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Monday, 21 November 11
CAPESIZES DRIVE MARKET LOWER, ANALYSTS DIVIDED ON DRY BULK OUTLOOK IN THE LONG RUN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
 The dry bulk market ended the week on a sour note, with the industry’s benchmark heading downwards to 1,895 points, which represented a slight fall of 0.16%. Capesizes were the main drivers of this trend, with the market falling by 0.71%. Still, the rest of the market segments were higher, with Panamaxes leading the pack, with an increase of 1.38%. In a recent report, consultant analysts PriceWaterHouseCoopers (PwC) said that the size of the Capesize fleet is forecast to rocket over the next three years at the same time as demand growth for seaborne iron ore is set to stagnate. In its report ‘Dry Bulk Shipping - Capes of no Hope?’, PwC said that there are currently 1,200 Capesize vessels worldwide at a value of $45billion but it is estimated that a further 450 more are on order over the next three years which will flood the market. While some of these orders may be delayed or cancelled, the global order book implies there will be rapid growth in seaborne transport of iron ore and coal, the main commodities carried by Capesizes.
David Smith, Assistant Director, PwC Strategy said that "as in other sectors of the shipping industry, dry bulk market participants are assuming that the next decade will look very much like the last in terms of patterns of trade flow growth. This has led to continued orders of new vessels on the assumption that Chinese demand for iron ore will continue to grow rapidly, but our estimates show that growth will be much lower in the future. The reality is that the ‘expected’ growth demand for iron ore is unlikely to materialise given the already high rate of infrastructure investment in China. This will leave a substantially increased number of vessels chasing a broadly unchanged level of cargo, with negative implications for rates. The situation, he added, will be exacerbated by the vessel building programmes being undertaken by the large mining companies. This will decrease the amount of cargo available on the spot market, at a time when the fleet is increasing dramatically, said Mr. Smith.
He went on to mention that "while rates in the Capesize sector have improved over the last three months, we see this as a temporary respite. Continued overcapacity is likely to push rates back towards operating costs, creating significant pressure for owners trading in the spot market.” “The worry, he said, is that these pressures will not be confined to the ship owning community. Low rates over a prolonged period will make it difficult for ship owners to keep up payments to the banks which have made substantial investments in the sector. Major sources of shipping finance include the UK, Germany, Greece, and Scandinavia, with UK banks alone having loans of over $50bn to the shipping sector” concluded Mr. Smith.
Meanwhile, in a separate report, shipowner Golden Ocean said that “most analysts agree that the dry bulk market does not have a demand problem. Iron ore and coal imports to China and coal imports to India are expected to grow at a steady pace over the next 5 years. A lot of new iron ore capacity will enter the market from 2013 onwards, which could put a downward pressure on international iron prices. This should support the freight market due to expensive, low quality Chinese iron ore production. However, the order book for the remainder of this year and 2012 is still a major concern and is the main reason why the forward freight assessment (FFA) is in backwardation.Despite the positive development in the freight market, asset values dropped further during third quarter. A five year old Capesize was priced at $39 million while a newbuilding resale was priced at approximately $50 million. There is a lot of uncertainty related to asset values going forward, but we observe that more forecasters state that they see limited downside” said Golden Ocean.
Analyzing the trade patterns noted during the third quarter, the company mentioned that “the third quarter of 2011 was yet another quarter which surpassed most analysts’ expectations. Given the large order book with record high deliveries both this year and next, it has been difficult to imagine a demand scenario which was able to cope with supply growth and maintain utilization at levels giving owners of dry bulk tonnage decent returns. Capesizes experienced a steady rise from bleak levels. Iron ore is the main commodity carried by Capesizes and China increased its import by more than 17 percent compared to same quarter previous year. Coal imports to China increased by almost 30 percent year-onyear.
In addition, other Asian countries contributed to the strong demand growth. Korea increased its iron ore imports by more than 20 percent and the rebuilding of Japan after the March 2011 earthquake and tsunami also contributed positively. These high growth numbers alone are still not sufficient to explain a utilization rate, which averaged 85 percent last quarter. Congestion remains as a positive factor for owners and between six to eight percent of vessel capacity was tied up in the third quarter” said Golden Ocean.
It further mentioned that “Chinese coastal trade increased by 17 percent during the third quarter and more than 300 million tons of dry bulk commodities was carried off the Chinese coast. On an annual basis, this represents 20 million dwt capacity. We have not seen the same focus on slow steaming in dry bulk as in other segments. However, analysis shows that average speed of the sailing fleet has dropped by more than two knots since 2008. This is not due to an effort to improve market conditions but rather a function of high bunker prices and optimizing earnings. Still, the focus has to be on the order book. So far this year approximately 205 vessels in the Capesize segment have been delivered, but at the same time almost 70 vessels of the same size have been scrapped. Delivery ratio compared to the official order book remains below 70 percent” concluded Golden Ocean.
Source: Nikos Roussanoglou, Hellenic Shipping
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Wednesday, 02 November 11
MMTC TO BUY 3.73 MILLION TONS OF COAL FOR 2011- 2013
COALspot.com - India’s state-owned coal and mineral trader MMTC looking for 3.73 million tons of power plant coal for the period 2011 - 2012/ ...
Wednesday, 02 November 11
PANAMAX MARKET BECAME QUIETER AFTER THE RECENT RECOVERY - BRS
There were substantial losses across the board this week: the BDI lost 6.3% to end at 2,018 and the BCI 8.2% to end 3,274. In the smaller sizes the ...
Tuesday, 01 November 11
BORNEO LUMBUNG BUYS 23.8% INTEREST IN BUMI
COALspot.com - PT. Borneo Lumbung Energi (BORN), an Indonesian coking coal producer announces that it has signed a sale and purchase agreement, cond ...
Tuesday, 01 November 11
BAKRIE FORMS STRATEGIC PARTNERSHIP WITH BORNEO - REDUCING DEBT BY USD 1 BILLION
Press Release - Enhancing the standing of “Indonesia Inc.” at the London Stock Exchange PT Bakrie & Brothers Tbk (“BNBR” ...
Tuesday, 01 November 11
ATLAS RESOURCES SETS IPO AT RP1,500 - INSIDER STORIES
Insider Stories reported that, coal miner PT Atlas Resources Tbk has set its initial public offering (IPO) at Rp1,500 (approximately US$ 0.169) per ...
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- LBH Netherlands Bv - Netherlands
- Medco Energi Mining Internasional
- Tata Chemicals Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Orica Mining Services - Indonesia
- Coal and Oil Company - UAE
- Parliament of New Zealand
- Larsen & Toubro Limited - India
- Indonesian Coal Mining Association
- India Bulls Power Limited - India
- Electricity Authority, New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- Mercator Lines Limited - India
- Globalindo Alam Lestari - Indonesia
- Goldman Sachs - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- Toyota Tsusho Corporation, Japan
- Interocean Group of Companies - India
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- Power Finance Corporation Ltd., India
- Orica Australia Pty. Ltd.
- Metalloyd Limited - United Kingdom
- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Manunggal Multi Energi - Indonesia
- Chamber of Mines of South Africa
- Merrill Lynch Commodities Europe
- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- Aditya Birla Group - India
- Edison Trading Spa - Italy
- Australian Coal Association
- Africa Commodities Group - South Africa
- Chettinad Cement Corporation Ltd - India
- Vizag Seaport Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Posco Energy - South Korea
- Tamil Nadu electricity Board
- Sindya Power Generating Company Private Ltd
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Grasim Industreis Ltd - India
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Gujarat Sidhee Cement - India
- Heidelberg Cement - Germany
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- VISA Power Limited - India
- Cement Manufacturers Association - India
- Directorate General of MIneral and Coal - Indonesia
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- CNBM International Corporation - China
- Star Paper Mills Limited - India
- Bhushan Steel Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- Siam City Cement PLC, Thailand
- Renaissance Capital - South Africa
- Port Waratah Coal Services - Australia
- San Jose City I Power Corp, Philippines
- Central Java Power - Indonesia
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- Anglo American - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Price Waterhouse Coopers - Russia
- White Energy Company Limited
- Bahari Cakrawala Sebuku - Indonesia
- Thai Mozambique Logistica
- McConnell Dowell - Australia
- Australian Commodity Traders Exchange
- PetroVietnam Power Coal Import and Supply Company
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Sree Jayajothi Cements Limited - India
- SMG Consultants - Indonesia
- Indian Oil Corporation Limited
- Bharathi Cement Corporation - India
- London Commodity Brokers - England
- Trasteel International SA, Italy
- Simpson Spence & Young - Indonesia
- Ambuja Cements Ltd - India
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- PNOC Exploration Corporation - Philippines
- ICICI Bank Limited - India
- MS Steel International - UAE
- Global Coal Blending Company Limited - Australia
- Electricity Generating Authority of Thailand
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Antam Resourcindo - Indonesia
- Bhatia International Limited - India
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- Billiton Holdings Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Attock Cement Pakistan Limited
- Marubeni Corporation - India
- Kepco SPC Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- ASAPP Information Group - India
- Singapore Mercantile Exchange
- Indian Energy Exchange, India
- Central Electricity Authority - India
- New Zealand Coal & Carbon
- Gujarat Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Economic Council, Georgia
- The Treasury - Australian Government
- Global Business Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- Ministry of Mines - Canada
- Mjunction Services Limited - India
- Coastal Gujarat Power Limited - India
- Baramulti Group, Indonesia
- Siam City Cement - Thailand
- Formosa Plastics Group - Taiwan
- Directorate Of Revenue Intelligence - India
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Lanco Infratech Ltd - India
- Eastern Coal Council - USA
- The University of Queensland
- Wood Mackenzie - Singapore
- Makarim & Taira - Indonesia
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Videocon Industries ltd - India
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- Coalindo Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Minerals Council of Australia
- Rio Tinto Coal - Australia
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- Uttam Galva Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Global Green Power PLC Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- Deloitte Consulting - India
- Barasentosa Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Thiess Contractors Indonesia
- Miang Besar Coal Terminal - Indonesia
- Eastern Energy - Thailand
- Timah Investasi Mineral - Indoneisa
- Kumho Petrochemical, South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Sojitz Corporation - Japan
- Malabar Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- Planning Commission, India
- GMR Energy Limited - India
- Kapuas Tunggal Persada - Indonesia
- Energy Link Ltd, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Xindia Steels Limited - India
- PTC India Limited - India
- Maheswari Brothers Coal Limited - India
- Intertek Mineral Services - Indonesia
- Savvy Resources Ltd - HongKong
- Ceylon Electricity Board - Sri Lanka
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- TeaM Sual Corporation - Philippines
- Petron Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- Gujarat Mineral Development Corp Ltd - India
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