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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, 12 October 11
CAPESIZE - A SURPRISE JUMP IN RATES - BRS
There was a surge across all sizes last week, resulting in the BDI gaining 101 points to end the week at 2,000 points (+5.3%). The BCI reached 3,218 ...
Wednesday, 12 October 11
CAPESIZE FREIGHT RATES BOUND TO RETREAT FROM 2011 HIGHS ON THE BACK OF TONNAGE OVERSUPPLY SAYS BIMCO
According to Nikos Roussanoglou, Hellenic Shipping, with the BDI (Baltic Dry Index) breaking yet another 2011 high yesterday and ending the se ...
Tuesday, 11 October 11
GLENCORE, SUITOR FOR BUMI PLC? - INSIDER STORIES
Insider Stories reported that, the largest commodities trader in the world, Glencore International Plc, is considering an opportunity to acquire a m ...
Tuesday, 11 October 11
RENUKA COALINDO BUYS JAMBI COAL
PT Renuka Coalindo Tbk, formerly PT Allbond Makmur Usaha Tbk plans to acquire PT Jambi Prima Coal holder of mining concession in Pauh, Sa ...
Monday, 10 October 11
MOZAMBIQUE CHANNEL TO BE THE NEW PIRACY HOTSPOT FOR THIS YEAR SAYS MARITIME SECURITY EXPERT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The Mozambique Channel, as well as the entrance to the Persian Gulf, are expected to become some of the new pirate hotspots for piracy, says Richard ...
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- Jorong Barutama Greston.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- Samtan Co., Ltd - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Jindal Steel & Power Ltd - India
- Edison Trading Spa - Italy
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Meenaskhi Energy Private Limited - India
- Bhoruka Overseas - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Trasteel International SA, Italy
- Cement Manufacturers Association - India
- PowerSource Philippines DevCo
- PNOC Exploration Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Siam City Cement - Thailand
- Indonesian Coal Mining Association
- Carbofer General Trading SA - India
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Therma Luzon, Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- Oldendorff Carriers - Singapore
- Bulk Trading Sa - Switzerland
- Goldman Sachs - Singapore
- India Bulls Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- OPG Power Generation Pvt Ltd - India
- Eastern Coal Council - USA
- Ambuja Cements Ltd - India
- Energy Link Ltd, New Zealand
- Ind-Barath Power Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Sical Logistics Limited - India
- Electricity Generating Authority of Thailand
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- Petron Corporation, Philippines
- Indika Energy - Indonesia
- Global Business Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Deloitte Consulting - India
- Directorate General of MIneral and Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Australian Commodity Traders Exchange
- ICICI Bank Limited - India
- Sojitz Corporation - Japan
- Kepco SPC Power Corporation, Philippines
- GMR Energy Limited - India
- Siam City Cement PLC, Thailand
- Sarangani Energy Corporation, Philippines
- GVK Power & Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- The Treasury - Australian Government
- Miang Besar Coal Terminal - Indonesia
- Anglo American - United Kingdom
- Electricity Authority, New Zealand
- Minerals Council of Australia
- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- AsiaOL BioFuels Corp., Philippines
- Coal and Oil Company - UAE
- Grasim Industreis Ltd - India
- Global Green Power PLC Corporation, Philippines
- Orica Australia Pty. Ltd.
- Star Paper Mills Limited - India
- Altura Mining Limited, Indonesia
- Essar Steel Hazira Ltd - India
- Coastal Gujarat Power Limited - India
- Aditya Birla Group - India
- GAC Shipping (India) Pvt Ltd
- Planning Commission, India
- Malabar Cements Ltd - India
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- San Jose City I Power Corp, Philippines
- Indian Energy Exchange, India
- TeaM Sual Corporation - Philippines
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- Karbindo Abesyapradhi - Indoneisa
- IEA Clean Coal Centre - UK
- VISA Power Limited - India
- Straits Asia Resources Limited - Singapore
- Timah Investasi Mineral - Indoneisa
- Bhatia International Limited - India
- Marubeni Corporation - India
- Bharathi Cement Corporation - India
- Riau Bara Harum - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Baramulti Group, Indonesia
- SMG Consultants - Indonesia
- Meralco Power Generation, Philippines
- Videocon Industries ltd - India
- Bukit Baiduri Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Mintek Dendrill Indonesia
- Kaltim Prima Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Banpu Public Company Limited - Thailand
- Thai Mozambique Logistica
- PTC India Limited - India
- Posco Energy - South Korea
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- ASAPP Information Group - India
- Tata Chemicals Ltd - India
- Renaissance Capital - South Africa
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- Economic Council, Georgia
- Sakthi Sugars Limited - India
- Madhucon Powers Ltd - India
- Merrill Lynch Commodities Europe
- Power Finance Corporation Ltd., India
- Africa Commodities Group - South Africa
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- Holcim Trading Pte Ltd - Singapore
- New Zealand Coal & Carbon
- Larsen & Toubro Limited - India
- Formosa Plastics Group - Taiwan
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- Eastern Energy - Thailand
- Bayan Resources Tbk. - Indonesia
- Kartika Selabumi Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- Orica Mining Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- The University of Queensland
- Antam Resourcindo - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhushan Steel Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Bukit Makmur.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Leighton Contractors Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- South Luzon Thermal Energy Corporation
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Gujarat Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Mjunction Services Limited - India
- MS Steel International - UAE
- Aboitiz Power Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- Port Waratah Coal Services - Australia
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- Standard Chartered Bank - UAE
- European Bulk Services B.V. - Netherlands
- Georgia Ports Authority, United States
- Rio Tinto Coal - Australia
- Latin American Coal - Colombia
- Krishnapatnam Port Company Ltd. - India
- Medco Energi Mining Internasional
- Bahari Cakrawala Sebuku - Indonesia
- Central Electricity Authority - India
- Singapore Mercantile Exchange
- Vizag Seaport Private Limited - India
- Uttam Galva Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Dalmia Cement Bharat India
- Globalindo Alam Lestari - Indonesia
- Chamber of Mines of South Africa
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- Australian Coal Association
- Karaikal Port Pvt Ltd - India
- Romanian Commodities Exchange
- LBH Netherlands Bv - Netherlands
- Manunggal Multi Energi - Indonesia
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