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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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Monday, 09 October 17
INDIA'S COAL IMPORTS UP 10% IN SEPT AS POWER PLANTS FACE FUEL SHORTAGE - PTI
Coal imports rose by 9.5 per cent to 18.33 million tonnes (MT) in September, after having registered year-on-year decline for five months in a row, ...
Friday, 06 October 17
U.S. WEEKLY COAL OUTPUT HAS REBOUNDED AFTER DECLINING 5 WEEKS IN A ROW
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 15.3 million short tons ...
Wednesday, 04 October 17
SHIPPING MARKET INSIGHT - GEORGE ILIOPOULOS
During the past couple of months the dry bulk market has displayed particularly strong momentum and we have been witnessing steady appetite and act ...
Tuesday, 03 October 17
VIETNAM'S COAL-FIRED THERMAL POWER DEPENDENT ON CHINA - VIETNAMNET BRIDGE
A report from the Green Innovation and Development Centre (GreenID) showed that, as of the end of last year, of 27 coal-fired thermopower plants, 1 ...
Tuesday, 03 October 17
RIO TINTO COMPLETES FIRST FULLY AUTONOMOUS RAIL JOURNEY IN WESTERN AUSTRALIA
Rio Tinto has successfully completed the first fully autonomous rail journey at its iron ore operations in the Pilbara region of Western Australia ...
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Showing 1921 to 1925 news of total 6871 |
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- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- Georgia Ports Authority, United States
- Indo Tambangraya Megah - Indonesia
- Coalindo Energy - Indonesia
- Australian Commodity Traders Exchange
- Indogreen Group - Indonesia
- ICICI Bank Limited - India
- Sinarmas Energy and Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- Aboitiz Power Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Electricity Generating Authority of Thailand
- Gujarat Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Eastern Coal Council - USA
- PetroVietnam Power Coal Import and Supply Company
- Kartika Selabumi Mining - Indonesia
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Goldman Sachs - Singapore
- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
- Malabar Cements Ltd - India
- London Commodity Brokers - England
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- McConnell Dowell - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Indian Energy Exchange, India
- Formosa Plastics Group - Taiwan
- Savvy Resources Ltd - HongKong
- Kepco SPC Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Port Waratah Coal Services - Australia
- Altura Mining Limited, Indonesia
- Sojitz Corporation - Japan
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- Barasentosa Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CIMB Investment Bank - Malaysia
- Planning Commission, India
- Deloitte Consulting - India
- Merrill Lynch Commodities Europe
- Power Finance Corporation Ltd., India
- IHS Mccloskey Coal Group - USA
- LBH Netherlands Bv - Netherlands
- Vedanta Resources Plc - India
- India Bulls Power Limited - India
- Wilmar Investment Holdings
- Agrawal Coal Company - India
- Uttam Galva Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- Coastal Gujarat Power Limited - India
- Trasteel International SA, Italy
- CNBM International Corporation - China
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Chamber of Mines of South Africa
- Bulk Trading Sa - Switzerland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Finance - Indonesia
- Jaiprakash Power Ventures ltd
- Oldendorff Carriers - Singapore
- Directorate Of Revenue Intelligence - India
- Alfred C Toepfer International GmbH - Germany
- Kideco Jaya Agung - Indonesia
- Thiess Contractors Indonesia
- SMG Consultants - Indonesia
- Tata Chemicals Ltd - India
- Grasim Industreis Ltd - India
- White Energy Company Limited
- Toyota Tsusho Corporation, Japan
- Orica Australia Pty. Ltd.
- Ambuja Cements Ltd - India
- Bharathi Cement Corporation - India
- Ind-Barath Power Infra Limited - India
- The State Trading Corporation of India Ltd
- Chettinad Cement Corporation Ltd - India
- Madhucon Powers Ltd - India
- The Treasury - Australian Government
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cement Manufacturers Association - India
- Energy Development Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Carbofer General Trading SA - India
- Riau Bara Harum - Indonesia
- Marubeni Corporation - India
- Tamil Nadu electricity Board
- Petron Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Bayan Resources Tbk. - Indonesia
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- Interocean Group of Companies - India
- Antam Resourcindo - Indonesia
- OPG Power Generation Pvt Ltd - India
- MS Steel International - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Videocon Industries ltd - India
- Thai Mozambique Logistica
- Sakthi Sugars Limited - India
- Central Java Power - Indonesia
- Makarim & Taira - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- Banpu Public Company Limited - Thailand
- IEA Clean Coal Centre - UK
- ASAPP Information Group - India
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Baramulti Group, Indonesia
- Timah Investasi Mineral - Indoneisa
- Posco Energy - South Korea
- Independent Power Producers Association of India
- Mercator Lines Limited - India
- Essar Steel Hazira Ltd - India
- SMC Global Power, Philippines
- TeaM Sual Corporation - Philippines
- Indian Oil Corporation Limited
- Semirara Mining Corp, Philippines
- Ministry of Transport, Egypt
- Romanian Commodities Exchange
- Orica Mining Services - Indonesia
- Salva Resources Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Rashtriya Ispat Nigam Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Samtan Co., Ltd - South Korea
- Electricity Authority, New Zealand
- South Luzon Thermal Energy Corporation
- Rio Tinto Coal - Australia
- Sindya Power Generating Company Private Ltd
- Ministry of Mines - Canada
- Xindia Steels Limited - India
- Sical Logistics Limited - India
- VISA Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Commonwealth Bank - Australia
- Africa Commodities Group - South Africa
- Meenaskhi Energy Private Limited - India
- Bhatia International Limited - India
- The University of Queensland
- Kohat Cement Company Ltd. - Pakistan
- Dalmia Cement Bharat India
- Latin American Coal - Colombia
- Borneo Indobara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Larsen & Toubro Limited - India
- International Coal Ventures Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Australian Coal Association
- Karaikal Port Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Singapore Mercantile Exchange
- Meralco Power Generation, Philippines
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- Kobexindo Tractors - Indoneisa
- PowerSource Philippines DevCo
- Straits Asia Resources Limited - Singapore
- PNOC Exploration Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Indonesian Coal Mining Association
- PTC India Limited - India
- New Zealand Coal & Carbon
- Sarangani Energy Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Indika Energy - Indonesia
- GMR Energy Limited - India
- Gujarat Sidhee Cement - India
- Intertek Mineral Services - Indonesia
- Parry Sugars Refinery, India
- Central Electricity Authority - India
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- Star Paper Mills Limited - India
- Iligan Light & Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Minerals Council of Australia
- Kapuas Tunggal Persada - Indonesia
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Kaltim Prima Coal - Indonesia
- Bangladesh Power Developement Board
- Attock Cement Pakistan Limited
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhushan Steel Limited - India
- Aditya Birla Group - India
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