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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, 05 January 12
DRY BULK MARKET TAKES A PLUNGE OF LOW ACTIVITY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
As was widely expected the first days of the new year are characterized by significantly low chartering across the board of the dry bulk market, pus ...
Wednesday, 04 January 12
NEWBUILDING ORDERS PICKED UP IN 2011, BUT 2012 EXPECTED TO BE A DIFFERENT STORY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the BDI (Baltic Dry Index) starting the year on a sour note, losing 114 points and ending yesterday’s session, the first of the new year, ...
Wednesday, 04 January 12
MAHAGENCO TO IMPORT LOW MOISTURE COAL
COALspot.com - Maharashtra State Power Generation Co. Ltd. is the state power generation utility owned by Government of Maharashtra, intends to proc ...
Tuesday, 03 January 12
INDONESIA COAL REFERENCE PRICE FELL AGAIN
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia has sets the January 2012 coal reference price at US$ 109.29 per ton or US$ 3.3 ...
Tuesday, 03 January 12
WHICH WAY WILL THE DRY BULK MARKET HEAD ON FIRST WEEK OF THE YEAR? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Dry bulk ship owners will be wondering which way will the BDI (Baltic Dry Index), the industry’s benchmark, will head during the first days of ...
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- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Bhushan Steel Limited - India
- Kapuas Tunggal Persada - Indonesia
- Wilmar Investment Holdings
- Asmin Koalindo Tuhup - Indonesia
- Borneo Indobara - Indonesia
- Tata Chemicals Ltd - India
- Energy Development Corp, Philippines
- Thiess Contractors Indonesia
- Antam Resourcindo - Indonesia
- PTC India Limited - India
- Heidelberg Cement - Germany
- Neyveli Lignite Corporation Ltd, - India
- Lanco Infratech Ltd - India
- SMC Global Power, Philippines
- Attock Cement Pakistan Limited
- Anglo American - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Globalindo Alam Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- Posco Energy - South Korea
- Ministry of Finance - Indonesia
- Interocean Group of Companies - India
- Parliament of New Zealand
- Salva Resources Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Deloitte Consulting - India
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- New Zealand Coal & Carbon
- Vijayanagar Sugar Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Intertek Mineral Services - Indonesia
- GMR Energy Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- Renaissance Capital - South Africa
- Economic Council, Georgia
- Commonwealth Bank - Australia
- Global Green Power PLC Corporation, Philippines
- Riau Bara Harum - Indonesia
- Wood Mackenzie - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- Petron Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Eastern Coal Council - USA
- Chettinad Cement Corporation Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Mining Services - Indonesia
- Mintek Dendrill Indonesia
- Bhoruka Overseas - Indonesia
- Latin American Coal - Colombia
- IHS Mccloskey Coal Group - USA
- Sinarmas Energy and Mining - Indonesia
- Altura Mining Limited, Indonesia
- Karaikal Port Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Singapore Mercantile Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- White Energy Company Limited
- Standard Chartered Bank - UAE
- Sarangani Energy Corporation, Philippines
- Power Finance Corporation Ltd., India
- Star Paper Mills Limited - India
- Parry Sugars Refinery, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- Madhucon Powers Ltd - India
- Mjunction Services Limited - India
- Jorong Barutama Greston.PT - Indonesia
- IEA Clean Coal Centre - UK
- Sical Logistics Limited - India
- Australian Coal Association
- GVK Power & Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Aboitiz Power Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Uttam Galva Steels Limited - India
- Bhatia International Limited - India
- Australian Commodity Traders Exchange
- PNOC Exploration Corporation - Philippines
- Agrawal Coal Company - India
- Georgia Ports Authority, United States
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Malabar Cements Ltd - India
- Semirara Mining Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- CIMB Investment Bank - Malaysia
- Meenaskhi Energy Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Central Electricity Authority - India
- Pipit Mutiara Jaya. PT, Indonesia
- Larsen & Toubro Limited - India
- Billiton Holdings Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Ministry of Transport, Egypt
- London Commodity Brokers - England
- Jindal Steel & Power Ltd - India
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- Bayan Resources Tbk. - Indonesia
- Price Waterhouse Coopers - Russia
- Marubeni Corporation - India
- Siam City Cement PLC, Thailand
- Chamber of Mines of South Africa
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- TeaM Sual Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Bharathi Cement Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Ambuja Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kepco SPC Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- Minerals Council of Australia
- Siam City Cement - Thailand
- Kideco Jaya Agung - Indonesia
- Trasteel International SA, Italy
- CNBM International Corporation - China
- VISA Power Limited - India
- Edison Trading Spa - Italy
- Kaltim Prima Coal - Indonesia
- Bangladesh Power Developement Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Goldman Sachs - Singapore
- Straits Asia Resources Limited - Singapore
- Independent Power Producers Association of India
- Cement Manufacturers Association - India
- Oldendorff Carriers - Singapore
- Eastern Energy - Thailand
- Xindia Steels Limited - India
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- Mercuria Energy - Indonesia
- Ministry of Mines - Canada
- Essar Steel Hazira Ltd - India
- Iligan Light & Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Samtan Co., Ltd - South Korea
- SN Aboitiz Power Inc, Philippines
- Medco Energi Mining Internasional
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- International Coal Ventures Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Mercator Lines Limited - India
- Directorate Of Revenue Intelligence - India
- Planning Commission, India
- PowerSource Philippines DevCo
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- Energy Link Ltd, New Zealand
- Indo Tambangraya Megah - Indonesia
- Indian Energy Exchange, India
- Orica Australia Pty. Ltd.
- Sree Jayajothi Cements Limited - India
- Gujarat Sidhee Cement - India
- SMG Consultants - Indonesia
- Timah Investasi Mineral - Indoneisa
- Indogreen Group - Indonesia
- Grasim Industreis Ltd - India
- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Bulk Trading Sa - Switzerland
- ICICI Bank Limited - India
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- Kumho Petrochemical, South Korea
- Indika Energy - Indonesia
- Central Java Power - Indonesia
- Meralco Power Generation, Philippines
- Toyota Tsusho Corporation, Japan
- Electricity Authority, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
- Simpson Spence & Young - Indonesia
- South Luzon Thermal Energy Corporation
- McConnell Dowell - Australia
- Sindya Power Generating Company Private Ltd
- Baramulti Group, Indonesia
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- Therma Luzon, Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Barasentosa Lestari - Indonesia
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