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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, 27 October 17
U.S WEEKLY COAL PRODUCTION FLAT WEEK OVER WEEK - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 14.9 million short tons ...
Thursday, 26 October 17
CYBER COVER FOR E-BILLS - PHILIP STEPHENSON
KNOWLEDGE TO ELEVATE
Increasingly popular electronic bills of lading are, by their nature, susceptible to the risk of cyber attack. Here, Stan ...
Thursday, 26 October 17
INDO TO CHINA ROUNDS SUPRAS ACHIEVING AROUND HIGH $14000 - FEARNLEYS
Supramax
By mid-week the market has been relatively quiet in the Pacific basin as well, but still some healthy rates being achieved on the differ ...
Thursday, 26 October 17
STRONG SIGNAL FOR AUSTRALIAN COAL DEMAND - GREG EVANS
The International Energy Agency’s Southeast Asia Energy Outlook report, released today, presents a positive outlook for Australian coal produ ...
Wednesday, 25 October 17
COAL MARKETS REMAINED SUBDUED - DANIEL HYNES
Coal markets remained subdued.
Daniel Hynes, Senior Commodity Strategist at ANZ, Coking coal prices were unchanged amid an absence of fresh of ...
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Showing 1901 to 1905 news of total 6871 |
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- ASAPP Information Group - India
- Toyota Tsusho Corporation, Japan
- Wood Mackenzie - Singapore
- Carbofer General Trading SA - India
- Global Business Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Ministry of Mines - Canada
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Star Paper Mills Limited - India
- Timah Investasi Mineral - Indoneisa
- Posco Energy - South Korea
- The State Trading Corporation of India Ltd
- Meenaskhi Energy Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Sarangani Energy Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Simpson Spence & Young - Indonesia
- The Treasury - Australian Government
- The University of Queensland
- Mintek Dendrill Indonesia
- Meralco Power Generation, Philippines
- MS Steel International - UAE
- Planning Commission, India
- Dalmia Cement Bharat India
- Bayan Resources Tbk. - Indonesia
- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Malabar Cements Ltd - India
- Kumho Petrochemical, South Korea
- Independent Power Producers Association of India
- PowerSource Philippines DevCo
- Karaikal Port Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wilmar Investment Holdings
- Attock Cement Pakistan Limited
- Georgia Ports Authority, United States
- Medco Energi Mining Internasional
- Ceylon Electricity Board - Sri Lanka
- Leighton Contractors Pty Ltd - Australia
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- SN Aboitiz Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Manunggal Multi Energi - Indonesia
- Bangladesh Power Developement Board
- Jindal Steel & Power Ltd - India
- Parliament of New Zealand
- Siam City Cement - Thailand
- Deloitte Consulting - India
- Mjunction Services Limited - India
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- Miang Besar Coal Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- Singapore Mercantile Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Commonwealth Bank - Australia
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- SMG Consultants - Indonesia
- Vizag Seaport Private Limited - India
- GVK Power & Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Altura Mining Limited, Indonesia
- Energy Development Corp, Philippines
- Sical Logistics Limited - India
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Kepco SPC Power Corporation, Philippines
- Indogreen Group - Indonesia
- SMC Global Power, Philippines
- Barasentosa Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Thiess Contractors Indonesia
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Eastern Coal Council - USA
- Semirara Mining Corp, Philippines
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Tamil Nadu electricity Board
- Marubeni Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Kideco Jaya Agung - Indonesia
- Semirara Mining and Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- San Jose City I Power Corp, Philippines
- Vedanta Resources Plc - India
- Jaiprakash Power Ventures ltd
- Asmin Koalindo Tuhup - Indonesia
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Iligan Light & Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- European Bulk Services B.V. - Netherlands
- Rio Tinto Coal - Australia
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- Anglo American - United Kingdom
- Latin American Coal - Colombia
- Directorate General of MIneral and Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- VISA Power Limited - India
- Oldendorff Carriers - Singapore
- Globalindo Alam Lestari - Indonesia
- Trasteel International SA, Italy
- Electricity Generating Authority of Thailand
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- PTC India Limited - India
- Aboitiz Power Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Mercuria Energy - Indonesia
- Agrawal Coal Company - India
- Tata Chemicals Ltd - India
- Kobexindo Tractors - Indoneisa
- PNOC Exploration Corporation - Philippines
- Australian Commodity Traders Exchange
- Kapuas Tunggal Persada - Indonesia
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- Indo Tambangraya Megah - Indonesia
- Central Java Power - Indonesia
- Eastern Energy - Thailand
- London Commodity Brokers - England
- McConnell Dowell - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Finance - Indonesia
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- Billiton Holdings Pty Ltd - Australia
- New Zealand Coal & Carbon
- Bulk Trading Sa - Switzerland
- Interocean Group of Companies - India
- Bukit Makmur.PT - Indonesia
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Borneo Indobara - Indonesia
- Kartika Selabumi Mining - Indonesia
- White Energy Company Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kalimantan Lumbung Energi - Indonesia
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- Central Electricity Authority - India
- Minerals Council of Australia
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- Grasim Industreis Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Romanian Commodities Exchange
- PetroVietnam Power Coal Import and Supply Company
- Energy Link Ltd, New Zealand
- Chamber of Mines of South Africa
- Bhushan Steel Limited - India
- Indian Energy Exchange, India
- Sree Jayajothi Cements Limited - India
- Sakthi Sugars Limited - India
- Orica Australia Pty. Ltd.
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Mineral Development Corp Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- Maheswari Brothers Coal Limited - India
- Economic Council, Georgia
- Thai Mozambique Logistica
- OPG Power Generation Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Sinarmas Energy and Mining - Indonesia
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- Coalindo Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Cement Manufacturers Association - India
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- Ind-Barath Power Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Ambuja Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- Gujarat Sidhee Cement - India
- Riau Bara Harum - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement PLC, Thailand
- Coastal Gujarat Power Limited - India
- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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