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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, 01 September 13
INDONESIA TO INDIA SPOT FREIGHT STAYS FIRM THIS WEEK - VISTAAR
COALspot.com: The freight market continued to be firm with even though the BDI and Cape index dropped by about 3 pct week on week.
The BDI was do ...
Friday, 30 August 13
US COAL PRODUCTION FELL 0.48 PERCENT WEEK ON WEEK - EIA
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.70 million short tons (mmst) of ...
Thursday, 29 August 13
HANDY: THE PACIFIC MARKET STARTED HEALTHY THIS WEEK - FEARNRESEARCH
Handy
The Pacific market started healthy this week. We have seen many bauxite, iron ore and few coal fixtures. Ships passing Singapore were able to ...
Thursday, 29 August 13
NO RATING IMPACT ON INDONESIAN ENERGY COMPANIES FROM RUPIAH DEPRECIATION - FITCH RATINGS
Fitch Ratings says the credit profiles of rated Indonesian energy and utilities companies, including thermal coal producers, will largely remain una ...
Wednesday, 28 August 13
THE BDI HAS MOVED TO LEVELS CONSIDERABLY STRONGER THAN THE BEGINNING OF THE YEAR - INTERMODAL
By George Bassakos
SnP Broker - Intermodal
We have already reached the end of August and whilst students are preparing themselves for another sc ...
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- Billiton Holdings Pty Ltd - Australia
- Indian Oil Corporation Limited
- GVK Power & Infra Limited - India
- VISA Power Limited - India
- Electricity Authority, New Zealand
- GAC Shipping (India) Pvt Ltd
- San Jose City I Power Corp, Philippines
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- Global Business Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Sarangani Energy Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- TNB Fuel Sdn Bhd - Malaysia
- Agrawal Coal Company - India
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Bukit Makmur.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- White Energy Company Limited
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- TeaM Sual Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Riau Bara Harum - Indonesia
- Coastal Gujarat Power Limited - India
- IHS Mccloskey Coal Group - USA
- Minerals Council of Australia
- Planning Commission, India
- McConnell Dowell - Australia
- PNOC Exploration Corporation - Philippines
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- Larsen & Toubro Limited - India
- Metalloyd Limited - United Kingdom
- London Commodity Brokers - England
- Ceylon Electricity Board - Sri Lanka
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Xindia Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Bangladesh Power Developement Board
- ASAPP Information Group - India
- Videocon Industries ltd - India
- Bayan Resources Tbk. - Indonesia
- Uttam Galva Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Samtan Co., Ltd - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Indian Energy Exchange, India
- Petron Corporation, Philippines
- Australian Coal Association
- Africa Commodities Group - South Africa
- Sree Jayajothi Cements Limited - India
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- Lanco Infratech Ltd - India
- Semirara Mining Corp, Philippines
- Orica Australia Pty. Ltd.
- Directorate Of Revenue Intelligence - India
- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- Straits Asia Resources Limited - Singapore
- Vizag Seaport Private Limited - India
- Binh Thuan Hamico - Vietnam
- New Zealand Coal & Carbon
- Deloitte Consulting - India
- Bhushan Steel Limited - India
- Kepco SPC Power Corporation, Philippines
- Parry Sugars Refinery, India
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- Siam City Cement PLC, Thailand
- Bhatia International Limited - India
- OPG Power Generation Pvt Ltd - India
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Sakthi Sugars Limited - India
- Kideco Jaya Agung - Indonesia
- Vedanta Resources Plc - India
- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- Rio Tinto Coal - Australia
- The State Trading Corporation of India Ltd
- Posco Energy - South Korea
- Bukit Baiduri Energy - Indonesia
- Madhucon Powers Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Orica Mining Services - Indonesia
- Bharathi Cement Corporation - India
- Aditya Birla Group - India
- Star Paper Mills Limited - India
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Goldman Sachs - Singapore
- Globalindo Alam Lestari - Indonesia
- GMR Energy Limited - India
- PTC India Limited - India
- Altura Mining Limited, Indonesia
- Bhoruka Overseas - Indonesia
- India Bulls Power Limited - India
- Edison Trading Spa - Italy
- Energy Development Corp, Philippines
- Meralco Power Generation, Philippines
- Chamber of Mines of South Africa
- Barasentosa Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Mjunction Services Limited - India
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Thai Mozambique Logistica
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- Toyota Tsusho Corporation, Japan
- Ministry of Transport, Egypt
- Gujarat Mineral Development Corp Ltd - India
- Ind-Barath Power Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Economic Council, Georgia
- Sojitz Corporation - Japan
- PowerSource Philippines DevCo
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Wood Mackenzie - Singapore
- Siam City Cement - Thailand
- Krishnapatnam Port Company Ltd. - India
- CNBM International Corporation - China
- Parliament of New Zealand
- European Bulk Services B.V. - Netherlands
- Standard Chartered Bank - UAE
- Latin American Coal - Colombia
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Makarim & Taira - Indonesia
- Price Waterhouse Coopers - Russia
- Bank of Tokyo Mitsubishi UFJ Ltd
- ICICI Bank Limited - India
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Sical Logistics Limited - India
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
- Pipit Mutiara Jaya. PT, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Marubeni Corporation - India
- Gujarat Sidhee Cement - India
- Independent Power Producers Association of India
- Renaissance Capital - South Africa
- Ministry of Mines - Canada
- Coal and Oil Company - UAE
- Commonwealth Bank - Australia
- MS Steel International - UAE
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Trasteel International SA, Italy
- Vijayanagar Sugar Pvt Ltd - India
- Indika Energy - Indonesia
- Dalmia Cement Bharat India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Thiess Contractors Indonesia
- Antam Resourcindo - Indonesia
- Central Electricity Authority - India
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Bulk Trading Sa - Switzerland
- Pendopo Energi Batubara - Indonesia
- Savvy Resources Ltd - HongKong
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Formosa Plastics Group - Taiwan
- Tamil Nadu electricity Board
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- Essar Steel Hazira Ltd - India
- Tata Chemicals Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- Coalindo Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cement Manufacturers Association - India
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Meenaskhi Energy Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Manunggal Multi Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Intertek Mineral Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Carbofer General Trading SA - India
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