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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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Friday, 05 July 13
THE DRY BULK MARKET IS GOING FROM STRENGTH TO STRENGTH - INTERMODAL
The Capesize sector has been one that has gone through a wild rollercoaster of emotions this past decade, ranging from the exuberance witnessed duri ...
Thursday, 04 July 13
CHALLENGER SIGNS FORMAL EXCLUSIVE MINING AND MARKETING AGREEMENT FOR ABBR PROJECT IN CENTRAL KALIMANTAN
COALspot.com - Challenger Deep Resources Corp., through its subsidiary PT Bestindo Energy has signed the formal exclusive Mining and Marketing agree ...
Thursday, 04 July 13
ASX LISTED QBL TO ACQUIRE INTERESTS IN MOZAMBIQUE COAL EXPLORATION LICENSES
- QBL to acquire interests in two Mozambique exploration licences prospective for coal
- Licenses located in the highly prospective Zambezi basin, ...
Thursday, 04 July 13
HANDY : INDO/CHINA, CHARTERERS RATING AROUND US$ 10,000 - FEARNLEYS AS
Handy
The Feast market firmed slightly up as mid-July cargos entered the market, but charterers seems not in hurry to cover them and looking for ch ...
Wednesday, 03 July 13
NEWCASTLE COAL EXPORTS DIP 24.79 PER CENT WOW
COALspot.com - Newcastle Coal exports fell 24.79% to 2.33 million tons WoW.
Newcastle port in Australia has loaded 2,332,513 tons of coal for the ...
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- Latin American Coal - Colombia
- Jorong Barutama Greston.PT - Indonesia
- Xindia Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Minerals Council of Australia
- ASAPP Information Group - India
- Ceylon Electricity Board - Sri Lanka
- Thiess Contractors Indonesia
- New Zealand Coal & Carbon
- Vijayanagar Sugar Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Mercator Lines Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- MS Steel International - UAE
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- Salva Resources Pvt Ltd - India
- Romanian Commodities Exchange
- GVK Power & Infra Limited - India
- Energy Development Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bharathi Cement Corporation - India
- Ministry of Finance - Indonesia
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Madhucon Powers Ltd - India
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- ICICI Bank Limited - India
- TeaM Sual Corporation - Philippines
- Medco Energi Mining Internasional
- White Energy Company Limited
- Ministry of Transport, Egypt
- Jaiprakash Power Ventures ltd
- Price Waterhouse Coopers - Russia
- Georgia Ports Authority, United States
- Ministry of Mines - Canada
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining Corp, Philippines
- Heidelberg Cement - Germany
- Sical Logistics Limited - India
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Sarangani Energy Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- European Bulk Services B.V. - Netherlands
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- Chamber of Mines of South Africa
- Interocean Group of Companies - India
- Alfred C Toepfer International GmbH - Germany
- Makarim & Taira - Indonesia
- Binh Thuan Hamico - Vietnam
- Indogreen Group - Indonesia
- Electricity Generating Authority of Thailand
- SMC Global Power, Philippines
- OPG Power Generation Pvt Ltd - India
- Ambuja Cements Ltd - India
- Dalmia Cement Bharat India
- Iligan Light & Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Riau Bara Harum - Indonesia
- Commonwealth Bank - Australia
- Coastal Gujarat Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Aboitiz Power Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement PLC, Thailand
- Mintek Dendrill Indonesia
- Bhoruka Overseas - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Central Electricity Authority - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Power Finance Corporation Ltd., India
- Marubeni Corporation - India
- Wood Mackenzie - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- GMR Energy Limited - India
- VISA Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Ind-Barath Power Infra Limited - India
- Eastern Coal Council - USA
- Trasteel International SA, Italy
- Global Coal Blending Company Limited - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Attock Cement Pakistan Limited
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Parliament of New Zealand
- Port Waratah Coal Services - Australia
- Eastern Energy - Thailand
- Independent Power Producers Association of India
- Tamil Nadu electricity Board
- Kohat Cement Company Ltd. - Pakistan
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- AsiaOL BioFuels Corp., Philippines
- Thai Mozambique Logistica
- Indonesian Coal Mining Association
- SN Aboitiz Power Inc, Philippines
- Carbofer General Trading SA - India
- London Commodity Brokers - England
- Vedanta Resources Plc - India
- Manunggal Multi Energi - Indonesia
- Oldendorff Carriers - Singapore
- Banpu Public Company Limited - Thailand
- Indian Energy Exchange, India
- Bahari Cakrawala Sebuku - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- The University of Queensland
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Bhushan Steel Limited - India
- Cement Manufacturers Association - India
- Rashtriya Ispat Nigam Limited - India
- Directorate Of Revenue Intelligence - India
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Kumho Petrochemical, South Korea
- Essar Steel Hazira Ltd - India
- Posco Energy - South Korea
- Kobexindo Tractors - Indoneisa
- Parry Sugars Refinery, India
- Bukit Asam (Persero) Tbk - Indonesia
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- Indika Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Merrill Lynch Commodities Europe
- PetroVietnam Power Coal Import and Supply Company
- Maharashtra Electricity Regulatory Commission - India
- PTC India Limited - India
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Singapore Mercantile Exchange
- Bangladesh Power Developement Board
- Meralco Power Generation, Philippines
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- Sree Jayajothi Cements Limited - India
- Renaissance Capital - South Africa
- Wilmar Investment Holdings
- Karaikal Port Pvt Ltd - India
- Siam City Cement - Thailand
- Anglo American - United Kingdom
- Bhatia International Limited - India
- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- Economic Council, Georgia
- Star Paper Mills Limited - India
- Samtan Co., Ltd - South Korea
- Mjunction Services Limited - India
- Uttam Galva Steels Limited - India
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- Sakthi Sugars Limited - India
- Gujarat Sidhee Cement - India
- Australian Coal Association
- Coalindo Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Electricity Authority, New Zealand
- Borneo Indobara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Orica Australia Pty. Ltd.
- Central Java Power - Indonesia
- India Bulls Power Limited - India
- Goldman Sachs - Singapore
- Meenaskhi Energy Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- Bayan Resources Tbk. - Indonesia
- Lanco Infratech Ltd - India
- Jindal Steel & Power Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Billiton Holdings Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Chettinad Cement Corporation Ltd - India
- Sindya Power Generating Company Private Ltd
- Kartika Selabumi Mining - Indonesia
- Indian Oil Corporation Limited
- Petron Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Metalloyd Limited - United Kingdom
- Standard Chartered Bank - UAE
- Simpson Spence & Young - Indonesia
- SMG Consultants - Indonesia
- Sojitz Corporation - Japan
- Energy Link Ltd, New Zealand
- Grasim Industreis Ltd - India
- Leighton Contractors Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Bukit Makmur.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Savvy Resources Ltd - HongKong
- Gujarat Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- Planning Commission, India
- Indo Tambangraya Megah - Indonesia
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