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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, 30 October 15
INDONESIA'S COAL EXPORTS DROP ON LOW PRICES - THE JAKARTA POST
Indonesia's coal exports significantly dropped in the first nine months of the year as coal companies continued to suffer from low prices in ad ...
Friday, 30 October 15
CHINESE MINERAL IMPORTS: MOVING ON FROM INDONESIA? - CLARKSONS
China has accounted for almost 90% of global imports of nickel ore and bauxite in recent years and was therefore heavily hit by the Indonesian mine ...
Friday, 30 October 15
COAL PRODUCTION IN THE UNITED STATES INCREASED THIS WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.5 million shor ...
Thursday, 29 October 15
IRAN'S RETURN TO OIL MARKETS WILL HAVE TEMPERED IMPACT FOR THE TANKER SHIPPING INDUSTRY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
While many analysts appear to be fearful of a potential incremental rise in tanker ships’ supply, as a result of the imminent return of Iran ...
Thursday, 29 October 15
Q2' 16 FOB INDONESIA COAL SWAP CLOSED US$ 37.40 PER TON; DECLINED 5.56 PER CENT M-M
COALspot.com: Indonesian coal swap for delivery Q4 2015 declined month on month and week over week.
The Q4 swap declined $ 2.13 (-5.34%) per t ...
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- IEA Clean Coal Centre - UK
- Iligan Light & Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- Bayan Resources Tbk. - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Parliament of New Zealand
- SMG Consultants - Indonesia
- Bukit Makmur.PT - Indonesia
- Latin American Coal - Colombia
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Attock Cement Pakistan Limited
- Oldendorff Carriers - Singapore
- Port Waratah Coal Services - Australia
- Kaltim Prima Coal - Indonesia
- Xindia Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- Ministry of Finance - Indonesia
- Gujarat Sidhee Cement - India
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- Carbofer General Trading SA - India
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- Vizag Seaport Private Limited - India
- Coastal Gujarat Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- India Bulls Power Limited - India
- Aditya Birla Group - India
- Gujarat Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Bhushan Steel Limited - India
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
- Eastern Energy - Thailand
- Riau Bara Harum - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kapuas Tunggal Persada - Indonesia
- Minerals Council of Australia
- Cement Manufacturers Association - India
- Australian Commodity Traders Exchange
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Ministry of Transport, Egypt
- GMR Energy Limited - India
- Altura Mining Limited, Indonesia
- Interocean Group of Companies - India
- Wood Mackenzie - Singapore
- AsiaOL BioFuels Corp., Philippines
- PTC India Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Independent Power Producers Association of India
- Billiton Holdings Pty Ltd - Australia
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
- Price Waterhouse Coopers - Russia
- MS Steel International - UAE
- Ministry of Mines - Canada
- Marubeni Corporation - India
- Vedanta Resources Plc - India
- Bhatia International Limited - India
- Heidelberg Cement - Germany
- Africa Commodities Group - South Africa
- Pendopo Energi Batubara - Indonesia
- Parry Sugars Refinery, India
- Sojitz Corporation - Japan
- Orica Mining Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- McConnell Dowell - Australia
- Jaiprakash Power Ventures ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- Semirara Mining Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Economic Council, Georgia
- Kalimantan Lumbung Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Georgia Ports Authority, United States
- Kobexindo Tractors - Indoneisa
- Indian Energy Exchange, India
- London Commodity Brokers - England
- Wilmar Investment Holdings
- Coalindo Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Meralco Power Generation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Thai Mozambique Logistica
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- Maharashtra Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- Medco Energi Mining Internasional
- Anglo American - United Kingdom
- Edison Trading Spa - Italy
- Maheswari Brothers Coal Limited - India
- Indian Oil Corporation Limited
- Thiess Contractors Indonesia
- Mjunction Services Limited - India
- Global Green Power PLC Corporation, Philippines
- Malabar Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Straits Asia Resources Limited - Singapore
- Binh Thuan Hamico - Vietnam
- Grasim Industreis Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Standard Chartered Bank - UAE
- Ambuja Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Makarim & Taira - Indonesia
- Lanco Infratech Ltd - India
- Sinarmas Energy and Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- Bhoruka Overseas - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Mintek Dendrill Indonesia
- Toyota Tsusho Corporation, Japan
- Globalindo Alam Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- PNOC Exploration Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Sakthi Sugars Limited - India
- GAC Shipping (India) Pvt Ltd
- Asmin Koalindo Tuhup - Indonesia
- Planning Commission, India
- TeaM Sual Corporation - Philippines
- Energy Development Corp, Philippines
- Essar Steel Hazira Ltd - India
- Directorate Of Revenue Intelligence - India
- Romanian Commodities Exchange
- Australian Coal Association
- The Treasury - Australian Government
- Kartika Selabumi Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Central Java Power - Indonesia
- Meenaskhi Energy Private Limited - India
- Indo Tambangraya Megah - Indonesia
- PowerSource Philippines DevCo
- Madhucon Powers Ltd - India
- Therma Luzon, Inc, Philippines
- San Jose City I Power Corp, Philippines
- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
- Tamil Nadu electricity Board
- Timah Investasi Mineral - Indoneisa
- Baramulti Group, Indonesia
- Ind-Barath Power Infra Limited - India
- Uttam Galva Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- The University of Queensland
- ICICI Bank Limited - India
- Eastern Coal Council - USA
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Merrill Lynch Commodities Europe
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- Petron Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- White Energy Company Limited
- Star Paper Mills Limited - India
- Central Electricity Authority - India
- Sree Jayajothi Cements Limited - India
- Cigading International Bulk Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Larsen & Toubro Limited - India
- GVK Power & Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Chamber of Mines of South Africa
- SMC Global Power, Philippines
- The State Trading Corporation of India Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kumho Petrochemical, South Korea
- Trasteel International SA, Italy
- Dalmia Cement Bharat India
- VISA Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- Banpu Public Company Limited - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Kepco SPC Power Corporation, Philippines
- CNBM International Corporation - China
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bulk Trading Sa - Switzerland
- Salva Resources Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- New Zealand Coal & Carbon
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
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