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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, 13 June 13
HANDY: SHORT PERIOD WERE FIXED AT AROUND USD 9000 LEVEL
Handy
Despite falling rates for bigger sizes, the Supras in Atlantic are seeing some improvements with fresh biz. US Gulf positions fetching tick a ...
Thursday, 13 June 13
BIMCO EXPECTS SUBDUED CAPESIZE EARNINGS FOR THE COMING WEEKS - HELLENIC SHIPPING NEWS
Bulk is not only about China even though it is a key driver. In this section, we have taken a closer look at the European seaborne coal markets, whi ...
Thursday, 13 June 13
RIO TINTO AGREES SALE OF EAGLE PROJECT FOR AN ESTIMATED US$325 MILLION IN CASH
COALspot.com - Rio Tinto has reached a binding agreement to sell its Eagle project to Lundin Mining Corporation for an estimated US$325 million in c ...
Thursday, 13 June 13
HARD COAL IMPORTS RISE SHARPLY IN GERMANY IN Q1 2013 - COAL IMPORTERS ASSOCIATION
Coal-fired Power Plants in Germany: Pillars of the Grid and the Energy Turnaround; Hard Coal Consumption and Hard Coal Imports Rise Sharply in Germa ...
Wednesday, 12 June 13
INDONESIAN COAL PRICE REFERENCE SLIDES TO 2013 LOW
COALspot.com - Indonesian Coal Price Reference continues to take its lumps this month, dropping about 0.54 % and hitting a 2013 low. The Indonesian ...
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- Price Waterhouse Coopers - Russia
- Sree Jayajothi Cements Limited - India
- IEA Clean Coal Centre - UK
- San Jose City I Power Corp, Philippines
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Tata Chemicals Ltd - India
- Aditya Birla Group - India
- Bulk Trading Sa - Switzerland
- Electricity Generating Authority of Thailand
- New Zealand Coal & Carbon
- Kapuas Tunggal Persada - Indonesia
- White Energy Company Limited
- Gujarat Sidhee Cement - India
- Ind-Barath Power Infra Limited - India
- Meralco Power Generation, Philippines
- Cement Manufacturers Association - India
- Petrochimia International Co. Ltd.- Taiwan
- IHS Mccloskey Coal Group - USA
- India Bulls Power Limited - India
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Orica Mining Services - Indonesia
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- Savvy Resources Ltd - HongKong
- Eastern Energy - Thailand
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- Indogreen Group - Indonesia
- Coalindo Energy - Indonesia
- The State Trading Corporation of India Ltd
- CIMB Investment Bank - Malaysia
- Central Electricity Authority - India
- Attock Cement Pakistan Limited
- Simpson Spence & Young - Indonesia
- Thai Mozambique Logistica
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- International Coal Ventures Pvt Ltd - India
- Parliament of New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Sinarmas Energy and Mining - Indonesia
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Bukit Baiduri Energy - Indonesia
- ASAPP Information Group - India
- Borneo Indobara - Indonesia
- Ambuja Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Grasim Industreis Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- Neyveli Lignite Corporation Ltd, - India
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Lanco Infratech Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- GAC Shipping (India) Pvt Ltd
- Uttam Galva Steels Limited - India
- Bhoruka Overseas - Indonesia
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- Bhatia International Limited - India
- Billiton Holdings Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Ministry of Finance - Indonesia
- PTC India Limited - India
- Timah Investasi Mineral - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- MS Steel International - UAE
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Latin American Coal - Colombia
- Oldendorff Carriers - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Indo Tambangraya Megah - Indonesia
- Global Business Power Corporation, Philippines
- Xindia Steels Limited - India
- Australian Commodity Traders Exchange
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Sojitz Corporation - Japan
- Vedanta Resources Plc - India
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- Makarim & Taira - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- Marubeni Corporation - India
- The University of Queensland
- Agrawal Coal Company - India
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- Mercator Lines Limited - India
- Toyota Tsusho Corporation, Japan
- Indonesian Coal Mining Association
- Indika Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Thiess Contractors Indonesia
- Power Finance Corporation Ltd., India
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- Orica Australia Pty. Ltd.
- Manunggal Multi Energi - Indonesia
- Merrill Lynch Commodities Europe
- London Commodity Brokers - England
- Vizag Seaport Private Limited - India
- SMG Consultants - Indonesia
- SN Aboitiz Power Inc, Philippines
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- Trasteel International SA, Italy
- Mercuria Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- CNBM International Corporation - China
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Anglo American - United Kingdom
- Minerals Council of Australia
- The Treasury - Australian Government
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Karaikal Port Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- European Bulk Services B.V. - Netherlands
- Bangladesh Power Developement Board
- Georgia Ports Authority, United States
- Heidelberg Cement - Germany
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- Australian Coal Association
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- Star Paper Mills Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kartika Selabumi Mining - Indonesia
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Wood Mackenzie - Singapore
- Samtan Co., Ltd - South Korea
- Sindya Power Generating Company Private Ltd
- Bayan Resources Tbk. - Indonesia
- Chamber of Mines of South Africa
- Kepco SPC Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Jaiprakash Power Ventures ltd
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Straits Asia Resources Limited - Singapore
- Petron Corporation, Philippines
- Singapore Mercantile Exchange
- Coastal Gujarat Power Limited - India
- Coal and Oil Company - UAE
- Posco Energy - South Korea
- PNOC Exploration Corporation - Philippines
- Interocean Group of Companies - India
- Independent Power Producers Association of India
- Rashtriya Ispat Nigam Limited - India
- Deloitte Consulting - India
- Central Java Power - Indonesia
- Riau Bara Harum - Indonesia
- Edison Trading Spa - Italy
- Antam Resourcindo - Indonesia
- Kaltim Prima Coal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sical Logistics Limited - India
- GN Power Mariveles Coal Plant, Philippines
- SMC Global Power, Philippines
- Sakthi Sugars Limited - India
- Malabar Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- Bharathi Cement Corporation - India
- GMR Energy Limited - India
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- Commonwealth Bank - Australia
- Altura Mining Limited, Indonesia
- Barasentosa Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
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