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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, 04 August 13
COAL SWAP MARKET HAS LOST DIRECTION; STRUGGLING TO CATCH UP
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average October 2013 delivery slightly down on day, week and month on Friday, 2 A ...
Sunday, 04 August 13
INDONESIA TO INDIA SUPRAMAX FREIGHT SOFT DUE TO HOLIDAYS IN INDONESIA - VISTAAR
COALspot.com : The freight market was fairly steady this week with the BDI recovering towards north since second half of the week with the support o ...
Friday, 02 August 13
DRY BULK MARKET STABILIZES ON RENEWED MARKET ACTIVITY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept its positive footing this week, although it's still a far cry to deem the market situation as a growing one, especiall ...
Friday, 02 August 13
ASIA ACCOUNTS FOR 27.95 PERCENT OF US COAL EXPORTS IN Q1, 2013
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.80 million short tons (mmst) of ...
Thursday, 01 August 13
CAPESIZE: THE FLOW OF CARGOES REMAINS RELATIVELY STABLE, AND THE PACIFIC IS LOOKING PROMISING - FEARNLEYS AS
Handy
The Pacific market is still facing low activity, so no wonder that the tonnage list is getting longer. It´s still Ramadan and only a fe ...
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- Australian Commodity Traders Exchange
- PetroVietnam Power Coal Import and Supply Company
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- India Bulls Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- Power Finance Corporation Ltd., India
- PNOC Exploration Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Bukit Makmur.PT - Indonesia
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Minerals Council of Australia
- Gujarat Mineral Development Corp Ltd - India
- Energy Link Ltd, New Zealand
- Grasim Industreis Ltd - India
- Meenaskhi Energy Private Limited - India
- Aboitiz Power Corporation - Philippines
- Rio Tinto Coal - Australia
- CNBM International Corporation - China
- Bukit Asam (Persero) Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- CIMB Investment Bank - Malaysia
- Tamil Nadu electricity Board
- Straits Asia Resources Limited - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Java Power - Indonesia
- Siam City Cement - Thailand
- Interocean Group of Companies - India
- Metalloyd Limited - United Kingdom
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- Medco Energi Mining Internasional
- Gujarat Sidhee Cement - India
- Electricity Authority, New Zealand
- Deloitte Consulting - India
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- Asmin Koalindo Tuhup - Indonesia
- Baramulti Group, Indonesia
- Eastern Coal Council - USA
- Indo Tambangraya Megah - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Ministry of Mines - Canada
- Marubeni Corporation - India
- Semirara Mining Corp, Philippines
- Edison Trading Spa - Italy
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- Kepco SPC Power Corporation, Philippines
- Carbofer General Trading SA - India
- McConnell Dowell - Australia
- Essar Steel Hazira Ltd - India
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Borneo Indobara - Indonesia
- SMC Global Power, Philippines
- Attock Cement Pakistan Limited
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- Iligan Light & Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- Maharashtra Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Sree Jayajothi Cements Limited - India
- GMR Energy Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kaltim Prima Coal - Indonesia
- Ministry of Transport, Egypt
- Kapuas Tunggal Persada - Indonesia
- Standard Chartered Bank - UAE
- Globalindo Alam Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Kumho Petrochemical, South Korea
- The Treasury - Australian Government
- SN Aboitiz Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- Coal and Oil Company - UAE
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- ICICI Bank Limited - India
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Global Coal Blending Company Limited - Australia
- Global Green Power PLC Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Wilmar Investment Holdings
- SMG Consultants - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Meralco Power Generation, Philippines
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- ASAPP Information Group - India
- Kideco Jaya Agung - Indonesia
- Madhucon Powers Ltd - India
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- Holcim Trading Pte Ltd - Singapore
- Aditya Birla Group - India
- Agrawal Coal Company - India
- Eastern Energy - Thailand
- Singapore Mercantile Exchange
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Coalindo Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Therma Luzon, Inc, Philippines
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Ind-Barath Power Infra Limited - India
- Mercuria Energy - Indonesia
- PTC India Limited - India
- Jindal Steel & Power Ltd - India
- Parry Sugars Refinery, India
- The State Trading Corporation of India Ltd
- European Bulk Services B.V. - Netherlands
- Planning Commission, India
- Petron Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Ambuja Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- Thai Mozambique Logistica
- PowerSource Philippines DevCo
- Binh Thuan Hamico - Vietnam
- Bayan Resources Tbk. - Indonesia
- International Coal Ventures Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- IEA Clean Coal Centre - UK
- GN Power Mariveles Coal Plant, Philippines
- Makarim & Taira - Indonesia
- VISA Power Limited - India
- Indonesian Coal Mining Association
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- The University of Queensland
- Energy Development Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Simpson Spence & Young - Indonesia
- Indogreen Group - Indonesia
- Intertek Mineral Services - Indonesia
- Larsen & Toubro Limited - India
- Dalmia Cement Bharat India
- Romanian Commodities Exchange
- Mjunction Services Limited - India
- White Energy Company Limited
- Mercator Lines Limited - India
- Oldendorff Carriers - Singapore
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Karaikal Port Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jorong Barutama Greston.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Vedanta Resources Plc - India
- Vizag Seaport Private Limited - India
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- Economic Council, Georgia
- Chamber of Mines of South Africa
- Commonwealth Bank - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Finance - Indonesia
- Sarangani Energy Corporation, Philippines
- Wood Mackenzie - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- MS Steel International - UAE
- Leighton Contractors Pty Ltd - Australia
- Australian Coal Association
- Cement Manufacturers Association - India
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Directorate Of Revenue Intelligence - India
- Independent Power Producers Association of India
- Bharathi Cement Corporation - India
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