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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, 29 November 11
DRY BULK MARKET BEGINS WEEK ON HIGHER NOTE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Contrary to what had been the case during the past few weeks, this one began on a high note for the dry bulk market, with the Capesize sector pullin ...
Monday, 28 November 11
CITING CONTRACTS, MINING FIRMS ARE NOT PAYING ROYALTIES UNDER LAW - THE JAKARTA POST
The Jakarta Post reported that, when the 2009 Law on Minerals and Coal was endorsed, hopes that Indonesia could maximize its revenue from the minera ...
Monday, 28 November 11
NEW ENVIRONMENTAL MARINE REGULATIONS TO IMPACT SHIPPING IN 2012 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
August of next year will see some major changes for marine navigation. It’s when the North American ECA will come into force, introducing a 1% ...
Sunday, 27 November 11
INDIA'S KPCL TO IMPORT 50 MMT OF COAL FOR 10 YEARS
COALspot.com - Karnataka Power Corporation Limited (KPCL) will buy 5 million metric tonnes of coal annually for 10 years starting from 2015.
In a ...
Saturday, 26 November 11
INDIAN PORTS ARE BECOME COAL STOCKPILES..!!
COALspot.com - The Indian coal stocks and power tariff situation is the hot topic among the world coal producers as well as Indian coal importers.&n ...
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- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Sical Logistics Limited - India
- Orica Mining Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ASAPP Information Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- GMR Energy Limited - India
- Port Waratah Coal Services - Australia
- Kumho Petrochemical, South Korea
- Mintek Dendrill Indonesia
- Leighton Contractors Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Xindia Steels Limited - India
- Economic Council, Georgia
- Jindal Steel & Power Ltd - India
- San Jose City I Power Corp, Philippines
- Savvy Resources Ltd - HongKong
- Directorate General of MIneral and Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- Petron Corporation, Philippines
- IEA Clean Coal Centre - UK
- Larsen & Toubro Limited - India
- Malabar Cements Ltd - India
- Ministry of Mines - Canada
- Bahari Cakrawala Sebuku - Indonesia
- Samtan Co., Ltd - South Korea
- Carbofer General Trading SA - India
- Formosa Plastics Group - Taiwan
- Power Finance Corporation Ltd., India
- MS Steel International - UAE
- Barasentosa Lestari - Indonesia
- Romanian Commodities Exchange
- Kapuas Tunggal Persada - Indonesia
- Therma Luzon, Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Baramulti Group, Indonesia
- Coastal Gujarat Power Limited - India
- Antam Resourcindo - Indonesia
- Maheswari Brothers Coal Limited - India
- Meralco Power Generation, Philippines
- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
- McConnell Dowell - Australia
- South Luzon Thermal Energy Corporation
- Wood Mackenzie - Singapore
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- Cement Manufacturers Association - India
- Australian Coal Association
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- OPG Power Generation Pvt Ltd - India
- Singapore Mercantile Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- London Commodity Brokers - England
- Vizag Seaport Private Limited - India
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- Tata Chemicals Ltd - India
- White Energy Company Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Toyota Tsusho Corporation, Japan
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- Parliament of New Zealand
- Indonesian Coal Mining Association
- Aditya Birla Group - India
- Price Waterhouse Coopers - Russia
- Indogreen Group - Indonesia
- Makarim & Taira - Indonesia
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Oldendorff Carriers - Singapore
- Globalindo Alam Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- Edison Trading Spa - Italy
- PetroVietnam Power Coal Import and Supply Company
- Global Green Power PLC Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- Planning Commission, India
- Grasim Industreis Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- Ind-Barath Power Infra Limited - India
- Videocon Industries ltd - India
- Georgia Ports Authority, United States
- Minerals Council of Australia
- Vijayanagar Sugar Pvt Ltd - India
- Vedanta Resources Plc - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Posco Energy - South Korea
- Neyveli Lignite Corporation Ltd, - India
- PTC India Limited - India
- Agrawal Coal Company - India
- Gujarat Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Commonwealth Bank - Australia
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- Marubeni Corporation - India
- Aboitiz Power Corporation - Philippines
- Metalloyd Limited - United Kingdom
- The University of Queensland
- ICICI Bank Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- The Treasury - Australian Government
- Pipit Mutiara Jaya. PT, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- SMC Global Power, Philippines
- Ministry of Finance - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- Ceylon Electricity Board - Sri Lanka
- Coal and Oil Company - UAE
- AsiaOL BioFuels Corp., Philippines
- Sarangani Energy Corporation, Philippines
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
- Tamil Nadu electricity Board
- Billiton Holdings Pty Ltd - Australia
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
- Latin American Coal - Colombia
- Bukit Baiduri Energy - Indonesia
- Bhushan Steel Limited - India
- PowerSource Philippines DevCo
- Semirara Mining and Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Borneo Indobara - Indonesia
- New Zealand Coal & Carbon
- LBH Netherlands Bv - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Mjunction Services Limited - India
- Karaikal Port Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Manunggal Multi Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Parry Sugars Refinery, India
- Kaltim Prima Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Eastern Energy - Thailand
- Kartika Selabumi Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Eastern Coal Council - USA
- Australian Commodity Traders Exchange
- Indian Energy Exchange, India
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Holcim Trading Pte Ltd - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Star Paper Mills Limited - India
- Global Business Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Intertek Mineral Services - Indonesia
- Kobexindo Tractors - Indoneisa
- European Bulk Services B.V. - Netherlands
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- Essar Steel Hazira Ltd - India
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- Bayan Resources Tbk. - Indonesia
- Kepco SPC Power Corporation, Philippines
- Central Electricity Authority - India
- TNB Fuel Sdn Bhd - Malaysia
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- SN Aboitiz Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Rio Tinto Coal - Australia
- Riau Bara Harum - Indonesia
- Standard Chartered Bank - UAE
- Bhoruka Overseas - Indonesia
- Meenaskhi Energy Private Limited - India
- Gujarat Sidhee Cement - India
- Electricity Authority, New Zealand
- VISA Power Limited - India
- Energy Development Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Anglo American - United Kingdom
- Indian Oil Corporation Limited
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- Lanco Infratech Ltd - India
- Siam City Cement - Thailand
- Heidelberg Cement - Germany
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