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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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Friday, 13 November 15
DRY BULK, IT IS HARD TO MAINTAIN AN OPTIMISTIC VIEW FOR THE NEXT COUPLE OF MONTHS - INTERMODAL
COALspot.com: The dry bulk owners looking for cover remained under pressure for size segments across the board. With Capes closing off the week as ...
Friday, 13 November 15
WEEKLY US COAL PRODUCTION DECLINES TO 16.5 MMST; SLIDE 14.9% Y-Y: EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 16.5 million shor ...
Thursday, 12 November 15
FOREIGN COAL MINE ACQUISITION - STRATEGY VERSUS OPPORTUNITY FOR INDIAN UTILITIES - DIPESH DIPU
The acquisition market for thermal coal assets abroad is dull. Sellers of all hues are in the market; some are actively scouting for buyers while o ...
Thursday, 12 November 15
PORT OF NEWCASTLE'S COAL EXPORT VOLUME UP IN OCTOBER 2015
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port has shipped $1.254 billio ...
Wednesday, 11 November 15
Q3' 16 RICHARDS BAY COAL SWAP LOST 15.47% SINCE 6 AUGUST; 18.65% SINCE 6 MAY
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q1’ 2016 declined week over week and month over month.
The Q1’ 2016 &nb ...
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- Bukit Baiduri Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Intertek Mineral Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Electricity Authority, New Zealand
- Uttam Galva Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Orica Australia Pty. Ltd.
- Indian Energy Exchange, India
- Binh Thuan Hamico - Vietnam
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Directorate Of Revenue Intelligence - India
- Trasteel International SA, Italy
- Planning Commission, India
- Riau Bara Harum - Indonesia
- Videocon Industries ltd - India
- Wood Mackenzie - Singapore
- ICICI Bank Limited - India
- Lanco Infratech Ltd - India
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- GVK Power & Infra Limited - India
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- TeaM Sual Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Ministry of Mines - Canada
- Economic Council, Georgia
- Tamil Nadu electricity Board
- McConnell Dowell - Australia
- Bhatia International Limited - India
- Bulk Trading Sa - Switzerland
- Price Waterhouse Coopers - Russia
- CIMB Investment Bank - Malaysia
- Parliament of New Zealand
- Marubeni Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Central Java Power - Indonesia
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- Kideco Jaya Agung - Indonesia
- Sindya Power Generating Company Private Ltd
- Chettinad Cement Corporation Ltd - India
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- IEA Clean Coal Centre - UK
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Independent Power Producers Association of India
- Mercator Lines Limited - India
- Toyota Tsusho Corporation, Japan
- Global Green Power PLC Corporation, Philippines
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- Latin American Coal - Colombia
- Simpson Spence & Young - Indonesia
- Madhucon Powers Ltd - India
- Central Electricity Authority - India
- European Bulk Services B.V. - Netherlands
- Romanian Commodities Exchange
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Samtan Co., Ltd - South Korea
- Iligan Light & Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Posco Energy - South Korea
- International Coal Ventures Pvt Ltd - India
- Dalmia Cement Bharat India
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Ministry of Finance - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Altura Mining Limited, Indonesia
- Heidelberg Cement - Germany
- Power Finance Corporation Ltd., India
- Banpu Public Company Limited - Thailand
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- Manunggal Multi Energi - Indonesia
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- Therma Luzon, Inc, Philippines
- Borneo Indobara - Indonesia
- PTC India Limited - India
- Pendopo Energi Batubara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- New Zealand Coal & Carbon
- Parry Sugars Refinery, India
- Gujarat Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Attock Cement Pakistan Limited
- Timah Investasi Mineral - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Anglo American - United Kingdom
- Jaiprakash Power Ventures ltd
- Essar Steel Hazira Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- GAC Shipping (India) Pvt Ltd
- Kalimantan Lumbung Energi - Indonesia
- Star Paper Mills Limited - India
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Jorong Barutama Greston.PT - Indonesia
- MS Steel International - UAE
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Oil Corporation Limited
- Electricity Generating Authority of Thailand
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- SMC Global Power, Philippines
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
- Vedanta Resources Plc - India
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- LBH Netherlands Bv - Netherlands
- Meenaskhi Energy Private Limited - India
- The State Trading Corporation of India Ltd
- Karbindo Abesyapradhi - Indoneisa
- Oldendorff Carriers - Singapore
- Global Business Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- VISA Power Limited - India
- Bharathi Cement Corporation - India
- Eastern Coal Council - USA
- Minerals Council of Australia
- Savvy Resources Ltd - HongKong
- Indika Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ambuja Cements Ltd - India
- The University of Queensland
- GN Power Mariveles Coal Plant, Philippines
- Bukit Makmur.PT - Indonesia
- Goldman Sachs - Singapore
- Coalindo Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Mintek Dendrill Indonesia
- Interocean Group of Companies - India
- Medco Energi Mining Internasional
- Edison Trading Spa - Italy
- Gujarat Sidhee Cement - India
- Rashtriya Ispat Nigam Limited - India
- Deloitte Consulting - India
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
- Rio Tinto Coal - Australia
- Kobexindo Tractors - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- White Energy Company Limited
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- Baramulti Group, Indonesia
- Ministry of Transport, Egypt
- Energy Link Ltd, New Zealand
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Thiess Contractors Indonesia
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- CNBM International Corporation - China
- Singapore Mercantile Exchange
- South Luzon Thermal Energy Corporation
- Antam Resourcindo - Indonesia
- Karaikal Port Pvt Ltd - India
- Energy Development Corp, Philippines
- Commonwealth Bank - Australia
- PowerSource Philippines DevCo
- Thai Mozambique Logistica
- Globalindo Alam Lestari - Indonesia
- Cement Manufacturers Association - India
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