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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, 26 September 17
REDUCING THE RISK OF LIQUEFACTION - IUMI
KNOWLEDGE TO ELEVATE
Liquefaction is a phenomenon that can take place in granular materials, such as soil or fine ore, where the beh ...
Tuesday, 26 September 17
THE CURRENT HIGHS IN THE DRY BULK FREIGHT MARKET WILL SURELY BE SURPASSED AND BY A CONSIDERABLE MARGIN IN THE NEXT YEAR OR SO - GEORGE LAZARIDIS
The Dry Bulk market con!nues to show a strong face amidst the favorable tail winds being seen, which have helped the Bal!c Dry Index inch above the ...
Monday, 25 September 17
CHOICES FOR SHIPPING AS 2020 APPROACHES? - CLARKSONS
Historically, the fuel of choice for the vast majority of large cargo ships has been heavy fuel oil. But in 2020, sulphur oxide emissions will be c ...
Monday, 25 September 17
THE FREIGHT MARKET ROSE IN ALL SEGMENTS EXCEPT PANAMAX WEEK OVER WEEK
COALspot.com: The freight market rose in all segments except Panamax week over week. Mainly Cape has supported to boosted up BDI this past week, BD ...
Monday, 25 September 17
U.S WEEKLY COAL OUTPUT DROPS FOR THE FOURTH WEEK IN A ROW, EIA DATA SHOWS
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 15.5 million short ton ...
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Showing 1931 to 1935 news of total 6871 |
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- Uttam Galva Steels Limited - India
- Indian Oil Corporation Limited
- International Coal Ventures Pvt Ltd - India
- Eastern Energy - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- CIMB Investment Bank - Malaysia
- Kumho Petrochemical, South Korea
- PowerSource Philippines DevCo
- Ministry of Transport, Egypt
- Alfred C Toepfer International GmbH - Germany
- Sical Logistics Limited - India
- Meenaskhi Energy Private Limited - India
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- London Commodity Brokers - England
- Timah Investasi Mineral - Indoneisa
- Trasteel International SA, Italy
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Deloitte Consulting - India
- Edison Trading Spa - Italy
- Minerals Council of Australia
- Star Paper Mills Limited - India
- Sarangani Energy Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Mjunction Services Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Bangladesh Power Developement Board
- Central Java Power - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Chamber of Mines of South Africa
- Leighton Contractors Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- GAC Shipping (India) Pvt Ltd
- Lanco Infratech Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhushan Steel Limited - India
- Orica Australia Pty. Ltd.
- Neyveli Lignite Corporation Ltd, - India
- Banpu Public Company Limited - Thailand
- Singapore Mercantile Exchange
- Madhucon Powers Ltd - India
- Rio Tinto Coal - Australia
- Kapuas Tunggal Persada - Indonesia
- Medco Energi Mining Internasional
- The Treasury - Australian Government
- Interocean Group of Companies - India
- MS Steel International - UAE
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- Ambuja Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- Sinarmas Energy and Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Cement Manufacturers Association - India
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- South Luzon Thermal Energy Corporation
- The University of Queensland
- Sindya Power Generating Company Private Ltd
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Essar Steel Hazira Ltd - India
- Bayan Resources Tbk. - Indonesia
- Indian Energy Exchange, India
- Ceylon Electricity Board - Sri Lanka
- Bulk Trading Sa - Switzerland
- Power Finance Corporation Ltd., India
- Jorong Barutama Greston.PT - Indonesia
- Makarim & Taira - Indonesia
- Price Waterhouse Coopers - Russia
- Economic Council, Georgia
- Kaltim Prima Coal - Indonesia
- Heidelberg Cement - Germany
- Semirara Mining Corp, Philippines
- Gujarat Sidhee Cement - India
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- Bhatia International Limited - India
- Grasim Industreis Ltd - India
- McConnell Dowell - Australia
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Agrawal Coal Company - India
- Parry Sugars Refinery, India
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- Toyota Tsusho Corporation, Japan
- Siam City Cement - Thailand
- Carbofer General Trading SA - India
- Bukit Makmur.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Videocon Industries ltd - India
- Merrill Lynch Commodities Europe
- Chettinad Cement Corporation Ltd - India
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- San Jose City I Power Corp, Philippines
- Malabar Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- White Energy Company Limited
- TNB Fuel Sdn Bhd - Malaysia
- Coalindo Energy - Indonesia
- Formosa Plastics Group - Taiwan
- ASAPP Information Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Business Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Coal and Oil Company - UAE
- Altura Mining Limited, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Karbindo Abesyapradhi - Indoneisa
- Anglo American - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- Latin American Coal - Colombia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vizag Seaport Private Limited - India
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- ICICI Bank Limited - India
- Iligan Light & Power Inc, Philippines
- Independent Power Producers Association of India
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Directorate Of Revenue Intelligence - India
- Jaiprakash Power Ventures ltd
- Kartika Selabumi Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- PTC India Limited - India
- Samtan Co., Ltd - South Korea
- Cigading International Bulk Terminal - Indonesia
- Thai Mozambique Logistica
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- Kobexindo Tractors - Indoneisa
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- Simpson Spence & Young - Indonesia
- Global Coal Blending Company Limited - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- Commonwealth Bank - Australia
- Africa Commodities Group - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indika Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Barasentosa Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- AsiaOL BioFuels Corp., Philippines
- Posco Energy - South Korea
- Petron Corporation, Philippines
- Electricity Generating Authority of Thailand
- Bharathi Cement Corporation - India
- SMC Global Power, Philippines
- Bukit Baiduri Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- Tata Chemicals Ltd - India
- GVK Power & Infra Limited - India
- Marubeni Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Straits Asia Resources Limited - Singapore
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- Central Electricity Authority - India
- Australian Coal Association
- CNBM International Corporation - China
- Bhoruka Overseas - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Binh Thuan Hamico - Vietnam
- Riau Bara Harum - Indonesia
- Georgia Ports Authority, United States
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
- Miang Besar Coal Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
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