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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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Thursday, 05 November 15
INFORMATION EXCHANGE GROUP'S LATAM MINING SECURITY SUMMIT 2016 - INTERNATIONAL CONFERENCE ON TECHNOLOGY SECURITY IN MINING
Press Release: LATAM Mining Security Summit 2016 is a carefully designed event that will bring together the leading stakeholders in the mining sect ...
Wednesday, 04 November 15
MARKET INSIGHT - CHRISTOPHER THOMAS WHITTY
Four companies dominate global iron ore production, namely; BHP Billiton, Vale, Rio Tinto, and Fortescue Metals Group. Together these companies con ...
Wednesday, 04 November 15
FOB RICHARDS BAY COAL SWAPS GAIN W-W AND M-M
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q4' 2015 gained week over week and month over month.
The Q4 swap was up US$ 1.4 ...
Tuesday, 03 November 15
THE DISCHARGE OF CARGO IN THE PRC WITHOUT ORIGINAL BILLS OF LADING - CLYDE&CO
KNOWLEDGE TO ELEVATE
On occasions, a vessel may arrive at a port and be ready to discharge but the original bills of lading in respect of the ...
Tuesday, 03 November 15
API 5 FOB NEWCASTLE COAL SWAPS DECLINE CONTINUES
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery slid $1.84 per ton (4.34%) month over month to US$ 40.54 per ton. The swap ...
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- PowerSource Philippines DevCo
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Global Business Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- International Coal Ventures Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Madhucon Powers Ltd - India
- Georgia Ports Authority, United States
- Oldendorff Carriers - Singapore
- Coastal Gujarat Power Limited - India
- Metalloyd Limited - United Kingdom
- Videocon Industries ltd - India
- New Zealand Coal & Carbon
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Larsen & Toubro Limited - India
- Iligan Light & Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- Trasteel International SA, Italy
- Sical Logistics Limited - India
- LBH Netherlands Bv - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Sidhee Cement - India
- ASAPP Information Group - India
- GVK Power & Infra Limited - India
- Mjunction Services Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aboitiz Power Corporation - Philippines
- Romanian Commodities Exchange
- Indian Energy Exchange, India
- McConnell Dowell - Australia
- Grasim Industreis Ltd - India
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- Global Coal Blending Company Limited - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Oil Corporation Limited
- Jorong Barutama Greston.PT - Indonesia
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- Therma Luzon, Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Tamil Nadu electricity Board
- Rio Tinto Coal - Australia
- Kobexindo Tractors - Indoneisa
- Timah Investasi Mineral - Indoneisa
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining and Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- Power Finance Corporation Ltd., India
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Sindya Power Generating Company Private Ltd
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- Central Electricity Authority - India
- Anglo American - United Kingdom
- Thai Mozambique Logistica
- ICICI Bank Limited - India
- Bhatia International Limited - India
- Krishnapatnam Port Company Ltd. - India
- Vijayanagar Sugar Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Latin American Coal - Colombia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- White Energy Company Limited
- India Bulls Power Limited - India
- Ministry of Mines - Canada
- Medco Energi Mining Internasional
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- Star Paper Mills Limited - India
- Electricity Authority, New Zealand
- Tata Chemicals Ltd - India
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Renaissance Capital - South Africa
- Formosa Plastics Group - Taiwan
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Economic Council, Georgia
- Kohat Cement Company Ltd. - Pakistan
- Interocean Group of Companies - India
- Pendopo Energi Batubara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Sakthi Sugars Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- Petron Corporation, Philippines
- Edison Trading Spa - Italy
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Goldman Sachs - Singapore
- CIMB Investment Bank - Malaysia
- Energy Development Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Cigading International Bulk Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Kapuas Tunggal Persada - Indonesia
- Deloitte Consulting - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- SMC Global Power, Philippines
- Parry Sugars Refinery, India
- Intertek Mineral Services - Indonesia
- Wood Mackenzie - Singapore
- Banpu Public Company Limited - Thailand
- Ind-Barath Power Infra Limited - India
- Simpson Spence & Young - Indonesia
- Dalmia Cement Bharat India
- Binh Thuan Hamico - Vietnam
- Ministry of Finance - Indonesia
- Kaltim Prima Coal - Indonesia
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- Parliament of New Zealand
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- MS Steel International - UAE
- Bayan Resources Tbk. - Indonesia
- Baramulti Group, Indonesia
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- Orica Mining Services - Indonesia
- Bangladesh Power Developement Board
- Malabar Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- London Commodity Brokers - England
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- Global Green Power PLC Corporation, Philippines
- Kumho Petrochemical, South Korea
- Posco Energy - South Korea
- Manunggal Multi Energi - Indonesia
- Heidelberg Cement - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- Aditya Birla Group - India
- Miang Besar Coal Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Chamber of Mines of South Africa
- Mercator Lines Limited - India
- San Jose City I Power Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Attock Cement Pakistan Limited
- Chettinad Cement Corporation Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Meralco Power Generation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- AsiaOL BioFuels Corp., Philippines
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Vedanta Resources Plc - India
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Indogreen Group - Indonesia
- European Bulk Services B.V. - Netherlands
- Makarim & Taira - Indonesia
- CNBM International Corporation - China
- Barasentosa Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- Eastern Coal Council - USA
- Cement Manufacturers Association - India
- Ambuja Cements Ltd - India
- Jaiprakash Power Ventures ltd
- Indonesian Coal Mining Association
- Ministry of Transport, Egypt
- SMG Consultants - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- Merrill Lynch Commodities Europe
- Bulk Trading Sa - Switzerland
- Salva Resources Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
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