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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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Monday, 02 January 12
THE PROMISE OF INDIA: A BRIEF INTERRUPTION? - CLARKSONS / HELLENIC SHIPPING
Future growth in Indian seaborne coal imports has sometimes been considered as one of the largest potential upsides in the currently oversupplied dr ...
Sunday, 01 January 12
IS INDIA FOLLOWING INDONESIA TO STANDARDIZE COAL PRICES TO GET MAXIMUM BENEFITS?
COALspot.com - Coal India limited, an Indian state owned and world largest coal producer has introduced gross calorific value (GCV) based pricing me ...
Saturday, 31 December 11
GLOBALCOAL NEWC INDEX SURGED 2.32 PERCENT
COALspot.com - globalCOAL index in Newcastle Port, benchmark for Asian market, ended substantially higher, surged 2.32 percent to US$115.47 per ...
Saturday, 31 December 11
BORNEO LUMBUNG TO BUY BUMI STAKE, SWAP CEO - THE JAKARTA GLOBE
The Jakarta Globe, one of the leading english news paper in Indonesia reported yesterday, shareholders of Indonesian coking coal miner Borneo Lumbun ...
Friday, 30 December 11
CENTRAL GOVERNMENT SHOULD ISSUE PERMITS - THE JAKARTA POST
The Jakarta Post reported that, business associations from both the palm oil and mining sectors have suggested that the central government should re ...
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- Tata Chemicals Ltd - India
- Therma Luzon, Inc, Philippines
- Africa Commodities Group - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- Pipit Mutiara Jaya. PT, Indonesia
- London Commodity Brokers - England
- Jindal Steel & Power Ltd - India
- Goldman Sachs - Singapore
- Barasentosa Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Australian Coal Association
- Minerals Council of Australia
- Indian Energy Exchange, India
- Timah Investasi Mineral - Indoneisa
- Bharathi Cement Corporation - India
- Cement Manufacturers Association - India
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- Thiess Contractors Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PTC India Limited - India
- Interocean Group of Companies - India
- Uttam Galva Steels Limited - India
- PowerSource Philippines DevCo
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Holcim Trading Pte Ltd - Singapore
- AsiaOL BioFuels Corp., Philippines
- Renaissance Capital - South Africa
- Bayan Resources Tbk. - Indonesia
- Agrawal Coal Company - India
- TNB Fuel Sdn Bhd - Malaysia
- Meenaskhi Energy Private Limited - India
- Straits Asia Resources Limited - Singapore
- LBH Netherlands Bv - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- IEA Clean Coal Centre - UK
- Iligan Light & Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Eastern Coal Council - USA
- Star Paper Mills Limited - India
- Central Java Power - Indonesia
- India Bulls Power Limited - India
- Parliament of New Zealand
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- Ministry of Mines - Canada
- Electricity Generating Authority of Thailand
- Planning Commission, India
- Vijayanagar Sugar Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Carbofer General Trading SA - India
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- Australian Commodity Traders Exchange
- Borneo Indobara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Attock Cement Pakistan Limited
- Mjunction Services Limited - India
- Price Waterhouse Coopers - Russia
- ASAPP Information Group - India
- Formosa Plastics Group - Taiwan
- European Bulk Services B.V. - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Anglo American - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Leighton Contractors Pty Ltd - Australia
- Aditya Birla Group - India
- Karbindo Abesyapradhi - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- South Luzon Thermal Energy Corporation
- Baramulti Group, Indonesia
- Maheswari Brothers Coal Limited - India
- Central Electricity Authority - India
- Mercator Lines Limited - India
- New Zealand Coal & Carbon
- Madhucon Powers Ltd - India
- Kobexindo Tractors - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Orica Mining Services - Indonesia
- Wilmar Investment Holdings
- Jorong Barutama Greston.PT - Indonesia
- GVK Power & Infra Limited - India
- GMR Energy Limited - India
- Oldendorff Carriers - Singapore
- Merrill Lynch Commodities Europe
- Coal and Oil Company - UAE
- Independent Power Producers Association of India
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- Bhushan Steel Limited - India
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- MS Steel International - UAE
- Semirara Mining and Power Corporation, Philippines
- Latin American Coal - Colombia
- Kideco Jaya Agung - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bhoruka Overseas - Indonesia
- Vizag Seaport Private Limited - India
- Salva Resources Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- Altura Mining Limited, Indonesia
- Ind-Barath Power Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Larsen & Toubro Limited - India
- Global Business Power Corporation, Philippines
- Siam City Cement - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Sidhee Cement - India
- Sarangani Energy Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Ministry of Transport, Egypt
- Power Finance Corporation Ltd., India
- OPG Power Generation Pvt Ltd - India
- Rio Tinto Coal - Australia
- Orica Australia Pty. Ltd.
- Coastal Gujarat Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Parry Sugars Refinery, India
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- Sinarmas Energy and Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Oil Corporation Limited
- Riau Bara Harum - Indonesia
- Deloitte Consulting - India
- Medco Energi Mining Internasional
- Singapore Mercantile Exchange
- McConnell Dowell - Australia
- SMC Global Power, Philippines
- Chamber of Mines of South Africa
- Georgia Ports Authority, United States
- Ministry of Finance - Indonesia
- Karaikal Port Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- Ambuja Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- Indogreen Group - Indonesia
- Economic Council, Georgia
- Petron Corporation, Philippines
- Bulk Trading Sa - Switzerland
- CNBM International Corporation - China
- Bangladesh Power Developement Board
- Tamil Nadu electricity Board
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Wood Mackenzie - Singapore
- Grasim Industreis Ltd - India
- The Treasury - Australian Government
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Antam Resourcindo - Indonesia
- Jaiprakash Power Ventures ltd
- Videocon Industries ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- International Coal Ventures Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Bukit Makmur.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Semirara Mining Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- GAC Shipping (India) Pvt Ltd
- Directorate Of Revenue Intelligence - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Lanco Infratech Ltd - India
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Makarim & Taira - Indonesia
- Savvy Resources Ltd - HongKong
- Kohat Cement Company Ltd. - Pakistan
- Energy Link Ltd, New Zealand
- Posco Energy - South Korea
- TeaM Sual Corporation - Philippines
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Sical Logistics Limited - India
- Mercuria Energy - Indonesia
- Malabar Cements Ltd - India
- Trasteel International SA, Italy
- Simpson Spence & Young - Indonesia
- Eastern Energy - Thailand
- Toyota Tsusho Corporation, Japan
- Kapuas Tunggal Persada - Indonesia
- ICICI Bank Limited - India
- Bhatia International Limited - India
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- Aboitiz Power Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- Siam City Cement PLC, Thailand
- Intertek Mineral Services - Indonesia
- CIMB Investment Bank - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
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