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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, 23 August 15
SHIPPING FREIGHT RATES FALL SHARPLY ON EXCESS SUPPLY AND LOW DEMAND
COALspot.com: The BDI continued to soften and was down 5.78 pct and falls back below 1000 points this week.
The cape Index lost 17.25 per cent ...
Friday, 21 August 15
U.S. YEAR-TO-DATE COAL PRODUCTION VOLUME FALLS 8.7% Y-O-Y
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 18.3 million shor ...
Friday, 21 August 15
GLOBALCOAL TO LAUNCH ONLINE TRADING OF PHYSICAL MET COAL ON 13 OCTOBER
On 13 October 2015, globalCOAL will launch an online platform for the physical procurement and trade of high quality hard coking coal delivered FOB ...
Thursday, 20 August 15
COAL PRICES FALL TO 12-YEAR LOWS AS CHINA, INDIA JOIN DEMAND SLOWDOWN - REUTERS
Coal futures have fallen to 12-year lows, hit by soaring production and a slowdown in global buying, including from India and China which until rec ...
Wednesday, 19 August 15
FOB INDONESIA COAL SWAPS CONTINUE FLAT TREND LINE THIS WEEK
COALspot.com: Indonesian coal swap for delivery 4Q 2015 declined month on month and flat week over week, this past week.
The 4Q swap was decli ...
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- GVK Power & Infra Limited - India
- Jaiprakash Power Ventures ltd
- Leighton Contractors Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Indian Energy Exchange, India
- Orica Mining Services - Indonesia
- Georgia Ports Authority, United States
- Formosa Plastics Group - Taiwan
- Oldendorff Carriers - Singapore
- Simpson Spence & Young - Indonesia
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- Sinarmas Energy and Mining - Indonesia
- Vizag Seaport Private Limited - India
- Madhucon Powers Ltd - India
- Central Electricity Authority - India
- Indika Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Bulk Trading Sa - Switzerland
- Petrochimia International Co. Ltd.- Taiwan
- The State Trading Corporation of India Ltd
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- New Zealand Coal & Carbon
- Anglo American - United Kingdom
- Cement Manufacturers Association - India
- Kumho Petrochemical, South Korea
- Marubeni Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- South Luzon Thermal Energy Corporation
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- Port Waratah Coal Services - Australia
- Singapore Mercantile Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kobexindo Tractors - Indoneisa
- Energy Link Ltd, New Zealand
- Posco Energy - South Korea
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
- Toyota Tsusho Corporation, Japan
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- White Energy Company Limited
- Bhushan Steel Limited - India
- Eastern Coal Council - USA
- Minerals Council of Australia
- Aditya Birla Group - India
- Iligan Light & Power Inc, Philippines
- Coalindo Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Mercator Lines Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Latin American Coal - Colombia
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- Medco Energi Mining Internasional
- Sakthi Sugars Limited - India
- Billiton Holdings Pty Ltd - Australia
- Meralco Power Generation, Philippines
- VISA Power Limited - India
- Sojitz Corporation - Japan
- Ministry of Transport, Egypt
- Bhoruka Overseas - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Romanian Commodities Exchange
- Miang Besar Coal Terminal - Indonesia
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Parliament of New Zealand
- Dalmia Cement Bharat India
- Antam Resourcindo - Indonesia
- Global Business Power Corporation, Philippines
- GMR Energy Limited - India
- Ministry of Mines - Canada
- Agrawal Coal Company - India
- Bangladesh Power Developement Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- Uttam Galva Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Meenaskhi Energy Private Limited - India
- ASAPP Information Group - India
- Africa Commodities Group - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- Barasentosa Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Energy Development Corp, Philippines
- Wilmar Investment Holdings
- Rashtriya Ispat Nigam Limited - India
- Ind-Barath Power Infra Limited - India
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Gujarat Sidhee Cement - India
- Bukit Asam (Persero) Tbk - Indonesia
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- ICICI Bank Limited - India
- Mercuria Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Makarim & Taira - Indonesia
- Ambuja Cements Ltd - India
- India Bulls Power Limited - India
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Australian Commodity Traders Exchange
- Planning Commission, India
- Indogreen Group - Indonesia
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- Bharathi Cement Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Indonesian Coal Mining Association
- Bayan Resources Tbk. - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement PLC, Thailand
- Grasim Industreis Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Electricity Generating Authority of Thailand
- Semirara Mining Corp, Philippines
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- Essar Steel Hazira Ltd - India
- MS Steel International - UAE
- Mintek Dendrill Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indo Tambangraya Megah - Indonesia
- SN Aboitiz Power Inc, Philippines
- Carbofer General Trading SA - India
- Standard Chartered Bank - UAE
- Petron Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Semirara Mining and Power Corporation, Philippines
- Coal and Oil Company - UAE
- Altura Mining Limited, Indonesia
- Baramulti Group, Indonesia
- Edison Trading Spa - Italy
- Vedanta Resources Plc - India
- Mjunction Services Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Malabar Cements Ltd - India
- Tamil Nadu electricity Board
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- IEA Clean Coal Centre - UK
- Krishnapatnam Port Company Ltd. - India
- Bhatia International Limited - India
- Orica Australia Pty. Ltd.
- Kapuas Tunggal Persada - Indonesia
- Karaikal Port Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Interocean Group of Companies - India
- AsiaOL BioFuels Corp., Philippines
- The University of Queensland
- CNBM International Corporation - China
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- TeaM Sual Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Sindya Power Generating Company Private Ltd
- Electricity Authority, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- The Treasury - Australian Government
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- Directorate Of Revenue Intelligence - India
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- Bukit Baiduri Energy - Indonesia
- PTC India Limited - India
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Xindia Steels Limited - India
- Thiess Contractors Indonesia
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- London Commodity Brokers - England
- Maheswari Brothers Coal Limited - India
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
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