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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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- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- VISA Power Limited - India
- Minerals Council of Australia
- Jindal Steel & Power Ltd - India
- GAC Shipping (India) Pvt Ltd
- LBH Netherlands Bv - Netherlands
- Bharathi Cement Corporation - India
- Wood Mackenzie - Singapore
- Leighton Contractors Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Energy Exchange, India
- Borneo Indobara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Global Coal Blending Company Limited - Australia
- Thiess Contractors Indonesia
- Port Waratah Coal Services - Australia
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- Bangladesh Power Developement Board
- Australian Commodity Traders Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- Maheswari Brothers Coal Limited - India
- Trasteel International SA, Italy
- Heidelberg Cement - Germany
- Karbindo Abesyapradhi - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- PowerSource Philippines DevCo
- Toyota Tsusho Corporation, Japan
- Anglo American - United Kingdom
- SMG Consultants - Indonesia
- Electricity Generating Authority of Thailand
- Attock Cement Pakistan Limited
- MS Steel International - UAE
- Kobexindo Tractors - Indoneisa
- Central Electricity Authority - India
- The Treasury - Australian Government
- CNBM International Corporation - China
- Chamber of Mines of South Africa
- Commonwealth Bank - Australia
- Ambuja Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- GMR Energy Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Lanco Infratech Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coalindo Energy - Indonesia
- Tata Chemicals Ltd - India
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Directorate General of MIneral and Coal - Indonesia
- Oldendorff Carriers - Singapore
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- Mjunction Services Limited - India
- Vizag Seaport Private Limited - India
- Tamil Nadu electricity Board
- Sojitz Corporation - Japan
- Sindya Power Generating Company Private Ltd
- Africa Commodities Group - South Africa
- SN Aboitiz Power Inc, Philippines
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- Electricity Authority, New Zealand
- Aditya Birla Group - India
- Binh Thuan Hamico - Vietnam
- Orica Mining Services - Indonesia
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- Parry Sugars Refinery, India
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- Australian Coal Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coal and Oil Company - UAE
- Semirara Mining Corp, Philippines
- Standard Chartered Bank - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Xindia Steels Limited - India
- Mintek Dendrill Indonesia
- Bulk Trading Sa - Switzerland
- GVK Power & Infra Limited - India
- Riau Bara Harum - Indonesia
- Banpu Public Company Limited - Thailand
- Alfred C Toepfer International GmbH - Germany
- Global Business Power Corporation, Philippines
- Medco Energi Mining Internasional
- Ministry of Mines - Canada
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- Ind-Barath Power Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- Jaiprakash Power Ventures ltd
- Neyveli Lignite Corporation Ltd, - India
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- Chettinad Cement Corporation Ltd - India
- Malabar Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- Ministry of Transport, Egypt
- Indian Oil Corporation Limited
- Global Green Power PLC Corporation, Philippines
- Merrill Lynch Commodities Europe
- Jorong Barutama Greston.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Finance - Indonesia
- Siam City Cement - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- Power Finance Corporation Ltd., India
- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- ASAPP Information Group - India
- Thai Mozambique Logistica
- Savvy Resources Ltd - HongKong
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- The University of Queensland
- Carbofer General Trading SA - India
- Planning Commission, India
- Parliament of New Zealand
- IEA Clean Coal Centre - UK
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- PetroVietnam Power Coal Import and Supply Company
- International Coal Ventures Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Cement Manufacturers Association - India
- Sarangani Energy Corporation, Philippines
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- India Bulls Power Limited - India
- Mercuria Energy - Indonesia
- Renaissance Capital - South Africa
- Eastern Coal Council - USA
- Straits Asia Resources Limited - Singapore
- Wilmar Investment Holdings
- Energy Link Ltd, New Zealand
- Metalloyd Limited - United Kingdom
- Latin American Coal - Colombia
- Bhatia International Limited - India
- White Energy Company Limited
- Central Java Power - Indonesia
- Edison Trading Spa - Italy
- Orica Australia Pty. Ltd.
- OPG Power Generation Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- PNOC Exploration Corporation - Philippines
- Eastern Energy - Thailand
- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- Intertek Mineral Services - Indonesia
- Simpson Spence & Young - Indonesia
- Kapuas Tunggal Persada - Indonesia
- PTC India Limited - India
- Pendopo Energi Batubara - Indonesia
- ICICI Bank Limited - India
- Essar Steel Hazira Ltd - India
- Kepco SPC Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Antam Resourcindo - Indonesia
- Posco Energy - South Korea
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Sakthi Sugars Limited - India
- Globalindo Alam Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Vedanta Resources Plc - India
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Makmur.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coastal Gujarat Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bhushan Steel Limited - India
- Sical Logistics Limited - India
- SMC Global Power, Philippines
- Therma Luzon, Inc, Philippines
- The State Trading Corporation of India Ltd
- Bahari Cakrawala Sebuku - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Madhucon Powers Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- South Luzon Thermal Energy Corporation
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- Holcim Trading Pte Ltd - Singapore
- Deloitte Consulting - India
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
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