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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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- Chamber of Mines of South Africa
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Central Electricity Authority - India
- CIMB Investment Bank - Malaysia
- Manunggal Multi Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Dalmia Cement Bharat India
- Karaikal Port Pvt Ltd - India
- Indonesian Coal Mining Association
- Tamil Nadu electricity Board
- Siam City Cement PLC, Thailand
- Sree Jayajothi Cements Limited - India
- TeaM Sual Corporation - Philippines
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- CNBM International Corporation - China
- New Zealand Coal & Carbon
- MS Steel International - UAE
- Rashtriya Ispat Nigam Limited - India
- The State Trading Corporation of India Ltd
- Directorate Of Revenue Intelligence - India
- Savvy Resources Ltd - HongKong
- Gujarat Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- PowerSource Philippines DevCo
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maheswari Brothers Coal Limited - India
- Essar Steel Hazira Ltd - India
- Rio Tinto Coal - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Africa Commodities Group - South Africa
- Merrill Lynch Commodities Europe
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Planning Commission, India
- Interocean Group of Companies - India
- Orica Australia Pty. Ltd.
- Coastal Gujarat Power Limited - India
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Deloitte Consulting - India
- Bukit Asam (Persero) Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- India Bulls Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Makarim & Taira - Indonesia
- Sojitz Corporation - Japan
- Trasteel International SA, Italy
- PTC India Limited - India
- Eastern Energy - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Indian Energy Exchange, India
- Gujarat Sidhee Cement - India
- Global Green Power PLC Corporation, Philippines
- Thiess Contractors Indonesia
- Cement Manufacturers Association - India
- Minerals Council of Australia
- Intertek Mineral Services - Indonesia
- Attock Cement Pakistan Limited
- Standard Chartered Bank - UAE
- San Jose City I Power Corp, Philippines
- Wood Mackenzie - Singapore
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Bangladesh Power Developement Board
- Bayan Resources Tbk. - Indonesia
- Coalindo Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Semirara Mining Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Indo Tambangraya Megah - Indonesia
- Oldendorff Carriers - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Electricity Authority, New Zealand
- Heidelberg Cement - Germany
- GMR Energy Limited - India
- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- Vizag Seaport Private Limited - India
- Posco Energy - South Korea
- Mintek Dendrill Indonesia
- Cigading International Bulk Terminal - Indonesia
- Mercuria Energy - Indonesia
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Romanian Commodities Exchange
- Maharashtra Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Mjunction Services Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Kalimantan Lumbung Energi - Indonesia
- Bharathi Cement Corporation - India
- Australian Commodity Traders Exchange
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- Bhushan Steel Limited - India
- Ministry of Transport, Egypt
- Videocon Industries ltd - India
- Marubeni Corporation - India
- Sakthi Sugars Limited - India
- Madhucon Powers Ltd - India
- Parliament of New Zealand
- Samtan Co., Ltd - South Korea
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jaiprakash Power Ventures ltd
- Kideco Jaya Agung - Indonesia
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- Global Coal Blending Company Limited - Australia
- Eastern Coal Council - USA
- Miang Besar Coal Terminal - Indonesia
- ASAPP Information Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Malabar Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Billiton Holdings Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- Kapuas Tunggal Persada - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- Renaissance Capital - South Africa
- Larsen & Toubro Limited - India
- Central Java Power - Indonesia
- SMC Global Power, Philippines
- IEA Clean Coal Centre - UK
- Jorong Barutama Greston.PT - Indonesia
- Baramulti Group, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Altura Mining Limited, Indonesia
- Meenaskhi Energy Private Limited - India
- Bukit Baiduri Energy - Indonesia
- Commonwealth Bank - Australia
- Global Business Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Sical Logistics Limited - India
- Sindya Power Generating Company Private Ltd
- GAC Shipping (India) Pvt Ltd
- Star Paper Mills Limited - India
- Metalloyd Limited - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Borneo Indobara - Indonesia
- Goldman Sachs - Singapore
- Alfred C Toepfer International GmbH - Germany
- ICICI Bank Limited - India
- Energy Development Corp, Philippines
- White Energy Company Limited
- GN Power Mariveles Coal Plant, Philippines
- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
- Riau Bara Harum - Indonesia
- Tata Chemicals Ltd - India
- GVK Power & Infra Limited - India
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- Medco Energi Mining Internasional
- Thai Mozambique Logistica
- Directorate General of MIneral and Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- OPG Power Generation Pvt Ltd - India
- Vedanta Resources Plc - India
- The Treasury - Australian Government
- Independent Power Producers Association of India
- Straits Asia Resources Limited - Singapore
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Carbofer General Trading SA - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- Orica Mining Services - Indonesia
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Uttam Galva Steels Limited - India
- Coal and Oil Company - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Energy Link Ltd, New Zealand
- McConnell Dowell - Australia
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- Australian Coal Association
- Wilmar Investment Holdings
- Timah Investasi Mineral - Indoneisa
- The University of Queensland
- Mercator Lines Limited - India
- VISA Power Limited - India
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
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