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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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Wednesday, 10 April 13
US COAL CONSUMPTION TO INCREASE FROM 889 MMST IN 2012 TO 948 MMST IN 2013 AND 957 MMST IN 2014 - EIA
Based on estimates for the first quarter of 2013, American coal production has continued to decline.
Total production is down 9.9 million short t ...
Wednesday, 10 April 13
DRY BULK FREIGHT RATES SEEN MOSTLY STABLE IN THE COMING WEEKS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS WORLDWIDE
In its latest report, BIMCO forecast that for the coming six weeks, Capesize time charter average rates will remain subdued around $4,500-8,500 per ...
Monday, 08 April 13
SUB-BIT INDONESIA COAL SWAPS: UPWARD TREND
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average Q2’ 2013 delivery has gained 2.71 percent and CFR South China coal shipment&nbs ...
Sunday, 07 April 13
CHARTER RATES ARE UNDER PRESSURE DUE TO DECLINING DEMAND - VISTAAR
COALspot.com - The freight market continued to fall further with all the indices down.
The BDI was down by 5.38 pct closing at 861 points and the ...
Friday, 05 April 13
SGX API 8 CFR SOUTH CHINA COAL SWAPS TO GO LIVE
COALspot.com - The Exchange has announced that the SGX API 8 CFR South China Coal Swap will go live for clearing on SGX-DC starting from 29 Ap ...
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- Straits Asia Resources Limited - Singapore
- Latin American Coal - Colombia
- PNOC Exploration Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhoruka Overseas - Indonesia
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cement Manufacturers Association - India
- Central Electricity Authority - India
- Barasentosa Lestari - Indonesia
- MS Steel International - UAE
- Renaissance Capital - South Africa
- Riau Bara Harum - Indonesia
- London Commodity Brokers - England
- GN Power Mariveles Coal Plant, Philippines
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- Makarim & Taira - Indonesia
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bhushan Steel Limited - India
- Parry Sugars Refinery, India
- Chamber of Mines of South Africa
- OPG Power Generation Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Goldman Sachs - Singapore
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- Indonesian Coal Mining Association
- Baramulti Group, Indonesia
- SMC Global Power, Philippines
- Marubeni Corporation - India
- Rio Tinto Coal - Australia
- Minerals Council of Australia
- Sakthi Sugars Limited - India
- SN Aboitiz Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Singapore Mercantile Exchange
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- The Treasury - Australian Government
- Karbindo Abesyapradhi - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Xindia Steels Limited - India
- ICICI Bank Limited - India
- SMG Consultants - Indonesia
- CNBM International Corporation - China
- Binh Thuan Hamico - Vietnam
- Carbofer General Trading SA - India
- Meralco Power Generation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- GMR Energy Limited - India
- Price Waterhouse Coopers - Russia
- GVK Power & Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Makmur.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Parliament of New Zealand
- Essar Steel Hazira Ltd - India
- PowerSource Philippines DevCo
- Vizag Seaport Private Limited - India
- Central Java Power - Indonesia
- Chettinad Cement Corporation Ltd - India
- Altura Mining Limited, Indonesia
- Grasim Industreis Ltd - India
- Commonwealth Bank - Australia
- AsiaOL BioFuels Corp., Philippines
- Petron Corporation, Philippines
- Attock Cement Pakistan Limited
- Holcim Trading Pte Ltd - Singapore
- Kobexindo Tractors - Indoneisa
- European Bulk Services B.V. - Netherlands
- Georgia Ports Authority, United States
- Kapuas Tunggal Persada - Indonesia
- Banpu Public Company Limited - Thailand
- Eastern Energy - Thailand
- Heidelberg Cement - Germany
- Ceylon Electricity Board - Sri Lanka
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Indika Energy - Indonesia
- Aditya Birla Group - India
- Sree Jayajothi Cements Limited - India
- Kumho Petrochemical, South Korea
- Kohat Cement Company Ltd. - Pakistan
- Ind-Barath Power Infra Limited - India
- Orica Australia Pty. Ltd.
- Indo Tambangraya Megah - Indonesia
- Indian Energy Exchange, India
- Jindal Steel & Power Ltd - India
- Thai Mozambique Logistica
- Mercator Lines Limited - India
- Neyveli Lignite Corporation Ltd, - India
- LBH Netherlands Bv - Netherlands
- Ministry of Transport, Egypt
- Agrawal Coal Company - India
- McConnell Dowell - Australia
- Metalloyd Limited - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Maheswari Brothers Coal Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Sical Logistics Limited - India
- Tamil Nadu electricity Board
- Star Paper Mills Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- South Luzon Thermal Energy Corporation
- Coastal Gujarat Power Limited - India
- Tata Chemicals Ltd - India
- Kideco Jaya Agung - Indonesia
- Interocean Group of Companies - India
- Kepco SPC Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Global Business Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- Electricity Generating Authority of Thailand
- Lanco Infratech Ltd - India
- Toyota Tsusho Corporation, Japan
- Indian Oil Corporation Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Borneo Indobara - Indonesia
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- Orica Mining Services - Indonesia
- Siam City Cement - Thailand
- Bhatia International Limited - India
- Energy Development Corp, Philippines
- ASAPP Information Group - India
- Maharashtra Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Sojitz Corporation - Japan
- Alfred C Toepfer International GmbH - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Malabar Cements Ltd - India
- Ministry of Finance - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- VISA Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Anglo American - United Kingdom
- Meenaskhi Energy Private Limited - India
- Samtan Co., Ltd - South Korea
- Simpson Spence & Young - Indonesia
- Planning Commission, India
- PTC India Limited - India
- Bharathi Cement Corporation - India
- Deloitte Consulting - India
- San Jose City I Power Corp, Philippines
- White Energy Company Limited
- Merrill Lynch Commodities Europe
- Australian Coal Association
- Uttam Galva Steels Limited - India
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- IEA Clean Coal Centre - UK
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
- Formosa Plastics Group - Taiwan
- GAC Shipping (India) Pvt Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Larsen & Toubro Limited - India
- Karaikal Port Pvt Ltd - India
- Mintek Dendrill Indonesia
- Manunggal Multi Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- Dalmia Cement Bharat India
- Semirara Mining and Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Posco Energy - South Korea
- Antam Resourcindo - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Standard Chartered Bank - UAE
- Edison Trading Spa - Italy
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Energy Link Ltd, New Zealand
- The University of Queensland
- Africa Commodities Group - South Africa
- Bayan Resources Tbk. - Indonesia
- Globalindo Alam Lestari - Indonesia
- Wood Mackenzie - Singapore
- Pendopo Energi Batubara - Indonesia
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