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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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- Interocean Group of Companies - India
- SN Aboitiz Power Inc, Philippines
- Ministry of Finance - Indonesia
- Port Waratah Coal Services - Australia
- Lanco Infratech Ltd - India
- Commonwealth Bank - Australia
- Global Business Power Corporation, Philippines
- McConnell Dowell - Australia
- AsiaOL BioFuels Corp., Philippines
- Coal and Oil Company - UAE
- Timah Investasi Mineral - Indoneisa
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- Petron Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Meenaskhi Energy Private Limited - India
- Cement Manufacturers Association - India
- London Commodity Brokers - England
- Globalindo Alam Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indian Oil Corporation Limited
- Trasteel International SA, Italy
- Videocon Industries ltd - India
- Kideco Jaya Agung - Indonesia
- Larsen & Toubro Limited - India
- Posco Energy - South Korea
- The Treasury - Australian Government
- Global Coal Blending Company Limited - Australia
- Vedanta Resources Plc - India
- GVK Power & Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Petrochimia International Co. Ltd.- Taiwan
- Directorate Of Revenue Intelligence - India
- The State Trading Corporation of India Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Electricity Authority, New Zealand
- Wilmar Investment Holdings
- Thai Mozambique Logistica
- PNOC Exploration Corporation - Philippines
- Central Java Power - Indonesia
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- GMR Energy Limited - India
- Intertek Mineral Services - Indonesia
- Africa Commodities Group - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Sree Jayajothi Cements Limited - India
- Sakthi Sugars Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- International Coal Ventures Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Straits Asia Resources Limited - Singapore
- Romanian Commodities Exchange
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Therma Luzon, Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Iligan Light & Power Inc, Philippines
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CNBM International Corporation - China
- Central Electricity Authority - India
- Star Paper Mills Limited - India
- Leighton Contractors Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- Mjunction Services Limited - India
- Barasentosa Lestari - Indonesia
- Mercator Lines Limited - India
- Rashtriya Ispat Nigam Limited - India
- Coalindo Energy - Indonesia
- Indika Energy - Indonesia
- Indogreen Group - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Independent Power Producers Association of India
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- Bukit Makmur.PT - Indonesia
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- Jindal Steel & Power Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ambuja Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Agrawal Coal Company - India
- Savvy Resources Ltd - HongKong
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Medco Energi Mining Internasional
- Bukit Baiduri Energy - Indonesia
- Bangladesh Power Developement Board
- Economic Council, Georgia
- Bhushan Steel Limited - India
- Altura Mining Limited, Indonesia
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- IEA Clean Coal Centre - UK
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Kumho Petrochemical, South Korea
- Kalimantan Lumbung Energi - Indonesia
- Manunggal Multi Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- Bhatia International Limited - India
- Meralco Power Generation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chamber of Mines of South Africa
- Sarangani Energy Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Renaissance Capital - South Africa
- San Jose City I Power Corp, Philippines
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- Vizag Seaport Private Limited - India
- LBH Netherlands Bv - Netherlands
- Minerals Council of Australia
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- PowerSource Philippines DevCo
- Ministry of Transport, Egypt
- Indo Tambangraya Megah - Indonesia
- Coastal Gujarat Power Limited - India
- Deloitte Consulting - India
- Karbindo Abesyapradhi - Indoneisa
- Price Waterhouse Coopers - Russia
- Carbofer General Trading SA - India
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Siam City Cement PLC, Thailand
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- GAC Shipping (India) Pvt Ltd
- The University of Queensland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement - Thailand
- White Energy Company Limited
- MS Steel International - UAE
- Gujarat Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Bayan Resources Tbk. - Indonesia
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- Thiess Contractors Indonesia
- Banpu Public Company Limited - Thailand
- Bharathi Cement Corporation - India
- Binh Thuan Hamico - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Bahari Cakrawala Sebuku - Indonesia
- Planning Commission, India
- Marubeni Corporation - India
- Australian Coal Association
- Indonesian Coal Mining Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tata Chemicals Ltd - India
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- Global Green Power PLC Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Electricity Generating Authority of Thailand
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Latin American Coal - Colombia
- Maharashtra Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Georgia Ports Authority, United States
- Gujarat Mineral Development Corp Ltd - India
- Wood Mackenzie - Singapore
- European Bulk Services B.V. - Netherlands
- Parliament of New Zealand
- Maheswari Brothers Coal Limited - India
- Energy Development Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Power Finance Corporation Ltd., India
- Indian Energy Exchange, India
- South Luzon Thermal Energy Corporation
- India Bulls Power Limited - India
- Sindya Power Generating Company Private Ltd
- Metalloyd Limited - United Kingdom
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- Ind-Barath Power Infra Limited - India
- Anglo American - United Kingdom
- Samtan Co., Ltd - South Korea
- Makarim & Taira - Indonesia
- Oldendorff Carriers - Singapore
- Aboitiz Power Corporation - Philippines
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Energy Link Ltd, New Zealand
- Jaiprakash Power Ventures ltd
- OPG Power Generation Pvt Ltd - India
- SMG Consultants - Indonesia
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- Gujarat Sidhee Cement - India
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- PTC India Limited - India
- Semirara Mining and Power Corporation, Philippines
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