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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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Sunday, 10 September 23
CHINA AUGUST COAL IMPORTS OF 44.3 MLN T HIT RECORD - REUTERS
China, the world’s top coal consumer, imported 44.3 million metric tons of the fuel last month, customs data showed, the highest amount in an ...
Tuesday, 22 August 23
CHINA'S COAL PRODUCTION LOGS STEADY GROWTH IN JANUARY-JULY: XINHUA
China’s output of raw coal went up 3.6 percent year on year in the first seven months of this year, official data showed.
The ...
Sunday, 13 August 23
THE COMMODITIES FEED: LNG SUPPLY RISKS LINGER - ING
Energy – OPEC sees deficit over remainder of 2023
Oil prices came under some pressure yesterday with ICE Brent settling a litt ...
Wednesday, 09 August 23
COAL TRADE TO RETURN TO 2019 LEVELS - BALTIC EXCHANGE
The International Energy Agency’s mid-year Coal Market Update for 2023 brings both positive and concerning news for the global coal industry. ...
Sunday, 23 July 23
ANALYSIS-INDIA'S COAL MINING BET STUMBLES AS WARY BANKS WEIGH RISING RISKS - REUTERS
India’s drive to ramp up coal output to meet growing energy demand is faltering due to banks’ reluctance to finance newly auctioned min ...
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- Pendopo Energi Batubara - Indonesia
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- Coalindo Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- PowerSource Philippines DevCo
- SMC Global Power, Philippines
- Directorate General of MIneral and Coal - Indonesia
- White Energy Company Limited
- Oldendorff Carriers - Singapore
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
- Cigading International Bulk Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Energy Link Ltd, New Zealand
- Iligan Light & Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Australian Coal Association
- Wilmar Investment Holdings
- Posco Energy - South Korea
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- Metalloyd Limited - United Kingdom
- The State Trading Corporation of India Ltd
- Rashtriya Ispat Nigam Limited - India
- Ceylon Electricity Board - Sri Lanka
- Jaiprakash Power Ventures ltd
- Ministry of Finance - Indonesia
- Energy Development Corp, Philippines
- Deloitte Consulting - India
- Ind-Barath Power Infra Limited - India
- Orica Mining Services - Indonesia
- The University of Queensland
- Electricity Authority, New Zealand
- Indo Tambangraya Megah - Indonesia
- LBH Netherlands Bv - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Global Business Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Binh Thuan Hamico - Vietnam
- Siam City Cement - Thailand
- Parry Sugars Refinery, India
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- Marubeni Corporation - India
- PNOC Exploration Corporation - Philippines
- Anglo American - United Kingdom
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- MS Steel International - UAE
- Independent Power Producers Association of India
- Global Coal Blending Company Limited - Australia
- The Treasury - Australian Government
- PTC India Limited - India
- Leighton Contractors Pty Ltd - Australia
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Aboitiz Power Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Rio Tinto Coal - Australia
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Romanian Commodities Exchange
- Mercator Lines Limited - India
- Orica Australia Pty. Ltd.
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- Kumho Petrochemical, South Korea
- Bharathi Cement Corporation - India
- Agrawal Coal Company - India
- Sindya Power Generating Company Private Ltd
- Sakthi Sugars Limited - India
- Global Green Power PLC Corporation, Philippines
- Indogreen Group - Indonesia
- Trasteel International SA, Italy
- Electricity Generating Authority of Thailand
- Banpu Public Company Limited - Thailand
- Minerals Council of Australia
- Bulk Trading Sa - Switzerland
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indian Energy Exchange, India
- Petron Corporation, Philippines
- Sical Logistics Limited - India
- Mjunction Services Limited - India
- Georgia Ports Authority, United States
- Latin American Coal - Colombia
- Kobexindo Tractors - Indoneisa
- Malabar Cements Ltd - India
- Makarim & Taira - Indonesia
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Bukit Makmur.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Directorate Of Revenue Intelligence - India
- Bahari Cakrawala Sebuku - Indonesia
- Star Paper Mills Limited - India
- Wood Mackenzie - Singapore
- Price Waterhouse Coopers - Russia
- Neyveli Lignite Corporation Ltd, - India
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Medco Energi Mining Internasional
- Semirara Mining and Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Renaissance Capital - South Africa
- Heidelberg Cement - Germany
- Formosa Plastics Group - Taiwan
- Chettinad Cement Corporation Ltd - India
- Tata Chemicals Ltd - India
- Globalindo Alam Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Economic Council, Georgia
- Coal and Oil Company - UAE
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- Grasim Industreis Ltd - India
- Gujarat Sidhee Cement - India
- Bukit Asam (Persero) Tbk - Indonesia
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Singapore Mercantile Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Mines - Canada
- Attock Cement Pakistan Limited
- Xindia Steels Limited - India
- Madhucon Powers Ltd - India
- TeaM Sual Corporation - Philippines
- Thai Mozambique Logistica
- Goldman Sachs - Singapore
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- Therma Luzon, Inc, Philippines
- Australian Commodity Traders Exchange
- Petrochimia International Co. Ltd.- Taiwan
- SN Aboitiz Power Inc, Philippines
- New Zealand Coal & Carbon
- Tamil Nadu electricity Board
- Vedanta Resources Plc - India
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
- Sarangani Energy Corporation, Philippines
- Central Electricity Authority - India
- VISA Power Limited - India
- Sree Jayajothi Cements Limited - India
- Bangladesh Power Developement Board
- Interocean Group of Companies - India
- Antam Resourcindo - Indonesia
- Central Java Power - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Riau Bara Harum - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Essar Steel Hazira Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Bhoruka Overseas - Indonesia
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Lanco Infratech Ltd - India
- International Coal Ventures Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- Parliament of New Zealand
- European Bulk Services B.V. - Netherlands
- Cement Manufacturers Association - India
- Siam City Cement PLC, Thailand
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Uttam Galva Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Edison Trading Spa - Italy
- Intertek Mineral Services - Indonesia
- GMR Energy Limited - India
- Altura Mining Limited, Indonesia
- Indonesian Coal Mining Association
- Carbofer General Trading SA - India
- Jindal Steel & Power Ltd - India
- Chamber of Mines of South Africa
- Eastern Coal Council - USA
- Timah Investasi Mineral - Indoneisa
- Eastern Energy - Thailand
- SMG Consultants - Indonesia
- San Jose City I Power Corp, Philippines
- CNBM International Corporation - China
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Mercuria Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- ASAPP Information Group - India
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