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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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Thursday, 25 July 13
CAPESIZE : PACIFIC AND ATLANTIC RATES ARE HOLDING STEADY - FEARNLEYS AS
Handy
The Far East market remains quiet even if some Indo coal trip orders were fed in the market at early this week. Prompt ships passing Singapor ...
Thursday, 25 July 13
SUMMER LULL CHIPPING AWAY RECENT GAINS IN DRY BULK FREIGHT RATES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
In what seems to be establishing as a permanent trend, at least for the time being, the dry bulk market kept on retreating yesterday, even if this r ...
Tuesday, 23 July 13
NEWCASTLE'S COAL EXPORTS CLIMB 17.82% ON WEEK, PORT'S DATA SHOWS
COALspot.com: Newcastle port in Australia has loaded 3,369,865 tons of coal for the week ended 0700 hours 22 July 2013, Newcastle Port Corp. s ...
Monday, 22 July 13
DRY BULK MARKET DIFFICULT TO MAINTAIN POSITIVE DRIVE CLAIMS SHIPBROKER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has seen a significant recovery in recent weeks, leading most ship classes to earnings above their operating expenses, thus brin ...
Monday, 22 July 13
INDO COAL SWAP FOR AUGUST 13 DELIVERY GAINED ON WEEK BUT LOST ON DAY AND MONTH
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average August 2013 delivery slightly up on week but fell on day and month on Fri ...
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- Petron Corporation, Philippines
- Indonesian Coal Mining Association
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Merrill Lynch Commodities Europe
- Billiton Holdings Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Sical Logistics Limited - India
- Grasim Industreis Ltd - India
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- GAC Shipping (India) Pvt Ltd
- VISA Power Limited - India
- Energy Development Corp, Philippines
- London Commodity Brokers - England
- Indo Tambangraya Megah - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Minerals Council of Australia
- Kaltim Prima Coal - Indonesia
- SMG Consultants - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Sidhee Cement - India
- Carbofer General Trading SA - India
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- Karaikal Port Pvt Ltd - India
- Edison Trading Spa - Italy
- Indian Oil Corporation Limited
- Aditya Birla Group - India
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- Thai Mozambique Logistica
- Directorate Of Revenue Intelligence - India
- Romanian Commodities Exchange
- Eastern Coal Council - USA
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- Posco Energy - South Korea
- Australian Commodity Traders Exchange
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Aboitiz Power Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Videocon Industries ltd - India
- Electricity Authority, New Zealand
- Commonwealth Bank - Australia
- Ceylon Electricity Board - Sri Lanka
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- Bhoruka Overseas - Indonesia
- ICICI Bank Limited - India
- Holcim Trading Pte Ltd - Singapore
- Indika Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Coal and Oil Company - UAE
- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- Mercator Lines Limited - India
- South Luzon Thermal Energy Corporation
- Larsen & Toubro Limited - India
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- MS Steel International - UAE
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- Vedanta Resources Plc - India
- Star Paper Mills Limited - India
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- The University of Queensland
- Banpu Public Company Limited - Thailand
- Standard Chartered Bank - UAE
- Meralco Power Generation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Global Green Power PLC Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Indian Energy Exchange, India
- Thiess Contractors Indonesia
- Timah Investasi Mineral - Indoneisa
- Meenaskhi Energy Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- GVK Power & Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- GMR Energy Limited - India
- Altura Mining Limited, Indonesia
- Semirara Mining Corp, Philippines
- Tata Chemicals Ltd - India
- Binh Thuan Hamico - Vietnam
- Global Coal Blending Company Limited - Australia
- Samtan Co., Ltd - South Korea
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- Cement Manufacturers Association - India
- Goldman Sachs - Singapore
- Borneo Indobara - Indonesia
- Agrawal Coal Company - India
- Salva Resources Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Orica Australia Pty. Ltd.
- Deloitte Consulting - India
- Vizag Seaport Private Limited - India
- Bukit Makmur.PT - Indonesia
- Mjunction Services Limited - India
- SN Aboitiz Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Pendopo Energi Batubara - Indonesia
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- Antam Resourcindo - Indonesia
- Kideco Jaya Agung - Indonesia
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- Kobexindo Tractors - Indoneisa
- Maheswari Brothers Coal Limited - India
- CNBM International Corporation - China
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- SMC Global Power, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Baiduri Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sree Jayajothi Cements Limited - India
- Iligan Light & Power Inc, Philippines
- Bhushan Steel Limited - India
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- Global Business Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
- Independent Power Producers Association of India
- Port Waratah Coal Services - Australia
- Coalindo Energy - Indonesia
- White Energy Company Limited
- Ambuja Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- Petrochimia International Co. Ltd.- Taiwan
- Bhatia International Limited - India
- Semirara Mining and Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Dalmia Cement Bharat India
- Australian Coal Association
- Pipit Mutiara Jaya. PT, Indonesia
- Oldendorff Carriers - Singapore
- AsiaOL BioFuels Corp., Philippines
- Medco Energi Mining Internasional
- PetroVietnam Power Coal Import and Supply Company
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- PowerSource Philippines DevCo
- Georgia Ports Authority, United States
- Chamber of Mines of South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Orica Mining Services - Indonesia
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- The State Trading Corporation of India Ltd
- Ind-Barath Power Infra Limited - India
- ASAPP Information Group - India
- Siam City Cement PLC, Thailand
- Anglo American - United Kingdom
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