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Wednesday, 21 August 13
DRY BULK SHIPPING - POSITIVE WINDOW FOR CAPESIZE OWNERS - PETER SAND
 By: Peter Sand, Chief Shipping Analyst, BIMCO
Demand:
“Expect the unexpected from the dry bulk market” was what we wrote last time around and what we got – but did not anticipate. As the Summer heat arrived, Capesize owners found themselves basking in the sun. Average earnings for Capesize vessels went from USD 6,000 per day to USD 12,000 per day in less than two weeks. The momentum lifted rates as high as USD 15,218 per day on 1 July. This was a sizeable and very welcome surprise as the combination, once again, of vessels being at the “right place at the right time” proved to be profitable. As Brazilian iron ore exports in particular jumped after some weaker months, congestion at load ports rose and charterers were left searching for prompt and available tonnage. At the same time, Australian iron ore ports were hit by heavy rainfall which also affected shipping. It is a little miracle that tight situations can still appear and push up freight rates, in spite of tonnage being abundant in the market. Since the 1 July peak, freight rates have slid slowly, as the imbalanced market is smoothed by ballasting tonnage returning to the Atlantic from the Far East. Some of the weakness in most of H1 is due to the fact that Brazil has been losing some of its share of the iron ore market to Australia.
Besides that, the market is affected by falling commodity prices (iron ore, steel and coal). This could, in theory, positively affect shipping demand if consumers and traders take advantage of it and stock up, but it may as well mirror a fundamental slowdown in demand.
No slowdown is seen in steel production fortunately, at Chinese steel production went up by 9.2% in the first half as compared to same period last year. Iron ore imports “only” went up by 4.8% in the same period of time. Both indicators are positive for shipping demand. Traditionally, Chinese iron ore demand is stronger in the second half of the year; this could build a case for stronger rates in the larger segments in Q3 and Q4 if this seasonality is repeated.
The larger production of steel and moderate consumption of same has put steel prices under pressure. Falling steel prices are normally quite worrying for the dry bulk sector. In the wake of several months with record high steel production, prices weakened continuously, getting quite close to the threateningly low levels of August/September 2012. But has the scare just evaporated with the latest pick up in prices toward the end of July? That is still too early to call despite the optimism in most recent “official” China manufacturing PMI report.
Supply:
During the past two months, 10 million DWT of new tonnage has joined the dry bulk fleet, which now totals at 704 million DWT. This is up by 3.6% since 1 January.
Looking at future delivery prospect, 70% of all new orders placed during the past two months have been for 2015 delivery. In addition to some postponements, this has pushed the projected orders for 2015 delivery up from 20 million to 25 million DWT.
For 2013, BIMCO projects new tonnage of 70 million to hit the water, a four-year low, and a gradual return to a lower supply pressure on the market.
While new orders have been fairly equally distributed for the past two months as a whole, June saw a flurry of Supramax orders whereas July was pretty biased towards Capesize vessels. As a lot of Panamax ships are currently being delivered into an oversupplied market, owners showed only little appetite for placing new orders for Panamax ships.
In total, the dry bulk order book has grown by 3.2 million DWT during the recent two months. It now stands at 126 million DWT. It’s the first time in more than two and a half years that the order book has increased, on its way down from 300 million DWT highs at the end of 2010.
As 29 million DWT of new vessels have been ordered so far in 2013, the total has already surpassed that of the full year 2012. This development seems to have stopped the slide of new building prices, which are now seen to be on a slow rise, with the exception of Panamax new building prices which are still flat, as demand does not support higher prices in this segment yet.
Outlook:
As the global and Chinese GDP are now seen lower than earlier in the year, we also have to settle for something that might be the sixth consecutive year of supply outpacing demand. But the race is still on, as supply is set for 5.7% and demand for 5-6%.
China’s import of agricultural products could provide some upside, as wheat and soybeans could end up falling short of demand due to adverse weather conditions. If imports of wheat are supplied predominantly by US producers, which is likely, this may bring some growth in demand due to long sailing distances. The same effect can be expected by increased Brazilian exports of soybeans in the second half of the year following a congestion-affected export level in the January-May period.
In recent months, Asian thermal coal prices have nose-dived, as plenty of coal is offered in the market. Utilities are no longer worried about running stocks low, as supply is excessive. During the second quarter, Russian, Columbian and American coal was also offered into the market, putting further pressure on traditional Indonesian and Australian coal markets. FOB thermal coal prices for “Newcastle 5500” or “Richards Bay 5500” were just above USD 66 per Mt coming down from USD 75 per Mt and USD 72 per Mt respectively. As we know, demand is healthy, the lower prices could prove a catalyst for higher freight rates as we move further into Q3. Further weakening of the Indian Rupee or the Japanese Yen could dampen the positive effect somewhat.
To sum up, our forecast for the coming 2 months:
BIMCO holds the view that Capesize TC average rates are expected around USD 8,000-13,000 per day.
Panamax is expected to stay in the USD 6,000-9,000 per day interval.
For the Supramax segment, BIMCO forecasts freight rates in the USD 8,000-11,000 per day interval,
whereas Handysize rates are forecast to show limited volatility in the interval of USD 6,500-9,000 per day.
Source: BIMCO Peter Sand Chief Shipping Analyst / Hellenic Shipping
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Friday, 01 December 23
COAL MINERS GROUP EXPECTS INDONESIA’S 2023 COAL OUTPUT TO SURPASS TARGET - REUTERS
The Indonesian Coal Mining Association (ICMA) expects the country’s 2023 coal output to surpass the official target of 695 million metric ton ...
Friday, 24 November 23
COAL IMPORTS TO INDIA IN OCTOBER 2023 REACHED HIGHEST LEVELS IN NEARLY A YEAR AND A HALF - VESSELSVALUE, VESON NAUTICAL
In October, coal imports to India reached 13.8 mt in October 2023, according to Oceanbolt, a Veson Nautical solution, the highest level since May 2 ...
Friday, 24 November 23
COAL SHIPMENTS TO ADVANCED ECONOMIES DOWN 17% SO FAR IN 2023 - BIMCO
In the first ten months of 2023, coal shipments to advanced economies fell by 17% y/y, as demand for electricity declined and the share of electric ...
Friday, 24 November 23
INTELLIGENT COAL MINES CONTRIBUTE TO IMPROVING SAFETY STANDARDS - CHINA DAILY
Mechanization, automation and intelligent upgrades have contributed to improved safety in coal mines, though the level of development of intelligen ...
Friday, 24 November 23
WHY AUSTRALIA'S COAL MINES ARE GETTING BIGGER - IEEFA
Australia’s largest coal mines are getting larger. Mines in New South Wales (NSW) are ramping up production following the state’s recov ...
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- Port Waratah Coal Services - Australia
- Salva Resources Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Sakthi Sugars Limited - India
- Manunggal Multi Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Tata Chemicals Ltd - India
- International Coal Ventures Pvt Ltd - India
- Orica Mining Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Central Java Power - Indonesia
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- Electricity Generating Authority of Thailand
- Kepco SPC Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kideco Jaya Agung - Indonesia
- Deloitte Consulting - India
- Ind-Barath Power Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Larsen & Toubro Limited - India
- Lanco Infratech Ltd - India
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- ASAPP Information Group - India
- Romanian Commodities Exchange
- Makarim & Taira - Indonesia
- Mintek Dendrill Indonesia
- Minerals Council of Australia
- Indian Energy Exchange, India
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- Binh Thuan Hamico - Vietnam
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Bhatia International Limited - India
- Kalimantan Lumbung Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- Parliament of New Zealand
- CIMB Investment Bank - Malaysia
- CNBM International Corporation - China
- Jindal Steel & Power Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Renaissance Capital - South Africa
- Kaltim Prima Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Borneo Indobara - Indonesia
- Global Business Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Coal Blending Company Limited - Australia
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- Jaiprakash Power Ventures ltd
- Kobexindo Tractors - Indoneisa
- Ministry of Finance - Indonesia
- Dalmia Cement Bharat India
- PNOC Exploration Corporation - Philippines
- Bangladesh Power Developement Board
- Semirara Mining Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Tamil Nadu electricity Board
- Krishnapatnam Port Company Ltd. - India
- Mercator Lines Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- MS Steel International - UAE
- VISA Power Limited - India
- GMR Energy Limited - India
- Indonesian Coal Mining Association
- Essar Steel Hazira Ltd - India
- Coastal Gujarat Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Antam Resourcindo - Indonesia
- Carbofer General Trading SA - India
- Trasteel International SA, Italy
- Parry Sugars Refinery, India
- Cigading International Bulk Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karbindo Abesyapradhi - Indoneisa
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- Bank of Tokyo Mitsubishi UFJ Ltd
- IHS Mccloskey Coal Group - USA
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- Indian Oil Corporation Limited
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Goldman Sachs - Singapore
- Mercuria Energy - Indonesia
- Standard Chartered Bank - UAE
- Madhucon Powers Ltd - India
- Kumho Petrochemical, South Korea
- Aditya Birla Group - India
- Samtan Co., Ltd - South Korea
- Sojitz Corporation - Japan
- Rio Tinto Coal - Australia
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- Iligan Light & Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Gujarat Sidhee Cement - India
- Toyota Tsusho Corporation, Japan
- Sree Jayajothi Cements Limited - India
- Ambuja Cements Ltd - India
- Cement Manufacturers Association - India
- Maheswari Brothers Coal Limited - India
- Bayan Resources Tbk. - Indonesia
- Ministry of Transport, Egypt
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- Singapore Mercantile Exchange
- Australian Coal Association
- Planning Commission, India
- Timah Investasi Mineral - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Eastern Energy - Thailand
- London Commodity Brokers - England
- Independent Power Producers Association of India
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- Energy Link Ltd, New Zealand
- San Jose City I Power Corp, Philippines
- Aboitiz Power Corporation - Philippines
- McConnell Dowell - Australia
- Petron Corporation, Philippines
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- Economic Council, Georgia
- Central Electricity Authority - India
- Billiton Holdings Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- SMG Consultants - Indonesia
- Bharathi Cement Corporation - India
- Oldendorff Carriers - Singapore
- Africa Commodities Group - South Africa
- Kartika Selabumi Mining - Indonesia
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- Meralco Power Generation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Wilmar Investment Holdings
- Baramulti Group, Indonesia
- Directorate Of Revenue Intelligence - India
- Straits Asia Resources Limited - Singapore
- PTC India Limited - India
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- The Treasury - Australian Government
- Altura Mining Limited, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Heidelberg Cement - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mjunction Services Limited - India
- AsiaOL BioFuels Corp., Philippines
- OPG Power Generation Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Attock Cement Pakistan Limited
- ICICI Bank Limited - India
- Siam City Cement - Thailand
- Sical Logistics Limited - India
- Riau Bara Harum - Indonesia
- Australian Commodity Traders Exchange
- Vedanta Resources Plc - India
- Star Paper Mills Limited - India
- Georgia Ports Authority, United States
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- GVK Power & Infra Limited - India
- Barasentosa Lestari - Indonesia
- Agrawal Coal Company - India
- Maharashtra Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Power Finance Corporation Ltd., India
- Indika Energy - Indonesia
- Orica Australia Pty. Ltd.
- Sarangani Energy Corporation, Philippines
- Medco Energi Mining Internasional
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- India Bulls Power Limited - India
- Banpu Public Company Limited - Thailand
- Indo Tambangraya Megah - Indonesia
- Commonwealth Bank - Australia
- SMC Global Power, Philippines
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