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Monday, 24 February 14
DRY BULK MARKET TO IMPROVE OVER THE COURSE OF 2014, BUT OVERSUPPLY STILL AN ISSUE SAYS BIMCO'S CHIEF SHIPPING ANALYST
As a gruelling first quarter edges closer to the end, dry bulk ship owners are looking at an improved second quarter demand, which, coupled with slow steaming and other cost saving measures, will lead to the market's rebound. Speaking with Hellenic Shipping News Worldwide in an exclusive interview, BIMCO's Chief Shipping Analyst, Mr. Peter Sand, noted that lower freight rates over the first couple of months of 2014, were to be expected, but as 2014 moves forward, things will begin to improve. "On the average freight rates levels we have already seen 2013 was better than 2012. BIMCO expect 2014 to become better than 2013 in that sense", Sand said. But, oversupply is still an issue, while demolition activity is expected to be lower this year, on the back of improved freight rates.
Since the start of 2014, dry bulk rates have plunged close to the level they were prior to last year's rally. Is this development attributed solely on low seasonal demand, or have there been other factors in play as well?
The development in dry bulk rates are more or less in line with BIMCO expectations as expressed in our recent reports on the shipping market. The combination of the strongest Q4 ever on record and the recurring seasonal low demand in Q1 multiplied by the weakness in demand during Chinese New Year always test the market with a downward correction. Sometimes high volatility results in rates undershooting when a new lower balance is settling in, this time around is not much different but the rebound is not likely to be especially strong in the short run as can also be seen in the freight rates forecasts that BIMCO has released in early-February for the coming two months.
How crucial has been slow steaming to helping sustain freight rates?
Slow steaming is a very vital tool in today’s markets. Without that, the full force of oversupply would weight heavy on the rates, causing miserable returns on investments.
Most recently, the combination of a slower pace of newbuilding tonnage flowing into the market and widely applied slow steaming has lifted earnings.
The way back to an improved utilization of the fleet is paved with patience and “supply management”. The latter includes keeping slow steaming around, continue the scrapping of the less efficient part of the fleet, making retrofits/repairs works now rather than later, an carefully considering the future expansion of the fleet.
In this sense, it is important to remember that slow steaming has a larger impact on the supply side as compared to demolition, but the temporary nature of slow steaming makes it all more volatile as the market conditions improve.
In its recent report, BIMCO reiterated its view that, beginning April and throughout the remainder of the year, the dry bulk market's prospects are rosier, at least demand-wise. Why is this?
A lot of seasonality plays into this forecast. If you e.g. look at exports of iron ore out of Brazil and Australia the pace and volumes increase throughout the year as it progresses – with Q1 being the low quarter. Demand for steam coal and iron ore is expected to rebound during Q2. Moreover, BIMCO do not expect the support from grains to kick in before we enter Q3 and Q4. This is how we expect 2014 will play out on the big scale.
Do you expect the recovery scenario to fully materialize over the course of the year, in terms of freight rate levels and how sustainable will this rebound be?
We see a winding and potentially long road back to a fully sustainable market where the fleet is once again steaming at “new normal” service speed also on the ballast legs to some extent. Our “new normal” service speed is one that is lower than the norm of the past decade – due to higher bunker costs, increased fuel efficiency and the fact that slow steaming is applied whenever possible. But the way back also holds many “windows of opportunity” where rates will firm and spike as demand picks up strongly or weather-related factors lend a hand.
On the average freight rates levels we have already seen 2013 was better than 2012. BIMCO expect 2014 to become better than 2013 in that sense. But as we are only just about to see the demand side outstripping the supply side, following multiple years of the opposite, the fundamental market balance is also likely only to improve slowly and bring around higher levels of fleet utilization. Going forward BIMCO expect higher volatility as the market get tighter.
Is the supply overhang alleviated at the moment, compared to a year ago?
We have to consider slow steaming an integral part of our industry to handle the oversupply and improve industry economics. The overhang has come down over the past half year, but we still estimate oversupply of 20-25%.
Are you worried about the level of newbuilding ordering over the past year, a dynamic which has spilled over into 2014, even more aggressively?
As regards to the placing of new orders, I am confident that the individual industry players knows exactly what they are doing. Nevertheless, if you look at it from a pure industry point of view you could argue that if there is an overhang of capacity you should scrap more vessels than enters into the active fleet in order to bring back a balance – but that’s not how it works.
In terms of demolition activity we've seen a drop over the past few months, as owners found it more financially wise to retain or resell their older vessels. Will this trend change, or will we see a substantial drop over the course of 2014, thus offsetting the rise in demand?
There is no real big surprise in the recent development and we rely on the trend to go on. BIMCO expect 14m DWT to be scrapped in 2014, this a drop of 33% as compared to 2013. When rates go up – fewer chose to cut capacity. The increased in secondhand prices too, spells it out – a resale is much more likely than a sale to cash buyer. It also tells us that more buyers than sellers are in the market now. This is pushing prices up. Different types of ships, in size, gear, draft and operational capabilities simple cater for different demand. This is why ships are not sold for demolition due to the age criteria only.
Taking into account the aforementioned development in terms of tonnage supply, do you think that the projected recovery this year could be shortlived, or is there "enough gas in the tank", to see the market up the hills of 2015 and 2016 newbuilding deliveries?
Our supply forecast for 2014 and 2015 certainly looks manageable. Any additional new orders can still absorbed by yards for 2016-2017 delivery without jeopardizing the recovery. BIMCO do not see the improving trend derailed by anything that we can see in the market today. Only unforeseen major game changers can do that. Even though China is slowing down and transforming its economy toward a higher dependency on services (rather than manufacturing) and private consumption, we trust a soft landing will continue to support the dry bulk market.
Will the market ever shake the effect of China in cargo demand, at least offset it, through the rise of other countries in dry bulk trade? If so, which countries could those be?
China is the elephant in the dry bulk room. The wise buyer of commodities at the right prices and heavy weight player providing the market with massive amounts of demand. China means the world to dry bulk shipping and the nation holds the key to a strong market going forward. We have not seen a single nation being so dominant in the global market before and I doubt we will see something like this duplicated in the near term perhaps never. It is natural to mention India in this context, as the nation holds a giant potential as an importer but also as an exporter of dry bulk commodities. However, it would be premature to compare the two nations today to forecast the development of India, as they are fundamentally very different.
Source: Nikos Roussanoglou, Hellenic Shipping News
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Monday, 19 May 14
API 8 CFR SOUTH CHINA COAL LOST 2.49% MONTH ON MONTH
COALspot.com: API 8 CFR South China Coal swaps for average Q3 14 deliveries lost 2.49 percent month on month and closed at US$ 74.35 per mt as on F ...
Sunday, 18 May 14
FREIGHT RATES ARE EXPECTED TO BE FIRM NEXT WEEK
COALspot.com: The freight market was steady with the BDI was closed slightly higher at 1027 points or up 3.00 pct week on week.
The Cape ...
Friday, 16 May 14
KOMIPO IS LOOKING FOR 60K MT OF LOW VOLATILE BITUMINOUS COAL
COALspot.com : Korea Midland Power Co., Ltd. has invited bids through International open bidding for 60,000 Metric Tons (MT) of low volatile bitumi ...
Friday, 16 May 14
U.S. COAL PRODUCTION TOTALED APPROXIMATELY 18.9 MMST
COALspot.com – United States the world's second largest coal producer, produced approximately 18.9 million short tons (mmst) of coal i ...
Thursday, 15 May 14
PANAMAX : SHORT PERIOD UP TO ONE YEAR REPORTED IN THE 12.000-12.500 RANGE - FEARNRESEARCH
Handy
The Supra and handy market seems to be affected by the recent holidays in Singapore which still relatively quiet. There are some Indo / ...
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- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- Planning Commission, India
- White Energy Company Limited
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- GAC Shipping (India) Pvt Ltd
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Coastal Gujarat Power Limited - India
- Eastern Energy - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Aboitiz Power Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Timah Investasi Mineral - Indoneisa
- The University of Queensland
- Sindya Power Generating Company Private Ltd
- Meenaskhi Energy Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- TeaM Sual Corporation - Philippines
- Dalmia Cement Bharat India
- Australian Coal Association
- Billiton Holdings Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Renaissance Capital - South Africa
- Formosa Plastics Group - Taiwan
- Rashtriya Ispat Nigam Limited - India
- Riau Bara Harum - Indonesia
- Sical Logistics Limited - India
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- Parliament of New Zealand
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Pipit Mutiara Jaya. PT, Indonesia
- Independent Power Producers Association of India
- Global Green Power PLC Corporation, Philippines
- Energy Link Ltd, New Zealand
- India Bulls Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Attock Cement Pakistan Limited
- Marubeni Corporation - India
- PTC India Limited - India
- GMR Energy Limited - India
- Goldman Sachs - Singapore
- Bukit Baiduri Energy - Indonesia
- Economic Council, Georgia
- Cement Manufacturers Association - India
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- Toyota Tsusho Corporation, Japan
- Bukit Makmur.PT - Indonesia
- New Zealand Coal & Carbon
- Trasteel International SA, Italy
- Semirara Mining and Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Kobexindo Tractors - Indoneisa
- Rio Tinto Coal - Australia
- Larsen & Toubro Limited - India
- International Coal Ventures Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- SMC Global Power, Philippines
- Petron Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- Essar Steel Hazira Ltd - India
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Sojitz Corporation - Japan
- Madhucon Powers Ltd - India
- Electricity Authority, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Orica Mining Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- Asmin Koalindo Tuhup - Indonesia
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- ASAPP Information Group - India
- Interocean Group of Companies - India
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- TNB Fuel Sdn Bhd - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- Mjunction Services Limited - India
- Sinarmas Energy and Mining - Indonesia
- Eastern Coal Council - USA
- Romanian Commodities Exchange
- SMG Consultants - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vizag Seaport Private Limited - India
- Aditya Birla Group - India
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- Latin American Coal - Colombia
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Grasim Industreis Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- Tamil Nadu electricity Board
- MS Steel International - UAE
- Agrawal Coal Company - India
- Coalindo Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Ministry of Transport, Egypt
- Indian Energy Exchange, India
- Intertek Mineral Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Meralco Power Generation, Philippines
- ICICI Bank Limited - India
- Mercator Lines Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Directorate Of Revenue Intelligence - India
- Vedanta Resources Plc - India
- Therma Luzon, Inc, Philippines
- Xindia Steels Limited - India
- Bangladesh Power Developement Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wood Mackenzie - Singapore
- Savvy Resources Ltd - HongKong
- Leighton Contractors Pty Ltd - Australia
- Bhushan Steel Limited - India
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Carbofer General Trading SA - India
- SN Aboitiz Power Inc, Philippines
- Global Business Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The State Trading Corporation of India Ltd
- Directorate General of MIneral and Coal - Indonesia
- Tata Chemicals Ltd - India
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- Makarim & Taira - Indonesia
- Chettinad Cement Corporation Ltd - India
- Ministry of Mines - Canada
- Binh Thuan Hamico - Vietnam
- Jindal Steel & Power Ltd - India
- IHS Mccloskey Coal Group - USA
- LBH Netherlands Bv - Netherlands
- Barasentosa Lestari - Indonesia
- Thai Mozambique Logistica
- Oldendorff Carriers - Singapore
- Indonesian Coal Mining Association
- European Bulk Services B.V. - Netherlands
- Pendopo Energi Batubara - Indonesia
- Port Waratah Coal Services - Australia
- Indika Energy - Indonesia
- Videocon Industries ltd - India
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- PowerSource Philippines DevCo
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Posco Energy - South Korea
- Miang Besar Coal Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- Merrill Lynch Commodities Europe
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Maheswari Brothers Coal Limited - India
- Samtan Co., Ltd - South Korea
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- Antam Resourcindo - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Iligan Light & Power Inc, Philippines
- Ministry of Finance - Indonesia
- Siam City Cement - Thailand
- Mintek Dendrill Indonesia
- Bharathi Cement Corporation - India
- Ambuja Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Baramulti Group, Indonesia
- VISA Power Limited - India
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- Lanco Infratech Ltd - India
- Australian Commodity Traders Exchange
- Star Paper Mills Limited - India
- Edison Trading Spa - Italy
- Deloitte Consulting - India
- IEA Clean Coal Centre - UK
- GN Power Mariveles Coal Plant, Philippines
- Simpson Spence & Young - Indonesia
- Gujarat Sidhee Cement - India
- Central Electricity Authority - India
- Neyveli Lignite Corporation Ltd, - India
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