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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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Wednesday, 30 September 15
Q1'16 FOB INDONESIA COAL SWAP FALLS $1.25 A TON AS SLIDE CONTINUES
COALspot.com: Indonesian coal swap for delivery Q4 2015 declined month on month and week over week.
The Q4 swap declined $ 0.72 (-1.78%) per t ...
Wednesday, 30 September 15
NEW BUILDING MARKET INSIGHT
COALspot.com: This year has been, beyond any doubt, a rather strenuous one for the newbuilding market. Ordering activity with regards to Dry Bulker ...
Tuesday, 29 September 15
FOB RICHARDS BAY COAL SWAPS ARE SLIDING
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q4' 2015 declined week over week and month over month.
The Q4 swap was down US$ ...
Monday, 28 September 15
API 5 FOB NEWCASTLE COAL SWAPS UP $2.15 IN ONE MONTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery increased $2.10 per ton (5.15%) month over month to US$ 42.93 per ton. The ...
Monday, 28 September 15
CAPESIZE FLEET INCREASES BY JUST 1 VESSEL DURING LAST 12 MONTHS, IN POSITIVE SIGN FOR DRY BULK SHIPPING MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
After a rather tumultuous period, the shipping industry and more particular the dry bulk market has started to adjust to the new realities of globa ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Bulk Trading Sa - Switzerland
- Metalloyd Limited - United Kingdom
- Antam Resourcindo - Indonesia
- Siam City Cement - Thailand
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- SMC Global Power, Philippines
- Timah Investasi Mineral - Indoneisa
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Chettinad Cement Corporation Ltd - India
- Essar Steel Hazira Ltd - India
- Rio Tinto Coal - Australia
- Indika Energy - Indonesia
- Bhushan Steel Limited - India
- Krishnapatnam Port Company Ltd. - India
- Uttam Galva Steels Limited - India
- CNBM International Corporation - China
- Coal and Oil Company - UAE
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- Marubeni Corporation - India
- Larsen & Toubro Limited - India
- Petron Corporation, Philippines
- London Commodity Brokers - England
- Grasim Industreis Ltd - India
- Wilmar Investment Holdings
- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Medco Energi Mining Internasional
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Samtan Co., Ltd - South Korea
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Electricity Generating Authority of Thailand
- Sojitz Corporation - Japan
- Petrochimia International Co. Ltd.- Taiwan
- Binh Thuan Hamico - Vietnam
- Indo Tambangraya Megah - Indonesia
- IEA Clean Coal Centre - UK
- Vizag Seaport Private Limited - India
- Orica Australia Pty. Ltd.
- Mintek Dendrill Indonesia
- Energy Development Corp, Philippines
- Minerals Council of Australia
- Lanco Infratech Ltd - India
- Central Electricity Authority - India
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Posco Energy - South Korea
- OPG Power Generation Pvt Ltd - India
- Bharathi Cement Corporation - India
- Meenaskhi Energy Private Limited - India
- San Jose City I Power Corp, Philippines
- Mercuria Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Sical Logistics Limited - India
- Borneo Indobara - Indonesia
- Trasteel International SA, Italy
- Directorate General of MIneral and Coal - Indonesia
- Kumho Petrochemical, South Korea
- Kartika Selabumi Mining - Indonesia
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- Eastern Coal Council - USA
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Agrawal Coal Company - India
- Manunggal Multi Energi - Indonesia
- Oldendorff Carriers - Singapore
- Global Green Power PLC Corporation, Philippines
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Parry Sugars Refinery, India
- White Energy Company Limited
- Directorate Of Revenue Intelligence - India
- South Luzon Thermal Energy Corporation
- Romanian Commodities Exchange
- Maheswari Brothers Coal Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thai Mozambique Logistica
- Cigading International Bulk Terminal - Indonesia
- Africa Commodities Group - South Africa
- Standard Chartered Bank - UAE
- Kalimantan Lumbung Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Salva Resources Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Commonwealth Bank - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Carbofer General Trading SA - India
- Pendopo Energi Batubara - Indonesia
- Latin American Coal - Colombia
- Baramulti Group, Indonesia
- New Zealand Coal & Carbon
- GAC Shipping (India) Pvt Ltd
- Sindya Power Generating Company Private Ltd
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Globalindo Alam Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Global Business Power Corporation, Philippines
- ICICI Bank Limited - India
- TeaM Sual Corporation - Philippines
- PowerSource Philippines DevCo
- Savvy Resources Ltd - HongKong
- Bukit Asam (Persero) Tbk - Indonesia
- SMG Consultants - Indonesia
- PTC India Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Star Paper Mills Limited - India
- Heidelberg Cement - Germany
- Mercator Lines Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- Kapuas Tunggal Persada - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Makarim & Taira - Indonesia
- Thiess Contractors Indonesia
- Australian Commodity Traders Exchange
- Videocon Industries ltd - India
- Gujarat Sidhee Cement - India
- Mjunction Services Limited - India
- Central Java Power - Indonesia
- Intertek Mineral Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Price Waterhouse Coopers - Russia
- PNOC Exploration Corporation - Philippines
- Interocean Group of Companies - India
- MS Steel International - UAE
- Singapore Mercantile Exchange
- Banpu Public Company Limited - Thailand
- ASAPP Information Group - India
- Madhucon Powers Ltd - India
- Iligan Light & Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Indian Energy Exchange, India
- Bahari Cakrawala Sebuku - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bhatia International Limited - India
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- Parliament of New Zealand
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- Edison Trading Spa - Italy
- Eastern Energy - Thailand
- Kideco Jaya Agung - Indonesia
- Global Coal Blending Company Limited - Australia
- Gujarat Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Semirara Mining Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- Siam City Cement PLC, Thailand
- Attock Cement Pakistan Limited
- VISA Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Formosa Plastics Group - Taiwan
- Electricity Authority, New Zealand
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- The Treasury - Australian Government
- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
- Coalindo Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Merrill Lynch Commodities Europe
- Bukit Baiduri Energy - Indonesia
- Deloitte Consulting - India
- Cement Manufacturers Association - India
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Planning Commission, India
- Altura Mining Limited, Indonesia
- Economic Council, Georgia
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Aboitiz Power Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Transport, Egypt
- Holcim Trading Pte Ltd - Singapore
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