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Tuesday, 19 June 12
SMALLER DRY BULK CARRIERS LIFT UP MARKET, PANAMAXES SET TO FALL SAYS ANALYST - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
 Another rise for the dry bulk market was evident yesterday, as the industry’s benchmark, the BDI (Baltic Dry Index) was up for a ninth straight session to 938 points, rising by 14 points. The rise was once again triggered by the smaller ship types, with the Panamax market rising by 16 points, or 1.5% to 1,081 points, with average daily earnings rising to $8,592. By contrast, the Capesize market was once again falling, with the relative index falling by 10 points to 1,138 points, as a result of tumbling iron ore demand. As a result average daily earnings dropping at just $3,377, a multi-year low.
In a relative note, analyst Commodore Research predicted a new fall of the market, which will most likely impact Panamaxes the most. Commodore mentioned that “it might be hard for some to believe, but at the start of the year capesize rates were averaging $23,991/day. Capesize rates quickly came under intense vessel supply-related pressure, however, and have remained below $10,000/day since January 12th. More recently, rates have come under additional pressure due to the ongoing lull in Chinese iron ore demand. While near-term prospects for capesize rates remain bleak - first and foremost due to the tremendous amount of capesize vessels that will remain available in the market - a strong case can be made that future prospects for panamax rates are considerably worse” said Commodore.
It concluded by mentioning that “for the second half of this year, the orderbook for panamax vessels stands at roughly 355 vessels, while the orderbook for capesize vessels stands at roughly 145 vessels. The 2013 panamax orderbook dwarfs the 2013 capesize orderbook as well. For 2013, the orderbook for panamax vessels stands at roughly 240 vessels, while the orderbook for capesize vessels stands at roughly 90 vessels. In 2013, the panamax market is poised to become the most oversupplied of all of the dry bulk vessel classes. The 595 panamax vessels expected to be delivered by the end of 2013 represent a growth of approximately 28% on the current panamax fleet. The 235 capesize vessels expected to be delivered represent a growth of approximately 16% on the current capesize fleet. While the story for 2012 will likely remain the depressed capesize market, panamax rates are likely to feel great pain in 2013” said Commodore.
In an earlier note, BIMCO had noted that “the dry bulk market is under immense pressure, as the retreating weight of China as the driver of the market is extensively felt. At a time when supply growth simply breaks new mind-blowing delivery records, the demand situation is pitching in a bit too. Currently, there are reports of Chinese customers in the steel industry that are refusing to honour their contract as prices drop, and stock piles are fuller than normal at a time when steel mills take their foot off the throttle following a red-hot production period in recent months. Current fundamental demand/consumption is not strong enough to support such a high production level. As the world awaits the next anticipated Chinese stimulus package to lift demand, the dry bulk market is scouting for another saviour to get it through the day. Crude steel production in China surpassed 60 million tons a month in both March and April. The monthly average in 2011 was 57 million per month” said BIMCO.
It added that “the first five months average earnings of a Capesize bulker ended at USD 7,013 per day. This is down by 13% as compared to the same period last year that earned USD 8,060 per day. The time charter average has only been above USD 10,000 per day in the first 11 days of the year. The brief strengthening of freight rates in the midst of May unfortunately proved to be short-lived. As suggested two months ago, the downward overshooting of rates was corrected upwards with stronger rates during April and the first half of May, but as the optimism in the macroeconomic picture also began to fade, so did the freight market.
China imports more coal when the price gap between Chinese thermal coal (less a heat discount) and imported thermal coal is providing an arbitrage opportunity (including freight costs). When e.g. Australian or Indonesian coal prices become relatively cheaper, Chinese buyers are interested in importing more coal from Australia, which is good news for ship owners. In 2011 the price gap widened substantially, leading to hitherto unseen levels of thermal coal imports to China. If the price of Australian and Indonesian coal drops below the price of Chinese coal, as has been the case the last few months, we might see Chinese imports get back strongly when coal demand peaks in July. This could make 2012 imports surpass those record volumes of 2011” BIMCO concluded.
Source: Nikos Roussanoglou, Hellenic Shipping
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- New Zealand Coal & Carbon
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- Global Green Power PLC Corporation, Philippines
- ICICI Bank Limited - India
- Economic Council, Georgia
- European Bulk Services B.V. - Netherlands
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- MS Steel International - UAE
- Barasentosa Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Sojitz Corporation - Japan
- Jaiprakash Power Ventures ltd
- Therma Luzon, Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Banpu Public Company Limited - Thailand
- Kideco Jaya Agung - Indonesia
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- Planning Commission, India
- Oldendorff Carriers - Singapore
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- Larsen & Toubro Limited - India
- Sree Jayajothi Cements Limited - India
- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- Bhatia International Limited - India
- Kepco SPC Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Energy Development Corp, Philippines
- Borneo Indobara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Independent Power Producers Association of India
- OPG Power Generation Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Antam Resourcindo - Indonesia
- McConnell Dowell - Australia
- Formosa Plastics Group - Taiwan
- Krishnapatnam Port Company Ltd. - India
- Karaikal Port Pvt Ltd - India
- Deloitte Consulting - India
- Rio Tinto Coal - Australia
- Maheswari Brothers Coal Limited - India
- Attock Cement Pakistan Limited
- CIMB Investment Bank - Malaysia
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- ASAPP Information Group - India
- Indo Tambangraya Megah - Indonesia
- LBH Netherlands Bv - Netherlands
- Renaissance Capital - South Africa
- Price Waterhouse Coopers - Russia
- Metalloyd Limited - United Kingdom
- Australian Commodity Traders Exchange
- Sarangani Energy Corporation, Philippines
- Madhucon Powers Ltd - India
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bhushan Steel Limited - India
- VISA Power Limited - India
- Ministry of Finance - Indonesia
- Siam City Cement - Thailand
- AsiaOL BioFuels Corp., Philippines
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coalindo Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Savvy Resources Ltd - HongKong
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- IHS Mccloskey Coal Group - USA
- Mjunction Services Limited - India
- Manunggal Multi Energi - Indonesia
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Intertek Mineral Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- Semirara Mining Corp, Philippines
- Grasim Industreis Ltd - India
- India Bulls Power Limited - India
- White Energy Company Limited
- Semirara Mining and Power Corporation, Philippines
- Star Paper Mills Limited - India
- Kartika Selabumi Mining - Indonesia
- Edison Trading Spa - Italy
- Holcim Trading Pte Ltd - Singapore
- Ambuja Cements Ltd - India
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
- Latin American Coal - Colombia
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Binh Thuan Hamico - Vietnam
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Aditya Birla Group - India
- Simpson Spence & Young - Indonesia
- Iligan Light & Power Inc, Philippines
- Dalmia Cement Bharat India
- Eastern Coal Council - USA
- Indian Energy Exchange, India
- Bhoruka Overseas - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- SMC Global Power, Philippines
- Sakthi Sugars Limited - India
- Port Waratah Coal Services - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- PowerSource Philippines DevCo
- Marubeni Corporation - India
- Malabar Cements Ltd - India
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Sinarmas Energy and Mining - Indonesia
- Parliament of New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GVK Power & Infra Limited - India
- Salva Resources Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Altura Mining Limited, Indonesia
- Energy Link Ltd, New Zealand
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Bukit Baiduri Energy - Indonesia
- Mercator Lines Limited - India
- Medco Energi Mining Internasional
- Pendopo Energi Batubara - Indonesia
- PTC India Limited - India
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Sindya Power Generating Company Private Ltd
- Heidelberg Cement - Germany
- Jorong Barutama Greston.PT - Indonesia
- Parry Sugars Refinery, India
- Samtan Co., Ltd - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- Bahari Cakrawala Sebuku - Indonesia
- The University of Queensland
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- Goldman Sachs - Singapore
- Jindal Steel & Power Ltd - India
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- Coal and Oil Company - UAE
- Gujarat Sidhee Cement - India
- Agrawal Coal Company - India
- Eastern Energy - Thailand
- Meenaskhi Energy Private Limited - India
- The Treasury - Australian Government
- Gujarat Mineral Development Corp Ltd - India
- Bangladesh Power Developement Board
- Australian Coal Association
- Thiess Contractors Indonesia
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Meralco Power Generation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Tamil Nadu electricity Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Generating Authority of Thailand
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- Bayan Resources Tbk. - Indonesia
- Merrill Lynch Commodities Europe
- Wood Mackenzie - Singapore
- Romanian Commodities Exchange
- Siam City Cement PLC, Thailand
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Mines - Canada
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