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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, 25 December 11
THERMAL COAL PRICES GAINED UP TO 4.32 PERCENT
COALspot.com - globalCOAL index gained 4.32 percent to US$106.36 per ton in RBCT, benchmark for South Asia and West Europe markets, for the week end ...
Saturday, 24 December 11
CHINAS LEVEL OF GROWTH TO DETERMINE COURSE OF DRY BULK MARKET IN 2012 SAYS SHIPBROKER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In its latest report, shipbroker Intermodal attempted to find a silver lining in the tough year that was 2011, as well as what one could expect from ...
Friday, 23 December 11
SPOT PACIFIC CAPESIZE VESSELS HAVE COMMANDED HIGH PREMIUMS - FEARNLEYS
Handy
Rates in the Atlantic kept stable from last week, with a touch of negativity closer to the end. Less spot cargoes seen, and owners are ...
Friday, 23 December 11
CONTENTIOUS ISSUES IN CONTRACT RENEGOTIATION - THE JAKARTA POST
The government has been renegotiating mining contracts, especially those 30-40 years old, with almost all mining companies, including PT Freeport In ...
Friday, 23 December 11
LANCO JOINS HANDS WITH BUKIT ASAM FOR INDONESIAN POWER PROJECT
COALspot.com - PT Tambang Batubara Bukit Asam, Indonesia's state owned coal miner and Indian based Lanco Infratech Ltd plans to build steam power p ...
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- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Leighton Contractors Pty Ltd - Australia
- Indogreen Group - Indonesia
- Ministry of Transport, Egypt
- Medco Energi Mining Internasional
- Meralco Power Generation, Philippines
- Tata Chemicals Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Power Finance Corporation Ltd., India
- Parry Sugars Refinery, India
- Metalloyd Limited - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chamber of Mines of South Africa
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- ICICI Bank Limited - India
- Eastern Coal Council - USA
- Rio Tinto Coal - Australia
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- Coastal Gujarat Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- PowerSource Philippines DevCo
- Central Electricity Authority - India
- Krishnapatnam Port Company Ltd. - India
- European Bulk Services B.V. - Netherlands
- The State Trading Corporation of India Ltd
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- Gujarat Mineral Development Corp Ltd - India
- SMG Consultants - Indonesia
- Sarangani Energy Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Makarim & Taira - Indonesia
- PTC India Limited - India
- Iligan Light & Power Inc, Philippines
- Heidelberg Cement - Germany
- Orica Australia Pty. Ltd.
- Cigading International Bulk Terminal - Indonesia
- Global Business Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Goldman Sachs - Singapore
- Trasteel International SA, Italy
- Edison Trading Spa - Italy
- Indo Tambangraya Megah - Indonesia
- IEA Clean Coal Centre - UK
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
- Billiton Holdings Pty Ltd - Australia
- The University of Queensland
- Sical Logistics Limited - India
- Salva Resources Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Kobexindo Tractors - Indoneisa
- Samtan Co., Ltd - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- Ministry of Mines - Canada
- Australian Coal Association
- Kumho Petrochemical, South Korea
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Vedanta Resources Plc - India
- Thiess Contractors Indonesia
- Tamil Nadu electricity Board
- Australian Commodity Traders Exchange
- Merrill Lynch Commodities Europe
- Sojitz Corporation - Japan
- VISA Power Limited - India
- Bhatia International Limited - India
- Coal and Oil Company - UAE
- IHS Mccloskey Coal Group - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Kaltim Prima Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining and Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thai Mozambique Logistica
- Bank of Tokyo Mitsubishi UFJ Ltd
- Timah Investasi Mineral - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
- Renaissance Capital - South Africa
- Sree Jayajothi Cements Limited - India
- Commonwealth Bank - Australia
- Bangladesh Power Developement Board
- Interocean Group of Companies - India
- Star Paper Mills Limited - India
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- Energy Development Corp, Philippines
- Mercuria Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- McConnell Dowell - Australia
- Parliament of New Zealand
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Standard Chartered Bank - UAE
- ASAPP Information Group - India
- Larsen & Toubro Limited - India
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Grasim Industreis Ltd - India
- Globalindo Alam Lestari - Indonesia
- Agrawal Coal Company - India
- Georgia Ports Authority, United States
- White Energy Company Limited
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Borneo Indobara - Indonesia
- Singapore Mercantile Exchange
- Bukit Makmur.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Kideco Jaya Agung - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Energy Exchange, India
- Banpu Public Company Limited - Thailand
- Uttam Galva Steels Limited - India
- Central Java Power - Indonesia
- Economic Council, Georgia
- Anglo American - United Kingdom
- Indian Oil Corporation Limited
- Bhushan Steel Limited - India
- Alfred C Toepfer International GmbH - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Generating Authority of Thailand
- Karaikal Port Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Mercator Lines Limited - India
- South Luzon Thermal Energy Corporation
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Africa Commodities Group - South Africa
- Essar Steel Hazira Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- Electricity Authority, New Zealand
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Simpson Spence & Young - Indonesia
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Latin American Coal - Colombia
- Carbofer General Trading SA - India
- Chettinad Cement Corporation Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Oldendorff Carriers - Singapore
- Sindya Power Generating Company Private Ltd
- Ind-Barath Power Infra Limited - India
- SMC Global Power, Philippines
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- Mintek Dendrill Indonesia
- Dalmia Cement Bharat India
- Orica Mining Services - Indonesia
- Siam City Cement - Thailand
- Marubeni Corporation - India
- Intertek Mineral Services - Indonesia
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- Cement Manufacturers Association - India
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- Videocon Industries ltd - India
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- Posco Energy - South Korea
- Jindal Steel & Power Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- International Coal Ventures Pvt Ltd - India
- The Treasury - Australian Government
- Malabar Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- San Jose City I Power Corp, Philippines
- MS Steel International - UAE
- Xindia Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Planning Commission, India
- Semirara Mining Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Savvy Resources Ltd - HongKong
- Offshore Bulk Terminal Pte Ltd, Singapore
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