We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Monday, 30 March 15
WORST IS OVER FOR THE DRY BULK MARKET, BUT THE PAIN WILL REMAIN FOR YEARS TO COME, SAYS BIMCO CHIEF ANALYST - HELLENIC SHIPPING
 The current demise of the dry bulk market isn’t one to go away anytime soon. That doesn’t mean that it can’t improve, with all ship classes expected to cover their operating costs by May. Meanwhile, demolition activity isn’t enough, at least thus far, to offset oversupply of tonnage in the dry bulk market. It’s one of the reasons behind the downfall of the market in the past few months.
In an exclusive interview with Hellenic Shipping News Worldwide, BIMCO’s Chief Shipping Analyst, Mr. Peter Sand, said that the organization expects a fleet growth of 19m DWT for 2015, while already 8m DWT of bulkers have been scrapped. However, the market fundamentals remain negative, despite increasing demand during the current quarter. As Mr. Sand puts it, “we need multiple years of demand outstripping supply to turn the tables. The fact that demand may be fading somewhat now with China in an economical transition phase is not making prospects any better”.
Traditionally, the second quarter of the year signals the rebound of the dry bulk market, at least in terms of demand, with the grain/soya trades of South America kicking in. What’s your estimates about the demand side of the equation in the market going forward?
BIMCO is comfortable that demand for dry bulk ships is improving in Q2 as compared to Q1. Primarily due to increased volumes of soya and iron ore getting seaborne out of South America. Most focus will be on Brazil, with Argentina in a supporting role as soya exporter. It is positive for shipping volumes that Argentina is on track for a record harvest with 5% gathered already and the combined soybean production for Argentina and Brazil, as estimated by USDA, is to hit an all-time high at 150 million tonnes.
Nevertheless, we have to remain patient as regards to increased iron ore exports out of Brazil. In our recently published dry bulk market report we stated that Australia “won the battle” of increased sales to the Chinese in 2014. Additionally, “BIMCO expects that they will not let go of the lead in 2015, at the expense of long-haul shipping demand from Brazil.” Insight provided by Commodore Research & Consultancy supports this view – unfortunately.
For the full year, BIMCO expects demand a bit lower than estimated at the end of 2014. We are currently looking at 3-4% growth down from 4-5%. Key importer, China, is the main culprit behind this revision.
With the market plunging to all-time lows during February, do you think that the worst is behind us? Would you say that this time around, the main reason behind the dry bulk market’s demise is low demand or tonnage oversupply, which was deemed as the main “culprit” in the past?
The pain will stick around for a number of years even though the worst is behind us. The second dry bulk recovery in recent years from the trough in 2012 lasted until the autumn of 2014 where it became apparent how fragile it was. Mostly brought down by overcapacity, but also a tendency that the demand side would not remain as strong as it had been for the past decade or two. Key trigger behind this is of course the decline in coal imports from China, the still lack of nickel ore and bauxite imports and the fact that most importers (excl. China) is still not back at levels reached in 2007-2008!
If you try to look back on the big fleet growth years of 2009-2012, it grew by an annual average of 13.1%. All of those years the overcapacity increased. In 2013-2014, the fleet grew by an annual average of 5.1%, which is much more balanced, but it does not change the fact that the overcapacity is still here. We need multiple years of demand outstripping supply to turn the tables. The fact that demand may be fading somewhat now with China in an economical transition phase is not making prospects any better.
Can India support the market in a few years’ time, much like China did since the early 2000’s?
India is becoming more and more important to the dry bulk market, but they are still not to be seen as “a new China”. The two nations are very different and their development paths not alike. Unleashing the potential of India will be done at slower pace providing a solid level of demand growth going forward.
Given the challenging conditions which have prevailed so far in the market, when do you expect to see rates back above operating expenses, if not for all, at least for the majority of vessels?
BIMCO forecast freight rates for all dry bulk ships to remain below USD 9,000 per day for March-May. The trend is seen up – meaning that they should all be above OPEX cost levels in May. That is if we assume OPEX between USD 4,500 per day for the Handies going up to USD 7,500 for the Capes.
Looking at OPEX alone means Handies, which is making USD 5,766 per day in the current market, and Supras, which is making USD 6,772 per day, is getting OPEX covered. Panamaxes and Capesizes are not.
Beyond OPEX, you need to look at capital costs too. Interests, repayments, and/or depreciations on the fleet often means more to profitability than OPEX does. So in order to be “back into the black” all costs must be covered – freight rates must reach OPEX times two or three, as a rule of thumb, to earn money for supporting a going concern.
How important has the fall in bunker prices been for shipping companies, given the reduction of their operating costs? Would we have seen more bankruptcies in the segment, according to your view?
Cutting the bunker costs in halves is definitely a sizeable cost reduction on the voyage related expenditures. A cost reduction for the one paying for the fuel, that is. So who does that?
Mostly the spot operators working on a USD per tonnes basis, paying the fuel themselves, reap the benefits. So reaping the benefits of a falling cost item is a matter of negation skills too. In case your ship is out on charter, the charterer gets the cost reduction, as the owner is not paying voyage related expenditures. OPEX is only impacted to a minor extent as the price for lubricants may follow the oil price down somewhat.
Will the Capesize segment lead the way “out of the mud” once more?
Without doubt. Why? Because the demand picture as we see at BIMCO is very much biased towards the larger ship sizes of Panamax and Capesizes, whereas the demand situation for the two smaller segments is more slow growing. Bear in mind though that the current drop in rates was also lead by Capes, indicating a “normalized” market condition, but as Capes also took the deepest dive it becomes clear that overcapacity is still significant also for Capesize segment.
In this market environment, which options have ship owners to cut their losses? Out of demolition, slow steaming, or lay ups, which is the preferable choice at the moment?
All options are open, but the only significant one and most widely applied is slow steaming. Fortunately also the most effective one to counterbalance oversupply. Downside however is that is has a temporary nature as compared to demolition of a ship, which has a permanent effect on fleet growth, nominal and actual.
Demolition is also being used as a tool to turn around fortunes. The poor condition of the markets means BIMCO is forecasting total volume of dry bulk ship capacity to go higher than in 2014. Our estimate is 19m DWT for 2015 with some 8m DWT scrapped already.
In terms of investments, have asset prices adjusted accordingly either in the S&P or the newbuilding markets? Is it a good time to invest in modern tonnage, price-wise?
Newbuilding prices have not hit the floor yet; they are still by some distance higher than in 2012. Second hand prices have tumbled the most with all but Capesizes now below the 2012-lows. Capes being on par. Second hand prices has gone down by 40% over the past year, with older ships taking the biggest hits. Is now a time to invest, price-wise? Well, the return on investment seems to be potentially higher elsewhere. Despite many reasons to pick a newbuilt instead of a second hand – the eventual arrival of a more balanced market would all other things being equal be postponed by adding more tonnage to the market without removing the equivalent capacity. Should you be in need of extra tonnage, the market would be better off if those ships are found in the second hand market.
Source: Nikos Roussanoglou, Hellenic Shipping News
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Friday, 27 March 15
INDONESIA: NEW REGULATION REQUIRES LETTER OF CREDIT FOR EXPORT OF PRODUCTS FROM NATURAL RESOURCES
The Minister of Trade issued Ministerial Regulation No. 04/M-DAG/PER/1/2015 (“Regulation No. 4/2015”) on 5 January 2015. Regulati ...
Friday, 27 March 15
WEEKLY U.S COAL OUTPUT FALLS 1.7% W-W; 7.9% Y-Y
COALspot.com – United States the world's one of the largest coal producers, produced approximately totaled an estimated 18.2 million ...
Thursday, 26 March 15
CHINA IRON ORE IMPORT FOR THE FIRST 2 MONTHS DECLINED BY 1.2 % Y-O-Y; PANAMAX AUSSIE/CHINA ROUNDS BEING FIXED IN THE $4 -5K RANGE - FEARNLEYS
Handy
There has been more activity in both hemispheres this week. Especially the USG market has picked up with more cargoes for prompter dates en ...
Thursday, 26 March 15
RATES FOR THE SMALLER SIZE SEGMENT CONTINUED TO IMPROVE LAST WEEK - INTERMODAL
To see green across the board is a rare occurrence in the Dry Bulk market nowadays and while the upside in which last week closed off is not of the ...
Thursday, 26 March 15
KYUSHU ELECTRIC POWER OF JAPAN HAS JOINED GLOBALCOAL ONLINE COAL TRADING PLATFORM
globalCOAL® announced today that Kyushu Electric Power, one of Japan’s largest utility companies, has joined its online coal trading plat ...
|
|
|
Showing 3106 to 3110 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Meralco Power Generation, Philippines
- Latin American Coal - Colombia
- Rashtriya Ispat Nigam Limited - India
- Makarim & Taira - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- Coal and Oil Company - UAE
- Salva Resources Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- The University of Queensland
- Mercuria Energy - Indonesia
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- Economic Council, Georgia
- Binh Thuan Hamico - Vietnam
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- Bharathi Cement Corporation - India
- Sical Logistics Limited - India
- India Bulls Power Limited - India
- Dalmia Cement Bharat India
- Meenaskhi Energy Private Limited - India
- Intertek Mineral Services - Indonesia
- Mintek Dendrill Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Carbofer General Trading SA - India
- Wood Mackenzie - Singapore
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Malabar Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
- Billiton Holdings Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Thai Mozambique Logistica
- AsiaOL BioFuels Corp., Philippines
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- Larsen & Toubro Limited - India
- White Energy Company Limited
- Barasentosa Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Borneo Indobara - Indonesia
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Tamil Nadu electricity Board
- ASAPP Information Group - India
- Global Coal Blending Company Limited - Australia
- McConnell Dowell - Australia
- San Jose City I Power Corp, Philippines
- Merrill Lynch Commodities Europe
- SMC Global Power, Philippines
- Baramulti Group, Indonesia
- Timah Investasi Mineral - Indoneisa
- Anglo American - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Wilmar Investment Holdings
- IEA Clean Coal Centre - UK
- Ministry of Transport, Egypt
- Power Finance Corporation Ltd., India
- Agrawal Coal Company - India
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- Electricity Generating Authority of Thailand
- Deloitte Consulting - India
- Holcim Trading Pte Ltd - Singapore
- Directorate Of Revenue Intelligence - India
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Energy Link Ltd, New Zealand
- Altura Mining Limited, Indonesia
- Standard Chartered Bank - UAE
- Orica Australia Pty. Ltd.
- International Coal Ventures Pvt Ltd - India
- Bhatia International Limited - India
- GMR Energy Limited - India
- Formosa Plastics Group - Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jorong Barutama Greston.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Medco Energi Mining Internasional
- Bulk Trading Sa - Switzerland
- Romanian Commodities Exchange
- Heidelberg Cement - Germany
- Bayan Resources Tbk. - Indonesia
- TeaM Sual Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Vedanta Resources Plc - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bangladesh Power Developement Board
- CIMB Investment Bank - Malaysia
- PTC India Limited - India
- Kumho Petrochemical, South Korea
- CNBM International Corporation - China
- Samtan Co., Ltd - South Korea
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Ministry of Finance - Indonesia
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- VISA Power Limited - India
- Sindya Power Generating Company Private Ltd
- The Treasury - Australian Government
- Indian Energy Exchange, India
- Petrochimia International Co. Ltd.- Taiwan
- Jindal Steel & Power Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- GVK Power & Infra Limited - India
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- Africa Commodities Group - South Africa
- Madhucon Powers Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Electricity Authority, New Zealand
- Edison Trading Spa - Italy
- Tata Chemicals Ltd - India
- Energy Development Corp, Philippines
- Bhoruka Overseas - Indonesia
- Simpson Spence & Young - Indonesia
- Bukit Makmur.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Commonwealth Bank - Australia
- Siam City Cement - Thailand
- Grasim Industreis Ltd - India
- Renaissance Capital - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Australian Coal Association
- Maheswari Brothers Coal Limited - India
- Manunggal Multi Energi - Indonesia
- Goldman Sachs - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- Mercator Lines Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Bukit Baiduri Energy - Indonesia
- Antam Resourcindo - Indonesia
- New Zealand Coal & Carbon
- Gujarat Sidhee Cement - India
- Orica Mining Services - Indonesia
- Petron Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- MS Steel International - UAE
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ambuja Cements Ltd - India
- Jaiprakash Power Ventures ltd
- Cement Manufacturers Association - India
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Ministry of Mines - Canada
- Neyveli Lignite Corporation Ltd, - India
- Parry Sugars Refinery, India
- Bhushan Steel Limited - India
- Eastern Energy - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Global Business Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Georgia Ports Authority, United States
- IHS Mccloskey Coal Group - USA
- Independent Power Producers Association of India
- Minerals Council of Australia
- Eastern Coal Council - USA
- Iligan Light & Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Planning Commission, India
- Riau Bara Harum - Indonesia
- Thiess Contractors Indonesia
- Kartika Selabumi Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- ICICI Bank Limited - India
- Oldendorff Carriers - Singapore
- London Commodity Brokers - England
- Parliament of New Zealand
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- Marubeni Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Xindia Steels Limited - India
- Price Waterhouse Coopers - Russia
- Karaikal Port Pvt Ltd - India
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- Trasteel International SA, Italy
- Pendopo Energi Batubara - Indonesia
|
| |
| |
|
