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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, 04 June 13
WOOD MACKENZIE SAYS THE CHINA'S THERMAL COAL DEMAND WILL REACH NEARLY 7BTPA BY 2030
COALspot.com - The Illusion of Peak Coal' says that despite efforts to limit coal consumption and seek alternative fuel options, China's strong ap ...
Saturday, 01 June 13
COAL PRICES STRUGGLE TO FIRM UP
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average July 2013 delivery have gained 0.18 percent week on week and 0.03 percent ...
Saturday, 01 June 13
THE FREIGHT MARKET FOR S7 AND S8 SECTORS ARE EXPECTED TO BE SOFT - VISTAAR
COALspot.com – The freights are remains weak week ended 31 May 2013, as BDI fell 2.05 pct and closed at 809 points on 31 May 2013.
The Cape ...
Friday, 31 May 13
US PRODUCED 18.5 MILLION SHORT TONS OF COAL W/E 25 MAY 2013
COALspot.com – United states the world’s second largest coal producer produced totalled approximately 18.50 million short tons (mmst) of ...
Thursday, 30 May 13
HANDY: RBCT ROUND WAS AROUND USD 9K + 300 BB - FEARNRESEARCH
Handy
THE Atlantic market remained flat. The USG-Feast was at USD 19k and Black Sea-Feast was at USD 12k. The Pacific market remained quiet with no ...
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- Timah Investasi Mineral - Indoneisa
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- SMC Global Power, Philippines
- Sindya Power Generating Company Private Ltd
- Bulk Trading Sa - Switzerland
- Neyveli Lignite Corporation Ltd, - India
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- Australian Coal Association
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- Sical Logistics Limited - India
- Kapuas Tunggal Persada - Indonesia
- Port Waratah Coal Services - Australia
- PowerSource Philippines DevCo
- Gujarat Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Mining Services - Indonesia
- Savvy Resources Ltd - HongKong
- Bukit Makmur.PT - Indonesia
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- London Commodity Brokers - England
- International Coal Ventures Pvt Ltd - India
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- PTC India Limited - India
- Central Electricity Authority - India
- ICICI Bank Limited - India
- Borneo Indobara - Indonesia
- Sakthi Sugars Limited - India
- Mercuria Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Tata Chemicals Ltd - India
- Indo Tambangraya Megah - Indonesia
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- Mintek Dendrill Indonesia
- Indian Oil Corporation Limited
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- Coastal Gujarat Power Limited - India
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- GVK Power & Infra Limited - India
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- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- The Treasury - Australian Government
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- Aditya Birla Group - India
- Maharashtra Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Aboitiz Power Corporation - Philippines
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- Heidelberg Cement - Germany
- Minerals Council of Australia
- Asmin Koalindo Tuhup - Indonesia
- Carbofer General Trading SA - India
- Marubeni Corporation - India
- Power Finance Corporation Ltd., India
- Bukit Baiduri Energy - Indonesia
- Riau Bara Harum - Indonesia
- Attock Cement Pakistan Limited
- Karaikal Port Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Parliament of New Zealand
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- ASAPP Information Group - India
- Jorong Barutama Greston.PT - Indonesia
- Planning Commission, India
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- PetroVietnam Power Coal Import and Supply Company
- Malabar Cements Ltd - India
- Tamil Nadu electricity Board
- Essar Steel Hazira Ltd - India
- McConnell Dowell - Australia
- Kaltim Prima Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- Mercator Lines Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- Vijayanagar Sugar Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Indian Energy Exchange, India
- The University of Queensland
- Holcim Trading Pte Ltd - Singapore
- Coalindo Energy - Indonesia
- Eastern Energy - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Thai Mozambique Logistica
- Semirara Mining Corp, Philippines
- Bhushan Steel Limited - India
- Wood Mackenzie - Singapore
- GAC Shipping (India) Pvt Ltd
- Lanco Infratech Ltd - India
- GMR Energy Limited - India
- Commonwealth Bank - Australia
- Mjunction Services Limited - India
- Krishnapatnam Port Company Ltd. - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Finance - Indonesia
- Kideco Jaya Agung - Indonesia
- Videocon Industries ltd - India
- Bhatia International Limited - India
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- Renaissance Capital - South Africa
- Electricity Authority, New Zealand
- Independent Power Producers Association of India
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
- Medco Energi Mining Internasional
- Globalindo Alam Lestari - Indonesia
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- Binh Thuan Hamico - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- New Zealand Coal & Carbon
- Kepco SPC Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Standard Chartered Bank - UAE
- Wilmar Investment Holdings
- Sree Jayajothi Cements Limited - India
- Straits Asia Resources Limited - Singapore
- Baramulti Group, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Goldman Sachs - Singapore
- Orica Australia Pty. Ltd.
- Anglo American - United Kingdom
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- Merrill Lynch Commodities Europe
- Vizag Seaport Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- Eastern Coal Council - USA
- Altura Mining Limited, Indonesia
- Leighton Contractors Pty Ltd - Australia
- India Bulls Power Limited - India
- Gujarat Sidhee Cement - India
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Africa Commodities Group - South Africa
- Global Coal Blending Company Limited - Australia
- Jindal Steel & Power Ltd - India
- Iligan Light & Power Inc, Philippines
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Chamber of Mines of South Africa
- San Jose City I Power Corp, Philippines
- Sojitz Corporation - Japan
- Global Green Power PLC Corporation, Philippines
- Meralco Power Generation, Philippines
- Cement Manufacturers Association - India
- Barasentosa Lestari - Indonesia
- VISA Power Limited - India
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indonesian Coal Mining Association
- The State Trading Corporation of India Ltd
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Latin American Coal - Colombia
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- Xindia Steels Limited - India
- Maheswari Brothers Coal Limited - India
- IEA Clean Coal Centre - UK
- Global Business Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
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- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
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- Trasteel International SA, Italy
- Formosa Plastics Group - Taiwan
- CIMB Investment Bank - Malaysia
- Therma Luzon, Inc, Philippines
- Economic Council, Georgia
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