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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, 20 September 13
US COAL PRODUCTION SLIGHTLY UP WEEK ON WEEK
COALspot.com – United States the world’s second largest coal producer produced totalled approximately 20.30 million short tons (mmst) of ...
Friday, 20 September 13
COLOMBIA SHIPPED 31.14 MILLION TONS OF THERMAL COAL IN H1
COALspot.com : Colombia’s coal exports fell by 20.59 percent in June 2013 compared to Colombia’s May's export of 7,633,579 MT.
Colom ...
Thursday, 19 September 13
CAPESIZE : AVERAGE DAILY EARNINGS HAVE GAINED ALMOST USD 6K WOW - FEARNLEYS
Handy
The rates in Feast are still firm this week even the activity calmed down a bit as chrtrs are not in a rush to cover even their end Sept carg ...
Wednesday, 18 September 13
IRON ORE AND ZINC ARE BEST PERFORMING MINING SECTORS IN CURRENT LOW PRICE, HIGH COST ENVIRONMENT - WOOD MACKENZIE
With the fall in commodity prices, cash margins in the mining industry have come under pressure. Accordingly, producers and investors are placing in ...
Wednesday, 18 September 13
DRY BULK MARKET CONTINUED TO ADVANCE - INTERMODAL
Chartering (Wet: Stable- / Dry: Firm+ )
The Dry Bulk market continued to advance at a very fast pace, with the BDI closing off the week north ...
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- Ministry of Finance - Indonesia
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- Directorate General of MIneral and Coal - Indonesia
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- Energy Development Corp, Philippines
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- IHS Mccloskey Coal Group - USA
- Bangladesh Power Developement Board
- Planning Commission, India
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- Cigading International Bulk Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- VISA Power Limited - India
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Australian Commodity Traders Exchange
- Jindal Steel & Power Ltd - India
- Electricity Authority, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- McConnell Dowell - Australia
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- Metalloyd Limited - United Kingdom
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- Kumho Petrochemical, South Korea
- PTC India Limited - India
- Miang Besar Coal Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Bulk Trading Sa - Switzerland
- Goldman Sachs - Singapore
- Sarangani Energy Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
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- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- Kartika Selabumi Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- TeaM Sual Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Independent Power Producers Association of India
- Indian Energy Exchange, India
- Billiton Holdings Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Georgia Ports Authority, United States
- IEA Clean Coal Centre - UK
- Medco Energi Mining Internasional
- Bahari Cakrawala Sebuku - Indonesia
- Aditya Birla Group - India
- Larsen & Toubro Limited - India
- Straits Asia Resources Limited - Singapore
- Energy Link Ltd, New Zealand
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining and Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Formosa Plastics Group - Taiwan
- Dalmia Cement Bharat India
- Sakthi Sugars Limited - India
- Lanco Infratech Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Kobexindo Tractors - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
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- India Bulls Power Limited - India
- Indian Oil Corporation Limited
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- Price Waterhouse Coopers - Russia
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- ASAPP Information Group - India
- Petron Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Agrawal Coal Company - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- International Coal Ventures Pvt Ltd - India
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tata Chemicals Ltd - India
- Minerals Council of Australia
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- Cement Manufacturers Association - India
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- Jaiprakash Power Ventures ltd
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- Siam City Cement PLC, Thailand
- Therma Luzon, Inc, Philippines
- New Zealand Coal & Carbon
- Singapore Mercantile Exchange
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Economic Council, Georgia
- Bhushan Steel Limited - India
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- The University of Queensland
- Malabar Cements Ltd - India
- CNBM International Corporation - China
- Thiess Contractors Indonesia
- Rashtriya Ispat Nigam Limited - India
- Parry Sugars Refinery, India
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- Leighton Contractors Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Maheswari Brothers Coal Limited - India
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- Meralco Power Generation, Philippines
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Africa Commodities Group - South Africa
- Makarim & Taira - Indonesia
- Vizag Seaport Private Limited - India
- ICICI Bank Limited - India
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- Central Electricity Authority - India
- Merrill Lynch Commodities Europe
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- LBH Netherlands Bv - Netherlands
- Ind-Barath Power Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- The Treasury - Australian Government
- CIMB Investment Bank - Malaysia
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Eastern Coal Council - USA
- Coastal Gujarat Power Limited - India
- Samtan Co., Ltd - South Korea
- Latin American Coal - Colombia
- Mercuria Energy - Indonesia
- Eastern Energy - Thailand
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- Wood Mackenzie - Singapore
- Attock Cement Pakistan Limited
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- SMC Global Power, Philippines
- Edison Trading Spa - Italy
- Global Green Power PLC Corporation, Philippines
- Baramulti Group, Indonesia
- Savvy Resources Ltd - HongKong
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Star Paper Mills Limited - India
- Parliament of New Zealand
- Orica Mining Services - Indonesia
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