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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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Thursday, 27 October 11
CAPESIZE REACHING NEW HIGHS - FEARNLEYS
Handy
Pacific market has mixed sentiments with tonnages fixed at firm levels and some tonnages in feast failing on subs.For indo-india, large eco ...
Thursday, 27 October 11
DRY BULK MARKET EDGES DOWN AS CHINAS IRON ORE DEMAND LOSES GROUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A plunge in Chinese iron ore demand, as a result of high steel inventories and a bleak outlook regarding steel prices, has prompted the dry bulk mar ...
Thursday, 27 October 11
BUKIT ASAM 3Q PROFIT SURGES 66.91%
Insider Stories reported that, the state-controlled coal miner PT Bukit Asam Tbk (PTBA) experienced a 66.91% increase in its net profit during a per ...
Wednesday, 26 October 11
MOODYS SEES MORE GROWTH FOR INDONESIAN COAL MINERS - THE JAKARTA GLOBE
The Jakarta Globe reported that, Indonesia’s coal mining industry looks set to grow despite an uncertain global economic outlook, according to ...
Wednesday, 26 October 11
PWCS GLOBAL SHIPPING BENCHMARKING ANALYSIS: RECOVERY IN 2010 BUT GREAT UNCERTAINLY FOR 2011
The recovery of global trade in 2010 to the same levels as 2008 led to an improvement in the overall performance of shipping companies in 2010 compa ...
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- Jindal Steel & Power Ltd - India
- Bhoruka Overseas - Indonesia
- Orica Mining Services - Indonesia
- Simpson Spence & Young - Indonesia
- White Energy Company Limited
- Kepco SPC Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Carbofer General Trading SA - India
- GN Power Mariveles Coal Plant, Philippines
- London Commodity Brokers - England
- VISA Power Limited - India
- Toyota Tsusho Corporation, Japan
- Anglo American - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Videocon Industries ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Global Coal Blending Company Limited - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Vedanta Resources Plc - India
- Gujarat Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Australian Commodity Traders Exchange
- Coal and Oil Company - UAE
- OPG Power Generation Pvt Ltd - India
- The University of Queensland
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Iligan Light & Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Kapuas Tunggal Persada - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bahari Cakrawala Sebuku - Indonesia
- MS Steel International - UAE
- International Coal Ventures Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- Alfred C Toepfer International GmbH - Germany
- Price Waterhouse Coopers - Russia
- Riau Bara Harum - Indonesia
- Directorate Of Revenue Intelligence - India
- TNB Fuel Sdn Bhd - Malaysia
- Samtan Co., Ltd - South Korea
- Bayan Resources Tbk. - Indonesia
- Eastern Energy - Thailand
- Romanian Commodities Exchange
- Antam Resourcindo - Indonesia
- Merrill Lynch Commodities Europe
- Wood Mackenzie - Singapore
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- Trasteel International SA, Italy
- Dalmia Cement Bharat India
- The State Trading Corporation of India Ltd
- TeaM Sual Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Malabar Cements Ltd - India
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- Cigading International Bulk Terminal - Indonesia
- Central Electricity Authority - India
- Medco Energi Mining Internasional
- Georgia Ports Authority, United States
- SMC Global Power, Philippines
- IHS Mccloskey Coal Group - USA
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- Banpu Public Company Limited - Thailand
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- Petron Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chamber of Mines of South Africa
- ICICI Bank Limited - India
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- Bharathi Cement Corporation - India
- Deloitte Consulting - India
- Barasentosa Lestari - Indonesia
- Uttam Galva Steels Limited - India
- CNBM International Corporation - China
- Gujarat Sidhee Cement - India
- Latin American Coal - Colombia
- Metalloyd Limited - United Kingdom
- Indian Oil Corporation Limited
- Central Java Power - Indonesia
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- Borneo Indobara - Indonesia
- Economic Council, Georgia
- Formosa Plastics Group - Taiwan
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- Electricity Generating Authority of Thailand
- Commonwealth Bank - Australia
- Minerals Council of Australia
- Goldman Sachs - Singapore
- Australian Coal Association
- Manunggal Multi Energi - Indonesia
- GVK Power & Infra Limited - India
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- Thiess Contractors Indonesia
- Pendopo Energi Batubara - Indonesia
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- Heidelberg Cement - Germany
- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Electricity Authority, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Ambuja Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Madhucon Powers Ltd - India
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- Siam City Cement - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- SMG Consultants - Indonesia
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- Posco Energy - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Leighton Contractors Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- San Jose City I Power Corp, Philippines
- Grasim Industreis Ltd - India
- Planning Commission, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Port Waratah Coal Services - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Indonesian Coal Mining Association
- Tamil Nadu electricity Board
- CIMB Investment Bank - Malaysia
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Aditya Birla Group - India
- Renaissance Capital - South Africa
- Star Paper Mills Limited - India
- Independent Power Producers Association of India
- Sakthi Sugars Limited - India
- Sical Logistics Limited - India
- Energy Link Ltd, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Parry Sugars Refinery, India
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Lanco Infratech Ltd - India
- Meralco Power Generation, Philippines
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Wilmar Investment Holdings
- Indian Energy Exchange, India
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Energy Development Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Gujarat Mineral Development Corp Ltd - India
- New Zealand Coal & Carbon
- Mercator Lines Limited - India
- Makarim & Taira - Indonesia
- Mjunction Services Limited - India
- Bukit Makmur.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Meenaskhi Energy Private Limited - India
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- Vizag Seaport Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Mintek Dendrill Indonesia
- Timah Investasi Mineral - Indoneisa
- Savvy Resources Ltd - HongKong
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