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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, 22 November 11
NTPC TO BUY 2 MMT OF IMPORTED COAL FOR ITS FOUR PLANTS
COALspot.com - NTPC Limited, incorporated in 1975 as a public sector company wholly owned by Government of India, the largest thermal power generati ...
Tuesday, 22 November 11
ABM INVESTAMA SETS IPO AT RP 3,750
Insider Stories reported that, Integrated energy company PT ABM Investama Tbk has determined the IPO price at Rp3,750 (approximately US$ 0.415) per ...
Tuesday, 22 November 11
A SURPRISINGLY STRONG WEEK FOR THE CAPES - BRS
Positive gains for most of the segments this week, the exception being the Handysizes. Overall the BDI ended the week at 1,895 points (+3.3% week-on ...
Tuesday, 22 November 11
APPETITE FOR DRY BULK VESSELS SLOWS DOWN AT THE START OF THE WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market was down at the beginning of the week, as demand for Capesize vessels was particularly low. The industry’s benchmark, the ...
Sunday, 20 November 11
THE FREIGHT MARKETS EXPECTED TO BE FIRM NEXT WEEK - VISTAAR
COALspot.com - The market continued to move up with all sectors gaining except for handy size.
The BDI was up by 3.26 pct and closed at 1895 poin ...
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- Star Paper Mills Limited - India
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Globalindo Alam Lestari - Indonesia
- Tamil Nadu electricity Board
- AsiaOL BioFuels Corp., Philippines
- PTC India Limited - India
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Minerals Council of Australia
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parliament of New Zealand
- Essar Steel Hazira Ltd - India
- SMG Consultants - Indonesia
- Posco Energy - South Korea
- Rashtriya Ispat Nigam Limited - India
- Heidelberg Cement - Germany
- GN Power Mariveles Coal Plant, Philippines
- Sindya Power Generating Company Private Ltd
- Edison Trading Spa - Italy
- Holcim Trading Pte Ltd - Singapore
- Iligan Light & Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- MS Steel International - UAE
- Billiton Holdings Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
- Latin American Coal - Colombia
- Sree Jayajothi Cements Limited - India
- Mintek Dendrill Indonesia
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Attock Cement Pakistan Limited
- Kumho Petrochemical, South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Baramulti Group, Indonesia
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- Simpson Spence & Young - Indonesia
- Eastern Energy - Thailand
- Global Business Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- OPG Power Generation Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- Parry Sugars Refinery, India
- Directorate General of MIneral and Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Gujarat Sidhee Cement - India
- The University of Queensland
- Goldman Sachs - Singapore
- Indian Energy Exchange, India
- Maheswari Brothers Coal Limited - India
- Australian Commodity Traders Exchange
- Interocean Group of Companies - India
- European Bulk Services B.V. - Netherlands
- Vizag Seaport Private Limited - India
- PNOC Exploration Corporation - Philippines
- Indian Oil Corporation Limited
- Africa Commodities Group - South Africa
- London Commodity Brokers - England
- Timah Investasi Mineral - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Wood Mackenzie - Singapore
- Independent Power Producers Association of India
- Makarim & Taira - Indonesia
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- Alfred C Toepfer International GmbH - Germany
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Romanian Commodities Exchange
- India Bulls Power Limited - India
- Bukit Makmur.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bhatia International Limited - India
- Sical Logistics Limited - India
- Coal and Oil Company - UAE
- Wilmar Investment Holdings
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- SN Aboitiz Power Inc, Philippines
- Meralco Power Generation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Chettinad Cement Corporation Ltd - India
- Bhoruka Overseas - Indonesia
- Deloitte Consulting - India
- Formosa Plastics Group - Taiwan
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Xindia Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Baiduri Energy - Indonesia
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- Standard Chartered Bank - UAE
- Indo Tambangraya Megah - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Videocon Industries ltd - India
- Sojitz Corporation - Japan
- Ministry of Finance - Indonesia
- Thiess Contractors Indonesia
- Intertek Mineral Services - Indonesia
- Jindal Steel & Power Ltd - India
- Kobexindo Tractors - Indoneisa
- Mercator Lines Limited - India
- VISA Power Limited - India
- Carbofer General Trading SA - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Salva Resources Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- Aboitiz Power Corporation - Philippines
- Port Waratah Coal Services - Australia
- McConnell Dowell - Australia
- Banpu Public Company Limited - Thailand
- IHS Mccloskey Coal Group - USA
- Altura Mining Limited, Indonesia
- Electricity Authority, New Zealand
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- TeaM Sual Corporation - Philippines
- Uttam Galva Steels Limited - India
- Manunggal Multi Energi - Indonesia
- Singapore Mercantile Exchange
- Karaikal Port Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bayan Resources Tbk. - Indonesia
- Energy Link Ltd, New Zealand
- CIMB Investment Bank - Malaysia
- Vedanta Resources Plc - India
- GVK Power & Infra Limited - India
- Barasentosa Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Power Finance Corporation Ltd., India
- Mercuria Energy - Indonesia
- Cement Manufacturers Association - India
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- Trasteel International SA, Italy
- Pendopo Energi Batubara - Indonesia
- Antam Resourcindo - Indonesia
- Energy Development Corp, Philippines
- Siam City Cement PLC, Thailand
- GMR Energy Limited - India
- Karbindo Abesyapradhi - Indoneisa
- South Luzon Thermal Energy Corporation
- Global Coal Blending Company Limited - Australia
- Australian Coal Association
- ICICI Bank Limited - India
- IEA Clean Coal Centre - UK
- Larsen & Toubro Limited - India
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Bulk Trading Sa - Switzerland
- Sarangani Energy Corporation, Philippines
- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Toyota Tsusho Corporation, Japan
- Kaltim Prima Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Economic Council, Georgia
- Marubeni Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Semirara Mining Corp, Philippines
- Central Electricity Authority - India
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- CNBM International Corporation - China
- Semirara Mining and Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Orica Australia Pty. Ltd.
- Renaissance Capital - South Africa
- Ambuja Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- SMC Global Power, Philippines
- Miang Besar Coal Terminal - Indonesia
- Malabar Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
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