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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, 24 February 13
COAL SWAPS INCH UP WEEK - ON - WEEK
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average Q2’ 2013 delivery has gained 0.17 percent and CFR South China coal shipme ...
Sunday, 24 February 13
BDI FELL 1.72 PERCENT BUT FREIGHT MARKET FAIRLY STEADY - VISTAAR
COALspot.com - This freight market has been fairly steady this week but, BDI fell1.72 pct and closed at 740 points.
The cape index also joins BDI ...
Saturday, 23 February 13
IHS MCCLOSKEY 20TH ANNUAL COAL CONFERENCE OF THE AMERICAS
IHS McCloskey 20th Annual Coal Conference of the Americas to be held on 13-14 March 2013 in Cartagena, Colombia
IHS is pleased to invite you to t ...
Thursday, 21 February 13
HANDY : THE PACIFIC MARKET GOT FIRMED UP AS CHINESE CAME BACK FROM HOLIDAYS - FEARNLEYS
Handy
The Atlantic saw more cargoes than last week but rates remained unchanged as lot of ships in the market. The USG-Feast was at USD 18k and Bla ...
Thursday, 21 February 13
SPRING COAL PROCUREMENT 2013 IS ABOUT TO TAKE PLACE
In 2012, “Steady Growth” had set the keynote for China’s economic development. Guided by the principle of progressing steadily, do ...
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- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Oldendorff Carriers - Singapore
- Central Electricity Authority - India
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
- Jaiprakash Power Ventures ltd
- Ministry of Transport, Egypt
- Globalindo Alam Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Renaissance Capital - South Africa
- Central Java Power - Indonesia
- GVK Power & Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Lanco Infratech Ltd - India
- Altura Mining Limited, Indonesia
- SN Aboitiz Power Inc, Philippines
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- Dalmia Cement Bharat India
- Riau Bara Harum - Indonesia
- Global Business Power Corporation, Philippines
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Commonwealth Bank - Australia
- Kideco Jaya Agung - Indonesia
- Eastern Coal Council - USA
- Maharashtra Electricity Regulatory Commission - India
- White Energy Company Limited
- Price Waterhouse Coopers - Russia
- Electricity Generating Authority of Thailand
- Mjunction Services Limited - India
- Madhucon Powers Ltd - India
- Baramulti Group, Indonesia
- Videocon Industries ltd - India
- Vizag Seaport Private Limited - India
- Straits Asia Resources Limited - Singapore
- Kepco SPC Power Corporation, Philippines
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- European Bulk Services B.V. - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Indika Energy - Indonesia
- Sical Logistics Limited - India
- Merrill Lynch Commodities Europe
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Planning Commission, India
- Leighton Contractors Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Posco Energy - South Korea
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- Sojitz Corporation - Japan
- Bangladesh Power Developement Board
- Makarim & Taira - Indonesia
- Tata Chemicals Ltd - India
- Standard Chartered Bank - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Bhushan Steel Limited - India
- New Zealand Coal & Carbon
- Rashtriya Ispat Nigam Limited - India
- Ambuja Cements Ltd - India
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- Binh Thuan Hamico - Vietnam
- Trasteel International SA, Italy
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- Rio Tinto Coal - Australia
- Essar Steel Hazira Ltd - India
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- Kapuas Tunggal Persada - Indonesia
- Power Finance Corporation Ltd., India
- Minerals Council of Australia
- Agrawal Coal Company - India
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- Orica Australia Pty. Ltd.
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- Grasim Industreis Ltd - India
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Metalloyd Limited - United Kingdom
- Siam City Cement - Thailand
- Edison Trading Spa - Italy
- Timah Investasi Mineral - Indoneisa
- McConnell Dowell - Australia
- Interocean Group of Companies - India
- Latin American Coal - Colombia
- PowerSource Philippines DevCo
- Chettinad Cement Corporation Ltd - India
- Goldman Sachs - Singapore
- Independent Power Producers Association of India
- Pipit Mutiara Jaya. PT, Indonesia
- OPG Power Generation Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Petrochimia International Co. Ltd.- Taiwan
- PNOC Exploration Corporation - Philippines
- Indian Oil Corporation Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- VISA Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Cement Manufacturers Association - India
- Coastal Gujarat Power Limited - India
- Bukit Makmur.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Petron Corporation, Philippines
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Energy - Thailand
- Kartika Selabumi Mining - Indonesia
- Orica Mining Services - Indonesia
- Star Paper Mills Limited - India
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- Tamil Nadu electricity Board
- Karaikal Port Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Gujarat Mineral Development Corp Ltd - India
- The State Trading Corporation of India Ltd
- Bhatia International Limited - India
- IEA Clean Coal Centre - UK
- Wood Mackenzie - Singapore
- AsiaOL BioFuels Corp., Philippines
- Asmin Koalindo Tuhup - Indonesia
- Global Coal Blending Company Limited - Australia
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- SMG Consultants - Indonesia
- Sree Jayajothi Cements Limited - India
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Coalindo Energy - Indonesia
- The Treasury - Australian Government
- LBH Netherlands Bv - Netherlands
- Barasentosa Lestari - Indonesia
- Sakthi Sugars Limited - India
- TeaM Sual Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Toyota Tsusho Corporation, Japan
- MS Steel International - UAE
- Kaltim Prima Coal - Indonesia
- Uttam Galva Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Xindia Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Sarangani Energy Corporation, Philippines
- Gujarat Sidhee Cement - India
- Larsen & Toubro Limited - India
- Intertek Mineral Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- Thai Mozambique Logistica
- Marubeni Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- GMR Energy Limited - India
- Bhoruka Overseas - Indonesia
- Economic Council, Georgia
- Mercator Lines Limited - India
- Semirara Mining and Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thiess Contractors Indonesia
- London Commodity Brokers - England
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Borneo Indobara - Indonesia
- Parliament of New Zealand
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- SMC Global Power, Philippines
- Australian Coal Association
- Coal and Oil Company - UAE
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Authority, New Zealand
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Port Waratah Coal Services - Australia
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Antam Resourcindo - Indonesia
- Attock Cement Pakistan Limited
- Alfred C Toepfer International GmbH - Germany
- ASAPP Information Group - India
- Pendopo Energi Batubara - Indonesia
- Iligan Light & Power Inc, Philippines
- Siam City Cement PLC, Thailand
- The University of Queensland
- CNBM International Corporation - China
- Kumho Petrochemical, South Korea
- Bukit Baiduri Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
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