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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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Sunday, 17 March 13
A WEAK WEEK FOR SUB-BIT INDONESIA COAL SWAPS
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average Q2’ 2013 delivery has lost 2.11 percent and CFR South China coal shipment ...
Sunday, 17 March 13
COAL FREIGHT RATES STEADY ON HIGHER DEMAND - CAPT. REDDY
COALspot.com - This freight market continued to remain firm in all segments.
The BDI was up by 5.81 pct closing at 892 points. Cape index was up ...
Friday, 15 March 13
CHEAP SHIP VALUATIONS DON'T NECESSARILY MEAN ATTRACTIVE SAYS VESSELS VALUE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
With ship prices plunging by double-digits in the past few years, many ship owners are pondering their next moves in a market often described as att ...
Thursday, 14 March 13
SUPRAMAX : INDO - INDIA TRIP RATE IS AROUND $10,000; SOUTH CHINA $9500 - FEARNRESEARCH
Handy
Indian market is still quiet in respect of export of iron ore. WC India market has improved with a few stems out of the MEG, WC India opening ...
Thursday, 14 March 13
DRY BULK MARKET KEEPS ON RISING MOMENTUM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has maintained its rising momentum, on the back of increased cargo availability. According to yesterday's figures, the industry ...
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- Indika Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Carbofer General Trading SA - India
- Aditya Birla Group - India
- Chamber of Mines of South Africa
- GMR Energy Limited - India
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Central Electricity Authority - India
- GN Power Mariveles Coal Plant, Philippines
- VISA Power Limited - India
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- Ind-Barath Power Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Tamil Nadu electricity Board
- Parliament of New Zealand
- Savvy Resources Ltd - HongKong
- Coalindo Energy - Indonesia
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- Star Paper Mills Limited - India
- Ceylon Electricity Board - Sri Lanka
- San Jose City I Power Corp, Philippines
- Meralco Power Generation, Philippines
- Malabar Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- Sical Logistics Limited - India
- Electricity Authority, New Zealand
- CIMB Investment Bank - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- Mintek Dendrill Indonesia
- Bangladesh Power Developement Board
- Ambuja Cements Ltd - India
- Mercuria Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kohat Cement Company Ltd. - Pakistan
- Sarangani Energy Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- Lanco Infratech Ltd - India
- Antam Resourcindo - Indonesia
- Eastern Coal Council - USA
- Latin American Coal - Colombia
- Rio Tinto Coal - Australia
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Georgia Ports Authority, United States
- Kepco SPC Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Marubeni Corporation - India
- Cement Manufacturers Association - India
- Bukit Baiduri Energy - Indonesia
- Energy Link Ltd, New Zealand
- IEA Clean Coal Centre - UK
- Kapuas Tunggal Persada - Indonesia
- Pendopo Energi Batubara - Indonesia
- Oldendorff Carriers - Singapore
- Billiton Holdings Pty Ltd - Australia
- SMG Consultants - Indonesia
- Simpson Spence & Young - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Australian Coal Association
- Thai Mozambique Logistica
- Uttam Galva Steels Limited - India
- Ministry of Mines - Canada
- Leighton Contractors Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Krishnapatnam Port Company Ltd. - India
- ASAPP Information Group - India
- Rashtriya Ispat Nigam Limited - India
- LBH Netherlands Bv - Netherlands
- Mercator Lines Limited - India
- Indian Energy Exchange, India
- CNBM International Corporation - China
- MS Steel International - UAE
- Economic Council, Georgia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- South Luzon Thermal Energy Corporation
- IHS Mccloskey Coal Group - USA
- Standard Chartered Bank - UAE
- Indo Tambangraya Megah - Indonesia
- Thiess Contractors Indonesia
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- Riau Bara Harum - Indonesia
- Ministry of Transport, Egypt
- Power Finance Corporation Ltd., India
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Global Business Power Corporation, Philippines
- Dalmia Cement Bharat India
- Miang Besar Coal Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Vedanta Resources Plc - India
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Timah Investasi Mineral - Indoneisa
- Kumho Petrochemical, South Korea
- Kideco Jaya Agung - Indonesia
- Maheswari Brothers Coal Limited - India
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- Petron Corporation, Philippines
- Planning Commission, India
- Kaltim Prima Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- The University of Queensland
- Pipit Mutiara Jaya. PT, Indonesia
- Indogreen Group - Indonesia
- Edison Trading Spa - Italy
- Salva Resources Pvt Ltd - India
- Indian Oil Corporation Limited
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- GVK Power & Infra Limited - India
- Australian Commodity Traders Exchange
- Goldman Sachs - Singapore
- Gujarat Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- London Commodity Brokers - England
- Deloitte Consulting - India
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- PetroVietnam Power Coal Import and Supply Company
- New Zealand Coal & Carbon
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- Tata Chemicals Ltd - India
- Meenaskhi Energy Private Limited - India
- Port Waratah Coal Services - Australia
- Jorong Barutama Greston.PT - Indonesia
- Banpu Public Company Limited - Thailand
- SN Aboitiz Power Inc, Philippines
- Independent Power Producers Association of India
- Energy Development Corp, Philippines
- Videocon Industries ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Indonesian Coal Mining Association
- OPG Power Generation Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mjunction Services Limited - India
- Minerals Council of Australia
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- Jaiprakash Power Ventures ltd
- Bhoruka Overseas - Indonesia
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Orica Australia Pty. Ltd.
- Intertek Mineral Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Trasteel International SA, Italy
- PTC India Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Electricity Generating Authority of Thailand
- Parry Sugars Refinery, India
- Asmin Koalindo Tuhup - Indonesia
- Bharathi Cement Corporation - India
- Sree Jayajothi Cements Limited - India
- Cigading International Bulk Terminal - Indonesia
- Bhatia International Limited - India
- The Treasury - Australian Government
- Ministry of Finance - Indonesia
- Bayan Resources Tbk. - Indonesia
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- Medco Energi Mining Internasional
- Posco Energy - South Korea
- Therma Luzon, Inc, Philippines
- Anglo American - United Kingdom
- Vizag Seaport Private Limited - India
- Romanian Commodities Exchange
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- Globalindo Alam Lestari - Indonesia
- Makarim & Taira - Indonesia
- Commonwealth Bank - Australia
- Kobexindo Tractors - Indoneisa
- Madhucon Powers Ltd - India
- Bulk Trading Sa - Switzerland
- TeaM Sual Corporation - Philippines
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