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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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Tuesday, 11 June 13
COAL: NO SIGN OF RECOVERY - GABRIELLA
COALspot.com: We attended the 19th Annual Coaltrans Asia Conference, where we found most of the speakers were not very optimistic on the outlook for ...
Tuesday, 11 June 13
NEWCASTLE PORT SHIPPED MORE COAL WEEK ENDED 11 JUNE 2013
COALspot.com - Newcastle port in Australia has loaded 3,104,509 tons of coal for the week ended 0700 hours 11 June 2013, Newcastle Port Corp. ...
Tuesday, 11 June 13
OUTLOOK FOR CAPESIZES LOOKS GRIM, DESPITE FALLING IRON ORE PRICES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Things aren't looking all that rosy for the dry bulk market, despite a stronger volume of iron ore imports during the months of March and April, as ...
Sunday, 09 June 13
CFR SOUTH CHINA COAL SWAP IS UNDER PRESSURE
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average July 2013 delivery have lost 0.03 percent week on week but gained 0.07 pe ...
Sunday, 09 June 13
IRON ORE DEMAND: WEAK; COAL MOVEMENT: STEADY TO INDIA AND CHINA - CAPT. REDDY
COALspot.com - The freight market was fairly steady with BDI up by 0.37 per cent closed at 812 points this week.
The Cape index was also ended in ...
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- Coal and Oil Company - UAE
- Ceylon Electricity Board - Sri Lanka
- Therma Luzon, Inc, Philippines
- Mintek Dendrill Indonesia
- Parliament of New Zealand
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bharathi Cement Corporation - India
- Siam City Cement - Thailand
- The Treasury - Australian Government
- GMR Energy Limited - India
- Kepco SPC Power Corporation, Philippines
- Tamil Nadu electricity Board
- PowerSource Philippines DevCo
- Mercuria Energy - Indonesia
- Coalindo Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Global Green Power PLC Corporation, Philippines
- Aditya Birla Group - India
- Karaikal Port Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- Larsen & Toubro Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Edison Trading Spa - Italy
- McConnell Dowell - Australia
- Holcim Trading Pte Ltd - Singapore
- Iligan Light & Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Anglo American - United Kingdom
- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Heidelberg Cement - Germany
- Ambuja Cements Ltd - India
- Sojitz Corporation - Japan
- Power Finance Corporation Ltd., India
- London Commodity Brokers - England
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- SN Aboitiz Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Trasteel International SA, Italy
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Planning Commission, India
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- Romanian Commodities Exchange
- Star Paper Mills Limited - India
- Commonwealth Bank - Australia
- Tata Chemicals Ltd - India
- Kaltim Prima Coal - Indonesia
- Dalmia Cement Bharat India
- Parry Sugars Refinery, India
- Essar Steel Hazira Ltd - India
- Kobexindo Tractors - Indoneisa
- Manunggal Multi Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Petron Corporation, Philippines
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Riau Bara Harum - Indonesia
- Meralco Power Generation, Philippines
- Interocean Group of Companies - India
- Globalindo Alam Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Marubeni Corporation - India
- Australian Coal Association
- Oldendorff Carriers - Singapore
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- IEA Clean Coal Centre - UK
- Asmin Koalindo Tuhup - Indonesia
- The State Trading Corporation of India Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Renaissance Capital - South Africa
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- Port Waratah Coal Services - Australia
- Sinarmas Energy and Mining - Indonesia
- Kartika Selabumi Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Coastal Gujarat Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Rio Tinto Coal - Australia
- Videocon Industries ltd - India
- Toyota Tsusho Corporation, Japan
- Chamber of Mines of South Africa
- Semirara Mining and Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Ind-Barath Power Infra Limited - India
- CNBM International Corporation - China
- Straits Asia Resources Limited - Singapore
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Grasim Industreis Ltd - India
- Standard Chartered Bank - UAE
- Simpson Spence & Young - Indonesia
- Indogreen Group - Indonesia
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- ICICI Bank Limited - India
- Posco Energy - South Korea
- IHS Mccloskey Coal Group - USA
- Price Waterhouse Coopers - Russia
- Minerals Council of Australia
- Lanco Infratech Ltd - India
- Goldman Sachs - Singapore
- PTC India Limited - India
- Bhushan Steel Limited - India
- Aboitiz Power Corporation - Philippines
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Pendopo Energi Batubara - Indonesia
- Intertek Mineral Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Thai Mozambique Logistica
- Global Business Power Corporation, Philippines
- Central Electricity Authority - India
- Eastern Energy - Thailand
- Ministry of Finance - Indonesia
- Uttam Galva Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- MS Steel International - UAE
- Neyveli Lignite Corporation Ltd, - India
- Deloitte Consulting - India
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- Electricity Generating Authority of Thailand
- White Energy Company Limited
- Mjunction Services Limited - India
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- LBH Netherlands Bv - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- Eastern Coal Council - USA
- Antam Resourcindo - Indonesia
- Electricity Authority, New Zealand
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- AsiaOL BioFuels Corp., Philippines
- Economic Council, Georgia
- Central Java Power - Indonesia
- VISA Power Limited - India
- Thiess Contractors Indonesia
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- Agrawal Coal Company - India
- Medco Energi Mining Internasional
- Meenaskhi Energy Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Cement Manufacturers Association - India
- Timah Investasi Mineral - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- San Jose City I Power Corp, Philippines
- Indika Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Wood Mackenzie - Singapore
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Vedanta Resources Plc - India
- Georgia Ports Authority, United States
- Gujarat Mineral Development Corp Ltd - India
- Singapore Mercantile Exchange
- GVK Power & Infra Limited - India
- SMC Global Power, Philippines
- South Luzon Thermal Energy Corporation
- Savvy Resources Ltd - HongKong
- Siam City Cement PLC, Thailand
- Barasentosa Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
- CIMB Investment Bank - Malaysia
- Bayan Resources Tbk. - Indonesia
- OPG Power Generation Pvt Ltd - India
- Latin American Coal - Colombia
- Directorate Of Revenue Intelligence - India
- Gujarat Sidhee Cement - India
- Carbofer General Trading SA - India
- Bulk Trading Sa - Switzerland
- Salva Resources Pvt Ltd - India
- ASAPP Information Group - India
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