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Monday, 12 October 15
DRY BULK SHIPPING: MARKETS ARE SLOWLY IMPROVING FROM A VERY LOW LEVEL AS THE DEMAND SIDE FALTERS - HELLENIC SHIPPING NEWS
 The dry bulk market is in the midst of a shift in demand patterns, which coupled with a tonnage supply overhang, has been facing headwinds over the past few years. In its latest short-term outlook, BIMCO noted that “when traditional demand growth is not increasing, we need to look harder for future growth. Here the glut of high-iron-content ore in the international markets and the following low prices may finally bring around a sizeable substitution in consumption by Chinese steel mills, away from the domestically produced low-iron-content ore, in favour of imports”.
“Calculations done by BIMCO show that monthly imports into China could be 20mt higher per month (+26%). A total of an extra 240 million tons on an annual basis could bring deployment for around 155 Capesizes, assuming an unchanged distribution between Australian and Brazilian imports (75%/25%). Last year, Australia grew its share significantly as 90% of Chinese incremental demand came from Australia.
As Brazilian miner Vale is expecting to grow its output over the next year, this would improve the prospects. Working against would be more Brazilian ore transported on 400,000-DWT Valemax class ships operated by the miner itself or related parties”, BIMCO noted in its report.
As such, it concludes that “for the coming months: September-November, BIMCO expects the supply of new ships to stay subdued and slow paced towards the end of the year. The deteriorating demand-side conditions are expected to be somewhat reversed as we move into the stronger months of the year. The vital commodities, coal and iron ore, are both expected to be in higher demand in coming months, enhancing owners’ and operators’ opportunities to find employment for their ships. Altogether this should support the freight rates although no large-scale improvement to the fundamental balance is likely to develop”.
According to BIMCO’s Chief Shipping Analyst, Peter Sand, “the shipping market and underlying profitability can only improve if the fundamental conditions (supply and demand) also improve. Therefore transportation of larger volumes, longer sailing distances in general or a lower increase of dry-bulk fleet size is a prerequisite for better markets to arrive. On the first issue about more commodities, we have seen coal as the primary culprit so far, with grains potentially also sinking into the red before the end of the year. Volumes of steam coal and coking coal are both contracting notably, and our forecast is for an annual decline in transport driven by the lack of demand from China (-51 million mt) in the East and the UK (-13mt) in the West cushioned by increased appetite for imported steam coal in India (+16mt). Prospects for the latter have declined somewhat over the summer as domestic production and power-plant stocks both have risen”.
At the same time, “the coal-exporting nations suffering from this decline in demand are the two giants, Indonesia and Australia, while US exports are down on lower UK imports. On the positive side, the longer-than-normal grain season in South America has benefited primarily the Supramaxes, which apparently defy gravity as being the segment with the highest freight rates, while also facing the biggest increase in fleet size in the dry-bulk sector. Additionally, strong steel exports out of China have contributed to higher Supramax fleet use”.
BIMCO’s report also noted that “the second issue about ton–miles has also come into play this year as a part of the decline in coal has cut off the longer trades at the expense of the shorter hauls. The complete absence of South African thermal coal exports to China for more than a year now is a devastating example of this, especially when it is substituted by non-seaborne imports. In 2014 South Africa supplied China with 5.2mt of thermal down from 12.4mt in 2013.
Meanwhile, “the freight rates for all dry-bulk segments have been low throughout 2015, the July/August spike for Capesize ships being the short-lived exception. Averages for the first eight months of 2015 range from USD 5,605 per day for a Handysize to USD 8,163 per day for a Capesize. The poorest freight market on record is due to a combination of demand weakness and capacity abundance. Unfortunately, there are no easy ways to escape this. As China is going through a period of transition that does not favour the dry-bulk shipping industry, the prime driver is out of the picture. Capacity has been abundant for years, so it’s the change to the demand side, the variable that the industry cannot impact, which is at the epicentre in 2015”.
Supply-wise, BIMCO said that “speaking of the contributing factors to an improved shipping market, the dry-bulk fleet has grown only marginally during the first nine months. The inflow of 39.7 million DWT, which has been offset by demolition of 23.8 million DWT, means a fleet growth of just 2.1%. Continuance of a low fleet growth is vital to achieving an eventual recovery and a return of sustainable earnings for the industry. A central element in that equation is a low level of new orders. This has been accomplished by a landslide margin. In Clarksons orderbook statistics, there were only 84 new contracts recorded at the end of August. Such a cautious attitude is quite the opposite of what happened less than two years ago, when capacity equal to the year-to-date amount in 2015 (4.7 million DWT) was contracted in just 16 days!”
According to Mr. Sand, “demolition also holds a key position in today’s and tomorrow’s fleet-growth level. Although 306 ships have left the fleet so far in 2015, owners’ interest in making use of the demolition “tool” to limit supply growth seems to have evaporated completely over the summer. In early July, BIMCO cautioned that a new full year record level of demolished capacity would not arrive in spite of a record first half of the year. Unfortunately, our expectations have proven to be all too right. Spiking Capesize rates immediately cooled owners’ interest in the hope that a market rebound was around the corner”.
Furthermore, the strong Chinese steel export at discount prices to the countries that used to prefer scrap steel to new steel means that scrap prices keep heading lower and lower as volumes decrease. “Only 37 ships were sent to the blow torch in July and August. As trading conditions continue to challenge all shipowners and operators, everything that can be done to delay the delivery of the next ship has been done within the legally binding nature of a newbuilding contract. It is not easy to discuss terms with shipyards at a late stage in the building process, but the result is now clear. 2015 is about to receive “only” 49 million DWT, which will bring fleet growth down to a 10-year low at 2.5%”, BIMCO concluded.
Source: Nikos Roussanoglou, Hellenic Shipping News
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Thursday, 15 October 15
INDONESIA COAL PRICE REFERENCE FALLS FOR SEVEN STRAIGHT MONTH IN OCTOBER
COALspot.com - The Director General of Mineral and Coal of Indonesia once a again revised down Indonesian coal benchmark price this month.
The ...
Thursday, 15 October 15
Q1' 16 FOB RICHARDS BAY COAL SWAP ADVANCED 2 PER CENT WEEK OVER WEEK
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q4' 2015 gain week over week and declined month over month.
The Q4 swap was dow ...
Tuesday, 13 October 15
DRY BULK SHIPPING FLEET NET EXPANSION WAS 1.3% DURING THIRD QUARTER, BUT ORDERBOOK REDUCED TO 17% OF THE TRADING FLEET
If the dry bulk market is to rebound on a sustainable level, it needs to limit the tonnage expansion, at least until demand picks up again, as Chin ...
Tuesday, 13 October 15
FOB NEWCASTLE COAL SWAP DECLINED 2 PER CENT MONTH OVER MONTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery decreased $0.46 per ton (1.08%) month over month to US$ 42.17 per ton. The ...
Monday, 12 October 15
CFR SOUTH CHINA COAL SWAPS GAIN W-W; SLIGHTLY DOWN M-M
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery down just US cents 3 (0.06 %) per ton month over month.
A commodity ...
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- Ministry of Mines - Canada
- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- Baramulti Group, Indonesia
- Dalmia Cement Bharat India
- Formosa Plastics Group - Taiwan
- Standard Chartered Bank - UAE
- Port Waratah Coal Services - Australia
- Borneo Indobara - Indonesia
- Merrill Lynch Commodities Europe
- Bangladesh Power Developement Board
- Global Green Power PLC Corporation, Philippines
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- Simpson Spence & Young - Indonesia
- Barasentosa Lestari - Indonesia
- Global Business Power Corporation, Philippines
- White Energy Company Limited
- PNOC Exploration Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- GMR Energy Limited - India
- Toyota Tsusho Corporation, Japan
- Essar Steel Hazira Ltd - India
- Siam City Cement PLC, Thailand
- Sree Jayajothi Cements Limited - India
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- Sarangani Energy Corporation, Philippines
- Siam City Cement - Thailand
- Electricity Authority, New Zealand
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Aboitiz Power Corporation - Philippines
- Eastern Energy - Thailand
- Uttam Galva Steels Limited - India
- SMG Consultants - Indonesia
- The University of Queensland
- Power Finance Corporation Ltd., India
- Gujarat Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Australian Coal Association
- Renaissance Capital - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining Corp, Philippines
- Heidelberg Cement - Germany
- The Treasury - Australian Government
- Petron Corporation, Philippines
- Agrawal Coal Company - India
- Jorong Barutama Greston.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- Star Paper Mills Limited - India
- Larsen & Toubro Limited - India
- GVK Power & Infra Limited - India
- Independent Power Producers Association of India
- Thiess Contractors Indonesia
- Kobexindo Tractors - Indoneisa
- Grasim Industreis Ltd - India
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- Central Java Power - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Carbofer General Trading SA - India
- Ceylon Electricity Board - Sri Lanka
- Ambuja Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- GAC Shipping (India) Pvt Ltd
- Pendopo Energi Batubara - Indonesia
- Commonwealth Bank - Australia
- Bharathi Cement Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhatia International Limited - India
- VISA Power Limited - India
- Meenaskhi Energy Private Limited - India
- Energy Development Corp, Philippines
- MS Steel International - UAE
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Videocon Industries ltd - India
- Bhushan Steel Limited - India
- Mercator Lines Limited - India
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- Metalloyd Limited - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Anglo American - United Kingdom
- Medco Energi Mining Internasional
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- Kumho Petrochemical, South Korea
- Directorate Of Revenue Intelligence - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Parliament of New Zealand
- Trasteel International SA, Italy
- Miang Besar Coal Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kartika Selabumi Mining - Indonesia
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- Coastal Gujarat Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining and Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Indogreen Group - Indonesia
- Planning Commission, India
- ICICI Bank Limited - India
- Salva Resources Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- Tamil Nadu electricity Board
- Straits Asia Resources Limited - Singapore
- OPG Power Generation Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- AsiaOL BioFuels Corp., Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Vedanta Resources Plc - India
- Chettinad Cement Corporation Ltd - India
- Marubeni Corporation - India
- Indian Energy Exchange, India
- Eastern Coal Council - USA
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- Orica Australia Pty. Ltd.
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Coal and Oil Company - UAE
- Rio Tinto Coal - Australia
- Posco Energy - South Korea
- Mjunction Services Limited - India
- The State Trading Corporation of India Ltd
- Thai Mozambique Logistica
- Riau Bara Harum - Indonesia
- Kapuas Tunggal Persada - Indonesia
- TeaM Sual Corporation - Philippines
- IEA Clean Coal Centre - UK
- Timah Investasi Mineral - Indoneisa
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Indika Energy - Indonesia
- McConnell Dowell - Australia
- Africa Commodities Group - South Africa
- Parry Sugars Refinery, India
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- PowerSource Philippines DevCo
- Kepco SPC Power Corporation, Philippines
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Karaikal Port Pvt Ltd - India
- ASAPP Information Group - India
- Aditya Birla Group - India
- Vizag Seaport Private Limited - India
- Altura Mining Limited, Indonesia
- SMC Global Power, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Price Waterhouse Coopers - Russia
- Australian Commodity Traders Exchange
- Interocean Group of Companies - India
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Banpu Public Company Limited - Thailand
- Singapore Mercantile Exchange
- Binh Thuan Hamico - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Madhucon Powers Ltd - India
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Electricity Generating Authority of Thailand
- Lanco Infratech Ltd - India
- Bukit Makmur.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Xindia Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- CIMB Investment Bank - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Sakthi Sugars Limited - India
- Meralco Power Generation, Philippines
- LBH Netherlands Bv - Netherlands
- Coalindo Energy - Indonesia
- Bulk Trading Sa - Switzerland
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