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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, 17 July 13
NEWCASTLE COAL EXPORTS FELL 3.85% ON WEEK
COALspot.com: Newcastle port in Australia has loaded 2,860,149 tons of coal for the week ended 0700 hours 15 July 2013, Newcastle Port Corp. s ...
Wednesday, 17 July 13
TORN BETWEEN A CREDIT CRUNCH AND SUSTAINABLE GROWTH - GEORGE DERMATIS
COALspot.com: In 2012 China expanded at a rate of 7.8%, its worst annual performance in 13 years, raising criticism over the newly appointed governm ...
Tuesday, 16 July 13
TAKE - OR - PAY CONTRACTS CONTINUE TO INCENTIVISE AUSTRALIAN COAL PRODUCERS DESPITE POTENTIAL NEGATIVE CASH MARGINS - WOOD MACKENZIE
Australia's coal production has continued to grow, despite lower coal prices in 2013. Global investors and suppliers are therefore questioning whet ...
Monday, 15 July 13
INDONESIAN GOVERNMENT HAS REVISED DOWN ITS JULY BENCH-MARK COAL PRICE TO US$ 81.69 PER MT
COALspot. com - Indonesian Coal Price Reference dropped 3.75 % and hitting a 2013 low. The Indonesian government has revised down its owned coal ben ...
Monday, 15 July 13
INDO COAL SWAPS ARE STRUGGLING FOR RIGHT DIRECTION
COALspot.com – Indo coal swaps are struggling to find the right direction. Sub-Bit Indonesia coal swaps (FOB ) for average August 2013 d ...
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- Bulk Trading Sa - Switzerland
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- Bhoruka Overseas - Indonesia
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- Minerals Council of Australia
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- Ambuja Cements Ltd - India
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Tamil Nadu electricity Board
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
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- Planning Commission, India
- White Energy Company Limited
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- Coal and Oil Company - UAE
- Malabar Cements Ltd - India
- Vizag Seaport Private Limited - India
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- Xindia Steels Limited - India
- Orica Mining Services - Indonesia
- SMC Global Power, Philippines
- South Luzon Thermal Energy Corporation
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- Sakthi Sugars Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chamber of Mines of South Africa
- Intertek Mineral Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Videocon Industries ltd - India
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- Chettinad Cement Corporation Ltd - India
- Manunggal Multi Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Bharathi Cement Corporation - India
- Singapore Mercantile Exchange
- Bukit Makmur.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Leighton Contractors Pty Ltd - Australia
- Energy Development Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Eastern Energy - Thailand
- IEA Clean Coal Centre - UK
- Mercator Lines Limited - India
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- Vedanta Resources Plc - India
- Metalloyd Limited - United Kingdom
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- Thai Mozambique Logistica
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- Trasteel International SA, Italy
- Marubeni Corporation - India
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- VISA Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Savvy Resources Ltd - HongKong
- Renaissance Capital - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Pipit Mutiara Jaya. PT, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Independent Power Producers Association of India
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Riau Bara Harum - Indonesia
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- Indian Energy Exchange, India
- Ministry of Finance - Indonesia
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- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
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- SMG Consultants - Indonesia
- The University of Queensland
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- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
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- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Parliament of New Zealand
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- Billiton Holdings Pty Ltd - Australia
- Interocean Group of Companies - India
- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- Neyveli Lignite Corporation Ltd, - India
- Electricity Generating Authority of Thailand
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- Price Waterhouse Coopers - Russia
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- Pendopo Energi Batubara - Indonesia
- CNBM International Corporation - China
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhushan Steel Limited - India
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- Thiess Contractors Indonesia
- Samtan Co., Ltd - South Korea
- Semirara Mining Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Directorate Of Revenue Intelligence - India
- Tata Chemicals Ltd - India
- Jaiprakash Power Ventures ltd
- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Oldendorff Carriers - Singapore
- European Bulk Services B.V. - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- Bayan Resources Tbk. - Indonesia
- TeaM Sual Corporation - Philippines
- Petron Corporation, Philippines
- Central Electricity Authority - India
- PTC India Limited - India
- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- Africa Commodities Group - South Africa
- Global Green Power PLC Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- The Treasury - Australian Government
- Gujarat Sidhee Cement - India
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- Siam City Cement PLC, Thailand
- Wilmar Investment Holdings
- Rashtriya Ispat Nigam Limited - India
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- Gujarat Mineral Development Corp Ltd - India
- Iligan Light & Power Inc, Philippines
- Standard Chartered Bank - UAE
- Electricity Authority, New Zealand
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
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- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- Kapuas Tunggal Persada - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
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