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Friday, 11 October 13
DRY BULK FREIGHT RATE POSITIVE MOMENTUM TO BE SUPPORTED BY HIGHER DEMAND SAYS BIMCO - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
BIMCO released its latest short term research on the shipping markets, estimating that the elevated level of Capesize TC average rates is fragile, but forecasts rates to stay around USD 20,000-35,000 per day. Panamax TC average rates will settle in at USD 8,500-15,000 per day. For the Supramax segment, BIMCO forecasts freight rates in the USD 9,500-13,500 per day interval, whereas Handysize rates are expected to continue with low volatility in the interval of USD 7,500-9,500 per day.
According to BIMCO's head of shipping analysis, Mr. Peter Sand, "entering the fourth quarter of 2013, our optimism is intact and demand expected to remain supportive to freight rates; maybe not at levels as strong as the recent Capesize peak, but we are certain that Q4 will return the highest average of any quarter in 2013. In 2013, Chinese steel production has gone up more than 6% every month compared to the same month last year, and iron ore imports have followed suit. Imports of iron ore totalled 69 million tonnes in August 2013, a small step down from the record high of July, but still the second-highest this year so far. The large production of steel also meant increasing amounts of steel exports – handing improved opportunities for better back-haul trade to owners and operators" he said.
According to the report, "the historical seasonality, as well as the current solid demand for long hauls of iron ore and grains going from the Atlantic into the Pacific, makes a believable case. In combination with a steady delivery scheme that will slow down even further next year, we are on course for an improved market balance. The tables may have turned already, despite the slowdown in demolition activity. Nevertheless, it remains fundamental that demand needs to exceed supply in order to improve the market balance, a balance that is affected largely by the widespread application of slow steaming", BIMCO said.
It added on its outlook of the dry bulk market that "when freight rates go up, slow steaming is likely to be amongst the first “sacrifices” because of narrow considerations regarding bunker costs. Stronger rates could spur owners and operators to speed up to cater for increased demand. The path back to higher levels of utilization is paved with volatile freight rates that are backed-up by a higher and higher “rate-floor” that eventually brings around sustainable earnings across the board once again. The fact is that the active fleet is capable of catering to a much higher level of demand than at present if normal service speed is applied in the market place", BIMCO noted.
SUPPLY
Supply-wise, BIMCO noted that "while freight rates headed North, demolition volumes went South. This has led BIMCO to revise the demolition forecast for 2013 downwards. Because of unchanged expectations to deliveries, the fleet growth for 2013 is now one percentage-point higher than previously at 6.7%. In the first half of 2013, a monthly average of 2.2 million DWT was demolished, but the third quarter of the year has only seen demolished tonnage to the tune of 1.1 million DWT (monthly average). This revision proves how sensitive the supply side is when it comes to lifting the foot off the demolition throttle. an almost complete stop, with just six ships at an average age of 24 years sold to the breakers since 1 July. The total order-book is moving sideways these days, with new contracts and newbuilds matching each other. Half of all new capacity ordered is for Capesize tonnage, which is quite a comeback in terms of interest for this oversupplied segment", BIMCO's report said.
Actually, Capesize tonnage is in such high demand that the total 2013 orders now surpass the combined Capesize orders in 2011 and 2012. "The lion’s share of the new contracts are set for 2015 delivery. 46 million DWT delivered and 17 million DWT leaving the fleet means that the overall dry bulk fleet has increased by 4.4% in 2013. For the Capesize segment, demolition activity has naturally come to an almost complete stop, with just six ships at an average age of 24 years sold to the breakers since 1 July.
The renewed optimism in dry bulk shipping has also resulted in Panamax newbuilding prices leaving the floor to go higher – as the last segment to do so. A 77,000 DWT Panamax can now be contracted at USD 26.5 million, whereas a 180,000 DWT Capesize inched higher.
last week to reach USD 49 million, according to Intermodal. Having said that, Panamax orders are almost out of fashion, with just 59 new contracts for 4.8 million DWT signed in 2013. It follows the pattern of Capesizes that only saw 36 new contracts made in 2012 when that market bottomed out", the report noted.
DEMAND
Demand-wise, BIMCO noted that it's been a joyride for Capesize owners in September. During that month, freight rates lifted from the USD 10,000-15,000 per day interval experienced from mid-June until the beginning of September, when the market caught fire in a big way. Then, rates climbed all the way to their peak on 25 September at USD 42,211 per day. Since then, they have backtracked somewhat, but are still hovering at very healthy levels, covering all the costs that are borne by owners and operators: OPEX, finance cost, depreciation and additionally, leaving some returns on equity as well for Capesize vessels. This has not been the case since December 2011. So what happened? Brazil came back strongly by lifting its share of the growing iron ore market from 13.0% in June to 19.7% in August – bringing it back to normal – while Australian exports stagnated. Given that there is a factor of 3 in sailing distances between Australia and Brazil, such a shift matters. The so-called “silent stimulus” from China and accompanying excessive lending at a point when iron ore prices had reached a low, caused steel mills to restock, as steel production also surged.
The record high steel production in August/September caused HRC steel prices to slide slowly during September. It may be an indicator of demand for tonnage easing off somewhat. This is backed by data from Commodore Research, showing that the number of vessels charted to ship iron ore to China peaked by mid-September, leaving the following weeks with lower activity levels", BIMCO noted.
It added that "during the September rally in the Capesize segment, the Capesize/Panamax freight rate ratio broke the 2.3 mark, making charterers split Capesize cargoes in two Panamax vessels if possible. This effect made the pulse in the Panamax market beat faster, bringing around a doubling of freight rates to just shy of USD 14,500 per day by end-September. Increased demand for coal has also proved to be a catalyst behind the recent upturn. The power plants of the world have taken advantage of the lower coal prices on the world market to run low stock due to oversupplied markets and import at lower prices when in need. The oversupply of coal in the Pacific Basin has squeezed out some of the strong levels of US coal exports we saw in the first quarter, reducing the positive effect on shipping demand from these long sailing distances", the report concluded.
Source: Nikos Roussanoglou, Hellenic Shipping News
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Friday, 25 October 13
U.S. YEAR-TO-DATE COAL PRODUCTION REACHED TOTALLED 803.1 MMST
COALspot.com – United States the world’s second largest coal producer produced approximately 19.10 million short tons (mmst) of coal in ...
Thursday, 24 October 13
PANAMAX: RATES SLIP ACROSS BOTH HEMISPHERES
Handy
We were back from holidays but still not much enquiries in the market. Overall future direction is uncertain. Currently, ships passing Singap ...
Thursday, 24 October 13
SHIP PRICES ARE INCREASING ON THE BACK OF IMPROVED MARKET SENTIMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept on retreating from its recent highs, ending yesterday at 1,786 points, down 61 points on the day, with Capesizes leadin ...
Wednesday, 23 October 13
DRY BULK MARKET HAS SHOWN SIGNS OF STABILITY - INTERMODAL
Chartering (Wet: Stable+ / Dry: Stable-)
The Dry Bulk market has shown signs of stability this past week, with the sole exception of Capes, rates f ...
Wednesday, 23 October 13
MARKET SENTIMENT IN THE DRY BULK SECTOR REMAINS POSITIVE - YANNIS OLZIERSKY
Market sentiment in the dry bulk sector remains positive despite the latest correction in freight rates for the Capesize sector, which are sliding f ...
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- Kumho Petrochemical, South Korea
- Sakthi Sugars Limited - India
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- Semirara Mining Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- MS Steel International - UAE
- Indogreen Group - Indonesia
- Essar Steel Hazira Ltd - India
- Electricity Generating Authority of Thailand
- Jorong Barutama Greston.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Petron Corporation, Philippines
- Energy Link Ltd, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Ambuja Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Coalindo Energy - Indonesia
- Goldman Sachs - Singapore
- Parry Sugars Refinery, India
- GMR Energy Limited - India
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Electricity Authority - India
- CIMB Investment Bank - Malaysia
- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- Independent Power Producers Association of India
- Formosa Plastics Group - Taiwan
- Trasteel International SA, Italy
- Siam City Cement PLC, Thailand
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Port Waratah Coal Services - Australia
- The Treasury - Australian Government
- Orica Australia Pty. Ltd.
- AsiaOL BioFuels Corp., Philippines
- GN Power Mariveles Coal Plant, Philippines
- VISA Power Limited - India
- Salva Resources Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- Jindal Steel & Power Ltd - India
- Sojitz Corporation - Japan
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Makmur.PT - Indonesia
- London Commodity Brokers - England
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- IHS Mccloskey Coal Group - USA
- India Bulls Power Limited - India
- Iligan Light & Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Videocon Industries ltd - India
- Antam Resourcindo - Indonesia
- Parliament of New Zealand
- Rashtriya Ispat Nigam Limited - India
- Romanian Commodities Exchange
- Energy Development Corp, Philippines
- Eastern Coal Council - USA
- Meralco Power Generation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Dalmia Cement Bharat India
- Chettinad Cement Corporation Ltd - India
- Indian Oil Corporation Limited
- Global Green Power PLC Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Binh Thuan Hamico - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- Pendopo Energi Batubara - Indonesia
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- Bhoruka Overseas - Indonesia
- Bayan Resources Tbk. - Indonesia
- Minerals Council of Australia
- Indika Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- Madhucon Powers Ltd - India
- Indonesian Coal Mining Association
- Grasim Industreis Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Mercuria Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Attock Cement Pakistan Limited
- Semirara Mining and Power Corporation, Philippines
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- Altura Mining Limited, Indonesia
- Metalloyd Limited - United Kingdom
- Simpson Spence & Young - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Latin American Coal - Colombia
- Kepco SPC Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Borneo Indobara - Indonesia
- Lanco Infratech Ltd - India
- Savvy Resources Ltd - HongKong
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- Eastern Energy - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Bharathi Cement Corporation - India
- SMG Consultants - Indonesia
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Carbofer General Trading SA - India
- Central Java Power - Indonesia
- Anglo American - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Rio Tinto Coal - Australia
- Oldendorff Carriers - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- McConnell Dowell - Australia
- Maheswari Brothers Coal Limited - India
- Sical Logistics Limited - India
- GAC Shipping (India) Pvt Ltd
- Edison Trading Spa - Italy
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
- Heidelberg Cement - Germany
- Directorate Of Revenue Intelligence - India
- Toyota Tsusho Corporation, Japan
- Kideco Jaya Agung - Indonesia
- PTC India Limited - India
- Mintek Dendrill Indonesia
- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Therma Luzon, Inc, Philippines
- Georgia Ports Authority, United States
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- Standard Chartered Bank - UAE
- Africa Commodities Group - South Africa
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Timah Investasi Mineral - Indoneisa
- Posco Energy - South Korea
- IEA Clean Coal Centre - UK
- Larsen & Toubro Limited - India
- Bangladesh Power Developement Board
- Gujarat Mineral Development Corp Ltd - India
- Deloitte Consulting - India
- Planning Commission, India
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- SN Aboitiz Power Inc, Philippines
- The University of Queensland
- Ministry of Mines - Canada
- Tata Chemicals Ltd - India
- Electricity Authority, New Zealand
- Power Finance Corporation Ltd., India
- Jaiprakash Power Ventures ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercator Lines Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kaltim Prima Coal - Indonesia
- ICICI Bank Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Medco Energi Mining Internasional
- Australian Commodity Traders Exchange
- Marubeni Corporation - India
- Xindia Steels Limited - India
- Barasentosa Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- ASAPP Information Group - India
- Samtan Co., Ltd - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- Agrawal Coal Company - India
- Thai Mozambique Logistica
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Aditya Birla Group - India
- White Energy Company Limited
- Merrill Lynch Commodities Europe
- PowerSource Philippines DevCo
- Neyveli Lignite Corporation Ltd, - India
- Intertek Mineral Services - Indonesia
- Bhushan Steel Limited - India
- PNOC Exploration Corporation - Philippines
- Renaissance Capital - South Africa
- Mjunction Services Limited - India
- Wood Mackenzie - Singapore
- Interocean Group of Companies - India
- Global Business Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Baramulti Group, Indonesia
- The State Trading Corporation of India Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- Globalindo Alam Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Australian Coal Association
- Bhatia International Limited - India
- Indian Energy Exchange, India
- Sarangani Energy Corporation, Philippines
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