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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, 20 October 15
API 5 FOB NEWCASTLE COAL SWAP CLOSED NEGATIVE
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery decreased $1.23 per ton (2.86%) month over month to US$ 41.80 per ton. The ...
Monday, 19 October 15
RUSSIA MAJOR COAL MINER KRU CUTS 4.5 MLN T/YR "UNPROFITABLE" EURO SALES - JACQUELINE HOLMES
COALspot.com: Kuzbassrazrezugol (KRU), one of Russia's largest producers of high-quality coal, plans to cut its coal exports in 2016 by about 4 ...
Monday, 19 October 15
CFR SOUTH CHINA COAL SWAP CLOSED AT $48.68 PER TON
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery down just US cents 55 (1.12 %) per ton month over month.
A commodity ...
Monday, 19 October 15
KOMIPO SEEKS 1.28 MILLION T/Y COAL FOR DEC 2015 - Q2 2016
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender for 1,280,000 Metric Tons (MT) of minimum 4,600 kc ...
Sunday, 18 October 15
THE BDI AND OTHER INDICES CLOSED OFF ON NEGATIVE NOTE THIS FRIDAY
COALspot.com: The BDI closed off on negative note this Friday compared to previous Friday's closing.
The BDI closed this Friday (16 Octobe ...
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- London Commodity Brokers - England
- Energy Development Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- ICICI Bank Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Attock Cement Pakistan Limited
- PetroVietnam Power Coal Import and Supply Company
- Independent Power Producers Association of India
- Samtan Co., Ltd - South Korea
- Cement Manufacturers Association - India
- SMC Global Power, Philippines
- Merrill Lynch Commodities Europe
- Coal and Oil Company - UAE
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Jaiprakash Power Ventures ltd
- Bharathi Cement Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Romanian Commodities Exchange
- Aditya Birla Group - India
- OPG Power Generation Pvt Ltd - India
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- Electricity Generating Authority of Thailand
- Bhatia International Limited - India
- Mercuria Energy - Indonesia
- Eastern Coal Council - USA
- Kobexindo Tractors - Indoneisa
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- India Bulls Power Limited - India
- Planning Commission, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Larsen & Toubro Limited - India
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Central Java Power - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- South Luzon Thermal Energy Corporation
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Minerals Council of Australia
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- Goldman Sachs - Singapore
- Ambuja Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- McConnell Dowell - Australia
- Holcim Trading Pte Ltd - Singapore
- New Zealand Coal & Carbon
- Aboitiz Power Corporation - Philippines
- Heidelberg Cement - Germany
- VISA Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- Timah Investasi Mineral - Indoneisa
- Siam City Cement - Thailand
- Parry Sugars Refinery, India
- Jindal Steel & Power Ltd - India
- Uttam Galva Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Standard Chartered Bank - UAE
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
- Australian Coal Association
- Kalimantan Lumbung Energi - Indonesia
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Ministry of Transport, Egypt
- Electricity Authority, New Zealand
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Chamber of Mines of South Africa
- Asmin Koalindo Tuhup - Indonesia
- Indian Energy Exchange, India
- Bhoruka Overseas - Indonesia
- Mjunction Services Limited - India
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- Global Coal Blending Company Limited - Australia
- Iligan Light & Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- CNBM International Corporation - China
- SN Aboitiz Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Altura Mining Limited, Indonesia
- Toyota Tsusho Corporation, Japan
- Binh Thuan Hamico - Vietnam
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Indo Tambangraya Megah - Indonesia
- Ceylon Electricity Board - Sri Lanka
- MS Steel International - UAE
- Orica Australia Pty. Ltd.
- SMG Consultants - Indonesia
- Rio Tinto Coal - Australia
- The University of Queensland
- Borneo Indobara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Dalmia Cement Bharat India
- Metalloyd Limited - United Kingdom
- Energy Link Ltd, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Edison Trading Spa - Italy
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Star Paper Mills Limited - India
- Posco Energy - South Korea
- Indogreen Group - Indonesia
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Manunggal Multi Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bangladesh Power Developement Board
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- Renaissance Capital - South Africa
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
- Price Waterhouse Coopers - Russia
- Oldendorff Carriers - Singapore
- Baramulti Group, Indonesia
- GVK Power & Infra Limited - India
- Intertek Mineral Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Singapore Mercantile Exchange
- GN Power Mariveles Coal Plant, Philippines
- Kideco Jaya Agung - Indonesia
- Semirara Mining Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Makarim & Taira - Indonesia
- Thiess Contractors Indonesia
- Parliament of New Zealand
- Coastal Gujarat Power Limited - India
- Orica Mining Services - Indonesia
- Wilmar Investment Holdings
- Marubeni Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- PTC India Limited - India
- Simpson Spence & Young - Indonesia
- Global Business Power Corporation, Philippines
- Bhushan Steel Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Sinarmas Energy and Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- Alfred C Toepfer International GmbH - Germany
- Indian Oil Corporation Limited
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- Australian Commodity Traders Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vedanta Resources Plc - India
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- Port Waratah Coal Services - Australia
- Directorate Of Revenue Intelligence - India
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Anglo American - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Central Electricity Authority - India
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- Georgia Ports Authority, United States
- White Energy Company Limited
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- Therma Luzon, Inc, Philippines
- Commonwealth Bank - Australia
- Riau Bara Harum - Indonesia
- Salva Resources Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Mintek Dendrill Indonesia
- Kaltim Prima Coal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Lanco Infratech Ltd - India
- Straits Asia Resources Limited - Singapore
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Billiton Holdings Pty Ltd - Australia
- Tamil Nadu electricity Board
- IHS Mccloskey Coal Group - USA
- Kartika Selabumi Mining - Indonesia
- Vizag Seaport Private Limited - India
- Petron Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Indika Energy - Indonesia
- Thai Mozambique Logistica
- Bayan Resources Tbk. - Indonesia
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