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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, 06 September 15
AUTOMATION AND TECHNOLOGY IS CERTAINLY PART OF THE SOLUTION FOR IMPROVING PERFORMANCE AND EFFICIENCY TO MAKE THE MINE OPERATIONS MORE PROFITABLE, HOWEVER............ - LUKE JALSEVAC
"The Technology and Innovation in Mining 2015" production team at Information Exchange Group interviewed Luke Jalsevac, Director, Busines ...
Sunday, 06 September 15
THE CAPE SIZE INDEX ROSE 10.83 PER CENT WEEK OVER WEEK
COALspot.com: The BDI, the Baltic exchange's main sea freight index, which tracks rates for ships carrying dry bulk commodities, declined o ...
Saturday, 05 September 15
DRY BULK MARKET MAY SUFFER NOW, BUT IS BOUND FOR A RECOVERY THANKS TO A LIMITED FUTURE FLEET GROWTH - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The slow increase of dry bulk tonnage growth this year could turn into a solid indicator of the market’s future prospects. According to a rec ...
Friday, 04 September 15
U.S. COAL PRODUCTION FOR THE W/E AUGUST 29, UP SLIGHTLY; FALL 4.5 PERCENT Y-Y: EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 18.7 million shor ...
Friday, 04 September 15
GOVERNORS WILL HAVE THE POWER TO REVOKE MINERS' PERMITS: ENERGY MINISTRY - JG
Starting Oct. 1, Indonesia's governors will lawfully become "executors" in revoking the licenses of miners that fail to secure a &quo ...
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- Larsen & Toubro Limited - India
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- International Coal Ventures Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Merrill Lynch Commodities Europe
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- Toyota Tsusho Corporation, Japan
- Energy Link Ltd, New Zealand
- Port Waratah Coal Services - Australia
- Sarangani Energy Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Kartika Selabumi Mining - Indonesia
- Australian Commodity Traders Exchange
- Ambuja Cements Ltd - India
- Vedanta Resources Plc - India
- Parliament of New Zealand
- IEA Clean Coal Centre - UK
- Eastern Coal Council - USA
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Transport, Egypt
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- Agrawal Coal Company - India
- Miang Besar Coal Terminal - Indonesia
- Sojitz Corporation - Japan
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- Eastern Energy - Thailand
- Wilmar Investment Holdings
- Neyveli Lignite Corporation Ltd, - India
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- PNOC Exploration Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Aditya Birla Group - India
- Coal and Oil Company - UAE
- Bhoruka Overseas - Indonesia
- Ministry of Mines - Canada
- Star Paper Mills Limited - India
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- OPG Power Generation Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Vizag Seaport Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Kideco Jaya Agung - Indonesia
- VISA Power Limited - India
- Essar Steel Hazira Ltd - India
- Borneo Indobara - Indonesia
- Tamil Nadu electricity Board
- Uttam Galva Steels Limited - India
- Planning Commission, India
- Formosa Plastics Group - Taiwan
- Trasteel International SA, Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement PLC, Thailand
- Sinarmas Energy and Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Asmin Koalindo Tuhup - Indonesia
- Madhucon Powers Ltd - India
- Bulk Trading Sa - Switzerland
- Minerals Council of Australia
- South Luzon Thermal Energy Corporation
- Sical Logistics Limited - India
- Sindya Power Generating Company Private Ltd
- Therma Luzon, Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Rio Tinto Coal - Australia
- Electricity Generating Authority of Thailand
- Samtan Co., Ltd - South Korea
- Anglo American - United Kingdom
- Attock Cement Pakistan Limited
- Carbofer General Trading SA - India
- The State Trading Corporation of India Ltd
- Gujarat Mineral Development Corp Ltd - India
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- Makarim & Taira - Indonesia
- Global Business Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- GMR Energy Limited - India
- Economic Council, Georgia
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tata Chemicals Ltd - India
- Barasentosa Lestari - Indonesia
- Mjunction Services Limited - India
- Marubeni Corporation - India
- Bharathi Cement Corporation - India
- Salva Resources Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Jindal Steel & Power Ltd - India
- Indonesian Coal Mining Association
- PTC India Limited - India
- Edison Trading Spa - Italy
- Dalmia Cement Bharat India
- Riau Bara Harum - Indonesia
- Commonwealth Bank - Australia
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Timah Investasi Mineral - Indoneisa
- Thiess Contractors Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Heidelberg Cement - Germany
- Deloitte Consulting - India
- Coastal Gujarat Power Limited - India
- Indian Oil Corporation Limited
- ASAPP Information Group - India
- Billiton Holdings Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Pendopo Energi Batubara - Indonesia
- Iligan Light & Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CNBM International Corporation - China
- Alfred C Toepfer International GmbH - Germany
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- London Commodity Brokers - England
- GVK Power & Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- McConnell Dowell - Australia
- Baramulti Group, Indonesia
- Chettinad Cement Corporation Ltd - India
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Independent Power Producers Association of India
- Ind-Barath Power Infra Limited - India
- Cement Manufacturers Association - India
- Australian Coal Association
- Power Finance Corporation Ltd., India
- Kepco SPC Power Corporation, Philippines
- Latin American Coal - Colombia
- Videocon Industries ltd - India
- Sakthi Sugars Limited - India
- Grasim Industreis Ltd - India
- LBH Netherlands Bv - Netherlands
- Bhatia International Limited - India
- Price Waterhouse Coopers - Russia
- ICICI Bank Limited - India
- Standard Chartered Bank - UAE
- Altura Mining Limited, Indonesia
- Binh Thuan Hamico - Vietnam
- San Jose City I Power Corp, Philippines
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- Aboitiz Power Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Singapore Mercantile Exchange
- Leighton Contractors Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Renaissance Capital - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Indian Energy Exchange, India
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- GAC Shipping (India) Pvt Ltd
- Wood Mackenzie - Singapore
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indogreen Group - Indonesia
- Medco Energi Mining Internasional
- Petron Corporation, Philippines
- Oldendorff Carriers - Singapore
- Energy Development Corp, Philippines
- Mintek Dendrill Indonesia
- Mercator Lines Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- The Treasury - Australian Government
- Gujarat Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Thai Mozambique Logistica
- Bhushan Steel Limited - India
- Rashtriya Ispat Nigam Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Manunggal Multi Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Bank of Tokyo Mitsubishi UFJ Ltd
- Straits Asia Resources Limited - Singapore
- European Bulk Services B.V. - Netherlands
- MS Steel International - UAE
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- Parry Sugars Refinery, India
- Indika Energy - Indonesia
- Gujarat Sidhee Cement - India
- Xindia Steels Limited - India
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Posco Energy - South Korea
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