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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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Tuesday, 13 December 11
CAPESIZES AND PANAMAXES LEAD DRY BULK MARKET HIGHER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market inched closer to the 2,000 mark on Monday, with Panamaxes rebounding firmly and leading the gains. As a result, the industry&rsq ...
Monday, 12 December 11
DRY BULK MARKET LOOKING FOR BALANCE AS WE ENTER 2012 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
During the past few months, freight rates for dry bulk carriers, especially Capesizes have increased significantly, providing ship owners with a muc ...
Sunday, 11 December 11
THE PANAMAX INDEX ENDED ON POSITIVE DIRECTION - VISTAAR
COALspot.com - The BDI and Cape index continued the upward trend this week also with BDI up by 3.00 pct closing at 1,922 points and Cape index up by ...
Saturday, 10 December 11
MAHAKAM RIVER RESUMES COAL TRANSPORTATION
COALspot.com - East Kalimantan local government has resumed limited coal barging through Mahakam River after two weeks of suspension following the c ...
Friday, 09 December 11
DRY BULK MARKET REBOUNDS ON HEALTHIER DEMAND OUTLOOK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market edged forward yesterday, at the highest rate of the past couple of weeks, as a result of stonger iron ore demand, backed by lowe ...
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- Electricity Generating Authority of Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Makarim & Taira - Indonesia
- Latin American Coal - Colombia
- Gujarat Sidhee Cement - India
- Kapuas Tunggal Persada - Indonesia
- Mjunction Services Limited - India
- Wood Mackenzie - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Bharathi Cement Corporation - India
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Romanian Commodities Exchange
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- Oldendorff Carriers - Singapore
- Mintek Dendrill Indonesia
- Port Waratah Coal Services - Australia
- Kaltim Prima Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Altura Mining Limited, Indonesia
- Coalindo Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Thai Mozambique Logistica
- CIMB Investment Bank - Malaysia
- Formosa Plastics Group - Taiwan
- Eastern Coal Council - USA
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- Rashtriya Ispat Nigam Limited - India
- Coal and Oil Company - UAE
- Coastal Gujarat Power Limited - India
- Iligan Light & Power Inc, Philippines
- Trasteel International SA, Italy
- India Bulls Power Limited - India
- VISA Power Limited - India
- PNOC Exploration Corporation - Philippines
- Medco Energi Mining Internasional
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMC Global Power, Philippines
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- Bhatia International Limited - India
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- Gujarat Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- Essar Steel Hazira Ltd - India
- Interocean Group of Companies - India
- SN Aboitiz Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- PowerSource Philippines DevCo
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- TeaM Sual Corporation - Philippines
- Aditya Birla Group - India
- Posco Energy - South Korea
- Bangladesh Power Developement Board
- Bayan Resources Tbk. - Indonesia
- Renaissance Capital - South Africa
- Madhucon Powers Ltd - India
- Economic Council, Georgia
- Singapore Mercantile Exchange
- Krishnapatnam Port Company Ltd. - India
- San Jose City I Power Corp, Philippines
- Wilmar Investment Holdings
- Cement Manufacturers Association - India
- Timah Investasi Mineral - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Planning Commission, India
- GN Power Mariveles Coal Plant, Philippines
- IHS Mccloskey Coal Group - USA
- MS Steel International - UAE
- Tamil Nadu electricity Board
- Xindia Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ICICI Bank Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Straits Asia Resources Limited - Singapore
- Leighton Contractors Pty Ltd - Australia
- Borneo Indobara - Indonesia
- PTC India Limited - India
- Chettinad Cement Corporation Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Star Paper Mills Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Agrawal Coal Company - India
- Semirara Mining Corp, Philippines
- Indika Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- Sree Jayajothi Cements Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- Ministry of Transport, Egypt
- Deloitte Consulting - India
- Tata Chemicals Ltd - India
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- Banpu Public Company Limited - Thailand
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- London Commodity Brokers - England
- Binh Thuan Hamico - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Maheswari Brothers Coal Limited - India
- Barasentosa Lestari - Indonesia
- Marubeni Corporation - India
- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
- Metalloyd Limited - United Kingdom
- Ambuja Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Development Corp, Philippines
- Meralco Power Generation, Philippines
- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Manunggal Multi Energi - Indonesia
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- Global Business Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Pendopo Energi Batubara - Indonesia
- IEA Clean Coal Centre - UK
- Central Electricity Authority - India
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- Power Finance Corporation Ltd., India
- Thiess Contractors Indonesia
- GMR Energy Limited - India
- Jaiprakash Power Ventures ltd
- Savvy Resources Ltd - HongKong
- Ind-Barath Power Infra Limited - India
- Sarangani Energy Corporation, Philippines
- Antam Resourcindo - Indonesia
- Uttam Galva Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Lanco Infratech Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Sakthi Sugars Limited - India
- GVK Power & Infra Limited - India
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- Parliament of New Zealand
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- Global Coal Blending Company Limited - Australia
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- Videocon Industries ltd - India
- Miang Besar Coal Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Parry Sugars Refinery, India
- Karaikal Port Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Aboitiz Power Corporation - Philippines
- White Energy Company Limited
- Toyota Tsusho Corporation, Japan
- Chamber of Mines of South Africa
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Edison Trading Spa - Italy
- PetroVietnam Power Coal Import and Supply Company
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- Mercator Lines Limited - India
- AsiaOL BioFuels Corp., Philippines
- Intertek Mineral Services - Indonesia
- Commonwealth Bank - Australia
- Siam City Cement - Thailand
- Larsen & Toubro Limited - India
- Riau Bara Harum - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Heidelberg Cement - Germany
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Attock Cement Pakistan Limited
- Electricity Authority, New Zealand
- South Luzon Thermal Energy Corporation
- Globalindo Alam Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Orica Australia Pty. Ltd.
- Energy Link Ltd, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Australian Coal Association
- Central Java Power - Indonesia
- Minerals Council of Australia
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- New Zealand Coal & Carbon
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