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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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Monday, 09 November 15
INDIAN THERMAL COAL IMPORTS SURGED 18%; COKING COAL 6.31% DURING APRIL-OCTOBER: BUSINESS-STANDARD
Indian thermal coal imports surged 18% at the country's top 12 major ports to 55.90 million tonnes (MT) in the first seven months of the curren ...
Sunday, 08 November 15
THE FREIGHT MARKET KEEP DROPPING THIS WEEK - VISTAAR
COALspot.com: The freight market keep dropping this week.
The BDI down 12.48 percent week on week and closed at 631 points on 6 November 2015. ...
Sunday, 08 November 15
CAPESIZE FREIGHT RATES IN AUSTRALIA-CHINA ROUTES OVER 50% CHEAPER THAN BRAZIL-CHINA ROUTE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
China’s mining and steel industries are facing tectonic shifts over the past couple of years, with the country’s limiting of coal use, ...
Friday, 06 November 15
COAL PRODUCTION IN THE U.S. FELL SHARPLY FOR THE WEEK ENDING OCTOBER 31
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 16.6 million shor ...
Thursday, 05 November 15
Q2'16 INDO THERMAL COAL SWAP CONTRACT FOB INDONESIA FALLS TO $39.90/T
COALspot.com: Indonesian coal swap for delivery Q4 2015 declined month on month and week over week. Price of coal seen no improvements this past we ...
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- Chettinad Cement Corporation Ltd - India
- SMG Consultants - Indonesia
- Planning Commission, India
- Rio Tinto Coal - Australia
- Marubeni Corporation - India
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
- Chamber of Mines of South Africa
- Port Waratah Coal Services - Australia
- Aboitiz Power Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Larsen & Toubro Limited - India
- CNBM International Corporation - China
- Kepco SPC Power Corporation, Philippines
- Vedanta Resources Plc - India
- Energy Development Corp, Philippines
- Australian Coal Association
- Bangladesh Power Developement Board
- Sinarmas Energy and Mining - Indonesia
- Ambuja Cements Ltd - India
- Mintek Dendrill Indonesia
- Vizag Seaport Private Limited - India
- Therma Luzon, Inc, Philippines
- Ministry of Transport, Egypt
- Savvy Resources Ltd - HongKong
- Economic Council, Georgia
- International Coal Ventures Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Grasim Industreis Ltd - India
- Lanco Infratech Ltd - India
- Singapore Mercantile Exchange
- Essar Steel Hazira Ltd - India
- Minerals Council of Australia
- Siam City Cement - Thailand
- Borneo Indobara - Indonesia
- Eastern Energy - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- London Commodity Brokers - England
- Heidelberg Cement - Germany
- Thiess Contractors Indonesia
- Cement Manufacturers Association - India
- Sical Logistics Limited - India
- Mercator Lines Limited - India
- Electricity Generating Authority of Thailand
- Global Coal Blending Company Limited - Australia
- Aditya Birla Group - India
- PTC India Limited - India
- Indian Oil Corporation Limited
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- Sree Jayajothi Cements Limited - India
- Samtan Co., Ltd - South Korea
- The University of Queensland
- GVK Power & Infra Limited - India
- Indika Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Indian Energy Exchange, India
- Sindya Power Generating Company Private Ltd
- Malabar Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Mjunction Services Limited - India
- Edison Trading Spa - Italy
- Orica Australia Pty. Ltd.
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- Medco Energi Mining Internasional
- Maharashtra Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Maheswari Brothers Coal Limited - India
- ICICI Bank Limited - India
- Gujarat Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Bhushan Steel Limited - India
- Siam City Cement PLC, Thailand
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- ASAPP Information Group - India
- Carbofer General Trading SA - India
- Petrochimia International Co. Ltd.- Taiwan
- The Treasury - Australian Government
- Videocon Industries ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Toyota Tsusho Corporation, Japan
- Central Electricity Authority - India
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- GAC Shipping (India) Pvt Ltd
- Global Business Power Corporation, Philippines
- Parry Sugars Refinery, India
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sojitz Corporation - Japan
- Miang Besar Coal Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Makarim & Taira - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- SN Aboitiz Power Inc, Philippines
- Trasteel International SA, Italy
- Deloitte Consulting - India
- Pendopo Energi Batubara - Indonesia
- Simpson Spence & Young - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Independent Power Producers Association of India
- Global Green Power PLC Corporation, Philippines
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- India Bulls Power Limited - India
- Antam Resourcindo - Indonesia
- MS Steel International - UAE
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- Interocean Group of Companies - India
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Mines - Canada
- Iligan Light & Power Inc, Philippines
- Latin American Coal - Colombia
- Oldendorff Carriers - Singapore
- Metalloyd Limited - United Kingdom
- TeaM Sual Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- Formosa Plastics Group - Taiwan
- Riau Bara Harum - Indonesia
- Australian Commodity Traders Exchange
- Alfred C Toepfer International GmbH - Germany
- PetroVietnam Power Coal Import and Supply Company
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- Manunggal Multi Energi - Indonesia
- Goldman Sachs - Singapore
- Ministry of Finance - Indonesia
- Tata Chemicals Ltd - India
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- Coal and Oil Company - UAE
- Salva Resources Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Makmur.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Bayan Resources Tbk. - Indonesia
- Energy Link Ltd, New Zealand
- Indogreen Group - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Globalindo Alam Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Petron Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- Attock Cement Pakistan Limited
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- AsiaOL BioFuels Corp., Philippines
- Bulk Trading Sa - Switzerland
- GN Power Mariveles Coal Plant, Philippines
- Ceylon Electricity Board - Sri Lanka
- Eastern Coal Council - USA
- Timah Investasi Mineral - Indoneisa
- Altura Mining Limited, Indonesia
- New Zealand Coal & Carbon
- SMC Global Power, Philippines
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- VISA Power Limited - India
- Xindia Steels Limited - India
- Parliament of New Zealand
- White Energy Company Limited
- Mercuria Energy - Indonesia
- Power Finance Corporation Ltd., India
- IHS Mccloskey Coal Group - USA
- Bharathi Cement Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Bhatia International Limited - India
- Romanian Commodities Exchange
- LBH Netherlands Bv - Netherlands
- Kumho Petrochemical, South Korea
- Africa Commodities Group - South Africa
- Sakthi Sugars Limited - India
- European Bulk Services B.V. - Netherlands
- Commonwealth Bank - Australia
- Wood Mackenzie - Singapore
- Agrawal Coal Company - India
- Bahari Cakrawala Sebuku - Indonesia
- IEA Clean Coal Centre - UK
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Central Java Power - Indonesia
- PowerSource Philippines DevCo
- PNOC Exploration Corporation - Philippines
- Semirara Mining Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Coalindo Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Meenaskhi Energy Private Limited - India
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