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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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Sunday, 23 October 11
CHINA LOOKING TO RESELL INDONESIAN COAL CARGOES - BARCLAYS
Commodity Online reported that, Anecdotal evidence has suggested that China is even looking to resell Indonesian cargoes back into the seaborne coal ...
Saturday, 22 October 11
THE SHORT-PERIOD RATES FOR PANAMAX REMAINED FIRM - CAPT. REDDY
COALspot.com - "The market seemed to slow down a bit this week, and all sectors were down by about One to five percent", said Capt. Reddy, ...
Saturday, 22 October 11
WILL THE PROPOSED 26 PERCENT PROFIT SHARING CLAUSE IN THE MINING BILL SPEED UP THE PRODUCTION OR SCARE AWAY INVESTORS? - DIPESH DIPU
A draft law has been approved by a ministerial panel headed by Finance Minister Pranab Mukherjee of India which, if passed by the Cabinet, will make ...
Saturday, 22 October 11
INDONESIA'S GOLDEN ENERGY SLASHES ITS IPO PRICE - THE JAKARTA GLOBE
The Jakarta Globe reported that, Golden Energy Mines, a coal mining company affiliated with Sinar Mas Group, lowered its target in an initial public ...
Thursday, 20 October 11
CAPESIZE - TUBARAO /QINGDAO BEING FIXED AT STRONG US$ 29.75 PMT
Handy
The Atlantic market is quite steady, and market seems to be around the same levels as last week. Fewer fixtures reported though. ...
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- Global Coal Blending Company Limited - Australia
- Bayan Resources Tbk. - Indonesia
- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bangladesh Power Developement Board
- Maheswari Brothers Coal Limited - India
- Central Java Power - Indonesia
- Parry Sugars Refinery, India
- San Jose City I Power Corp, Philippines
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Rashtriya Ispat Nigam Limited - India
- Billiton Holdings Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Chettinad Cement Corporation Ltd - India
- Tamil Nadu electricity Board
- Australian Coal Association
- Goldman Sachs - Singapore
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- India Bulls Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Indian Energy Exchange, India
- SMC Global Power, Philippines
- ASAPP Information Group - India
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Indonesian Coal Mining Association
- Altura Mining Limited, Indonesia
- GAC Shipping (India) Pvt Ltd
- Eastern Energy - Thailand
- Larsen & Toubro Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Deloitte Consulting - India
- Leighton Contractors Pty Ltd - Australia
- New Zealand Coal & Carbon
- Independent Power Producers Association of India
- Bhoruka Overseas - Indonesia
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- White Energy Company Limited
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- Mercuria Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Xindia Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- Posco Energy - South Korea
- Coal and Oil Company - UAE
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- LBH Netherlands Bv - Netherlands
- Kobexindo Tractors - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Tata Chemicals Ltd - India
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Port Waratah Coal Services - Australia
- Carbofer General Trading SA - India
- Romanian Commodities Exchange
- Power Finance Corporation Ltd., India
- Siam City Cement PLC, Thailand
- Kaltim Prima Coal - Indonesia
- VISA Power Limited - India
- Mercator Lines Limited - India
- IEA Clean Coal Centre - UK
- Marubeni Corporation - India
- Formosa Plastics Group - Taiwan
- Videocon Industries ltd - India
- TeaM Sual Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Jindal Steel & Power Ltd - India
- Indian Oil Corporation Limited
- Ministry of Finance - Indonesia
- Malabar Cements Ltd - India
- Kumho Petrochemical, South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aboitiz Power Corporation - Philippines
- Uttam Galva Steels Limited - India
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement - Thailand
- Ceylon Electricity Board - Sri Lanka
- Ambuja Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- OPG Power Generation Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Chamber of Mines of South Africa
- Attock Cement Pakistan Limited
- Coalindo Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- Petron Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Sidhee Cement - India
- Binh Thuan Hamico - Vietnam
- Indo Tambangraya Megah - Indonesia
- Parliament of New Zealand
- Vedanta Resources Plc - India
- Star Paper Mills Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Energy Development Corp, Philippines
- Indika Energy - Indonesia
- The State Trading Corporation of India Ltd
- Kartika Selabumi Mining - Indonesia
- Medco Energi Mining Internasional
- Orica Australia Pty. Ltd.
- Toyota Tsusho Corporation, Japan
- GVK Power & Infra Limited - India
- Georgia Ports Authority, United States
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Barasentosa Lestari - Indonesia
- Electricity Authority, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Samtan Co., Ltd - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- The University of Queensland
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Minerals Council of Australia
- Kideco Jaya Agung - Indonesia
- Orica Mining Services - Indonesia
- Trasteel International SA, Italy
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Timah Investasi Mineral - Indoneisa
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- Antam Resourcindo - Indonesia
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Karaikal Port Pvt Ltd - India
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- Ministry of Mines - Canada
- Kepco SPC Power Corporation, Philippines
- Sojitz Corporation - Japan
- Banpu Public Company Limited - Thailand
- Indogreen Group - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Planning Commission, India
- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- Thai Mozambique Logistica
- Vizag Seaport Private Limited - India
- Bhushan Steel Limited - India
- McConnell Dowell - Australia
- Manunggal Multi Energi - Indonesia
- Meralco Power Generation, Philippines
- Global Green Power PLC Corporation, Philippines
- Commonwealth Bank - Australia
- IHS Mccloskey Coal Group - USA
- Directorate Of Revenue Intelligence - India
- Bukit Asam (Persero) Tbk - Indonesia
- Lanco Infratech Ltd - India
- Price Waterhouse Coopers - Russia
- Latin American Coal - Colombia
- Heidelberg Cement - Germany
- Australian Commodity Traders Exchange
- Semirara Mining Corp, Philippines
- Coastal Gujarat Power Limited - India
- Edison Trading Spa - Italy
- ICICI Bank Limited - India
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Asmin Koalindo Tuhup - Indonesia
- London Commodity Brokers - England
- Krishnapatnam Port Company Ltd. - India
- The Treasury - Australian Government
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- MS Steel International - UAE
- Economic Council, Georgia
- Sree Jayajothi Cements Limited - India
- Intertek Mineral Services - Indonesia
- Wilmar Investment Holdings
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- GN Power Mariveles Coal Plant, Philippines
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- Directorate General of MIneral and Coal - Indonesia
- PTC India Limited - India
- Straits Asia Resources Limited - Singapore
- South Luzon Thermal Energy Corporation
- Sical Logistics Limited - India
- Eastern Coal Council - USA
- Meenaskhi Energy Private Limited - India
- CIMB Investment Bank - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Aditya Birla Group - India
- Electricity Generating Authority of Thailand
- Central Electricity Authority - India
- Ministry of Transport, Egypt
- Merrill Lynch Commodities Europe
- Pipit Mutiara Jaya. PT, Indonesia
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