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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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Saturday, 10 August 13
DEMOLITION ACTIVITY TO BE CRUCIAL AGAIN IN PROVIDING SUPPORT TO THE DRY BULK MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
We appear to have forgotten demolition activity this year, with the Baltic Dry Index gaining traction in the latter part of the second half and emer ...
Friday, 09 August 13
US PRODUCED 4.00 PERCENT LESS COAL ON WEEK
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.00 million short tons (mmst) of ...
Thursday, 08 August 13
HANDY : NO POSITIVE SENTIMENT FOR THE FAR EAST MARKET - FEARNRESEARCH
Handy
No positive sentiment for the Far East market. There are a number of ships coming open in SE Asia this week and owners rating mid/high USD 8k ...
Thursday, 08 August 13
MALAYSIA HOSTS THIRD ANNUAL ASIAN SUB-BITUMINOUS COAL USERS' GROUP CONFERENCE
Press Release : The third Annual Asian Sub-Bituminous Coal Users’ Group (ASBCUG) conference convenes Sept. 30-Oct. 3 at the Eastern & Orie ...
Wednesday, 07 August 13
HANDIES : FINDING IT DIFFICULT TO SUSTAIN THEIR PREVIOUS LEVELS - KONSTANTINOS KONTOMICHIS
Broker's insight
by Konstantinos Kontomichis,
SnP Broker
Entering the most predictable month of the year, as expected the seasonal effects ha ...
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- New Zealand Coal & Carbon
- Planning Commission, India
- Krishnapatnam Port Company Ltd. - India
- TeaM Sual Corporation - Philippines
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- Parry Sugars Refinery, India
- Straits Asia Resources Limited - Singapore
- Antam Resourcindo - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Electricity Authority, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Coal and Oil Company - UAE
- Independent Power Producers Association of India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Toyota Tsusho Corporation, Japan
- Deloitte Consulting - India
- Pendopo Energi Batubara - Indonesia
- Cement Manufacturers Association - India
- Rashtriya Ispat Nigam Limited - India
- Anglo American - United Kingdom
- Heidelberg Cement - Germany
- Leighton Contractors Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Bukit Baiduri Energy - Indonesia
- Wood Mackenzie - Singapore
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Intertek Mineral Services - Indonesia
- IHS Mccloskey Coal Group - USA
- Merrill Lynch Commodities Europe
- Pipit Mutiara Jaya. PT, Indonesia
- Central Java Power - Indonesia
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Ambuja Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- Global Coal Blending Company Limited - Australia
- Aboitiz Power Corporation - Philippines
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- IEA Clean Coal Centre - UK
- Agrawal Coal Company - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMG Consultants - Indonesia
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Indogreen Group - Indonesia
- Thai Mozambique Logistica
- Meralco Power Generation, Philippines
- Manunggal Multi Energi - Indonesia
- Mintek Dendrill Indonesia
- Sarangani Energy Corporation, Philippines
- Energy Development Corp, Philippines
- Trasteel International SA, Italy
- Altura Mining Limited, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Mjunction Services Limited - India
- Africa Commodities Group - South Africa
- Bukit Makmur.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Bharathi Cement Corporation - India
- Energy Link Ltd, New Zealand
- Ministry of Finance - Indonesia
- Uttam Galva Steels Limited - India
- The State Trading Corporation of India Ltd
- Interocean Group of Companies - India
- Directorate General of MIneral and Coal - Indonesia
- White Energy Company Limited
- Rio Tinto Coal - Australia
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- Ministry of Transport, Egypt
- Australian Coal Association
- McConnell Dowell - Australia
- Borneo Indobara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Therma Luzon, Inc, Philippines
- Bulk Trading Sa - Switzerland
- Aditya Birla Group - India
- Billiton Holdings Pty Ltd - Australia
- Ministry of Mines - Canada
- India Bulls Power Limited - India
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- Sakthi Sugars Limited - India
- Gujarat Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Indian Oil Corporation Limited
- PetroVietnam Power Coal Import and Supply Company
- Kideco Jaya Agung - Indonesia
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Karaikal Port Pvt Ltd - India
- Larsen & Toubro Limited - India
- Orica Australia Pty. Ltd.
- European Bulk Services B.V. - Netherlands
- Oldendorff Carriers - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bangladesh Power Developement Board
- Semirara Mining and Power Corporation, Philippines
- Mercator Lines Limited - India
- GAC Shipping (India) Pvt Ltd
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Marubeni Corporation - India
- Banpu Public Company Limited - Thailand
- Jindal Steel & Power Ltd - India
- International Coal Ventures Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- Thiess Contractors Indonesia
- Cigading International Bulk Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Indian Energy Exchange, India
- Siam City Cement PLC, Thailand
- Directorate Of Revenue Intelligence - India
- Electricity Generating Authority of Thailand
- ASAPP Information Group - India
- Australian Commodity Traders Exchange
- Grasim Industreis Ltd - India
- Samtan Co., Ltd - South Korea
- Georgia Ports Authority, United States
- PTC India Limited - India
- Wilmar Investment Holdings
- Barasentosa Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Chamber of Mines of South Africa
- Renaissance Capital - South Africa
- Global Green Power PLC Corporation, Philippines
- Riau Bara Harum - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- Videocon Industries ltd - India
- Timah Investasi Mineral - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Baramulti Group, Indonesia
- PowerSource Philippines DevCo
- GVK Power & Infra Limited - India
- CNBM International Corporation - China
- Makarim & Taira - Indonesia
- Global Business Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining Corp, Philippines
- Siam City Cement - Thailand
- Attock Cement Pakistan Limited
- Maharashtra Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Star Paper Mills Limited - India
- Tata Chemicals Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jorong Barutama Greston.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Medco Energi Mining Internasional
- Essar Steel Hazira Ltd - India
- MS Steel International - UAE
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Orica Mining Services - Indonesia
- Sical Logistics Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- SMC Global Power, Philippines
- Latin American Coal - Colombia
- GMR Energy Limited - India
- Salva Resources Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Central Electricity Authority - India
- Iligan Light & Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Posco Energy - South Korea
- Minerals Council of Australia
- ICICI Bank Limited - India
- Maheswari Brothers Coal Limited - India
- San Jose City I Power Corp, Philippines
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Standard Chartered Bank - UAE
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
- Coastal Gujarat Power Limited - India
- VISA Power Limited - India
- SN Aboitiz Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- The University of Queensland
- Edison Trading Spa - Italy
- Power Finance Corporation Ltd., India
- Ceylon Electricity Board - Sri Lanka
- Madhucon Powers Ltd - India
- Commonwealth Bank - Australia
- London Commodity Brokers - England
- Sinarmas Energy and Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Dalmia Cement Bharat India
- Bhushan Steel Limited - India
- Xindia Steels Limited - India
- Metalloyd Limited - United Kingdom
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