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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, 05 December 11
THE DECEMBER HBA FELL 11% FROM ITS PEAK AT US$127.05 PER TON IN FEBRUARY 2011
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia has sets the December 2011 coal reference price at US$ 112.67 per ton US$ 3.98 ...
Monday, 05 December 11
SGX LAUNCHED IHS MCCLOSKEY/XINHUA INFOLINK OTC CFR SOUTH CHINA COAL CONTRACT TODAY
COALspot.com - In order to meet the demand of the coal industry for an effective coal hedging tool with counterparty credit risk mitigation facility ...
Monday, 05 December 11
DRY BULK RATES LOOKING TO EXTEND GAINS THIS WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Capesize dry bulk carrier owners have had a great week, with rates rising for six straight sessions (including the end of the week before that). As ...
Sunday, 04 December 11
SUPRAMAX TRIPS VIA INDONESIA WERE REPORTED AROUND $ 7500 - 8000 PD
COALspot.com - The BDI and Cape index recovered this week. The BDI was up by 3.26 pct and Cape index saw a big jump and closed at 3409 points (up by ...
Saturday, 03 December 11
BORNEO TO SPEND US$600 MIO CAPEX - INSIDER STORIES
Insider Stories reported that, Coking coal miner PT Borneo Lumbung Energi & Metal Tbk (BORN) plans to spend US$600 million capital expenditure ( ...
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- Simpson Spence & Young - Indonesia
- MS Steel International - UAE
- Latin American Coal - Colombia
- Meenaskhi Energy Private Limited - India
- Oldendorff Carriers - Singapore
- PTC India Limited - India
- Kumho Petrochemical, South Korea
- Orica Australia Pty. Ltd.
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- SMC Global Power, Philippines
- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
- ICICI Bank Limited - India
- Bhushan Steel Limited - India
- Siam City Cement - Thailand
- Romanian Commodities Exchange
- Neyveli Lignite Corporation Ltd, - India
- Economic Council, Georgia
- Holcim Trading Pte Ltd - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- VISA Power Limited - India
- Agrawal Coal Company - India
- Energy Development Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Gujarat Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- Mintek Dendrill Indonesia
- Pendopo Energi Batubara - Indonesia
- Bulk Trading Sa - Switzerland
- Manunggal Multi Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Global Business Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- McConnell Dowell - Australia
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- Renaissance Capital - South Africa
- Australian Coal Association
- Leighton Contractors Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- GAC Shipping (India) Pvt Ltd
- Grasim Industreis Ltd - India
- Dalmia Cement Bharat India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhatia International Limited - India
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- Parry Sugars Refinery, India
- Directorate General of MIneral and Coal - Indonesia
- Africa Commodities Group - South Africa
- Kideco Jaya Agung - Indonesia
- Wood Mackenzie - Singapore
- Thai Mozambique Logistica
- GMR Energy Limited - India
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- Semirara Mining and Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Metalloyd Limited - United Kingdom
- Interocean Group of Companies - India
- Global Green Power PLC Corporation, Philippines
- The Treasury - Australian Government
- Bhoruka Overseas - Indonesia
- Planning Commission, India
- Mercator Lines Limited - India
- Madhucon Powers Ltd - India
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Vedanta Resources Plc - India
- Thiess Contractors Indonesia
- Timah Investasi Mineral - Indoneisa
- Coalindo Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Power Finance Corporation Ltd., India
- Wilmar Investment Holdings
- Makarim & Taira - Indonesia
- Indonesian Coal Mining Association
- Global Coal Blending Company Limited - Australia
- PetroVietnam Power Coal Import and Supply Company
- Bukit Asam (Persero) Tbk - Indonesia
- Riau Bara Harum - Indonesia
- PowerSource Philippines DevCo
- IEA Clean Coal Centre - UK
- Alfred C Toepfer International GmbH - Germany
- Ministry of Mines - Canada
- Bukit Makmur.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Kartika Selabumi Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Indo Tambangraya Megah - Indonesia
- Borneo Indobara - Indonesia
- Xindia Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Semirara Mining Corp, Philippines
- Barasentosa Lestari - Indonesia
- Bangladesh Power Developement Board
- Chamber of Mines of South Africa
- Tamil Nadu electricity Board
- Standard Chartered Bank - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement PLC, Thailand
- Aboitiz Power Corporation - Philippines
- Edison Trading Spa - Italy
- Ambuja Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Heidelberg Cement - Germany
- Petrochimia International Co. Ltd.- Taiwan
- OPG Power Generation Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Lanco Infratech Ltd - India
- ASAPP Information Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asmin Koalindo Tuhup - Indonesia
- Sree Jayajothi Cements Limited - India
- Vizag Seaport Private Limited - India
- Indika Energy - Indonesia
- New Zealand Coal & Carbon
- Georgia Ports Authority, United States
- Samtan Co., Ltd - South Korea
- Sojitz Corporation - Japan
- European Bulk Services B.V. - Netherlands
- Chettinad Cement Corporation Ltd - India
- Ind-Barath Power Infra Limited - India
- Altura Mining Limited, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Cigading International Bulk Terminal - Indonesia
- Central Electricity Authority - India
- Miang Besar Coal Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- Carbofer General Trading SA - India
- Essar Steel Hazira Ltd - India
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Rio Tinto Coal - Australia
- Marubeni Corporation - India
- Commonwealth Bank - Australia
- Maharashtra Electricity Regulatory Commission - India
- The University of Queensland
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- Star Paper Mills Limited - India
- Orica Mining Services - Indonesia
- Aditya Birla Group - India
- Mercuria Energy - Indonesia
- Port Waratah Coal Services - Australia
- Intertek Mineral Services - Indonesia
- Mjunction Services Limited - India
- India Bulls Power Limited - India
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Central Java Power - Indonesia
- Ministry of Finance - Indonesia
- Singapore Mercantile Exchange
- White Energy Company Limited
- Kohat Cement Company Ltd. - Pakistan
- Cement Manufacturers Association - India
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- Goldman Sachs - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Energy - Thailand
- GVK Power & Infra Limited - India
- Indogreen Group - Indonesia
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- Sindya Power Generating Company Private Ltd
- Kapuas Tunggal Persada - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Malabar Cements Ltd - India
- Trasteel International SA, Italy
- Uttam Galva Steels Limited - India
- Indian Oil Corporation Limited
- Coal and Oil Company - UAE
- Electricity Authority, New Zealand
- Eastern Coal Council - USA
- Rashtriya Ispat Nigam Limited - India
- Meralco Power Generation, Philippines
- Indian Energy Exchange, India
- GN Power Mariveles Coal Plant, Philippines
- SMG Consultants - Indonesia
- Karaikal Port Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Bharathi Cement Corporation - India
- Tata Chemicals Ltd - India
- Savvy Resources Ltd - HongKong
- TeaM Sual Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
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