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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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Wednesday, 16 November 11
A STRONG WEEK FOR THE CAPES - BRS
A sharp bounce by the Cape market pushed the BDI up by 3% last week. This was despite a softening in the other indices with the Panamax, Supramax an ...
Monday, 14 November 11
BORL SEEKS 660K MT OF LOW SULPHUR COAL
COALspot.com - BORL India has issued a tender for around 660,000 MT of 4500 - 5500 kcal/kg sub-bituminous Coal.
Bharat Oman Refineries Ltd ...
Sunday, 13 November 11
BUNKER PRICES REMAINED FIRM
COALspot.com - The market seemed to recover this week with the BDI and Cape Index up.
The BDI was up by only about 2.86 pct closing at 1835 point ...
Saturday, 12 November 11
COALINDO ENERGY LAUNCHED INDEX FOR 3400 GAR COAL
COALspot.com - PT Coalindo Energy, in cooperation with Argus Media Limited, launched the coal index for low-rank coal with a calorific value of 3,40 ...
Saturday, 12 November 11
BBJ WILL RELEASE A COAL CONTRACT
Jakarta Futures Exchange will soon release a coal futures contracts during the quarter 1 / 2012.
Director of the Jakarta Futures Exchange (BBJ) S ...
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- Agrawal Coal Company - India
- Globalindo Alam Lestari - Indonesia
- PTC India Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Sree Jayajothi Cements Limited - India
- Aboitiz Power Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Australian Coal Association
- Krishnapatnam Port Company Ltd. - India
- Vijayanagar Sugar Pvt Ltd - India
- Indonesian Coal Mining Association
- Renaissance Capital - South Africa
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- Trasteel International SA, Italy
- Africa Commodities Group - South Africa
- Tamil Nadu electricity Board
- Semirara Mining Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Meenaskhi Energy Private Limited - India
- Kartika Selabumi Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Thai Mozambique Logistica
- Bhatia International Limited - India
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- TeaM Sual Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Altura Mining Limited, Indonesia
- CNBM International Corporation - China
- Aditya Birla Group - India
- Mercuria Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Indika Energy - Indonesia
- Malabar Cements Ltd - India
- Planning Commission, India
- Port Waratah Coal Services - Australia
- The State Trading Corporation of India Ltd
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Parry Sugars Refinery, India
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- Parliament of New Zealand
- Minerals Council of Australia
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- Karaikal Port Pvt Ltd - India
- Attock Cement Pakistan Limited
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- Sical Logistics Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- Price Waterhouse Coopers - Russia
- Chamber of Mines of South Africa
- Coalindo Energy - Indonesia
- Sakthi Sugars Limited - India
- Ministry of Transport, Egypt
- Vizag Seaport Private Limited - India
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- Chettinad Cement Corporation Ltd - India
- Riau Bara Harum - Indonesia
- Central Java Power - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- IEA Clean Coal Centre - UK
- Orica Mining Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Global Coal Blending Company Limited - Australia
- White Energy Company Limited
- Mintek Dendrill Indonesia
- The Treasury - Australian Government
- Wood Mackenzie - Singapore
- Lanco Infratech Ltd - India
- Electricity Authority, New Zealand
- PowerSource Philippines DevCo
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Ministry of Mines - Canada
- New Zealand Coal & Carbon
- Commonwealth Bank - Australia
- Orica Australia Pty. Ltd.
- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- Global Green Power PLC Corporation, Philippines
- Oldendorff Carriers - Singapore
- Medco Energi Mining Internasional
- Salva Resources Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- San Jose City I Power Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- Carbofer General Trading SA - India
- Bukit Asam (Persero) Tbk - Indonesia
- Petron Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Global Business Power Corporation, Philippines
- The University of Queensland
- Makarim & Taira - Indonesia
- Siam City Cement - Thailand
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- Eastern Energy - Thailand
- Australian Commodity Traders Exchange
- Georgia Ports Authority, United States
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Indogreen Group - Indonesia
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Posco Energy - South Korea
- Ambuja Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Gujarat Sidhee Cement - India
- Maharashtra Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- Manunggal Multi Energi - Indonesia
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Dalmia Cement Bharat India
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- Indian Energy Exchange, India
- Cement Manufacturers Association - India
- GAC Shipping (India) Pvt Ltd
- Mercator Lines Limited - India
- Meralco Power Generation, Philippines
- Samtan Co., Ltd - South Korea
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Power Finance Corporation Ltd., India
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
- OPG Power Generation Pvt Ltd - India
- Indian Oil Corporation Limited
- South Luzon Thermal Energy Corporation
- Singapore Mercantile Exchange
- Banpu Public Company Limited - Thailand
- Star Paper Mills Limited - India
- Bhushan Steel Limited - India
- Larsen & Toubro Limited - India
- Merrill Lynch Commodities Europe
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Marubeni Corporation - India
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- Eastern Coal Council - USA
- Latin American Coal - Colombia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- India Bulls Power Limited - India
- Interocean Group of Companies - India
- Electricity Generating Authority of Thailand
- Energy Link Ltd, New Zealand
- CIMB Investment Bank - Malaysia
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Wilmar Investment Holdings
- Simpson Spence & Young - Indonesia
- Economic Council, Georgia
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- Holcim Trading Pte Ltd - Singapore
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- European Bulk Services B.V. - Netherlands
- Vedanta Resources Plc - India
- PNOC Exploration Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
- Kepco SPC Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Directorate Of Revenue Intelligence - India
- Jaiprakash Power Ventures ltd
- Baramulti Group, Indonesia
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