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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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Tuesday, 14 November 23
CHINA'S BELT AND ROAD INITIATIVE TURNS AWAY FROM COAL - WOOD MACKENZIE
Ambitious, contentious and big spending, China’s Belt and Road Initiative (BRI) is 10 years old. In that time, China has splashed more than U ...
Friday, 10 November 23
THE COMMODITIES FEED: OIL UNDER PRESSURE - ING
Energy – Brent plummets
The oil market came under significant pressure yesterday. ICE Brent settled 4.19% lower on the day and ...
Friday, 10 November 23
COAL USE AT U.S. POWER PLANTS CONTINUES DOWNWARD SPIRAL; FULL IMPACT ON MINES TO BE FELT IN 2024 - IEEFA
This year, the use of coal by the U.S.’s power producers has been so anemic that the fuel has not achieved a 20% market share in any month so ...
Friday, 10 November 23
INDIA: NATIONAL COAL INDEX RISES 3.83 POINTS IN SEPTEMBER AMID HIGHER DEMAND - LIVEMINT
The National Coal Index (NCI) rose 3.83 points to 143.91 in September amid growing demand for coal.
The union coal ministry on Tuesd ...
Thursday, 09 November 23
WE'RE PRODUCING TOO MUCH COAL, OIL AND GAS, REPORT SAYS - WSJ
World leaders pledged in 2015 to reduce emissions in a combined effort to limit climate change.
Now they are stepping up production ...
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- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
- Global Coal Blending Company Limited - Australia
- Alfred C Toepfer International GmbH - Germany
- Madhucon Powers Ltd - India
- Marubeni Corporation - India
- Ambuja Cements Ltd - India
- Goldman Sachs - Singapore
- Billiton Holdings Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Authority, New Zealand
- Maheswari Brothers Coal Limited - India
- Kumho Petrochemical, South Korea
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Mintek Dendrill Indonesia
- Mercuria Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Georgia Ports Authority, United States
- SMC Global Power, Philippines
- Globalindo Alam Lestari - Indonesia
- Romanian Commodities Exchange
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- PTC India Limited - India
- Binh Thuan Hamico - Vietnam
- Australian Commodity Traders Exchange
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- European Bulk Services B.V. - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Minerals Council of Australia
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- Petron Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- Aditya Birla Group - India
- Kobexindo Tractors - Indoneisa
- ASAPP Information Group - India
- Tamil Nadu electricity Board
- Ceylon Electricity Board - Sri Lanka
- Samtan Co., Ltd - South Korea
- Dalmia Cement Bharat India
- Siam City Cement PLC, Thailand
- Intertek Mineral Services - Indonesia
- Meenaskhi Energy Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Indogreen Group - Indonesia
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- Meralco Power Generation, Philippines
- Coal and Oil Company - UAE
- Electricity Generating Authority of Thailand
- Kartika Selabumi Mining - Indonesia
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Kepco SPC Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Power Finance Corporation Ltd., India
- Savvy Resources Ltd - HongKong
- Ministry of Finance - Indonesia
- White Energy Company Limited
- Larsen & Toubro Limited - India
- Carbofer General Trading SA - India
- Indika Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Sidhee Cement - India
- Global Green Power PLC Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate Of Revenue Intelligence - India
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Latin American Coal - Colombia
- Therma Luzon, Inc, Philippines
- Cement Manufacturers Association - India
- Videocon Industries ltd - India
- The University of Queensland
- Ind-Barath Power Infra Limited - India
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- Simpson Spence & Young - Indonesia
- Karaikal Port Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- The Treasury - Australian Government
- MS Steel International - UAE
- Vijayanagar Sugar Pvt Ltd - India
- VISA Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Mineral Development Corp Ltd - India
- McConnell Dowell - Australia
- Tata Chemicals Ltd - India
- Eastern Coal Council - USA
- Borneo Indobara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Sindya Power Generating Company Private Ltd
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- Central Electricity Authority - India
- CIMB Investment Bank - Malaysia
- Edison Trading Spa - Italy
- Bayan Resources Tbk. - Indonesia
- Wilmar Investment Holdings
- Chettinad Cement Corporation Ltd - India
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMG Consultants - Indonesia
- Thiess Contractors Indonesia
- Wood Mackenzie - Singapore
- OPG Power Generation Pvt Ltd - India
- Anglo American - United Kingdom
- Africa Commodities Group - South Africa
- Price Waterhouse Coopers - Russia
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- Global Business Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Indian Energy Exchange, India
- Sree Jayajothi Cements Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Trasteel International SA, Italy
- Leighton Contractors Pty Ltd - Australia
- Planning Commission, India
- Neyveli Lignite Corporation Ltd, - India
- Riau Bara Harum - Indonesia
- Bharathi Cement Corporation - India
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
- Interocean Group of Companies - India
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement - Thailand
- ICICI Bank Limited - India
- GMR Energy Limited - India
- Semirara Mining Corp, Philippines
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Orica Australia Pty. Ltd.
- Commonwealth Bank - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Agrawal Coal Company - India
- Deloitte Consulting - India
- Bhatia International Limited - India
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- GAC Shipping (India) Pvt Ltd
- Miang Besar Coal Terminal - Indonesia
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- Indo Tambangraya Megah - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- New Zealand Coal & Carbon
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- Aboitiz Power Corporation - Philippines
- Ministry of Mines - Canada
- PowerSource Philippines DevCo
- Toyota Tsusho Corporation, Japan
- Thai Mozambique Logistica
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Timah Investasi Mineral - Indoneisa
- CNBM International Corporation - China
- Australian Coal Association
- Energy Link Ltd, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Mjunction Services Limited - India
- Semirara Mining and Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Rio Tinto Coal - Australia
- Kideco Jaya Agung - Indonesia
- Ministry of Transport, Egypt
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Medco Energi Mining Internasional
- Sakthi Sugars Limited - India
- Sical Logistics Limited - India
- Chamber of Mines of South Africa
- Straits Asia Resources Limited - Singapore
- Independent Power Producers Association of India
- International Coal Ventures Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
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