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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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Thursday, 12 October 17
THERMAL COAL PRICES IN EUROPE AND ASIA PUSHING HIGHER - DANIEL HYNES
Coal markets took the lead from the oil market, with thermal coal prices in Europe and Asia pushing higher says Daniel Hynes,Senior Commodity Strat ...
Wednesday, 11 October 17
2020 DEBATE AT IBIA'S LISW EVENT: COMPLIANCE & ENFORCEMENT – IT'S COMPLICATED : IBIA
There is no doubt about the start date for the 0.50% marine fuel sulphur limit in MARPOL Annex VI, but questions remain around how it will be enfor ...
Wednesday, 11 October 17
SHIPPING MARKET INSIGHT - TIMOS PPADIMITRIOU
With the majority of second-hand tonnage transactions taking place in the dry bulk sector it’s easy to lose sight of what is happening over a ...
Tuesday, 10 October 17
DELIVERY OF CARGO WITHOUT ORIGINAL BILLS OF LADING - UK P&I CLUB
KNOWLEDGE TO ELEVATE
- It is common in a lot of trades, whether bulk or oil, to accept a Letter of Indemnity (“LOI”) for non-produ ...
Monday, 09 October 17
INDONESIAN COAL PRICE REFERENCE HITS NEW HIGH FOR 2017
COALspot.com: Indonesian coal benchmark price surges 2.13% in October month over month, the latest ministerial decree showed.
The benchmark pr ...
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Showing 1916 to 1920 news of total 6871 |
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- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- Georgia Ports Authority, United States
- Baramulti Group, Indonesia
- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- Price Waterhouse Coopers - Russia
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Tamil Nadu electricity Board
- SMG Consultants - Indonesia
- Kartika Selabumi Mining - Indonesia
- Economic Council, Georgia
- PNOC Exploration Corporation - Philippines
- SMC Global Power, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Metalloyd Limited - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Electricity Authority, New Zealand
- Barasentosa Lestari - Indonesia
- Mjunction Services Limited - India
- Cement Manufacturers Association - India
- Straits Asia Resources Limited - Singapore
- Renaissance Capital - South Africa
- Deloitte Consulting - India
- Minerals Council of Australia
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Salva Resources Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining Corp, Philippines
- San Jose City I Power Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Oldendorff Carriers - Singapore
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Xindia Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Indonesian Coal Mining Association
- Indian Oil Corporation Limited
- Wilmar Investment Holdings
- India Bulls Power Limited - India
- Essar Steel Hazira Ltd - India
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- Samtan Co., Ltd - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Kideco Jaya Agung - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Aditya Birla Group - India
- GN Power Mariveles Coal Plant, Philippines
- Latin American Coal - Colombia
- Madhucon Powers Ltd - India
- Sical Logistics Limited - India
- Eastern Energy - Thailand
- Marubeni Corporation - India
- PTC India Limited - India
- Miang Besar Coal Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Lanco Infratech Ltd - India
- Orica Mining Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Jaiprakash Power Ventures ltd
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- Globalindo Alam Lestari - Indonesia
- Medco Energi Mining Internasional
- SN Aboitiz Power Inc, Philippines
- The University of Queensland
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- Electricity Generating Authority of Thailand
- McConnell Dowell - Australia
- Gujarat Sidhee Cement - India
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- Uttam Galva Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- Kohat Cement Company Ltd. - Pakistan
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- Bhoruka Overseas - Indonesia
- Central Java Power - Indonesia
- Australian Coal Association
- Central Electricity Authority - India
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- Interocean Group of Companies - India
- Ministry of Finance - Indonesia
- Singapore Mercantile Exchange
- Coalindo Energy - Indonesia
- Larsen & Toubro Limited - India
- Malabar Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- VISA Power Limited - India
- Planning Commission, India
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- Orica Australia Pty. Ltd.
- Directorate Of Revenue Intelligence - India
- Standard Chartered Bank - UAE
- GAC Shipping (India) Pvt Ltd
- AsiaOL BioFuels Corp., Philippines
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sojitz Corporation - Japan
- Maharashtra Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Ministry of Mines - Canada
- Aboitiz Power Corporation - Philippines
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- Banpu Public Company Limited - Thailand
- Simpson Spence & Young - Indonesia
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- Attock Cement Pakistan Limited
- OPG Power Generation Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Wood Mackenzie - Singapore
- Makarim & Taira - Indonesia
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- ICICI Bank Limited - India
- Thai Mozambique Logistica
- Parry Sugars Refinery, India
- Indogreen Group - Indonesia
- Global Coal Blending Company Limited - Australia
- Edison Trading Spa - Italy
- Directorate General of MIneral and Coal - Indonesia
- Port Waratah Coal Services - Australia
- Krishnapatnam Port Company Ltd. - India
- Chettinad Cement Corporation Ltd - India
- IEA Clean Coal Centre - UK
- Parliament of New Zealand
- CIMB Investment Bank - Malaysia
- Carbofer General Trading SA - India
- Bharathi Cement Corporation - India
- European Bulk Services B.V. - Netherlands
- ASAPP Information Group - India
- Energy Development Corp, Philippines
- Global Business Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The State Trading Corporation of India Ltd
- PowerSource Philippines DevCo
- IHS Mccloskey Coal Group - USA
- Bukit Makmur.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Gujarat Mineral Development Corp Ltd - India
- Heidelberg Cement - Germany
- Agrawal Coal Company - India
- Sarangani Energy Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Petron Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Posco Energy - South Korea
- Bukit Baiduri Energy - Indonesia
- Coal and Oil Company - UAE
- New Zealand Coal & Carbon
- Ceylon Electricity Board - Sri Lanka
- Sakthi Sugars Limited - India
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Kaltim Prima Coal - Indonesia
- CNBM International Corporation - China
- Altura Mining Limited, Indonesia
- Rio Tinto Coal - Australia
- Romanian Commodities Exchange
- Bayan Resources Tbk. - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GMR Energy Limited - India
- Mercuria Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Goldman Sachs - Singapore
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- Eastern Coal Council - USA
- Ministry of Transport, Egypt
- Bhatia International Limited - India
- Thiess Contractors Indonesia
- Siam City Cement - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Africa Commodities Group - South Africa
- Kobexindo Tractors - Indoneisa
- Borneo Indobara - Indonesia
- Star Paper Mills Limited - India
- Manunggal Multi Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Videocon Industries ltd - India
- Chamber of Mines of South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Iligan Light & Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Energy Link Ltd, New Zealand
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