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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, 27 August 13
AUSTRALIA NEWCASTLE COAL EXPORTS JUMPED 15.59 PERCENT ON WEEK
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port up 15.59 per cent week on week to 2.76 million mt for ...
Monday, 26 August 13
CARRIAGE OF COAL CARGOES FROM KALIMANTAN, INDONESIA - WEST OF ENGLAND P&I CLUB
The Club has recently been advised by consulting scientists and engineers Dr J H Burgoyne and Partners (International) Limited that the number of in ...
Sunday, 25 August 13
API 8 CFR SOUTH CHINA COAL: HEADING TO NORTH
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average Q4 2013 delivery US$ 2.39 up month on month. The swap was moved positive ...
Sunday, 25 August 13
THE FREIGHT MARKET S7 & S8 SECTOR IS EXPECTED TO BE STEADY/FIRM NEXT WEEK - VISTAAR
COALspot.com - The freight market continued to be firm with all indices moved positive except for Panamax which was slightly down (2 pct down).
T ...
Friday, 23 August 13
US PRODUCED MORE COAL WEEK ON WEEK - EIA
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.80 million short tons (mmst) of ...
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- New Zealand Coal & Carbon
- Gujarat Electricity Regulatory Commission - India
- Economic Council, Georgia
- Tamil Nadu electricity Board
- Energy Development Corp, Philippines
- Power Finance Corporation Ltd., India
- Central Electricity Authority - India
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Simpson Spence & Young - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Formosa Plastics Group - Taiwan
- Malabar Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- European Bulk Services B.V. - Netherlands
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- Mercator Lines Limited - India
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Electricity Authority, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- Toyota Tsusho Corporation, Japan
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Videocon Industries ltd - India
- Interocean Group of Companies - India
- Renaissance Capital - South Africa
- VISA Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Larsen & Toubro Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Timah Investasi Mineral - Indoneisa
- Tata Chemicals Ltd - India
- Global Green Power PLC Corporation, Philippines
- Medco Energi Mining Internasional
- Vedanta Resources Plc - India
- Kideco Jaya Agung - Indonesia
- Georgia Ports Authority, United States
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Eastern Coal Council - USA
- Gujarat Mineral Development Corp Ltd - India
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- Mjunction Services Limited - India
- Singapore Mercantile Exchange
- Thai Mozambique Logistica
- Maheswari Brothers Coal Limited - India
- Siam City Cement PLC, Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kalimantan Lumbung Energi - Indonesia
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Kapuas Tunggal Persada - Indonesia
- Essar Steel Hazira Ltd - India
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Indonesian Coal Mining Association
- Bangladesh Power Developement Board
- Siam City Cement - Thailand
- Straits Asia Resources Limited - Singapore
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Gujarat Sidhee Cement - India
- Bulk Trading Sa - Switzerland
- Minerals Council of Australia
- Binh Thuan Hamico - Vietnam
- Chamber of Mines of South Africa
- Edison Trading Spa - Italy
- Ministry of Finance - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Semirara Mining and Power Corporation, Philippines
- GMR Energy Limited - India
- Kaltim Prima Coal - Indonesia
- The University of Queensland
- Salva Resources Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- Anglo American - United Kingdom
- Electricity Generating Authority of Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Link Ltd, New Zealand
- Latin American Coal - Colombia
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- Cigading International Bulk Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Neyveli Lignite Corporation Ltd, - India
- PTC India Limited - India
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Therma Luzon, Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Krishnapatnam Port Company Ltd. - India
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- Coal and Oil Company - UAE
- Mintek Dendrill Indonesia
- Port Waratah Coal Services - Australia
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- Bhatia International Limited - India
- Bukit Makmur.PT - Indonesia
- Rio Tinto Coal - Australia
- Kartika Selabumi Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- India Bulls Power Limited - India
- Marubeni Corporation - India
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Indogreen Group - Indonesia
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- Australian Coal Association
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- White Energy Company Limited
- OPG Power Generation Pvt Ltd - India
- Wilmar Investment Holdings
- Aboitiz Power Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- MS Steel International - UAE
- Jorong Barutama Greston.PT - Indonesia
- SMG Consultants - Indonesia
- PowerSource Philippines DevCo
- Makarim & Taira - Indonesia
- Star Paper Mills Limited - India
- SN Aboitiz Power Inc, Philippines
- Commonwealth Bank - Australia
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- PNOC Exploration Corporation - Philippines
- Agrawal Coal Company - India
- Romanian Commodities Exchange
- Iligan Light & Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Sical Logistics Limited - India
- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- Eastern Energy - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Carbofer General Trading SA - India
- Sarangani Energy Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- Baramulti Group, Indonesia
- Chettinad Cement Corporation Ltd - India
- Mercuria Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Transport, Egypt
- The Treasury - Australian Government
- Ambuja Cements Ltd - India
- Attock Cement Pakistan Limited
- Price Waterhouse Coopers - Russia
- Sree Jayajothi Cements Limited - India
- Alfred C Toepfer International GmbH - Germany
- Deloitte Consulting - India
- Wood Mackenzie - Singapore
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- Global Coal Blending Company Limited - Australia
- Meenaskhi Energy Private Limited - India
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- Ministry of Mines - Canada
- Indian Oil Corporation Limited
- CIMB Investment Bank - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Metalloyd Limited - United Kingdom
- Independent Power Producers Association of India
- Globalindo Alam Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Jindal Steel & Power Ltd - India
- London Commodity Brokers - England
- Kepco SPC Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Pendopo Energi Batubara - Indonesia
- Kumho Petrochemical, South Korea
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