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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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Friday, 08 December 17
U.S. WEEKLY COAL PRODUCTION UP 11.6 PER CENT WEEK OVER WEEK, EIA DATA SHOWS
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 15.7 million short ton ...
Thursday, 07 December 17
SUPRAMAX: CHINA TO INDIA FIXING AT MID US$ 8000 - FEARNLEYS
Supramax
There has been quite some activity in the Atlantic basin this week, rates out of USG are still firm, trips to Emed gone through at low/m ...
Thursday, 07 December 17
THE ROLE OF COAL - AN INCONVENIENT TRUTH - BENJAMIN SPORTON, WCA
At the climate talks in Bonn, a global alliance to phase out coal was launched. This, along with other rhetoric about developments in the energy se ...
Wednesday, 06 December 17
SHIPPING MARKET INSIGHT - VASILIS VASILEIOU
Moving towards the end of 2017, we are facing a relatively slack period of business in the ship repair sector. The repair market has already mature ...
Tuesday, 05 December 17
DOES BITCOIN HAVE A FUTURE IN SHIPPING? - ALIBRA SHIPPING
Google now receives more search requests for Bitcoin than for Kim Kardashian, Beyoncé and Taylor Swift combined. This week, a shipping compa ...
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Showing 1856 to 1860 news of total 6871 |
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- Heidelberg Cement - Germany
- AsiaOL BioFuels Corp., Philippines
- Wood Mackenzie - Singapore
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- The Treasury - Australian Government
- Interocean Group of Companies - India
- GN Power Mariveles Coal Plant, Philippines
- Vizag Seaport Private Limited - India
- Xindia Steels Limited - India
- Attock Cement Pakistan Limited
- Parry Sugars Refinery, India
- Renaissance Capital - South Africa
- India Bulls Power Limited - India
- Cement Manufacturers Association - India
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Coal and Oil Company - UAE
- Billiton Holdings Pty Ltd - Australia
- Indika Energy - Indonesia
- Energy Development Corp, Philippines
- IHS Mccloskey Coal Group - USA
- SN Aboitiz Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Salva Resources Pvt Ltd - India
- Eastern Energy - Thailand
- Energy Link Ltd, New Zealand
- Agrawal Coal Company - India
- LBH Netherlands Bv - Netherlands
- IEA Clean Coal Centre - UK
- Parliament of New Zealand
- Georgia Ports Authority, United States
- Kobexindo Tractors - Indoneisa
- Timah Investasi Mineral - Indoneisa
- Oldendorff Carriers - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kepco SPC Power Corporation, Philippines
- Economic Council, Georgia
- Global Business Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- Australian Commodity Traders Exchange
- Bayan Resources Tbk. - Indonesia
- Meenaskhi Energy Private Limited - India
- Goldman Sachs - Singapore
- Sical Logistics Limited - India
- Ministry of Mines - Canada
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- The University of Queensland
- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
- European Bulk Services B.V. - Netherlands
- GMR Energy Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Intertek Mineral Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Standard Chartered Bank - UAE
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- Orica Australia Pty. Ltd.
- The State Trading Corporation of India Ltd
- ICICI Bank Limited - India
- Indo Tambangraya Megah - Indonesia
- Essar Steel Hazira Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Orica Mining Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- SMC Global Power, Philippines
- Ministry of Finance - Indonesia
- Sojitz Corporation - Japan
- OPG Power Generation Pvt Ltd - India
- Star Paper Mills Limited - India
- Bharathi Cement Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement - Thailand
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- Samtan Co., Ltd - South Korea
- Sindya Power Generating Company Private Ltd
- Antam Resourcindo - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Karbindo Abesyapradhi - Indoneisa
- Meralco Power Generation, Philippines
- PNOC Exploration Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Kideco Jaya Agung - Indonesia
- Central Electricity Authority - India
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Coastal Gujarat Power Limited - India
- Carbofer General Trading SA - India
- PowerSource Philippines DevCo
- Therma Luzon, Inc, Philippines
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- Singapore Mercantile Exchange
- Pendopo Energi Batubara - Indonesia
- Lanco Infratech Ltd - India
- Makarim & Taira - Indonesia
- Uttam Galva Steels Limited - India
- Independent Power Producers Association of India
- Port Waratah Coal Services - Australia
- Bhatia International Limited - India
- Petron Corporation, Philippines
- Coalindo Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- Malabar Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- Minerals Council of Australia
- Iligan Light & Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Anglo American - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Deloitte Consulting - India
- Australian Coal Association
- Videocon Industries ltd - India
- Marubeni Corporation - India
- San Jose City I Power Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- GVK Power & Infra Limited - India
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- Central Java Power - Indonesia
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Medco Energi Mining Internasional
- Trasteel International SA, Italy
- Kaltim Prima Coal - Indonesia
- Thai Mozambique Logistica
- Chettinad Cement Corporation Ltd - India
- Ministry of Transport, Egypt
- Maheswari Brothers Coal Limited - India
- Riau Bara Harum - Indonesia
- McConnell Dowell - Australia
- London Commodity Brokers - England
- Borneo Indobara - Indonesia
- White Energy Company Limited
- Commonwealth Bank - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- VISA Power Limited - India
- Planning Commission, India
- Ambuja Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- Tata Chemicals Ltd - India
- South Luzon Thermal Energy Corporation
- Jindal Steel & Power Ltd - India
- Posco Energy - South Korea
- CIMB Investment Bank - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Generating Authority of Thailand
- Jorong Barutama Greston.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Simpson Spence & Young - Indonesia
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- New Zealand Coal & Carbon
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Straits Asia Resources Limited - Singapore
- Dalmia Cement Bharat India
- International Coal Ventures Pvt Ltd - India
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- Thiess Contractors Indonesia
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