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Monday, 23 November 15
DRY BULK MARKET: NET FLEET GROWTH IS SLOWING DOWN, AS SHIP OWNERS ARE LOOKING FOR WAYS TO ALLEVIATING MARKET MELTDOWN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
 The dry bulk market has been in “meltdown” mode for a few weeks now, unable to find support and avoid the fall in historical lows. As such, it’s worth taking a closer look at the factors which can support rates in the future. In a recent analysis, dry bulk ship owner Precious Shipping, said that “the dry bulk sector is chronically over-supplied and will remain so over next few years. However let’s not forget that global seaborne trade is still growing steadily from a historical perspective. But the market needs time to realign supply with demand. In the meantime we need to manage our expectations and keep our faith in the industry. Shipping is prone to surprises and things can change pretty quickly”.
For instance, in terms of future supply developments, the world bulker fleet growth has slowed down considerably over the course of the past year. According to Precious Shipping’s analysis, “we started 2015 with 770.34 MDWT and have increased to 781.74 MDWT by the end of Q3 for a 1.48% net fleet growth. A further 5.76% (44.40 MDWT) is scheduled for delivery in the balance of 2015 and another 8.73% (67.23 MDWT) scheduled for delivery in 2016. If we were to apply a slippage factor of 40% to these scheduled deliveries and further assume that scrapping reaches 36 MDWT per annum we would be left with a net fleet growth of 3.22% (795.12 MDWT) in 2015 and another 1.89% (810.12 MDWT) in 2016. Net fleet growth is increasing, but marginally, compared to the recent past”, said Precious.
The ship owner added though that “the situation in China is partially obscuring a real change that has taken place in the capesize market (which has been driven by the capesize fleet shrinking while iron ore production from the major miners is increasing). Many had expected Q4 strength in the capesize market, but the strength has begun in July. This is real change, and one that is become somewhat obscured due to panic over Chinese equity prices”. Precious then described a scenario, which, so far has failed to materialize. It has said that “going forward, we remain bullish for capesize rates for Q3 2015 and Q4 2015. Iron ore exports from major miners will rise during the upcoming months. If China is still buying the iron ore (which is very likely), capesize availability is likely to see upcoming periods in H2 where vessel availability is much tighter and this is what drives freight rates”.
Demand-wise, Precious wondered if “Peak Coal” is a reality in China? According to the owner, “China is the world’s largest consumer of coal, accounting for nearly half of global demand. The leading source of domestic demand is naturally power generation, which accounts for about two-thirds of coal consumption in the country. With air pollution and environmental degradation becoming increasingly acute social emergencies, significant effort and investment is being made by the government to try to reduce the country’s reliance on fossil fuels. Domestic coal mining has itself been at the center of a storm. This is a very fragmented industry, with an appalling environmental and safety record, and recently also in terrible financial shape as most mines are losing money. There seems to be very little incentive to support the industry, except in an attempt to save jobs in areas of the country where few alternatives exist. China’s domestic coal output has been essentially flat in 2013, and even declined marginally in 2014 and in the first half of this year. Therefore, there could actually still be hope for imports to rebound. Never say, never”.
Analyzing China’s economic transition, Precious noted that “averaging almost 10% per year in the thirty years from 1978 to 2008 the pace of China’s growth is in the process of slowing to probably half that, albeit on a substantially larger base. China’s gradual transition from investment-led to consumer-based growth is necessitated by the fact that it no longer gets a reasonable return from every dollar invested at home. It has chronic industrial and manufacturing overcapacity that has been built up to support jobs, jobs that require ever higher wages. Now that excess production, in the context of weak domestic and overseas demand, is causing falling prices and negative profit margins. The solution is a grand plan to rebuild the old Silk Road by taking advantage of absurdly low borrowing costs to invest in other people’s infrastructure. The project was first mentioned in 2013 but gained momentum in March as Chinese growth was noticeably decelerating. China’s surplus capital, labour and productive capacity can be mobilised to get a better investment return across a vast footprint that includes southeast Asia, the Subcontinent, the Middle East, central Asia and eastern Europe and well over 3 billion people. Chinese Premier Li Keqiang speaking at the World Economic Forum in Dalian said China is on track to meet all its economic targets for this year despite fears of a deepening slowdown in the world’s second largest economy. China would take more steps to boost domestic demand and implement more policies to lift imports, he said”.
In the meantime, “2015 is turning out to be another challenging year for the Chinese steel industry. However, we believe this to be cyclical rather than structural, and a recovery is expected next year, in terms of both steel demand and ore imports. We are still far from ‘peak steel’. China’s steel use per capita, at 515 kg, is still modest for a country at this stage of development. The USA, Japan and Germany peaked at well over 700 kg in the 1970s and 1980s. China is flooding the world with cheap steel at an unprecedented rate and keeping some shipping lanes busy that would otherwise be quiet. For the first seven months of the year, exports were up 27% to 62.13 MMT and could reach 111 MMT by the end of the year, according to forecasts from commodities researchers at Macquarie. Grain imports into China continue to forge ahead and at the 8 month point are up 10.8 MMT (19%) to 66.3 MMT y-o-y. Soyabean imports stand at 52.4 MMT up nearly 5 MMT, whilst barley imports have nearly trebled to 7.4 MMT; corn imports also more than doubled to 4.4 MMT and wheat imports are slightly lower at 2 MMT. This significant increase in grain imports contrasts to that of coal where imports into China have declined by 60 MMT (-32%) y-o-y whilst iron ore imports have also registered a modest decrease of 1.4 MMT (-0.2%) y-o-y”.
Additionally, “despite the macroeconomic numbers, Chinese Iron Ore imports reached 699.43 MMT by end September for an annualized total import of 932.57 MMT or almost identical to the 933.11 MMT in 2014. Chinese Steel production reached 606.73 MMT by end September for an annualized total of 808.97 MMT or a marginal decrease of 0.53% compared to the 813.30 MMT in 2014. Chinese Steel exports reached 73 MMT by end September for an annualized total of 97.33 MMT or an increase of 3.77% compared to the 93.79 MMT in 2014. Coal imports into China reached 156.47 MMT by end September for an annualized total of 208.63 MMT or a decrease of 28.46% over the 291.63 MMT imported in 2014. In a country that currently produces and consumes just under 4.0 BMT of Coal per annum even a small change in their Coal requirements via imports could have a dramatic impact on the dry bulk freight markets”, Precious Shipping concluded.
Source: Nikos Roussanoglou, Hellenic Shipping News
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Tuesday, 24 November 15
COAL PRICES SET TO REMAIN UNDER PRESSURE UNTIL 2016 DUE TO OVER SUPPLY GLUT; H1 '16 COAL SWAPS DOWN 13% M-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery slid $5 per ton (12.05%) month over month to US$ 36.50 per ton. The s ...
Monday, 23 November 15
NEGATIVE 2016 OUTLOOK FOR WESTERN EUROPEAN STEEL - SAYS FITCH RATINGS
COALspot.com: European steel in 2016 are both negative for the sector and for issuer ratings.
This reflects our expectation that import levels ...
Monday, 23 November 15
CS50 COAL INDEX CLOSED AT $40.27 PER TON; FELL 0.15% FROM LAST WEEK
COALspot.com: The 5700 GAR CS (i) coal index fell by US cents 3 per ton week over week on 20 November 2015. CS 57 (5700 GAR coal) index closed at U ...
Monday, 23 November 15
CFR SOUTH CHINA COAL SWAPS FALL FURTHER ON LOW DEMAND
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery declined US$ 6.75 (13.99%) per ton month over month.
A commodity swa ...
Sunday, 22 November 15
INDONESIA TO INDIA FREIGHT RATES TO REMAIN DULL NEXT WEEK
COALspot.com: The BDI was down to historical lows closing at 498 points which is down by almost 95.77 per cent compared to 11,800 points in 2008.
...
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- Uttam Galva Steels Limited - India
- New Zealand Coal & Carbon
- Ambuja Cements Ltd - India
- Indian Oil Corporation Limited
- Aditya Birla Group - India
- Bukit Baiduri Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Coal and Oil Company - UAE
- India Bulls Power Limited - India
- Siam City Cement - Thailand
- Vizag Seaport Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Billiton Holdings Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- Australian Commodity Traders Exchange
- Malabar Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Toyota Tsusho Corporation, Japan
- CNBM International Corporation - China
- Orica Mining Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Deloitte Consulting - India
- Indika Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Trasteel International SA, Italy
- Rio Tinto Coal - Australia
- Indo Tambangraya Megah - Indonesia
- Directorate Of Revenue Intelligence - India
- Bharathi Cement Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- PTC India Limited - India
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- Globalindo Alam Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- Parliament of New Zealand
- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- Sindya Power Generating Company Private Ltd
- Commonwealth Bank - Australia
- Economic Council, Georgia
- Oldendorff Carriers - Singapore
- OPG Power Generation Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Power Finance Corporation Ltd., India
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- Coastal Gujarat Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Sakthi Sugars Limited - India
- Kapuas Tunggal Persada - Indonesia
- Kideco Jaya Agung - Indonesia
- Coalindo Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Petron Corporation, Philippines
- Port Waratah Coal Services - Australia
- Aboitiz Power Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- Central Electricity Authority - India
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- Medco Energi Mining Internasional
- Pendopo Energi Batubara - Indonesia
- Posco Energy - South Korea
- Goldman Sachs - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Kumho Petrochemical, South Korea
- GN Power Mariveles Coal Plant, Philippines
- Interocean Group of Companies - India
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Therma Luzon, Inc, Philippines
- MS Steel International - UAE
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Mercator Lines Limited - India
- Bulk Trading Sa - Switzerland
- Karbindo Abesyapradhi - Indoneisa
- Baramulti Group, Indonesia
- Electricity Generating Authority of Thailand
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- Central Java Power - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Merrill Lynch Commodities Europe
- Larsen & Toubro Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Miang Besar Coal Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Indonesian Coal Mining Association
- Antam Resourcindo - Indonesia
- Barasentosa Lestari - Indonesia
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- The University of Queensland
- Tamil Nadu electricity Board
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- SN Aboitiz Power Inc, Philippines
- Ministry of Mines - Canada
- Banpu Public Company Limited - Thailand
- Australian Coal Association
- Dalmia Cement Bharat India
- Indogreen Group - Indonesia
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Gujarat Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Minerals Council of Australia
- Simpson Spence & Young - Indonesia
- White Energy Company Limited
- Bukit Asam (Persero) Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Mjunction Services Limited - India
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- PowerSource Philippines DevCo
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Videocon Industries ltd - India
- Sarangani Energy Corporation, Philippines
- Latin American Coal - Colombia
- Jaiprakash Power Ventures ltd
- Timah Investasi Mineral - Indoneisa
- Thiess Contractors Indonesia
- Altura Mining Limited, Indonesia
- SMG Consultants - Indonesia
- Kartika Selabumi Mining - Indonesia
- GMR Energy Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cement Manufacturers Association - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Madhucon Powers Ltd - India
- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- South Luzon Thermal Energy Corporation
- Sical Logistics Limited - India
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Price Waterhouse Coopers - Russia
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- Energy Link Ltd, New Zealand
- Binh Thuan Hamico - Vietnam
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- PNOC Exploration Corporation - Philippines
- SMC Global Power, Philippines
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Mineral Development Corp Ltd - India
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- Meralco Power Generation, Philippines
- International Coal Ventures Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- The State Trading Corporation of India Ltd
- Parry Sugars Refinery, India
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Wood Mackenzie - Singapore
- Wilmar Investment Holdings
- Bangladesh Power Developement Board
- Energy Development Corp, Philippines
- Grasim Industreis Ltd - India
- Planning Commission, India
- AsiaOL BioFuels Corp., Philippines
- Georgia Ports Authority, United States
- Romanian Commodities Exchange
- VISA Power Limited - India
- Semirara Mining Corp, Philippines
- Electricity Authority, New Zealand
- Bhoruka Overseas - Indonesia
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