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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, 15 November 17
MARKET INSIGHT - LINOS KOGEVINAS
For another week, oil seems to be the most volatile and interesting commodity to watch. In this segment we’ll look at some of the major facto ...
Tuesday, 14 November 17
COAL STOCKS RUN SHORT, CENTRE TO GET DAILY UPDATE ON STOCKS - DECCAN CHRONICLE
Facing a shortage of coal for thermal power generation in the country, the Central Electricity Authority (CEA) has issued guidelines for maintainin ...
Tuesday, 14 November 17
IN 2018, WORLD OIL DEMAND IS FORESEEN REACHING 1.51 MB/D - OPEC
Oil Market Highlights - OPEC
The OPEC Reference Basket averaged $55.50/b in October, gaining $2.06 over the previous month and reaching the hi ...
Monday, 13 November 17
THERMAL COAL PRICES WERE RELATIVELY UNCHANGED - DANIEL HYNES
Coal prices were broadly higher, driven by strong gains in the metallurgical coal market said Daniel Hynes, Senior Commodity Strategist at ANZ in h ...
Monday, 13 November 17
THIESS AWARDED $300M SANGATTA EXPANSION CONTRACT
Thiess has been awarded a $300 million contract by Kaltim Prima Coal (KPC) to expand operations at Sangatta coal mine in East Kalimantan, Indonesia ...
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Showing 1881 to 1885 news of total 6871 |
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- Directorate General of MIneral and Coal - Indonesia
- ICICI Bank Limited - India
- Romanian Commodities Exchange
- Petrochimia International Co. Ltd.- Taiwan
- PNOC Exploration Corporation - Philippines
- Rio Tinto Coal - Australia
- Australian Coal Association
- Manunggal Multi Energi - Indonesia
- ASAPP Information Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Java Power - Indonesia
- Simpson Spence & Young - Indonesia
- Edison Trading Spa - Italy
- Kohat Cement Company Ltd. - Pakistan
- Kapuas Tunggal Persada - Indonesia
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- LBH Netherlands Bv - Netherlands
- Electricity Generating Authority of Thailand
- Banpu Public Company Limited - Thailand
- Gujarat Electricity Regulatory Commission - India
- London Commodity Brokers - England
- IHS Mccloskey Coal Group - USA
- Bukit Baiduri Energy - Indonesia
- Agrawal Coal Company - India
- Bhoruka Overseas - Indonesia
- Mjunction Services Limited - India
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- Indonesian Coal Mining Association
- Neyveli Lignite Corporation Ltd, - India
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- The University of Queensland
- Videocon Industries ltd - India
- Standard Chartered Bank - UAE
- Wilmar Investment Holdings
- Petron Corporation, Philippines
- PTC India Limited - India
- Mintek Dendrill Indonesia
- Larsen & Toubro Limited - India
- Medco Energi Mining Internasional
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Kumho Petrochemical, South Korea
- Metalloyd Limited - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Samtan Co., Ltd - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Cigading International Bulk Terminal - Indonesia
- VISA Power Limited - India
- Trasteel International SA, Italy
- Goldman Sachs - Singapore
- Xindia Steels Limited - India
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- SMG Consultants - Indonesia
- The State Trading Corporation of India Ltd
- Sarangani Energy Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Coal and Oil Company - UAE
- Planning Commission, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GVK Power & Infra Limited - India
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- Jorong Barutama Greston.PT - Indonesia
- Minerals Council of Australia
- Global Business Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Jaiprakash Power Ventures ltd
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- McConnell Dowell - Australia
- Orica Australia Pty. Ltd.
- Savvy Resources Ltd - HongKong
- Thai Mozambique Logistica
- Carbofer General Trading SA - India
- Deloitte Consulting - India
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Meenaskhi Energy Private Limited - India
- Semirara Mining Corp, Philippines
- Electricity Authority, New Zealand
- Sojitz Corporation - Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Transport, Egypt
- Ministry of Mines - Canada
- Oldendorff Carriers - Singapore
- Wood Mackenzie - Singapore
- Economic Council, Georgia
- Maheswari Brothers Coal Limited - India
- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Borneo Indobara - Indonesia
- Parliament of New Zealand
- PowerSource Philippines DevCo
- Riau Bara Harum - Indonesia
- Independent Power Producers Association of India
- Georgia Ports Authority, United States
- Cement Manufacturers Association - India
- Siam City Cement PLC, Thailand
- Makarim & Taira - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kartika Selabumi Mining - Indonesia
- Vedanta Resources Plc - India
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- Bharathi Cement Corporation - India
- Eastern Energy - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tata Chemicals Ltd - India
- Madhucon Powers Ltd - India
- Antam Resourcindo - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Eastern Coal Council - USA
- Rashtriya Ispat Nigam Limited - India
- Commonwealth Bank - Australia
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Grasim Industreis Ltd - India
- Africa Commodities Group - South Africa
- GMR Energy Limited - India
- The Treasury - Australian Government
- Indogreen Group - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Lanco Infratech Ltd - India
- IEA Clean Coal Centre - UK
- Mercuria Energy - Indonesia
- Orica Mining Services - Indonesia
- CNBM International Corporation - China
- Star Paper Mills Limited - India
- Altura Mining Limited, Indonesia
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- Timah Investasi Mineral - Indoneisa
- Indian Oil Corporation Limited
- AsiaOL BioFuels Corp., Philippines
- Global Green Power PLC Corporation, Philippines
- Interocean Group of Companies - India
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- Intertek Mineral Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bulk Trading Sa - Switzerland
- Heidelberg Cement - Germany
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Ambuja Cements Ltd - India
- Barasentosa Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Iligan Light & Power Inc, Philippines
- White Energy Company Limited
- SN Aboitiz Power Inc, Philippines
- Sakthi Sugars Limited - India
- Parry Sugars Refinery, India
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Renaissance Capital - South Africa
- Central Electricity Authority - India
- Indika Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Alfred C Toepfer International GmbH - Germany
- Coalindo Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- South Luzon Thermal Energy Corporation
- Globalindo Alam Lestari - Indonesia
- Mercator Lines Limited - India
- SMC Global Power, Philippines
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Chamber of Mines of South Africa
- MS Steel International - UAE
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement - Thailand
- Port Waratah Coal Services - Australia
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Ministry of Finance - Indonesia
- Ceylon Electricity Board - Sri Lanka
- San Jose City I Power Corp, Philippines
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Thiess Contractors Indonesia
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- Essar Steel Hazira Ltd - India
- Kobexindo Tractors - Indoneisa
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- New Zealand Coal & Carbon
- GAC Shipping (India) Pvt Ltd
- Ind-Barath Power Infra Limited - India
- Bhushan Steel Limited - India
- Singapore Mercantile Exchange
- Baramulti Group, Indonesia
- Indian Energy Exchange, India
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