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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, 23 May 23
INDIA: COAL OUTPUT UP 8.9%, SUPPLY RISES 11.7% IN APRIL - FINANCIAL EXPRESS
India’s coal production jumped 8.85% to 73.14 million tonne (MT) in April 2023 and the total coal despatch during the month went up 11.66% to ...
Tuesday, 23 May 23
CHINA COAL OUTPUT UP 4.5 PCT IN APRIL - XINHUA
China’s raw coal output posted stable expansion in April, official data showed.
The country produced 380 million tonnes of raw ...
Saturday, 20 May 23
NON-OPEC OIL SUPPLY DEVELOPMENT - OPEC
In 2022, non-OPEC supply is estimated to have increased by 1.9 mb/d y-o-y. Out of this, US liquids production increased by 1.2 mb/d, mainly on the ...
Saturday, 20 May 23
GLOBAL COAL TRADE HAS REALLY PICKED UP PACE IN RECENT MONTHS, NOW FULLY BACK TO PRE-COVID LEVELS - BANCHERO COSTA
Global coal trade has really picked up pace in recent months, and is now fully back to pre-Covid levels. In Jan-Apr 2023, total global seaborne coa ...
Saturday, 20 May 23
MARKET INSIGHT - INTERMODAL
India is one of the world's largest coal producers and one of the world's largest importers of coal. The country uses coal mainly for power ...
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- Ministry of Transport, Egypt
- Bhatia International Limited - India
- Larsen & Toubro Limited - India
- Ministry of Mines - Canada
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercuria Energy - Indonesia
- Latin American Coal - Colombia
- Miang Besar Coal Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- GAC Shipping (India) Pvt Ltd
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- Interocean Group of Companies - India
- Petrochimia International Co. Ltd.- Taiwan
- Cigading International Bulk Terminal - Indonesia
- CNBM International Corporation - China
- The University of Queensland
- Meenaskhi Energy Private Limited - India
- Altura Mining Limited, Indonesia
- Directorate Of Revenue Intelligence - India
- European Bulk Services B.V. - Netherlands
- Makarim & Taira - Indonesia
- Indika Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- TeaM Sual Corporation - Philippines
- Georgia Ports Authority, United States
- Malabar Cements Ltd - India
- Thai Mozambique Logistica
- Coal and Oil Company - UAE
- Chamber of Mines of South Africa
- Kumho Petrochemical, South Korea
- Straits Asia Resources Limited - Singapore
- Eastern Energy - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Wilmar Investment Holdings
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- Samtan Co., Ltd - South Korea
- Vizag Seaport Private Limited - India
- SMG Consultants - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Africa Commodities Group - South Africa
- Siam City Cement PLC, Thailand
- Grasim Industreis Ltd - India
- Bukit Baiduri Energy - Indonesia
- Petron Corporation, Philippines
- New Zealand Coal & Carbon
- Antam Resourcindo - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bulk Trading Sa - Switzerland
- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- SMC Global Power, Philippines
- Edison Trading Spa - Italy
- Singapore Mercantile Exchange
- Medco Energi Mining Internasional
- Heidelberg Cement - Germany
- Australian Coal Association
- Tata Chemicals Ltd - India
- Bayan Resources Tbk. - Indonesia
- Ministry of Finance - Indonesia
- Bhushan Steel Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Indonesian Coal Mining Association
- Planning Commission, India
- PNOC Exploration Corporation - Philippines
- Cement Manufacturers Association - India
- Ind-Barath Power Infra Limited - India
- Iligan Light & Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Dalmia Cement Bharat India
- GN Power Mariveles Coal Plant, Philippines
- Bukit Makmur.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Global Business Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Vedanta Resources Plc - India
- Global Coal Blending Company Limited - Australia
- The Treasury - Australian Government
- Barasentosa Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
- Wood Mackenzie - Singapore
- Merrill Lynch Commodities Europe
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- Mintek Dendrill Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Trasteel International SA, Italy
- Commonwealth Bank - Australia
- Semirara Mining Corp, Philippines
- Tamil Nadu electricity Board
- Intertek Mineral Services - Indonesia
- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Xindia Steels Limited - India
- Savvy Resources Ltd - HongKong
- Maharashtra Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- Coastal Gujarat Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Mjunction Services Limited - India
- Energy Development Corp, Philippines
- Marubeni Corporation - India
- VISA Power Limited - India
- Parliament of New Zealand
- Banpu Public Company Limited - Thailand
- Kartika Selabumi Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- Mercator Lines Limited - India
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pendopo Energi Batubara - Indonesia
- Minerals Council of Australia
- Carbofer General Trading SA - India
- Thiess Contractors Indonesia
- Deloitte Consulting - India
- San Jose City I Power Corp, Philippines
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Manunggal Multi Energi - Indonesia
- GMR Energy Limited - India
- Economic Council, Georgia
- London Commodity Brokers - England
- Jorong Barutama Greston.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Gujarat Sidhee Cement - India
- Kobexindo Tractors - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Star Paper Mills Limited - India
- Therma Luzon, Inc, Philippines
- ASAPP Information Group - India
- Power Finance Corporation Ltd., India
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- Orica Mining Services - Indonesia
- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- SN Aboitiz Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Indian Energy Exchange, India
- Jindal Steel & Power Ltd - India
- Ambuja Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Central Java Power - Indonesia
- Aboitiz Power Corporation - Philippines
- Port Waratah Coal Services - Australia
- Essar Steel Hazira Ltd - India
- Uttam Galva Steels Limited - India
- Independent Power Producers Association of India
- Globalindo Alam Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Sindya Power Generating Company Private Ltd
- Karaikal Port Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Bharathi Cement Corporation - India
- The State Trading Corporation of India Ltd
- Neyveli Lignite Corporation Ltd, - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- OPG Power Generation Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- White Energy Company Limited
- PetroVietnam Power Coal Import and Supply Company
- Kapuas Tunggal Persada - Indonesia
- Sakthi Sugars Limited - India
- Kideco Jaya Agung - Indonesia
- Central Electricity Authority - India
- Goldman Sachs - Singapore
- Energy Link Ltd, New Zealand
- Baramulti Group, Indonesia
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Romanian Commodities Exchange
- Indo Tambangraya Megah - Indonesia
- Siam City Cement - Thailand
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Attock Cement Pakistan Limited
- Salva Resources Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- Parry Sugars Refinery, India
- ICICI Bank Limited - India
- MS Steel International - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- International Coal Ventures Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
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