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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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Monday, 24 June 13
INDONESIA COAL SWAP FOR AUGUST 2013 DELIVERY GAINS WEEK ON WEEK
COALspot.com – Coal prices for immediate supply contracts have started moving up, but prices for next year supply shows a negative trend ...
Sunday, 23 June 13
BDI CROSSED ITS PSYCHOLOGICAL BARRIER THIS WEEK - VISTAAR
COALspot.com : The BDI crossed the psychological barrier of 1000 points after many months and closed at 1,027 points, which were up by 14.11 pct wee ...
Sunday, 23 June 13
SHIP PRICES NOT FOLLOWING FREIGHT MARKET FUNDAMENTALS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Although it's been the case in many occasions in the past, it appears that ship prices haven't been quite following freight market fundamentals, i ...
Friday, 21 June 13
U.S. COAL PRODUCTION INCREASED WEEK ON WEEK, EIA SAYS
COALspot.com – United states the world’s second largest coal producer produced totalled approximately 19.70 million short tons (mmst) of ...
Thursday, 20 June 13
CAPESIZE : FINALLY A SUBSTANTIAL IMPROVEMENT IN RATES! - FEARNLEYS A.S
Handy
Atlantic market kept a steady curve from last week. US Gulf positions fetched tick above USD 21k for Cont/Skaw direction, and vessels fixed f ...
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- SN Aboitiz Power Inc, Philippines
- SMC Global Power, Philippines
- Bhoruka Overseas - Indonesia
- Marubeni Corporation - India
- Larsen & Toubro Limited - India
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- Standard Chartered Bank - UAE
- Cigading International Bulk Terminal - Indonesia
- Xindia Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- Bayan Resources Tbk. - Indonesia
- Therma Luzon, Inc, Philippines
- Oldendorff Carriers - Singapore
- Price Waterhouse Coopers - Russia
- Leighton Contractors Pty Ltd - Australia
- Medco Energi Mining Internasional
- San Jose City I Power Corp, Philippines
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Indika Energy - Indonesia
- Vedanta Resources Plc - India
- Uttam Galva Steels Limited - India
- Petron Corporation, Philippines
- ASAPP Information Group - India
- Cement Manufacturers Association - India
- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Planning Commission, India
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- Wood Mackenzie - Singapore
- Star Paper Mills Limited - India
- Economic Council, Georgia
- Attock Cement Pakistan Limited
- Meenaskhi Energy Private Limited - India
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Binh Thuan Hamico - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- PTC India Limited - India
- SMG Consultants - Indonesia
- Videocon Industries ltd - India
- Krishnapatnam Port Company Ltd. - India
- Agrawal Coal Company - India
- Chamber of Mines of South Africa
- Sical Logistics Limited - India
- Siam City Cement PLC, Thailand
- Neyveli Lignite Corporation Ltd, - India
- Riau Bara Harum - Indonesia
- PowerSource Philippines DevCo
- Sindya Power Generating Company Private Ltd
- Global Coal Blending Company Limited - Australia
- Sinarmas Energy and Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- Savvy Resources Ltd - HongKong
- Merrill Lynch Commodities Europe
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Parliament of New Zealand
- Coal and Oil Company - UAE
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Timah Investasi Mineral - Indoneisa
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Power Finance Corporation Ltd., India
- Coalindo Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Port Waratah Coal Services - Australia
- India Bulls Power Limited - India
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- Trasteel International SA, Italy
- MS Steel International - UAE
- South Luzon Thermal Energy Corporation
- The Treasury - Australian Government
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Australia Pty. Ltd.
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- Singapore Mercantile Exchange
- Directorate General of MIneral and Coal - Indonesia
- Bhatia International Limited - India
- GMR Energy Limited - India
- Sarangani Energy Corporation, Philippines
- Jaiprakash Power Ventures ltd
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- London Commodity Brokers - England
- Grasim Industreis Ltd - India
- IHS Mccloskey Coal Group - USA
- Asmin Koalindo Tuhup - Indonesia
- Central Electricity Authority - India
- Gujarat Mineral Development Corp Ltd - India
- Indian Energy Exchange, India
- Eastern Coal Council - USA
- Mercator Lines Limited - India
- Bukit Makmur.PT - Indonesia
- Interocean Group of Companies - India
- Kaltim Prima Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Semirara Mining and Power Corporation, Philippines
- Australian Coal Association
- Renaissance Capital - South Africa
- Meralco Power Generation, Philippines
- Independent Power Producers Association of India
- Electricity Authority, New Zealand
- Romanian Commodities Exchange
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- GVK Power & Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Simpson Spence & Young - Indonesia
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- PNOC Exploration Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Wilmar Investment Holdings
- IEA Clean Coal Centre - UK
- Parry Sugars Refinery, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Tata Chemicals Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Altura Mining Limited, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Samtan Co., Ltd - South Korea
- Metalloyd Limited - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Baramulti Group, Indonesia
- Ambuja Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bangladesh Power Developement Board
- Kalimantan Lumbung Energi - Indonesia
- Bhushan Steel Limited - India
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Maheswari Brothers Coal Limited - India
- OPG Power Generation Pvt Ltd - India
- The University of Queensland
- Straits Asia Resources Limited - Singapore
- Directorate Of Revenue Intelligence - India
- Indogreen Group - Indonesia
- Electricity Generating Authority of Thailand
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining Corp, Philippines
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- Bharathi Cement Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Ministry of Finance - Indonesia
- McConnell Dowell - Australia
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
- Madhucon Powers Ltd - India
- European Bulk Services B.V. - Netherlands
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- Africa Commodities Group - South Africa
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- Barasentosa Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Makarim & Taira - Indonesia
- Orica Mining Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dalmia Cement Bharat India
- PetroVietnam Power Coal Import and Supply Company
- Indian Oil Corporation Limited
- Kumho Petrochemical, South Korea
- Ministry of Transport, Egypt
- Global Green Power PLC Corporation, Philippines
- Thai Mozambique Logistica
- ICICI Bank Limited - India
- Posco Energy - South Korea
- Energy Link Ltd, New Zealand
- Commonwealth Bank - Australia
- Eastern Energy - Thailand
- Coastal Gujarat Power Limited - India
- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
- Deloitte Consulting - India
- Energy Development Corp, Philippines
- Tamil Nadu electricity Board
- Mintek Dendrill Indonesia
- The State Trading Corporation of India Ltd
- Goldman Sachs - Singapore
- Mjunction Services Limited - India
- Anglo American - United Kingdom
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