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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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Tuesday, 07 November 17
MECHEL SIGNED LONG-TERM COAL SUPPLY CONTRACT WITH ITOCHU CORPORATION
Mechel PAO a leading Russian mining and metals company, reports signing a framework agreement with a major Japanese universal trading company Itoch ...
Tuesday, 07 November 17
COAL MARKETS WERE RELATIVELY BUOYANT - DANIEL HYNES
Coal markets were relatively buoyant. Metallurgical coal prices were supported by the stronger steel and iron ore prices, says Daniel Hynes, Senior ...
Tuesday, 07 November 17
PROSPERITY AND WINTER WARMTH REMAIN PARAMOUNT IN CHINA - JEFFREY LANDSBERG
Chinese officials announced recently that 580 gigawatts of coal-derived electricity generation capacity has completed ultra-low emissions reform as ...
Monday, 06 November 17
COAL SHORTAGE HURTS INDIA'S HINDALCO AND VEDANTA SAYS BUSINESS STANDARD
Aluminium smelter operations of Vedanta and Hindalco are at risk of turning unviable due to a coal crunch.
According to Business Standard an I ...
Monday, 06 November 17
MARINE BUNKER EXCHANGE EXPECTS BUNKER PRICES WILL CONTINUE UPWARD TREND NEXT WEEK
World fuel indexes rose during the week, supported by main oil producers’ statements about possible extension of oil production cut agreement ...
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Showing 1891 to 1895 news of total 6871 |
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- Parliament of New Zealand
- Maheswari Brothers Coal Limited - India
- Meralco Power Generation, Philippines
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- SN Aboitiz Power Inc, Philippines
- The University of Queensland
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Binh Thuan Hamico - Vietnam
- TeaM Sual Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- Oldendorff Carriers - Singapore
- Coastal Gujarat Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Agrawal Coal Company - India
- Australian Coal Association
- Georgia Ports Authority, United States
- SMG Consultants - Indonesia
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- The State Trading Corporation of India Ltd
- Sree Jayajothi Cements Limited - India
- Pendopo Energi Batubara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Romanian Commodities Exchange
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- Parry Sugars Refinery, India
- Indonesian Coal Mining Association
- Essar Steel Hazira Ltd - India
- San Jose City I Power Corp, Philippines
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- IHS Mccloskey Coal Group - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Heidelberg Cement - Germany
- Sarangani Energy Corporation, Philippines
- Medco Energi Mining Internasional
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Star Paper Mills Limited - India
- Therma Luzon, Inc, Philippines
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- SMC Global Power, Philippines
- Indogreen Group - Indonesia
- Gujarat Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Metalloyd Limited - United Kingdom
- Standard Chartered Bank - UAE
- Iligan Light & Power Inc, Philippines
- Ministry of Finance - Indonesia
- Kobexindo Tractors - Indoneisa
- Bangladesh Power Developement Board
- Timah Investasi Mineral - Indoneisa
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- Mercator Lines Limited - India
- International Coal Ventures Pvt Ltd - India
- India Bulls Power Limited - India
- Australian Commodity Traders Exchange
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- Attock Cement Pakistan Limited
- Bayan Resources Tbk. - Indonesia
- Economic Council, Georgia
- Global Green Power PLC Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Interocean Group of Companies - India
- Petrochimia International Co. Ltd.- Taiwan
- Merrill Lynch Commodities Europe
- Central Java Power - Indonesia
- PNOC Exploration Corporation - Philippines
- Vedanta Resources Plc - India
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- Grasim Industreis Ltd - India
- Global Coal Blending Company Limited - Australia
- Bharathi Cement Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PTC India Limited - India
- Siam City Cement PLC, Thailand
- McConnell Dowell - Australia
- CIMB Investment Bank - Malaysia
- Anglo American - United Kingdom
- Indika Energy - Indonesia
- Indian Oil Corporation Limited
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- Edison Trading Spa - Italy
- Aditya Birla Group - India
- Sojitz Corporation - Japan
- Jaiprakash Power Ventures ltd
- Vijayanagar Sugar Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Madhucon Powers Ltd - India
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- South Luzon Thermal Energy Corporation
- PetroVietnam Power Coal Import and Supply Company
- Bhushan Steel Limited - India
- Carbofer General Trading SA - India
- Siam City Cement - Thailand
- MS Steel International - UAE
- Orica Australia Pty. Ltd.
- Asmin Koalindo Tuhup - Indonesia
- Indo Tambangraya Megah - Indonesia
- Videocon Industries ltd - India
- Planning Commission, India
- Ministry of Mines - Canada
- GMR Energy Limited - India
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Ind-Barath Power Infra Limited - India
- Global Business Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Latin American Coal - Colombia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Antam Resourcindo - Indonesia
- Makarim & Taira - Indonesia
- Xindia Steels Limited - India
- Electricity Generating Authority of Thailand
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bukit Makmur.PT - Indonesia
- Africa Commodities Group - South Africa
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- Lanco Infratech Ltd - India
- Sinarmas Energy and Mining - Indonesia
- GVK Power & Infra Limited - India
- Savvy Resources Ltd - HongKong
- Borneo Indobara - Indonesia
- Bhatia International Limited - India
- The Treasury - Australian Government
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- PowerSource Philippines DevCo
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Manunggal Multi Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Coalindo Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Aboitiz Power Corporation - Philippines
- Marubeni Corporation - India
- Dalmia Cement Bharat India
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- Barasentosa Lestari - Indonesia
- Wood Mackenzie - Singapore
- Vizag Seaport Private Limited - India
- Thai Mozambique Logistica
- Krishnapatnam Port Company Ltd. - India
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Energy Development Corp, Philippines
- Energy Link Ltd, New Zealand
- Eastern Energy - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Independent Power Producers Association of India
- Minerals Council of Australia
- Deloitte Consulting - India
- Petron Corporation, Philippines
- Sical Logistics Limited - India
- Bukit Baiduri Energy - Indonesia
- Mintek Dendrill Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kumho Petrochemical, South Korea
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- Price Waterhouse Coopers - Russia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Coal Council - USA
- Tamil Nadu electricity Board
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