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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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Tuesday, 04 March 14
AUSTRALIA'S NPC TO SHIP 11.85 MMT OF COAL IN MARCH
COALspot.com: In the week ended 3 March 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, total 3.15 m ...
Tuesday, 04 March 14
HIGHER PRICES AND STEADY FREIGHT RATES LEAD SHIP OWNERS TO TEMPORARILY HALT SECOND HAND VESSEL PURCHASES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As the dry bulk market has kept on improving, but at a very slow rate, ship owners have elected to take a step back from the flurry of the S&P m ...
Monday, 03 March 14
SUB-BIT INDONESIA COAL SWAP (FOB) FOR AVERAGE Q115 CLOSED AT $60.28, $ 1.70 HIGHER THAN 2Q14
COALspot.com – Indonesia, the world’s largest exporter of the thermal coal's swaps for delivery April - June 2014 slightly corrected do ...
Monday, 03 March 14
API 8 CFR SOUTH CHINA SWAPS: Q4' 2014 DELIVERY CLOSED US$ 1.40 HIGHER COMPARED TO Q2' 2014 DELIVERY
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 deliveries lost 1.90 percent month on month and closed at US$ 76.27 per mt as on Fr ...
Monday, 03 March 14
COSTS LIABILITY PASSING DOWN A CHARTERPARTY CHAIN - SKULD
KNOWLEDGE TO ELEVATE
Provided that charterparties are on back to back terms, and the claim is successful, liability for costs incurred shoul ...
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- OPG Power Generation Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Chamber of Mines of South Africa
- SMC Global Power, Philippines
- Meralco Power Generation, Philippines
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Orica Australia Pty. Ltd.
- Indonesian Coal Mining Association
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Bhoruka Overseas - Indonesia
- Toyota Tsusho Corporation, Japan
- Iligan Light & Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Malabar Cements Ltd - India
- Borneo Indobara - Indonesia
- Wood Mackenzie - Singapore
- Sarangani Energy Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- LBH Netherlands Bv - Netherlands
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- Kapuas Tunggal Persada - Indonesia
- Australian Commodity Traders Exchange
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Petron Corporation, Philippines
- Edison Trading Spa - Italy
- Star Paper Mills Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Essar Steel Hazira Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Baramulti Group, Indonesia
- Standard Chartered Bank - UAE
- Sindya Power Generating Company Private Ltd
- PNOC Exploration Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Minerals Council of Australia
- Gujarat Mineral Development Corp Ltd - India
- Altura Mining Limited, Indonesia
- Medco Energi Mining Internasional
- Directorate General of MIneral and Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Energy - Thailand
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- Romanian Commodities Exchange
- Xindia Steels Limited - India
- Gujarat Sidhee Cement - India
- Deloitte Consulting - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- Mjunction Services Limited - India
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Timah Investasi Mineral - Indoneisa
- The University of Queensland
- Sakthi Sugars Limited - India
- Central Electricity Authority - India
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Makarim & Taira - Indonesia
- Wilmar Investment Holdings
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Ministry of Transport, Egypt
- Independent Power Producers Association of India
- Tamil Nadu electricity Board
- Formosa Plastics Group - Taiwan
- Mercuria Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Dalmia Cement Bharat India
- IHS Mccloskey Coal Group - USA
- Directorate Of Revenue Intelligence - India
- Lanco Infratech Ltd - India
- Uttam Galva Steels Limited - India
- Videocon Industries ltd - India
- McConnell Dowell - Australia
- Bulk Trading Sa - Switzerland
- Anglo American - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- Banpu Public Company Limited - Thailand
- International Coal Ventures Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- Globalindo Alam Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Rio Tinto Coal - Australia
- Bayan Resources Tbk. - Indonesia
- Attock Cement Pakistan Limited
- Carbofer General Trading SA - India
- Energy Link Ltd, New Zealand
- Indo Tambangraya Megah - Indonesia
- SMG Consultants - Indonesia
- Goldman Sachs - Singapore
- Electricity Authority, New Zealand
- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- Riau Bara Harum - Indonesia
- Bharathi Cement Corporation - India
- Kideco Jaya Agung - Indonesia
- Kumho Petrochemical, South Korea
- Aditya Birla Group - India
- Vedanta Resources Plc - India
- Therma Luzon, Inc, Philippines
- PowerSource Philippines DevCo
- Kohat Cement Company Ltd. - Pakistan
- Ambuja Cements Ltd - India
- ASAPP Information Group - India
- Cement Manufacturers Association - India
- Australian Coal Association
- Commonwealth Bank - Australia
- The Treasury - Australian Government
- TNB Fuel Sdn Bhd - Malaysia
- Agrawal Coal Company - India
- Semirara Mining Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- VISA Power Limited - India
- India Bulls Power Limited - India
- Maheswari Brothers Coal Limited - India
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Indika Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- Billiton Holdings Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Alfred C Toepfer International GmbH - Germany
- Parliament of New Zealand
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- Sical Logistics Limited - India
- GMR Energy Limited - India
- Savvy Resources Ltd - HongKong
- The State Trading Corporation of India Ltd
- Indogreen Group - Indonesia
- Indian Energy Exchange, India
- Kobexindo Tractors - Indoneisa
- CNBM International Corporation - China
- Coalindo Energy - Indonesia
- Eastern Coal Council - USA
- Latin American Coal - Colombia
- Central Java Power - Indonesia
- Marubeni Corporation - India
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- Merrill Lynch Commodities Europe
- IEA Clean Coal Centre - UK
- Gujarat Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Kepco SPC Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Thai Mozambique Logistica
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- Holcim Trading Pte Ltd - Singapore
- Mercator Lines Limited - India
- Coal and Oil Company - UAE
- Jindal Steel & Power Ltd - India
- Parry Sugars Refinery, India
- Siam City Cement - Thailand
- Ministry of Finance - Indonesia
- Africa Commodities Group - South Africa
- Binh Thuan Hamico - Vietnam
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- Vizag Seaport Private Limited - India
- Electricity Generating Authority of Thailand
- Energy Development Corp, Philippines
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- White Energy Company Limited
- Heidelberg Cement - Germany
- Global Business Power Corporation, Philippines
- Mintek Dendrill Indonesia
- AsiaOL BioFuels Corp., Philippines
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- Bhatia International Limited - India
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Bukit Baiduri Energy - Indonesia
- Sojitz Corporation - Japan
- Georgia Ports Authority, United States
- CIMB Investment Bank - Malaysia
- Planning Commission, India
- Grasim Industreis Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Global Green Power PLC Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
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