soya and steel products are expected to grow by 3.4% from Q3 2017 (source: SSY). Whereas, grain peaks in Q1 and Q3, and soya in Q2, the seaborne trading of steel products, coking coal, thermal coal and iron ore will all peak in Q4.
After a bit of a downturn in the market during the first half of October (which was expected), demand lifted freight rates again. It’s time to make the most of it, before seasonal low demand in Q1-2018 get the upper hand and push freight rates down Peter Sand, Chief Shipping Analyst at BIMCO concluded.
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Wednesday, 13 December 17
REFINED COAL HAS MADE UP NEARLY ONE-FIFTH OF COAL-FIRED POWER GENERATION SO FAR IN 2017 - EIA
The U.S. power sector consumption of coal is increasingly shifting to refined coal, even as coal-fired electricity generation decreases. Use of ref ...
Wednesday, 13 December 17
DEMAND FOR THERMAL COAL LOOKED RELATIVELY ROBUST - DANIEL HYNES
Coal prices were a touch higher. Demand for thermal coal looked relatively robust, after reports continued to surface that Chinese authorities have ...
Wednesday, 13 December 17
SHIPPING MARKET INSIGHT - GEORGE PANAGOPOULOS
As another year is coming to an end and much has been already written about the positive reversal in the dry bulk market, we think it is interestin ...
Monday, 11 December 17
INDIA CONSUMERS ARE SAID TO BE DESPERATELY SEEKING CARGOES - DANIEL HYNES
Coal markets were stronger, as strong demand outside China continues to spur buying said Daniel Hynes, Senior Commodity Strategist at ANZ.
Acc ...
Monday, 11 December 17
CAPESIZE FFA MARKET LOOKING PROMISING MOVING FORWARD - FIS
Capesize
Another very promising day for the big ships as rates continued to firm in both oceans and the paper market ate into the backwardation s ...
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Showing 1851 to 1855 news of total 6871 |
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- Electricity Generating Authority of Thailand
- Semirara Mining Corp, Philippines
- Power Finance Corporation Ltd., India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Marubeni Corporation - India
- Bulk Trading Sa - Switzerland
- Aditya Birla Group - India
- Semirara Mining and Power Corporation, Philippines
- McConnell Dowell - Australia
- Energy Link Ltd, New Zealand
- Ambuja Cements Ltd - India
- Indika Energy - Indonesia
- The University of Queensland
- Indian Energy Exchange, India
- Sakthi Sugars Limited - India
- Deloitte Consulting - India
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- Indonesian Coal Mining Association
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Minerals Council of Australia
- New Zealand Coal & Carbon
- SMG Consultants - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- San Jose City I Power Corp, Philippines
- Cement Manufacturers Association - India
- Medco Energi Mining Internasional
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- Ministry of Mines - Canada
- Electricity Authority, New Zealand
- Goldman Sachs - Singapore
- Holcim Trading Pte Ltd - Singapore
- Billiton Holdings Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Intertek Mineral Services - Indonesia
- Madhucon Powers Ltd - India
- White Energy Company Limited
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- Directorate General of MIneral and Coal - Indonesia
- Global Business Power Corporation, Philippines
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- Agrawal Coal Company - India
- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- Meenaskhi Energy Private Limited - India
- Chettinad Cement Corporation Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Baramulti Group, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Banpu Public Company Limited - Thailand
- London Commodity Brokers - England
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- MS Steel International - UAE
- Coalindo Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dalmia Cement Bharat India
- Pendopo Energi Batubara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Ceylon Electricity Board - Sri Lanka
- Petron Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Malabar Cements Ltd - India
- Grasim Industreis Ltd - India
- Therma Luzon, Inc, Philippines
- Australian Coal Association
- Kohat Cement Company Ltd. - Pakistan
- Petrochimia International Co. Ltd.- Taiwan
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- Siam City Cement - Thailand
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- The Treasury - Australian Government
- Jaiprakash Power Ventures ltd
- Indian Oil Corporation Limited
- Planning Commission, India
- Indo Tambangraya Megah - Indonesia
- Larsen & Toubro Limited - India
- Indogreen Group - Indonesia
- Independent Power Producers Association of India
- PNOC Exploration Corporation - Philippines
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- Barasentosa Lestari - Indonesia
- Energy Development Corp, Philippines
- Xindia Steels Limited - India
- Tata Chemicals Ltd - India
- Posco Energy - South Korea
- Karaikal Port Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Kaltim Prima Coal - Indonesia
- Bharathi Cement Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tamil Nadu electricity Board
- Latin American Coal - Colombia
- Krishnapatnam Port Company Ltd. - India
- Kepco SPC Power Corporation, Philippines
- Star Paper Mills Limited - India
- Kobexindo Tractors - Indoneisa
- Wood Mackenzie - Singapore
- Sarangani Energy Corporation, Philippines
- Wilmar Investment Holdings
- OPG Power Generation Pvt Ltd - India
- Heidelberg Cement - Germany
- Ind-Barath Power Infra Limited - India
- Carbofer General Trading SA - India
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Jindal Steel & Power Ltd - India
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Gujarat Electricity Regulatory Commission - India
- PTC India Limited - India
- Ministry of Transport, Egypt
- Thai Mozambique Logistica
- Romanian Commodities Exchange
- Binh Thuan Hamico - Vietnam
- Oldendorff Carriers - Singapore
- European Bulk Services B.V. - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Interocean Group of Companies - India
- Kalimantan Lumbung Energi - Indonesia
- CIMB Investment Bank - Malaysia
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Videocon Industries ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Price Waterhouse Coopers - Russia
- ICICI Bank Limited - India
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
- Trasteel International SA, Italy
- Timah Investasi Mineral - Indoneisa
- Sree Jayajothi Cements Limited - India
- Parliament of New Zealand
- Eastern Coal Council - USA
- Commonwealth Bank - Australia
- Anglo American - United Kingdom
- Merrill Lynch Commodities Europe
- India Bulls Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Parry Sugars Refinery, India
- Altura Mining Limited, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Georgia Ports Authority, United States
- Vedanta Resources Plc - India
- Bayan Resources Tbk. - Indonesia
- Lanco Infratech Ltd - India
- Bhatia International Limited - India
- Mercuria Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- Economic Council, Georgia
- International Coal Ventures Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Chamber of Mines of South Africa
- South Luzon Thermal Energy Corporation
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- Mjunction Services Limited - India
- Kapuas Tunggal Persada - Indonesia
- Edison Trading Spa - Italy
- Essar Steel Hazira Ltd - India
- Global Coal Blending Company Limited - Australia
- CNBM International Corporation - China
- Riau Bara Harum - Indonesia
- Siam City Cement PLC, Thailand
- Maharashtra Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Metalloyd Limited - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Mining Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Sinarmas Energy and Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vizag Seaport Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Borneo Indobara - Indonesia
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