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Wednesday, 13 April 11
CAPESIZE VESSELS ARE DELIVERED AT A PACE OF ONE NEW VESSEL EVERY SECOND DAY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
 In a clear sign that it will take a significant rise in global seaborne dry bulk trade in order to be able to absorb the flurry of new building tonnage thrown into the water, BIMCO has issued a new report, saying, among others, that at the moment Capesize vessels are delivered at a rate of one new vessel every second day. On top of that, 6 VLOC’s have been launched with another 35 potentially up for delivery in 2011 (adjusted for slippage). The report also said that the active fleet has grown by 2.7% so far in 2011, caused by deliveries of 222 newbuilt vessels with an average cargo capacity of 85,000 DWT offset by 67 vessels with a total capacity of 4.8 million DWT being demolished.
On the positive side, “like in the tanker segments, demolition finally, but still surprisingly, has kicked off strongly – positively impacted by the high scrap steel prices. A 25 year-old large Capesize demolition was worth almost USD 11 million. However, the level of demolishing is still considerably below a level that could balance supply and demand and impact the freight markets positively” said the report by BIMCO’s shipping analyst, Peter Sand. “BIMCO forecasts inflow of new dry bulk tonnage in 2011 to be a bit higher than in 2010 at 86 million DWT. As demolitions are expected to reach 12 million DWT, the fleet is forecast to grow by 13.8% in 2011. Newbuilding contracts are being signed at the slowest pace since Q2 in 2009. This is a very positive development, especially seen in the light of the unbelievable high contracting level in 2010 with 78 million DWT of new contracts” said the report.
In terms of the dry bulk market’s outlook, BIMCO said that “the events in Japan, will, in the short term, be a negative story for the dry bulk market as expected high volumes into Japan will be some 10-20 million tons lower, as coal power plants and steel mills have be shut down for a while and some are expected to be so for up to 1 year. In the medium to long term, dry bulk is likely to benefit as reconstruction takes off. Iron ore, coking coal, thermal coal and wood for construction are likely to be in higher demand following the disasters. Unlike Australia, which was a supply story, Japan is mainly about demand falling short – the impact on the freight market has been insignificant as compared to the flooding in Queensland.
BIMCO assesses that Capesize freight rates will remain in depressed territory in the coming months. Capesize Time Charter Average is likely to hover around USD 10,000–15,000 per day and backhaul trip charter earnings likely to continue to make negative returns.
The Capesize fleet has already grown 4.5% this year and overcapacity in the segment will stay a drag on freight rates each time they try to escape the doldrums. Supramax and Panamax are likely to stay firm in the USD 15,000–USD 20,000 per day interval as demand supports this level. Overall, dry bulk commodity demand growth is expected to be around 7-8% in 2011, with iron ore and coal as usual in the driving seat. This outlook provides a solid demand picture to comfort and fence a collapse of earnings, as oversupply is haunting all segments” said the report.
For the time being though, since early January, Capesize time charter rates have been below all the other segments including Handysize. While the 3 smaller segments have rebounded since then, Capesize is still down. “Current average of 4 time-charter routes is USD 10,371 per day. For comparison – a Handysize makes USD 11,849 per day, a Supramax USD 15,921 per day and a Panamax USD 15,807 per day. Spot rates on main Capesize iron ore trades from Brazil and Australia, which are the top two suppliers to the Chinese steel industry, look as if they have bottomed out during January and February. This year’s unfolding story in relation to iron ore trades will be the scheduled delivery of the first 6 out of 19 400,000 DWT VLOC’s to the Brazilian miner, Vale. This is expected to impact the market, as Vale is a large charterer of Capesize tonnage to service its Asian customers. In 2010, Vale exported 131 million tons to China. Estimating 6 round voyage a year, the 6 new build VLOC’s will be able to carry 14.4 million tonnes of iron ore p.a., equal to 11% of Vale exports to China. With another 13 to be delivered over the next 2-3 years, Vale will depend much less on the Capesize chartering market – as it will be self-sufficient in 25-30% of its tonnage demand. The vessels are intended to bring down Vale’s price disadvantage to the Australian iron ore by taking out the longhaul maritime transportation cost element. The spot rates are on average 2½ times higher on Brazilian ore, being a close mirror of the difference in distance.
It remains uncertain where Vale is going to establish its Asian iron ore distribution centre. First Qingdao was targeted, but failed to become a done deal. Lately Vale has focused on a Malaysian distribution hub, but another site remains an option, the Tianjin Dongjiang Free Trade Port Zone near Beijing – a new giant port and logistics centre. The final location will be vital to the success of VLOC’s.
Seaborne Iron ore demand is expected to grow by 7% overall, where China will take the most and European demand will increase to a precrisis level.
Also recently, the commodities trader Cargill has decided to become a ship owner once again, this time round mainly with the purpose of being an asset player. This adds to the number of large charterers making an entry into ship owning primarily with the object of controlling a larger part of the supply chain and converting variable costs to fixed costs.
The demand for taking Capesize vessels on time charter is on a par with last year. Time charter rates are currently higher than spot freight rates, which indicates an extraordinarily weak spot market. Representative deals that support the rather flat medium term expectation in the market are, amongst others, Cargill taking the “Semirio”, 174,000 DWT for two years at USD 17,000 per day and Rio Tinto taking “Bulk India”, 177,000 DWT for one year at USD 16,500 per day”, concluded BIMCO’s analysis
Source: Nikos Roussanoglou, Hellenic Shipping
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Tuesday, 15 February 11
INDONESIAN COAL FOR HARYANA THERMAL PLANTS - PUNJAB NEWS LINE
To tide over the recurring coal shortage at thermal plants Haryana Power Generation Corporation Limited (HPGCL) has gone for Malaysian coal for its ...
Tuesday, 15 February 11
TONNAGE OVERSUPPLY TO CHOKE FREIGHT RATES IN THE COMING MONTHS SAYS BIMCO - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In a new report assessing the dry bulk market, BIMCO’s analysis suggests that freight rates for Capesize vessels are likely to remain depresse ...
Sunday, 13 February 11
COAL MARKETS 2011 TO HIGHLIGHT INDONESIAN COAL AND NEW SOURCES OF COAL SUPPLY
“Over 300 senior decision-makers from coal mining, power and trading companies expected to congregate in Singapore”
Press Release - K ...
Sunday, 13 February 11
YEAR OF RABBIT PUSHING FREIGHT MARKET UP
COALspot.com – “The market finally moved up with firmness in all sectors with some positive signs of markets recovering”, said Cap ...
Friday, 11 February 11
DRY BULK MARKET HEATING UP ON FRESH CARGO DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market is on a high this week, with owners of smaller vessels turning their attention towards the spot market, in order to take advanta ...
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- Meenaskhi Energy Private Limited - India
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- Simpson Spence & Young - Indonesia
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- Cigading International Bulk Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Lanco Infratech Ltd - India
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- Ministry of Transport, Egypt
- Aditya Birla Group - India
- IEA Clean Coal Centre - UK
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- Holcim Trading Pte Ltd - Singapore
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- Billiton Holdings Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Power Finance Corporation Ltd., India
- MS Steel International - UAE
- Makarim & Taira - Indonesia
- Port Waratah Coal Services - Australia
- PNOC Exploration Corporation - Philippines
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- Goldman Sachs - Singapore
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- Indonesian Coal Mining Association
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- Australian Commodity Traders Exchange
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- Riau Bara Harum - Indonesia
- Kepco SPC Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
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- Petron Corporation, Philippines
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- Energy Link Ltd, New Zealand
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- GVK Power & Infra Limited - India
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
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- Sarangani Energy Corporation, Philippines
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- Wood Mackenzie - Singapore
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- Ministry of Finance - Indonesia
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- Africa Commodities Group - South Africa
- Merrill Lynch Commodities Europe
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Heidelberg Cement - Germany
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
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- Eastern Energy - Thailand
- Kohat Cement Company Ltd. - Pakistan
- GAC Shipping (India) Pvt Ltd
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- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- London Commodity Brokers - England
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- Kaltim Prima Coal - Indonesia
- Standard Chartered Bank - UAE
- Parry Sugars Refinery, India
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sojitz Corporation - Japan
- Parliament of New Zealand
- Chamber of Mines of South Africa
- Therma Luzon, Inc, Philippines
- Gujarat Sidhee Cement - India
- Renaissance Capital - South Africa
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- Thai Mozambique Logistica
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- Leighton Contractors Pty Ltd - Australia
- Xindia Steels Limited - India
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- Meralco Power Generation, Philippines
- Mjunction Services Limited - India
- Independent Power Producers Association of India
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- Commonwealth Bank - Australia
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
- Tata Chemicals Ltd - India
- San Jose City I Power Corp, Philippines
- Romanian Commodities Exchange
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- Orica Australia Pty. Ltd.
- Straits Asia Resources Limited - Singapore
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- Globalindo Alam Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- International Coal Ventures Pvt Ltd - India
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- Sakthi Sugars Limited - India
- Anglo American - United Kingdom
- Thiess Contractors Indonesia
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- Planning Commission, India
- Siam City Cement - Thailand
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
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- Interocean Group of Companies - India
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- Antam Resourcindo - Indonesia
- Semirara Mining and Power Corporation, Philippines
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- Cement Manufacturers Association - India
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- Malabar Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bangladesh Power Developement Board
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- The State Trading Corporation of India Ltd
- Karbindo Abesyapradhi - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Star Paper Mills Limited - India
- Vizag Seaport Private Limited - India
- Mercator Lines Limited - India
- The University of Queensland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pendopo Energi Batubara - Indonesia
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- Electricity Authority, New Zealand
- Bhatia International Limited - India
- Vedanta Resources Plc - India
- Electricity Generating Authority of Thailand
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- Ministry of Mines - Canada
- Timah Investasi Mineral - Indoneisa
- Essar Steel Hazira Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
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- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
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- PetroVietnam Power Coal Import and Supply Company
- Bhushan Steel Limited - India
- Australian Coal Association
- Deloitte Consulting - India
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- White Energy Company Limited
- Ambuja Cements Ltd - India
- Global Business Power Corporation, Philippines
- GMR Energy Limited - India
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- Central Electricity Authority - India
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- McConnell Dowell - Australia
- Wilmar Investment Holdings
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
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- Tamil Nadu electricity Board
- Eastern Coal Council - USA
- Gujarat Mineral Development Corp Ltd - India
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- Coal and Oil Company - UAE
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