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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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Sunday, 25 October 15
ANOTHER DISAPPOINTING WEEK FOR PANAMAX; INDEX FELL 5.4 PERCENT W-W
COALspot.com: The BDI was slightly up by 2.65 pct closing at 774 points mainly because of Cape index which was up by 10.85 pct closing at 1461 poin ...
Sunday, 25 October 15
DRY BULK SHIP OWNERS ARE LOOKING TO CHINA'S POLICIES FOR CUES ON FUTURE MARKET DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
China’s hard or softer landing is a thing which has troubled dry bulk shipping for a couple of years now, as owners have been hit by the coun ...
Friday, 23 October 15
WILL INDIAN DOMESTIC COAL PRICES BE ABLE TO COMPETE IMPORTED COAL PRICES IF THE CURRENT TREND CONTINUES?
COALspot.com: The Most of the Indian end-users are waiting for last minute purchase to enjoy every drop in price. Coal procurement managers are als ...
Friday, 23 October 15
COAL PRODUCTION IN THE U.S. FOR THE WEEK ENDING OCTOBER 17 DECLINED FOR THE SECOND STRAIGHT WEEK
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 16.6 million shor ...
Wednesday, 21 October 15
RUSSIA'S CARBO ONE COAL SALES TO HIT 50 MLN T/YR - JACQUELINE HOLMES
COALspot.com: Russia's Carbo One has become one of the world's leading physical coal traders with an annual volume approaching 50 million t ...
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- Parliament of New Zealand
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- Siam City Cement PLC, Thailand
- VISA Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Kobexindo Tractors - Indoneisa
- McConnell Dowell - Australia
- Cement Manufacturers Association - India
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- Lanco Infratech Ltd - India
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Chamber of Mines of South Africa
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- Karaikal Port Pvt Ltd - India
- ICICI Bank Limited - India
- South Luzon Thermal Energy Corporation
- Straits Asia Resources Limited - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- Ceylon Electricity Board - Sri Lanka
- Central Java Power - Indonesia
- Bhushan Steel Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Therma Luzon, Inc, Philippines
- Metalloyd Limited - United Kingdom
- India Bulls Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Maheswari Brothers Coal Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Billiton Holdings Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- PNOC Exploration Corporation - Philippines
- Aditya Birla Group - India
- Kaltim Prima Coal - Indonesia
- Indian Energy Exchange, India
- Wilmar Investment Holdings
- Star Paper Mills Limited - India
- Grasim Industreis Ltd - India
- Latin American Coal - Colombia
- Kohat Cement Company Ltd. - Pakistan
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Tata Chemicals Ltd - India
- Economic Council, Georgia
- LBH Netherlands Bv - Netherlands
- Gujarat Sidhee Cement - India
- Gujarat Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Miang Besar Coal Terminal - Indonesia
- Singapore Mercantile Exchange
- Georgia Ports Authority, United States
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Romanian Commodities Exchange
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Edison Trading Spa - Italy
- Medco Energi Mining Internasional
- Borneo Indobara - Indonesia
- Simpson Spence & Young - Indonesia
- Global Business Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Pendopo Energi Batubara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Central Electricity Authority - India
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Mercator Lines Limited - India
- Antam Resourcindo - Indonesia
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- Global Green Power PLC Corporation, Philippines
- Vedanta Resources Plc - India
- Eastern Coal Council - USA
- PTC India Limited - India
- Interocean Group of Companies - India
- Wood Mackenzie - Singapore
- Videocon Industries ltd - India
- Anglo American - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- Trasteel International SA, Italy
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Coastal Gujarat Power Limited - India
- Xindia Steels Limited - India
- Attock Cement Pakistan Limited
- IEA Clean Coal Centre - UK
- Baramulti Group, Indonesia
- Indian Oil Corporation Limited
- Ind-Barath Power Infra Limited - India
- GMR Energy Limited - India
- OPG Power Generation Pvt Ltd - India
- Heidelberg Cement - Germany
- Energy Link Ltd, New Zealand
- Bangladesh Power Developement Board
- Sindya Power Generating Company Private Ltd
- Australian Commodity Traders Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Uttam Galva Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- CNBM International Corporation - China
- Vizag Seaport Private Limited - India
- Savvy Resources Ltd - HongKong
- The Treasury - Australian Government
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Petron Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Parry Sugars Refinery, India
- Ministry of Mines - Canada
- ASAPP Information Group - India
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Agrawal Coal Company - India
- Global Coal Blending Company Limited - Australia
- TeaM Sual Corporation - Philippines
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Malabar Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- GAC Shipping (India) Pvt Ltd
- Semirara Mining Corp, Philippines
- Bhatia International Limited - India
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- Altura Mining Limited, Indonesia
- Posco Energy - South Korea
- Meenaskhi Energy Private Limited - India
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- Mintek Dendrill Indonesia
- Barasentosa Lestari - Indonesia
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- Planning Commission, India
- Kapuas Tunggal Persada - Indonesia
- Port Waratah Coal Services - Australia
- London Commodity Brokers - England
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- Indika Energy - Indonesia
- Carbofer General Trading SA - India
- Goldman Sachs - Singapore
- Jaiprakash Power Ventures ltd
- The State Trading Corporation of India Ltd
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- Mjunction Services Limited - India
- Rio Tinto Coal - Australia
- Toyota Tsusho Corporation, Japan
- Bukit Makmur.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- Minerals Council of Australia
- Australian Coal Association
- Bharathi Cement Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Renaissance Capital - South Africa
- Krishnapatnam Port Company Ltd. - India
- Ambuja Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Kumho Petrochemical, South Korea
- Riau Bara Harum - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Power Finance Corporation Ltd., India
- Indogreen Group - Indonesia
- Madhucon Powers Ltd - India
- Jindal Steel & Power Ltd - India
- PowerSource Philippines DevCo
- Ministry of Transport, Egypt
- Marubeni Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Eastern Energy - Thailand
- SMC Global Power, Philippines
- Directorate Of Revenue Intelligence - India
- Kartika Selabumi Mining - Indonesia
- SMG Consultants - Indonesia
- Coalindo Energy - Indonesia
- Electricity Authority, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bayan Resources Tbk. - Indonesia
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