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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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Wednesday, 11 November 15
VESSEL VALUES ARE DOWN BY AT LEAST 20% SINCE MID-AUGUST - INTERMODAL
I had promised not to spend another broker’s insight focusing on the dry bulk side. However, the sale of the M/V Churchill Bulker (179,362 dw ...
Tuesday, 10 November 15
SELF-HEATING OF COAL HAS EMPHASISED THE IMPORTANCE OF CHECKING THE ACCURACY OF SHIPPER'S DECLARATIONS - GARD
Recent incidents involving self-heating of coal has emphasised the importance of checking the accuracy of shipper’s declarations for all type ...
Tuesday, 10 November 15
API 5 FOB NEWCASTLE COAL SWAP SLIDES CONTINUE
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery slid $3.55 per ton (8.50%) month over month to US$ 38.20 per ton. The swap ...
Monday, 09 November 15
BUNKER PRICES TO KEEP SLIDING THIS WEEK, EXPERT SAYS - MARINE BUNKER EXCHANGE
The oil price volatility has continued this week. Two dollars up one day and the next day two dollars down. The oil market has been trading on the ...
Monday, 09 November 15
CFR SOUTH CHINA THERMAL COAL SWAP FOR Q3' 16 CONTRACT DECLINED US$ 4 PER TON
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery declined US$ 4.35 (9.03 %) per ton month over month.
A commodity swa ...
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- Mercator Lines Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Posco Energy - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Orica Mining Services - Indonesia
- Wilmar Investment Holdings
- Coal and Oil Company - UAE
- Altura Mining Limited, Indonesia
- Indika Energy - Indonesia
- Cement Manufacturers Association - India
- Goldman Sachs - Singapore
- Rashtriya Ispat Nigam Limited - India
- Orica Australia Pty. Ltd.
- Meralco Power Generation, Philippines
- Indo Tambangraya Megah - Indonesia
- PowerSource Philippines DevCo
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- India Bulls Power Limited - India
- Carbofer General Trading SA - India
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- Petron Corporation, Philippines
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- Riau Bara Harum - Indonesia
- Dalmia Cement Bharat India
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Indian Energy Exchange, India
- Sakthi Sugars Limited - India
- Jindal Steel & Power Ltd - India
- GAC Shipping (India) Pvt Ltd
- Sindya Power Generating Company Private Ltd
- GVK Power & Infra Limited - India
- Mintek Dendrill Indonesia
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- Vedanta Resources Plc - India
- Bayan Resources Tbk. - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Electricity Generating Authority of Thailand
- Jaiprakash Power Ventures ltd
- Borneo Indobara - Indonesia
- LBH Netherlands Bv - Netherlands
- Ministry of Mines - Canada
- Directorate General of MIneral and Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indonesian Coal Mining Association
- Holcim Trading Pte Ltd - Singapore
- Binh Thuan Hamico - Vietnam
- Bangladesh Power Developement Board
- Merrill Lynch Commodities Europe
- Simpson Spence & Young - Indonesia
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Deloitte Consulting - India
- IEA Clean Coal Centre - UK
- SN Aboitiz Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- VISA Power Limited - India
- Madhucon Powers Ltd - India
- European Bulk Services B.V. - Netherlands
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Mjunction Services Limited - India
- SMG Consultants - Indonesia
- Electricity Authority, New Zealand
- Salva Resources Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Georgia Ports Authority, United States
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coastal Gujarat Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- Baramulti Group, Indonesia
- Chamber of Mines of South Africa
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- PTC India Limited - India
- Grasim Industreis Ltd - India
- Ambuja Cements Ltd - India
- Uttam Galva Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Global Coal Blending Company Limited - Australia
- Price Waterhouse Coopers - Russia
- Kobexindo Tractors - Indoneisa
- Anglo American - United Kingdom
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- ASAPP Information Group - India
- Sarangani Energy Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- Australian Coal Association
- Bhoruka Overseas - Indonesia
- Eastern Energy - Thailand
- Kumho Petrochemical, South Korea
- Star Paper Mills Limited - India
- Timah Investasi Mineral - Indoneisa
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- Attock Cement Pakistan Limited
- Marubeni Corporation - India
- Energy Development Corp, Philippines
- McConnell Dowell - Australia
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- Videocon Industries ltd - India
- Bhatia International Limited - India
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- Central Java Power - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Commonwealth Bank - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Trasteel International SA, Italy
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Banpu Public Company Limited - Thailand
- CIMB Investment Bank - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Straits Asia Resources Limited - Singapore
- Standard Chartered Bank - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- Central Electricity Authority - India
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Toyota Tsusho Corporation, Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bukit Baiduri Energy - Indonesia
- GMR Energy Limited - India
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- Wood Mackenzie - Singapore
- Romanian Commodities Exchange
- Parliament of New Zealand
- Vizag Seaport Private Limited - India
- Siam City Cement - Thailand
- South Luzon Thermal Energy Corporation
- Essar Steel Hazira Ltd - India
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- Barasentosa Lestari - Indonesia
- Planning Commission, India
- Ministry of Transport, Egypt
- Aditya Birla Group - India
- Savvy Resources Ltd - HongKong
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- Larsen & Toubro Limited - India
- Independent Power Producers Association of India
- Pendopo Energi Batubara - Indonesia
- Directorate Of Revenue Intelligence - India
- Rio Tinto Coal - Australia
- The University of Queensland
- Siam City Cement PLC, Thailand
- Minerals Council of Australia
- Miang Besar Coal Terminal - Indonesia
- Ministry of Finance - Indonesia
- Agrawal Coal Company - India
- Ind-Barath Power Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- New Zealand Coal & Carbon
- Sojitz Corporation - Japan
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- Metalloyd Limited - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Eastern Coal Council - USA
- Port Waratah Coal Services - Australia
- Ceylon Electricity Board - Sri Lanka
- SMC Global Power, Philippines
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- Economic Council, Georgia
- Oldendorff Carriers - Singapore
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