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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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Tuesday, 03 November 15
EU OIL MAJORS FACE FURTHER EARNINGS DECLINE IN Q415 - FITCH RATINGS
The sharp drop in major European oil companies' third-quarter profits is likely to be extended in the fourth quarter as refining margins, which ...
Monday, 02 November 15
DESPITE CHALLENGING MARKET CONDITIONS, ADARO LOWERS COSTS, DEBT AND DELIVERS STRONG FREE CASH FLOW
COALspot.com: Despite challenging market conditions, Adaro lowers costs, lowers debt and delivers strong free cash flow.
The Indonesia’s ...
Monday, 02 November 15
CFR SOUTH CHINA COAL SWAPS CLOSED ON A WEAK NOTE
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery declined US$ 1.81(3.71 %) per ton month over month.
A commodity swap ...
Sunday, 01 November 15
THE FREIGHT MARKET SENTIMENT REMAINS WEAK
This week’s freight market sentiment remains weak compared to last week.
The Baltic Dry Index (BDI), an economic indicator issued daily ...
Saturday, 31 October 15
ADARO ENERGY'S CORE EARNINGS DECLINE 21 PER CENT FOR THE NINE MONTHS PERIOD TO SEPTEMBER 2015
COALspot.com: Adaro Energy's core earnings decline 21% to US$228 Million for first 9months of this year compared to the same period last year. ...
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Anglo American - United Kingdom
- Edison Trading Spa - Italy
- Port Waratah Coal Services - Australia
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- Krishnapatnam Port Company Ltd. - India
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- VISA Power Limited - India
- TeaM Sual Corporation - Philippines
- Agrawal Coal Company - India
- PNOC Exploration Corporation - Philippines
- Indika Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- IHS Mccloskey Coal Group - USA
- Parry Sugars Refinery, India
- Baramulti Group, Indonesia
- Madhucon Powers Ltd - India
- Romanian Commodities Exchange
- Aditya Birla Group - India
- SMC Global Power, Philippines
- Trasteel International SA, Italy
- Mintek Dendrill Indonesia
- Miang Besar Coal Terminal - Indonesia
- Australian Coal Association
- Sakthi Sugars Limited - India
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- Rashtriya Ispat Nigam Limited - India
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Riau Bara Harum - Indonesia
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Dalmia Cement Bharat India
- Mercuria Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- Semirara Mining and Power Corporation, Philippines
- Videocon Industries ltd - India
- Renaissance Capital - South Africa
- Bhatia International Limited - India
- International Coal Ventures Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- Kobexindo Tractors - Indoneisa
- Wilmar Investment Holdings
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Energy Development Corp, Philippines
- The State Trading Corporation of India Ltd
- Energy Link Ltd, New Zealand
- Bhushan Steel Limited - India
- Minerals Council of Australia
- Essar Steel Hazira Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- IEA Clean Coal Centre - UK
- GN Power Mariveles Coal Plant, Philippines
- Chamber of Mines of South Africa
- Ind-Barath Power Infra Limited - India
- SMG Consultants - Indonesia
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- Gujarat Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Global Green Power PLC Corporation, Philippines
- Larsen & Toubro Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vedanta Resources Plc - India
- Directorate Of Revenue Intelligence - India
- Billiton Holdings Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Formosa Plastics Group - Taiwan
- PTC India Limited - India
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- Indian Energy Exchange, India
- Binh Thuan Hamico - Vietnam
- Indo Tambangraya Megah - Indonesia
- Chettinad Cement Corporation Ltd - India
- Meenaskhi Energy Private Limited - India
- Latin American Coal - Colombia
- Orica Mining Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Manunggal Multi Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- Malabar Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Tamil Nadu electricity Board
- London Commodity Brokers - England
- Interocean Group of Companies - India
- Commonwealth Bank - Australia
- Ministry of Finance - Indonesia
- Attock Cement Pakistan Limited
- Central Java Power - Indonesia
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- Independent Power Producers Association of India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Xindia Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- Mjunction Services Limited - India
- Ambuja Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- GMR Energy Limited - India
- Uttam Galva Steels Limited - India
- Singapore Mercantile Exchange
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- AsiaOL BioFuels Corp., Philippines
- Thai Mozambique Logistica
- Ministry of Transport, Egypt
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- Leighton Contractors Pty Ltd - Australia
- Cement Manufacturers Association - India
- Lanco Infratech Ltd - India
- Kaltim Prima Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Sical Logistics Limited - India
- Siam City Cement PLC, Thailand
- Merrill Lynch Commodities Europe
- Petrochimia International Co. Ltd.- Taiwan
- Heidelberg Cement - Germany
- Electricity Generating Authority of Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- MS Steel International - UAE
- PowerSource Philippines DevCo
- The Treasury - Australian Government
- Therma Luzon, Inc, Philippines
- Oldendorff Carriers - Singapore
- Tata Chemicals Ltd - India
- Kideco Jaya Agung - Indonesia
- Pendopo Energi Batubara - Indonesia
- Meralco Power Generation, Philippines
- White Energy Company Limited
- Thiess Contractors Indonesia
- Bukit Baiduri Energy - Indonesia
- Economic Council, Georgia
- Mercator Lines Limited - India
- Ceylon Electricity Board - Sri Lanka
- Sree Jayajothi Cements Limited - India
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- Marubeni Corporation - India
- Planning Commission, India
- Bharathi Cement Corporation - India
- Simpson Spence & Young - Indonesia
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- Makarim & Taira - Indonesia
- India Bulls Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- Sindya Power Generating Company Private Ltd
- Gujarat Sidhee Cement - India
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- Intertek Mineral Services - Indonesia
- Power Finance Corporation Ltd., India
- ASAPP Information Group - India
- Semirara Mining Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Medco Energi Mining Internasional
- Cigading International Bulk Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indogreen Group - Indonesia
- Rio Tinto Coal - Australia
- Global Business Power Corporation, Philippines
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