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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, 03 October 17
ALLIED MARKET ANALYSIS
It seems as though the future of the oil trade was once again put into the spotlight, as the Asia Pacific Petroleum Conference took place last week ...
Friday, 29 September 17
U.S WEEKLY COAL OUTPUT DROPS FOR THE FIFTH WEEK IN A ROW, EIA DATA SHOWS
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 14.7 million short ...
Thursday, 28 September 17
SUPRAMAX: S.CHINA TRIP TO INDIA HAS BEEN FIXED AT AROUND US$ 11000 - FEARNLEYS
Supramax
The hot market seen the last weeks in the Pacific has softened as the Golden week holiday in China approaches and the October shipments ...
Thursday, 28 September 17
THE 'UNREASONABLE' COST OF CASUALTY REPAIRS: ASSOCIATION OF AVERAGE ADJUSTERS CHAIRMAN DETAILS CLAIMS DILEMMAS
KNOWLEDGE TO ELEVATE
The ‘unreasonable’ cost of casualty repairs: Association of Average Adjusters chairman details claims dilemma ...
Thursday, 28 September 17
CHINESE GOVERNMENT TO CANCEL DOMESTIC IRON ORE MINING RIGHTS - JEFFREY LANDSBERG
It has been reported that China will cancel roughly one third of its iron ore mining licenses, says Commodore Research & Consultancy in its lat ...
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Showing 1926 to 1930 news of total 6871 |
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- IHS Mccloskey Coal Group - USA
- Medco Energi Mining Internasional
- Economic Council, Georgia
- Maheswari Brothers Coal Limited - India
- Kumho Petrochemical, South Korea
- Uttam Galva Steels Limited - India
- Independent Power Producers Association of India
- Formosa Plastics Group - Taiwan
- Ministry of Transport, Egypt
- Ambuja Cements Ltd - India
- Dalmia Cement Bharat India
- Coalindo Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Bharathi Cement Corporation - India
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- SN Aboitiz Power Inc, Philippines
- Anglo American - United Kingdom
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- Energy Link Ltd, New Zealand
- Grasim Industreis Ltd - India
- Meralco Power Generation, Philippines
- Indian Oil Corporation Limited
- The University of Queensland
- Semirara Mining Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Orica Australia Pty. Ltd.
- MS Steel International - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Mintek Dendrill Indonesia
- Bulk Trading Sa - Switzerland
- TNB Fuel Sdn Bhd - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining and Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- CNBM International Corporation - China
- Larsen & Toubro Limited - India
- PTC India Limited - India
- Leighton Contractors Pty Ltd - Australia
- Tata Chemicals Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jaiprakash Power Ventures ltd
- Commonwealth Bank - Australia
- Kideco Jaya Agung - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Australian Commodity Traders Exchange
- Coastal Gujarat Power Limited - India
- Metalloyd Limited - United Kingdom
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Sakthi Sugars Limited - India
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
- Eastern Coal Council - USA
- Manunggal Multi Energi - Indonesia
- Intertek Mineral Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Mercuria Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- SMC Global Power, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Madhucon Powers Ltd - India
- Aditya Birla Group - India
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Tamil Nadu electricity Board
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- Billiton Holdings Pty Ltd - Australia
- Posco Energy - South Korea
- SMG Consultants - Indonesia
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Pendopo Energi Batubara - Indonesia
- Bhoruka Overseas - Indonesia
- Kobexindo Tractors - Indoneisa
- Essar Steel Hazira Ltd - India
- Indo Tambangraya Megah - Indonesia
- Savvy Resources Ltd - HongKong
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- Parry Sugars Refinery, India
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- White Energy Company Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Minerals Council of Australia
- Asmin Koalindo Tuhup - Indonesia
- Trasteel International SA, Italy
- Bhushan Steel Limited - India
- Electricity Authority, New Zealand
- Meenaskhi Energy Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Interocean Group of Companies - India
- Central Electricity Authority - India
- Sinarmas Energy and Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Antam Resourcindo - Indonesia
- Siam City Cement - Thailand
- India Bulls Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- Xindia Steels Limited - India
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- San Jose City I Power Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Karbindo Abesyapradhi - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Mines - Canada
- Orica Mining Services - Indonesia
- GVK Power & Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Altura Mining Limited, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Timah Investasi Mineral - Indoneisa
- South Luzon Thermal Energy Corporation
- Banpu Public Company Limited - Thailand
- Baramulti Group, Indonesia
- Petron Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Makarim & Taira - Indonesia
- ICICI Bank Limited - India
- PowerSource Philippines DevCo
- Romanian Commodities Exchange
- Krishnapatnam Port Company Ltd. - India
- Ceylon Electricity Board - Sri Lanka
- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- Ministry of Finance - Indonesia
- Miang Besar Coal Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Power Finance Corporation Ltd., India
- Electricity Generating Authority of Thailand
- Standard Chartered Bank - UAE
- Chettinad Cement Corporation Ltd - India
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Attock Cement Pakistan Limited
- Parliament of New Zealand
- Global Coal Blending Company Limited - Australia
- Gujarat Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Barasentosa Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Vizag Seaport Private Limited - India
- Port Waratah Coal Services - Australia
- Eastern Energy - Thailand
- Indonesian Coal Mining Association
- Australian Coal Association
- OPG Power Generation Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Vedanta Resources Plc - India
- The Treasury - Australian Government
- Chamber of Mines of South Africa
- Singapore Mercantile Exchange
- Thai Mozambique Logistica
- Simpson Spence & Young - Indonesia
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Coal and Oil Company - UAE
- VISA Power Limited - India
- Aboitiz Power Corporation - Philippines
- Mercator Lines Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Cement Manufacturers Association - India
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- Oldendorff Carriers - Singapore
- Thiess Contractors Indonesia
- Siam City Cement PLC, Thailand
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- Borneo Indobara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Deloitte Consulting - India
- Renaissance Capital - South Africa
- Edison Trading Spa - Italy
- Heidelberg Cement - Germany
- Central Java Power - Indonesia
- Planning Commission, India
- Wood Mackenzie - Singapore
- Mjunction Services Limited - India
- London Commodity Brokers - England
- Bayan Resources Tbk. - Indonesia
- Jindal Steel & Power Ltd - India
- Sarangani Energy Corporation, Philippines
- Gujarat Sidhee Cement - India
- Malabar Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Indogreen Group - Indonesia
- Marubeni Corporation - India
- Global Business Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
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