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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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Friday, 15 February 13
SCRAPPING TO RISE AS BULKER OWNERS SUFFER - DREWRY MARITIME RESEARCH
Drewry's latest Dry Bulk Forecaster report suggests that cash-strapped shipowners will scrap younger and younger ships this year as the dry bulk ma ...
Thursday, 14 February 13
HANDY: ATLANTIC "STABLE"; PACIFIC "QUIET" - FEARNLEYS
Handy
The Atlantic remain stable with rates for FH from USG around USD 18k. The Pacific remains quiet due to Chinese New Year holidays. Rates were ...
Thursday, 14 February 13
BIMCO FORECASTS MOSTLY HIGHER DRY BULK RATES FOR THE COMING WEEKS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Higher steel demand is expected to keep dry bulk rates elevated during the next six weeks, according to the latest BIMCO forecast. The Organization ...
Wednesday, 13 February 13
6TH ANNUAL CBM CONFERENCE
The 6th Annual CBM conference which will be held in Singapore on 18-21 June 201 offers comprehensive insights into leading CBM projects in the Asia- ...
Tuesday, 12 February 13
GOVERNMENT DECLARED INDONESIAN THERMAL COAL PRICE INCHES UP IN FEBRUARY
COALspot.com - The Indonesian government has declared bench mark price for coal has moved upwards in February 2013.
The monthly coal refere ...
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- Bangladesh Power Developement Board
- Minerals Council of Australia
- Gujarat Mineral Development Corp Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Sojitz Corporation - Japan
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining Corp, Philippines
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Tata Chemicals Ltd - India
- Renaissance Capital - South Africa
- Deloitte Consulting - India
- Singapore Mercantile Exchange
- Parliament of New Zealand
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Price Waterhouse Coopers - Russia
- Sree Jayajothi Cements Limited - India
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Mintek Dendrill Indonesia
- Edison Trading Spa - Italy
- Lanco Infratech Ltd - India
- MS Steel International - UAE
- Central Java Power - Indonesia
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- Xindia Steels Limited - India
- London Commodity Brokers - England
- Banpu Public Company Limited - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aditya Birla Group - India
- Madhucon Powers Ltd - India
- Siam City Cement - Thailand
- Ceylon Electricity Board - Sri Lanka
- Ministry of Mines - Canada
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Parry Sugars Refinery, India
- Coastal Gujarat Power Limited - India
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- Mercuria Energy - Indonesia
- Rio Tinto Coal - Australia
- Petrochimia International Co. Ltd.- Taiwan
- SMG Consultants - Indonesia
- Africa Commodities Group - South Africa
- Carbofer General Trading SA - India
- Kideco Jaya Agung - Indonesia
- Coal and Oil Company - UAE
- GMR Energy Limited - India
- Goldman Sachs - Singapore
- Toyota Tsusho Corporation, Japan
- Interocean Group of Companies - India
- Port Waratah Coal Services - Australia
- GAC Shipping (India) Pvt Ltd
- Indian Energy Exchange, India
- Indogreen Group - Indonesia
- Energy Development Corp, Philippines
- Indonesian Coal Mining Association
- Wilmar Investment Holdings
- Marubeni Corporation - India
- Holcim Trading Pte Ltd - Singapore
- Standard Chartered Bank - UAE
- Globalindo Alam Lestari - Indonesia
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- Thai Mozambique Logistica
- VISA Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- ASAPP Information Group - India
- Larsen & Toubro Limited - India
- Sakthi Sugars Limited - India
- Medco Energi Mining Internasional
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Bahari Cakrawala Sebuku - Indonesia
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- PowerSource Philippines DevCo
- Eastern Energy - Thailand
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- Metalloyd Limited - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Jindal Steel & Power Ltd - India
- PNOC Exploration Corporation - Philippines
- Power Finance Corporation Ltd., India
- Therma Luzon, Inc, Philippines
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- Essar Steel Hazira Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- Directorate General of MIneral and Coal - Indonesia
- The Treasury - Australian Government
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- San Jose City I Power Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Georgia Ports Authority, United States
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Tamil Nadu electricity Board
- Kumho Petrochemical, South Korea
- Bhushan Steel Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Anglo American - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Australian Commodity Traders Exchange
- Vedanta Resources Plc - India
- Ministry of Finance - Indonesia
- Intertek Mineral Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Economic Council, Georgia
- Mjunction Services Limited - India
- Miang Besar Coal Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Latin American Coal - Colombia
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Makarim & Taira - Indonesia
- Eastern Coal Council - USA
- Antam Resourcindo - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Petron Corporation, Philippines
- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Alfred C Toepfer International GmbH - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- ICICI Bank Limited - India
- Commonwealth Bank - Australia
- Bayan Resources Tbk. - Indonesia
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- Dalmia Cement Bharat India
- Bukit Makmur.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- Riau Bara Harum - Indonesia
- Oldendorff Carriers - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PTC India Limited - India
- White Energy Company Limited
- SMC Global Power, Philippines
- IEA Clean Coal Centre - UK
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
- Malabar Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- Bhoruka Overseas - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Asmin Koalindo Tuhup - Indonesia
- Simpson Spence & Young - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ind-Barath Power Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Electricity Authority, New Zealand
- Global Green Power PLC Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Meralco Power Generation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- The University of Queensland
- Energy Link Ltd, New Zealand
- Barasentosa Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Karaikal Port Pvt Ltd - India
- Borneo Indobara - Indonesia
- Merrill Lynch Commodities Europe
- Leighton Contractors Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Coalindo Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Sical Logistics Limited - India
- International Coal Ventures Pvt Ltd - India
- Australian Coal Association
- Central Electricity Authority - India
- Posco Energy - South Korea
- TeaM Sual Corporation - Philippines
- Ambuja Cements Ltd - India
- Global Business Power Corporation, Philippines
- Cement Manufacturers Association - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- Binh Thuan Hamico - Vietnam
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