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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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Wednesday, 31 July 13
COAL GASIFICATION
IBC’s Coal Gasification conference explores the opportunities for coal gasification investment and development in Asia.
With depleting dome ...
Wednesday, 31 July 13
SUPRAMAX : THE PACIFIC BASIN WAS MOVING ON A POSITIVE PATH - EVA TZIMA
COALspot.com: Cape - Despite holding their ground fairly well early on in the week, Capes in the Atlantic basin gave in to the mounting pressure fro ...
Tuesday, 30 July 13
HARD COAL ON THE WAY TO BECOMING THE WORLD'S MOST IMPORTANT ENERGY SOURCE - VDKI
Press Release : Hard coal continued to be the world’s fastest-growing fossil primary energy source in 2012. It covered about 28% of the world ...
Tuesday, 30 July 13
WIJAYA TRI UTAMA PURCHASES MICROCOAL TECHNOLOGIES' CLEAN COAL UPGRADING FACILITY
- First MCI commercial scale application of proprietary microwave technology to upgrade coal thermal output and reduce pollutants
- MicroCoal to re ...
Tuesday, 30 July 13
KOMIPO INVITES BIDS FOR 520,000 MT OF 5,700 KCAL/KG COAL ON NAR BASIS FOR H1, 2014
COALspot.com : Korea Midland Power Co., Ltd. has invited bids for 520,000 Metric Tons (MT) of coal with calorific value 5,700 kcal/kg on NAR basis f ...
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- Deloitte Consulting - India
- Singapore Mercantile Exchange
- Petron Corporation, Philippines
- Coal and Oil Company - UAE
- Riau Bara Harum - Indonesia
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- Power Finance Corporation Ltd., India
- Chettinad Cement Corporation Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- Interocean Group of Companies - India
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- Bulk Trading Sa - Switzerland
- Wood Mackenzie - Singapore
- Videocon Industries ltd - India
- Posco Energy - South Korea
- Kalimantan Lumbung Energi - Indonesia
- GMR Energy Limited - India
- Standard Chartered Bank - UAE
- Electricity Authority, New Zealand
- Banpu Public Company Limited - Thailand
- Merrill Lynch Commodities Europe
- Mintek Dendrill Indonesia
- Energy Link Ltd, New Zealand
- Latin American Coal - Colombia
- Savvy Resources Ltd - HongKong
- Georgia Ports Authority, United States
- Thiess Contractors Indonesia
- McConnell Dowell - Australia
- Kepco SPC Power Corporation, Philippines
- Economic Council, Georgia
- Ministry of Transport, Egypt
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Coastal Gujarat Power Limited - India
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- Indogreen Group - Indonesia
- GVK Power & Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Lanco Infratech Ltd - India
- South Luzon Thermal Energy Corporation
- Ind-Barath Power Infra Limited - India
- Bharathi Cement Corporation - India
- Siam City Cement PLC, Thailand
- Jaiprakash Power Ventures ltd
- Aboitiz Power Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Therma Luzon, Inc, Philippines
- Eastern Coal Council - USA
- Indonesian Coal Mining Association
- Minerals Council of Australia
- Australian Commodity Traders Exchange
- Goldman Sachs - Singapore
- Bhatia International Limited - India
- Pendopo Energi Batubara - Indonesia
- Kideco Jaya Agung - Indonesia
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
- Orica Australia Pty. Ltd.
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Aditya Birla Group - India
- Marubeni Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ASAPP Information Group - India
- Vizag Seaport Private Limited - India
- India Bulls Power Limited - India
- San Jose City I Power Corp, Philippines
- Indian Energy Exchange, India
- Wilmar Investment Holdings
- Romanian Commodities Exchange
- PTC India Limited - India
- Star Paper Mills Limited - India
- SN Aboitiz Power Inc, Philippines
- Carbofer General Trading SA - India
- Siam City Cement - Thailand
- Kartika Selabumi Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Formosa Plastics Group - Taiwan
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Sree Jayajothi Cements Limited - India
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining and Power Corporation, Philippines
- Xindia Steels Limited - India
- SMG Consultants - Indonesia
- Orica Mining Services - Indonesia
- Attock Cement Pakistan Limited
- Bhushan Steel Limited - India
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- Billiton Holdings Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Metalloyd Limited - United Kingdom
- Cement Manufacturers Association - India
- Kapuas Tunggal Persada - Indonesia
- SMC Global Power, Philippines
- Antam Resourcindo - Indonesia
- Borneo Indobara - Indonesia
- Agrawal Coal Company - India
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Global Coal Blending Company Limited - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ambuja Cements Ltd - India
- New Zealand Coal & Carbon
- Central Java Power - Indonesia
- Indian Oil Corporation Limited
- Indo Tambangraya Megah - Indonesia
- Australian Coal Association
- Bangladesh Power Developement Board
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Indika Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- European Bulk Services B.V. - Netherlands
- Sarangani Energy Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Bukit Baiduri Energy - Indonesia
- Tamil Nadu electricity Board
- Neyveli Lignite Corporation Ltd, - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- Ceylon Electricity Board - Sri Lanka
- Bhoruka Overseas - Indonesia
- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Meralco Power Generation, Philippines
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- Manunggal Multi Energi - Indonesia
- Rio Tinto Coal - Australia
- LBH Netherlands Bv - Netherlands
- Bayan Resources Tbk. - Indonesia
- Gujarat Sidhee Cement - India
- Bukit Makmur.PT - Indonesia
- VISA Power Limited - India
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Parliament of New Zealand
- Straits Asia Resources Limited - Singapore
- Semirara Mining Corp, Philippines
- Energy Development Corp, Philippines
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- Uttam Galva Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Sinarmas Energy and Mining - Indonesia
- Renaissance Capital - South Africa
- ICICI Bank Limited - India
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- Kumho Petrochemical, South Korea
- Binh Thuan Hamico - Vietnam
- Global Green Power PLC Corporation, Philippines
- IEA Clean Coal Centre - UK
- Simpson Spence & Young - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Makarim & Taira - Indonesia
- Mjunction Services Limited - India
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- Rashtriya Ispat Nigam Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Altura Mining Limited, Indonesia
- The Treasury - Australian Government
- Madhucon Powers Ltd - India
- Maheswari Brothers Coal Limited - India
- Grasim Industreis Ltd - India
- Chamber of Mines of South Africa
- Alfred C Toepfer International GmbH - Germany
- Karaikal Port Pvt Ltd - India
- Heidelberg Cement - Germany
- Salva Resources Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- White Energy Company Limited
- The University of Queensland
- Jindal Steel & Power Ltd - India
- Coalindo Energy - Indonesia
- Oldendorff Carriers - Singapore
- Globalindo Alam Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Central Electricity Authority - India
- Bahari Cakrawala Sebuku - Indonesia
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