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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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Sunday, 22 November 15
INDIA COULD PROVIDE SILVER LINING FOR SHIPPING INDUSTRY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The rise of India as a global player in the shipping market could be just a couple of years away, as the country has the potential to become a seco ...
Friday, 20 November 15
U.S. COAL PRODUCTION FOR THE WEEK ENDING NOVEMBER '14; NO CHANGE FROM LAST WEEK
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 16.5 million shor ...
Friday, 20 November 15
NO IMPROVEMENT SEEN IN NEAR-TERM COAL DEMAND; SWAPS CLOSE LOWER
COALspot.com: Indonesian coal swap for delivery Q1 2016 declined month on month and flat on week over week. Price of coal seen no improvements this ...
Friday, 20 November 15
CHANGING CRUDE SUPPLY TRENDS MAY HELP EUROPEAN REFINERS - FITCH RATINGS
COALspot.com: Changes in global oil supply trends, including high Russian production, the expected renewal of Iranian heavy crude exports and the p ...
Thursday, 19 November 15
CHINA STEEL PRODUCTION CAPACITY TO PEAK IN 2016 - FITCH RATINGS
COALspot.com: Fitch Ratings today says that China's steel production capacity is likely to peak in 2016, with capacity elimination over the nex ...
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- Leighton Contractors Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Binh Thuan Hamico - Vietnam
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Rio Tinto Coal - Australia
- TeaM Sual Corporation - Philippines
- SMC Global Power, Philippines
- CNBM International Corporation - China
- Mjunction Services Limited - India
- McConnell Dowell - Australia
- Kalimantan Lumbung Energi - Indonesia
- Trasteel International SA, Italy
- Mercator Lines Limited - India
- Goldman Sachs - Singapore
- Straits Asia Resources Limited - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Kideco Jaya Agung - Indonesia
- Global Coal Blending Company Limited - Australia
- Petron Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- London Commodity Brokers - England
- Offshore Bulk Terminal Pte Ltd, Singapore
- White Energy Company Limited
- Central Electricity Authority - India
- Borneo Indobara - Indonesia
- Heidelberg Cement - Germany
- South Luzon Thermal Energy Corporation
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- Sree Jayajothi Cements Limited - India
- Lanco Infratech Ltd - India
- Bharathi Cement Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- Singapore Mercantile Exchange
- Kepco SPC Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Wilmar Investment Holdings
- Power Finance Corporation Ltd., India
- Siam City Cement - Thailand
- Grasim Industreis Ltd - India
- Globalindo Alam Lestari - Indonesia
- Parry Sugars Refinery, India
- Essar Steel Hazira Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- OPG Power Generation Pvt Ltd - India
- Standard Chartered Bank - UAE
- Gujarat Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Port Waratah Coal Services - Australia
- Semirara Mining and Power Corporation, Philippines
- Bhushan Steel Limited - India
- Siam City Cement PLC, Thailand
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- San Jose City I Power Corp, Philippines
- Edison Trading Spa - Italy
- Bhoruka Overseas - Indonesia
- Gujarat Sidhee Cement - India
- Global Business Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- Carbofer General Trading SA - India
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- Altura Mining Limited, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vizag Seaport Private Limited - India
- MS Steel International - UAE
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- The Treasury - Australian Government
- Eastern Energy - Thailand
- Star Paper Mills Limited - India
- Simpson Spence & Young - Indonesia
- Bayan Resources Tbk. - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- AsiaOL BioFuels Corp., Philippines
- Meralco Power Generation, Philippines
- Electricity Generating Authority of Thailand
- Barasentosa Lestari - Indonesia
- Georgia Ports Authority, United States
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Central Java Power - Indonesia
- Merrill Lynch Commodities Europe
- Cigading International Bulk Terminal - Indonesia
- Chamber of Mines of South Africa
- Romanian Commodities Exchange
- Global Green Power PLC Corporation, Philippines
- Attock Cement Pakistan Limited
- Minerals Council of Australia
- Coastal Gujarat Power Limited - India
- Kobexindo Tractors - Indoneisa
- Indonesian Coal Mining Association
- ASAPP Information Group - India
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Commonwealth Bank - Australia
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- Tamil Nadu electricity Board
- Ambuja Cements Ltd - India
- New Zealand Coal & Carbon
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- Anglo American - United Kingdom
- Mercuria Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Pendopo Energi Batubara - Indonesia
- Indogreen Group - Indonesia
- Planning Commission, India
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- Videocon Industries ltd - India
- Coal and Oil Company - UAE
- Latin American Coal - Colombia
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- Marubeni Corporation - India
- Bulk Trading Sa - Switzerland
- Posco Energy - South Korea
- International Coal Ventures Pvt Ltd - India
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Independent Power Producers Association of India
- Economic Council, Georgia
- Energy Link Ltd, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- Meenaskhi Energy Private Limited - India
- Aditya Birla Group - India
- Deloitte Consulting - India
- Australian Coal Association
- Asmin Koalindo Tuhup - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- Indika Energy - Indonesia
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- CIMB Investment Bank - Malaysia
- Coalindo Energy - Indonesia
- Uttam Galva Steels Limited - India
- Makarim & Taira - Indonesia
- Orica Mining Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- Bhatia International Limited - India
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Electricity Authority, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Thiess Contractors Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Interocean Group of Companies - India
- Samtan Co., Ltd - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Africa Commodities Group - South Africa
- Jindal Steel & Power Ltd - India
- European Bulk Services B.V. - Netherlands
- SMG Consultants - Indonesia
- Directorate Of Revenue Intelligence - India
- GAC Shipping (India) Pvt Ltd
- Oldendorff Carriers - Singapore
- VISA Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Antam Resourcindo - Indonesia
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- Aboitiz Power Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- Indian Oil Corporation Limited
- Sakthi Sugars Limited - India
- Semirara Mining Corp, Philippines
- India Bulls Power Limited - India
- Sojitz Corporation - Japan
- Sinarmas Energy and Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Madhucon Powers Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- Ind-Barath Power Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Agrawal Coal Company - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ceylon Electricity Board - Sri Lanka
- Sical Logistics Limited - India
- Manunggal Multi Energi - Indonesia
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