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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, 06 May 13
INDONESIAN COAL PRICE REFERENCE FALLS CONTINUE
COALspot.com - The Indonesian government’s declared coal bench mark price has lost $ 3.23 / MT in May 2013.
The monthly coal pr ...
Sunday, 05 May 13
SUB-BIT FOB INDONESIA COAL - MIXED TREND; API 8 CFR SOUTH CHINA COAL - POSITIVE TREND
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average June 2013 delivery has gained 0.28 percent and API 8 CFR South China Coal shipment&nb ...
Saturday, 04 May 13
INDONESIA TO INDIA PANAMAX FREIGHT : FLAT TO SOFT - CAPT. REDDY
COALspot.com - The demand for iron ore picked up and its pushed up the cape size index by 7.86 pct. Cape index closed at 1,344 points. The BDI ...
Friday, 03 May 13
US PRODUCED 17.9 MILLION SHORT TONS (MMST) OF COAL IN A WEEK
COALspot.com - U.S. produced totaled approximately 17.9 million short tons (mmst) in a week (For the week ended April 27, 2013), EIA said in its lat ...
Friday, 03 May 13
SHIP OWNERS ARE INVESTING HEAVILY IN DRY BULK CARRIER NEWBUILDINGS ONCE MORE: IS THERE ANY RATIONALE? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite the fact that the dry bulk market remains heavily oversupplied and just as the orderbook of newbuildings had began to shrink, it seems that sh ...
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- Gujarat Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- CNBM International Corporation - China
- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Maheswari Brothers Coal Limited - India
- Uttam Galva Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- Lanco Infratech Ltd - India
- Rio Tinto Coal - Australia
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- VISA Power Limited - India
- Interocean Group of Companies - India
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- GAC Shipping (India) Pvt Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- Kapuas Tunggal Persada - Indonesia
- Samtan Co., Ltd - South Korea
- Orica Mining Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- PTC India Limited - India
- The State Trading Corporation of India Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Alfred C Toepfer International GmbH - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The Treasury - Australian Government
- Simpson Spence & Young - Indonesia
- Carbofer General Trading SA - India
- Meenaskhi Energy Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Bhatia International Limited - India
- Jindal Steel & Power Ltd - India
- Ambuja Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Minerals Council of Australia
- SN Aboitiz Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Chamber of Mines of South Africa
- Jaiprakash Power Ventures ltd
- Cement Manufacturers Association - India
- Bukit Makmur.PT - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indo Tambangraya Megah - Indonesia
- Timah Investasi Mineral - Indoneisa
- Standard Chartered Bank - UAE
- GMR Energy Limited - India
- Sindya Power Generating Company Private Ltd
- Sarangani Energy Corporation, Philippines
- Eastern Energy - Thailand
- Sree Jayajothi Cements Limited - India
- Posco Energy - South Korea
- Bharathi Cement Corporation - India
- Parry Sugars Refinery, India
- Latin American Coal - Colombia
- Wood Mackenzie - Singapore
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- Tata Chemicals Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Iligan Light & Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Electricity Authority, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Agrawal Coal Company - India
- Leighton Contractors Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- Baramulti Group, Indonesia
- Power Finance Corporation Ltd., India
- Siam City Cement - Thailand
- Anglo American - United Kingdom
- Bhushan Steel Limited - India
- Xindia Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kalimantan Lumbung Energi - Indonesia
- Sojitz Corporation - Japan
- Coalindo Energy - Indonesia
- Mintek Dendrill Indonesia
- Indika Energy - Indonesia
- Antam Resourcindo - Indonesia
- Economic Council, Georgia
- Orica Australia Pty. Ltd.
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Singapore Mercantile Exchange
- Gujarat Sidhee Cement - India
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- Georgia Ports Authority, United States
- OPG Power Generation Pvt Ltd - India
- Madhucon Powers Ltd - India
- McConnell Dowell - Australia
- Central Electricity Authority - India
- Renaissance Capital - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- Bayan Resources Tbk. - Indonesia
- Indian Oil Corporation Limited
- Globalindo Alam Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- Ceylon Electricity Board - Sri Lanka
- Intertek Mineral Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- The University of Queensland
- Global Coal Blending Company Limited - Australia
- Kartika Selabumi Mining - Indonesia
- Siam City Cement PLC, Thailand
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- Central Java Power - Indonesia
- Australian Coal Association
- Karbindo Abesyapradhi - Indoneisa
- International Coal Ventures Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- White Energy Company Limited
- Savvy Resources Ltd - HongKong
- Tamil Nadu electricity Board
- Ministry of Mines - Canada
- IHS Mccloskey Coal Group - USA
- Bukit Baiduri Energy - Indonesia
- Altura Mining Limited, Indonesia
- Mercuria Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Electricity Generating Authority of Thailand
- Toyota Tsusho Corporation, Japan
- Mercator Lines Limited - India
- Directorate Of Revenue Intelligence - India
- Planning Commission, India
- Mjunction Services Limited - India
- Indogreen Group - Indonesia
- Pendopo Energi Batubara - Indonesia
- Commonwealth Bank - Australia
- Independent Power Producers Association of India
- Parliament of New Zealand
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- Meralco Power Generation, Philippines
- PNOC Exploration Corporation - Philippines
- Vizag Seaport Private Limited - India
- Attock Cement Pakistan Limited
- Essar Steel Hazira Ltd - India
- Coastal Gujarat Power Limited - India
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Deloitte Consulting - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- Heidelberg Cement - Germany
- South Luzon Thermal Energy Corporation
- Romanian Commodities Exchange
- PowerSource Philippines DevCo
- MS Steel International - UAE
- Price Waterhouse Coopers - Russia
- Bulk Trading Sa - Switzerland
- Metalloyd Limited - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Africa Commodities Group - South Africa
- Grasim Industreis Ltd - India
- San Jose City I Power Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- Marubeni Corporation - India
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Borneo Indobara - Indonesia
- Bangladesh Power Developement Board
- TeaM Sual Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Indonesian Coal Mining Association
- CIMB Investment Bank - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Thiess Contractors Indonesia
- Thai Mozambique Logistica
- SMC Global Power, Philippines
- Medco Energi Mining Internasional
- Kumho Petrochemical, South Korea
- Larsen & Toubro Limited - India
- New Zealand Coal & Carbon
- Dalmia Cement Bharat India
- Ind-Barath Power Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- Eastern Coal Council - USA
- Petron Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Bhoruka Overseas - Indonesia
- Coal and Oil Company - UAE
- Kobexindo Tractors - Indoneisa
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