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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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Sunday, 20 September 15
BALTIC CAPE INDEX ROSE 66.52 PER CENT AND STAND NOW AT 1995 POINTS
COALspot.com: The BDI (Baltic Dry Index) rose 17.35 per cent week over week to 960 points on Friday mainly driven by the Capesize segment. The Cape ...
Friday, 18 September 15
SHIPPING AND THE FED RATE DECISION: FINANCING COSTS COULD RISE EVEN HIGHER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Regardless of the FED’s decision to raise rates, shipping stands to be influenced by the decision. Shipbroker Allied Shipbroking noted this w ...
Friday, 18 September 15
U.S. COAL PRODUCTION DECLINED 6.7 PER CENT W-W: EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.4 million shor ...
Thursday, 17 September 15
COALSPOT HAS LAUNCHED NEW THERMAL COAL INDICES FOR INDONESIAN COAL
COALspot.com has today launched real-time CS (i) Coal Indices.
The Indices represents 3800 kcal/kg GAR, 4200 kcal/kg GAR, 5000 kcal/kg GAR a ...
Thursday, 17 September 15
LOW DEMAND PUSH COAL SWAP DOWN
COALspot.com: Indonesian coal swap for delivery 4Q 2015 declined month on month and gain week over week.
The 4Q swap declined $ 1.77 (-4.17%) ...
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- Central Java Power - Indonesia
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- Rashtriya Ispat Nigam Limited - India
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Kideco Jaya Agung - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate Of Revenue Intelligence - India
- Bangladesh Power Developement Board
- Interocean Group of Companies - India
- Latin American Coal - Colombia
- Parliament of New Zealand
- Sical Logistics Limited - India
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Savvy Resources Ltd - HongKong
- Goldman Sachs - Singapore
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- Sakthi Sugars Limited - India
- Sarangani Energy Corporation, Philippines
- Rio Tinto Coal - Australia
- Larsen & Toubro Limited - India
- Antam Resourcindo - Indonesia
- LBH Netherlands Bv - Netherlands
- Meralco Power Generation, Philippines
- Chamber of Mines of South Africa
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- Eastern Energy - Thailand
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- Simpson Spence & Young - Indonesia
- Indo Tambangraya Megah - Indonesia
- GAC Shipping (India) Pvt Ltd
- Binh Thuan Hamico - Vietnam
- Manunggal Multi Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement PLC, Thailand
- Electricity Authority, New Zealand
- Ministry of Transport, Egypt
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- Coastal Gujarat Power Limited - India
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Leighton Contractors Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Carbofer General Trading SA - India
- Edison Trading Spa - Italy
- CNBM International Corporation - China
- Kepco SPC Power Corporation, Philippines
- Parry Sugars Refinery, India
- Mercuria Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Videocon Industries ltd - India
- Global Coal Blending Company Limited - Australia
- Bayan Resources Tbk. - Indonesia
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- Central Electricity Authority - India
- PTC India Limited - India
- Mercator Lines Limited - India
- Energy Development Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Karbindo Abesyapradhi - Indoneisa
- Standard Chartered Bank - UAE
- Bukit Makmur.PT - Indonesia
- Malabar Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- Makarim & Taira - Indonesia
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- Siam City Cement - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Star Paper Mills Limited - India
- Planning Commission, India
- Indika Energy - Indonesia
- Dalmia Cement Bharat India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Georgia Ports Authority, United States
- Billiton Holdings Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Jaiprakash Power Ventures ltd
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Baramulti Group, Indonesia
- Wilmar Investment Holdings
- Medco Energi Mining Internasional
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Barasentosa Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- Merrill Lynch Commodities Europe
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Indian Energy Exchange, India
- IHS Mccloskey Coal Group - USA
- New Zealand Coal & Carbon
- Kartika Selabumi Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- SN Aboitiz Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pendopo Energi Batubara - Indonesia
- Vedanta Resources Plc - India
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- The University of Queensland
- Thiess Contractors Indonesia
- Indogreen Group - Indonesia
- Ambuja Cements Ltd - India
- Indonesian Coal Mining Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petrochimia International Co. Ltd.- Taiwan
- Intertek Mineral Services - Indonesia
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- International Coal Ventures Pvt Ltd - India
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- Orica Australia Pty. Ltd.
- Miang Besar Coal Terminal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- The Treasury - Australian Government
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- McConnell Dowell - Australia
- Kobexindo Tractors - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Karaikal Port Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Gujarat Sidhee Cement - India
- SMG Consultants - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Port Waratah Coal Services - Australia
- Essar Steel Hazira Ltd - India
- Africa Commodities Group - South Africa
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Aditya Birla Group - India
- Romanian Commodities Exchange
- India Bulls Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- Energy Link Ltd, New Zealand
- Heidelberg Cement - Germany
- Lanco Infratech Ltd - India
- Australian Coal Association
- Grasim Industreis Ltd - India
- The State Trading Corporation of India Ltd
- Electricity Generating Authority of Thailand
- Wood Mackenzie - Singapore
- VISA Power Limited - India
- Maheswari Brothers Coal Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Coalindo Energy - Indonesia
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- SMC Global Power, Philippines
- Semirara Mining Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Bhatia International Limited - India
- Economic Council, Georgia
- Sindya Power Generating Company Private Ltd
- Kohat Cement Company Ltd. - Pakistan
- Alfred C Toepfer International GmbH - Germany
- ASAPP Information Group - India
- MS Steel International - UAE
- Kalimantan Lumbung Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- Orica Mining Services - Indonesia
- Tamil Nadu electricity Board
- PowerSource Philippines DevCo
- Independent Power Producers Association of India
- GN Power Mariveles Coal Plant, Philippines
- London Commodity Brokers - England
- Cement Manufacturers Association - India
- Mintek Dendrill Indonesia
- Anglo American - United Kingdom
- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- Posco Energy - South Korea
- Marubeni Corporation - India
- Straits Asia Resources Limited - Singapore
- White Energy Company Limited
- Deloitte Consulting - India
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