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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, 16 October 15
MAJOR REVISION OF NYPE TIME CHAPTER PARTY - BIMCO
Major revision of NYPE time charter party promises to be both balanced and comprehensive
BIMCO has today jointly issued the first revision of ...
Friday, 16 October 15
FOB INDONESIA COAL SWAP FOR Q4'15 DELIVERY FLAT WEEK OVER WEEK; DOWN 5.5 PER CENT M-M
COALspot.com: Indonesian coal swap for delivery Q4 2015 declined month on month and flat week over week.
The Q4 swap declined $ 2.23 (-5.51%) ...
Friday, 16 October 15
COAL PRODUCTION IN THE UNITED STATES DECREASED THIS WEEK; DOWN 11.3 PER CENT Y-Y, DOWN 3.5 PERCENT W-W
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.1 million shor ...
Friday, 16 October 15
INDONESIA REJOINING OPEC DESPITE BEING A NET IMPORTER OF PETROLEUM - EIA
The Organization of the Petroleum Exporting Countries (OPEC) notified Indonesia that it plans to accept the country's request to reactivate its ...
Thursday, 15 October 15
INDONESIA COAL PRICE REFERENCE FALLS FOR SEVEN STRAIGHT MONTH IN OCTOBER
COALspot.com - The Director General of Mineral and Coal of Indonesia once a again revised down Indonesian coal benchmark price this month.
The ...
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- Latin American Coal - Colombia
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- Economic Council, Georgia
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- The University of Queensland
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- Independent Power Producers Association of India
- Karaikal Port Pvt Ltd - India
- Siam City Cement - Thailand
- Ind-Barath Power Infra Limited - India
- Georgia Ports Authority, United States
- Mjunction Services Limited - India
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- Kepco SPC Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Planning Commission, India
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- GMR Energy Limited - India
- Aboitiz Power Corporation - Philippines
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- Bayan Resources Tbk. - Indonesia
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
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- Global Green Power PLC Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Coalindo Energy - Indonesia
- Therma Luzon, Inc, Philippines
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Posco Energy - South Korea
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- PTC India Limited - India
- Straits Asia Resources Limited - Singapore
- Borneo Indobara - Indonesia
- Madhucon Powers Ltd - India
- Agrawal Coal Company - India
- SN Aboitiz Power Inc, Philippines
- The Treasury - Australian Government
- London Commodity Brokers - England
- San Jose City I Power Corp, Philippines
- Parliament of New Zealand
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- IEA Clean Coal Centre - UK
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- PNOC Exploration Corporation - Philippines
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- Bank of Tokyo Mitsubishi UFJ Ltd
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- Bahari Cakrawala Sebuku - Indonesia
- Eastern Coal Council - USA
- ASAPP Information Group - India
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- Iligan Light & Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Indian Oil Corporation Limited
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- International Coal Ventures Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Anglo American - United Kingdom
- Formosa Plastics Group - Taiwan
- Altura Mining Limited, Indonesia
- Commonwealth Bank - Australia
- Romanian Commodities Exchange
- Sical Logistics Limited - India
- Singapore Mercantile Exchange
- Coastal Gujarat Power Limited - India
- Interocean Group of Companies - India
- Krishnapatnam Port Company Ltd. - India
- Energy Link Ltd, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Bhoruka Overseas - Indonesia
- Banpu Public Company Limited - Thailand
- Electricity Authority, New Zealand
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Merrill Lynch Commodities Europe
- Bangladesh Power Developement Board
- Sojitz Corporation - Japan
- Medco Energi Mining Internasional
- Wilmar Investment Holdings
- Kideco Jaya Agung - Indonesia
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- Jindal Steel & Power Ltd - India
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- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
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- Kaltim Prima Coal - Indonesia
- Indian Energy Exchange, India
- Jorong Barutama Greston.PT - Indonesia
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- Tamil Nadu electricity Board
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- SMC Global Power, Philippines
- Thai Mozambique Logistica
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- Tata Chemicals Ltd - India
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- Bukit Baiduri Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Generating Authority of Thailand
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- Siam City Cement PLC, Thailand
- Grasim Industreis Ltd - India
- Uttam Galva Steels Limited - India
- Indonesian Coal Mining Association
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- Ministry of Mines - Canada
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- White Energy Company Limited
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- Deloitte Consulting - India
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Australian Commodity Traders Exchange
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Meenaskhi Energy Private Limited - India
- Petron Corporation, Philippines
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- Metalloyd Limited - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Goldman Sachs - Singapore
- Cement Manufacturers Association - India
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- Attock Cement Pakistan Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Pendopo Energi Batubara - Indonesia
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
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- Indo Tambangraya Megah - Indonesia
- MS Steel International - UAE
- Rashtriya Ispat Nigam Limited - India
- Mercuria Energy - Indonesia
- Coal and Oil Company - UAE
- Sree Jayajothi Cements Limited - India
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Global Coal Blending Company Limited - Australia
- New Zealand Coal & Carbon
- Essar Steel Hazira Ltd - India
- Australian Coal Association
- Carbofer General Trading SA - India
- CNBM International Corporation - China
- Africa Commodities Group - South Africa
- Mercator Lines Limited - India
- Intertek Mineral Services - Indonesia
- Riau Bara Harum - Indonesia
- GVK Power & Infra Limited - India
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Gujarat Electricity Regulatory Commission - India
- Minerals Council of Australia
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- Dalmia Cement Bharat India
- Timah Investasi Mineral - Indoneisa
- Chamber of Mines of South Africa
- Gujarat Sidhee Cement - India
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Simpson Spence & Young - Indonesia
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