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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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Friday, 18 November 11
MMTC SEEKS 1.365 MMT OF IMPORTED COAL
COALspot.com - India's MMTC, the largest trading company of India and a major trading company of Asia, has issued a term supply tender for 1.365Mt ...
Friday, 18 November 11
KPC, ARUTMIN OUTPUT REACHED 47.1 MIO TONS - INSIDER STORIES
PT Kaltim Prima Coal (KPC) and PT Arutmin Indonesia, reported 47.1 million tons of coal production in 9M 2011, according to Indiser Stories.
Insi ...
Friday, 18 November 11
THE ATLANTIC SUPRAMAX MARKET EXPERIENCED A STEADY AND FIRM TENDENCY
Handy
The Atlantic Supramax market experienced a steady and firm tendency this week. Especially the North Atlantic and Mediterranean position ...
Friday, 18 November 11
BERAU COAL 9M PROFIT SOARS 194.46% - INSIDER STORIES
Insider Stories reported that, PT Berau Coal Energy Tbk (BRAU), which is 84.7% owned by Bumi Plc, reported a 194.46% jump in net profit by end of Se ...
Thursday, 17 November 11
DRY BULK MARKET INCHES FORWARD AND INTO HIGHER GROUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market edged higher yesterday, on the back of stronger demand for Capesize vessels and general improvement of sentiment on most of the ...
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- Star Paper Mills Limited - India
- Merrill Lynch Commodities Europe
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- Straits Asia Resources Limited - Singapore
- Australian Coal Association
- Siam City Cement - Thailand
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- India Bulls Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- GVK Power & Infra Limited - India
- Cement Manufacturers Association - India
- Altura Mining Limited, Indonesia
- Sakthi Sugars Limited - India
- Videocon Industries ltd - India
- Bayan Resources Tbk. - Indonesia
- PowerSource Philippines DevCo
- Kobexindo Tractors - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Minerals Council of Australia
- OPG Power Generation Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- GMR Energy Limited - India
- Bukit Makmur.PT - Indonesia
- Mercator Lines Limited - India
- Power Finance Corporation Ltd., India
- Carbofer General Trading SA - India
- Thai Mozambique Logistica
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Indian Energy Exchange, India
- Coastal Gujarat Power Limited - India
- Commonwealth Bank - Australia
- Tamil Nadu electricity Board
- Vizag Seaport Private Limited - India
- Sree Jayajothi Cements Limited - India
- Simpson Spence & Young - Indonesia
- International Coal Ventures Pvt Ltd - India
- SMG Consultants - Indonesia
- Intertek Mineral Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- PNOC Exploration Corporation - Philippines
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Romanian Commodities Exchange
- Mintek Dendrill Indonesia
- Pendopo Energi Batubara - Indonesia
- Economic Council, Georgia
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- PTC India Limited - India
- Uttam Galva Steels Limited - India
- Electricity Authority, New Zealand
- VISA Power Limited - India
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Global Business Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- Alfred C Toepfer International GmbH - Germany
- Price Waterhouse Coopers - Russia
- Bharathi Cement Corporation - India
- Interocean Group of Companies - India
- Globalindo Alam Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Australian Commodity Traders Exchange
- LBH Netherlands Bv - Netherlands
- Vedanta Resources Plc - India
- Deloitte Consulting - India
- Georgia Ports Authority, United States
- MS Steel International - UAE
- Manunggal Multi Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- Medco Energi Mining Internasional
- Global Coal Blending Company Limited - Australia
- Heidelberg Cement - Germany
- Ministry of Transport, Egypt
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
- Kaltim Prima Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- Meenaskhi Energy Private Limited - India
- Marubeni Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Mercuria Energy - Indonesia
- Central Electricity Authority - India
- Jindal Steel & Power Ltd - India
- Essar Steel Hazira Ltd - India
- Indian Oil Corporation Limited
- Independent Power Producers Association of India
- Latin American Coal - Colombia
- Gujarat Sidhee Cement - India
- Ind-Barath Power Infra Limited - India
- Makarim & Taira - Indonesia
- CNBM International Corporation - China
- Aboitiz Power Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- ICICI Bank Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- London Commodity Brokers - England
- SN Aboitiz Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Kartika Selabumi Mining - Indonesia
- Riau Bara Harum - Indonesia
- Baramulti Group, Indonesia
- Indogreen Group - Indonesia
- Eastern Energy - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Chamber of Mines of South Africa
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Coal and Oil Company - UAE
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- Anglo American - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- New Zealand Coal & Carbon
- Savvy Resources Ltd - HongKong
- Maheswari Brothers Coal Limited - India
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Meralco Power Generation, Philippines
- Eastern Coal Council - USA
- Ambuja Cements Ltd - India
- Central Java Power - Indonesia
- Bhoruka Overseas - Indonesia
- Miang Besar Coal Terminal - Indonesia
- The University of Queensland
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- Posco Energy - South Korea
- Wood Mackenzie - Singapore
- Banpu Public Company Limited - Thailand
- Indo Tambangraya Megah - Indonesia
- Grasim Industreis Ltd - India
- Malabar Cements Ltd - India
- Bangladesh Power Developement Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhatia International Limited - India
- TeaM Sual Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- Sinarmas Energy and Mining - Indonesia
- IEA Clean Coal Centre - UK
- Orica Australia Pty. Ltd.
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- Mjunction Services Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Wilmar Investment Holdings
- GAC Shipping (India) Pvt Ltd
- Binh Thuan Hamico - Vietnam
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Dalmia Cement Bharat India
- Orica Mining Services - Indonesia
- Africa Commodities Group - South Africa
- Sarangani Energy Corporation, Philippines
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bulk Trading Sa - Switzerland
- Energy Development Corp, Philippines
- Iligan Light & Power Inc, Philippines
- McConnell Dowell - Australia
- Billiton Holdings Pty Ltd - Australia
- Coalindo Energy - Indonesia
- SMC Global Power, Philippines
- Tata Chemicals Ltd - India
- Parry Sugars Refinery, India
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- Planning Commission, India
- Aditya Birla Group - India
- Ministry of Mines - Canada
- Leighton Contractors Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Directorate Of Revenue Intelligence - India
- Petrochimia International Co. Ltd.- Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Bukit Asam (Persero) Tbk - Indonesia
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Antam Resourcindo - Indonesia
- The Treasury - Australian Government
- Singapore Mercantile Exchange
- Krishnapatnam Port Company Ltd. - India
- Electricity Generating Authority of Thailand
- Ministry of Finance - Indonesia
- The State Trading Corporation of India Ltd
- Trasteel International SA, Italy
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