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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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Thursday, 15 October 15
Q1' 16 FOB RICHARDS BAY COAL SWAP ADVANCED 2 PER CENT WEEK OVER WEEK
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q4' 2015 gain week over week and declined month over month.
The Q4 swap was dow ...
Tuesday, 13 October 15
DRY BULK SHIPPING FLEET NET EXPANSION WAS 1.3% DURING THIRD QUARTER, BUT ORDERBOOK REDUCED TO 17% OF THE TRADING FLEET
If the dry bulk market is to rebound on a sustainable level, it needs to limit the tonnage expansion, at least until demand picks up again, as Chin ...
Tuesday, 13 October 15
FOB NEWCASTLE COAL SWAP DECLINED 2 PER CENT MONTH OVER MONTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery decreased $0.46 per ton (1.08%) month over month to US$ 42.17 per ton. The ...
Monday, 12 October 15
CFR SOUTH CHINA COAL SWAPS GAIN W-W; SLIGHTLY DOWN M-M
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery down just US cents 3 (0.06 %) per ton month over month.
A commodity ...
Monday, 12 October 15
DRY BULK SHIPPING: MARKETS ARE SLOWLY IMPROVING FROM A VERY LOW LEVEL AS THE DEMAND SIDE FALTERS - HELLENIC SHIPPING NEWS
The dry bulk market is in the midst of a shift in demand patterns, which coupled with a tonnage supply overhang, has been facing headwinds over the ...
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- Straits Asia Resources Limited - Singapore
- Coastal Gujarat Power Limited - India
- Merrill Lynch Commodities Europe
- Trasteel International SA, Italy
- Rio Tinto Coal - Australia
- Agrawal Coal Company - India
- PTC India Limited - India
- Thiess Contractors Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Generating Authority of Thailand
- Eastern Energy - Thailand
- ICICI Bank Limited - India
- Leighton Contractors Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Global Green Power PLC Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Salva Resources Pvt Ltd - India
- London Commodity Brokers - England
- Parliament of New Zealand
- Anglo American - United Kingdom
- GMR Energy Limited - India
- OPG Power Generation Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement - Thailand
- Central Java Power - Indonesia
- Manunggal Multi Energi - Indonesia
- Port Waratah Coal Services - Australia
- Chamber of Mines of South Africa
- Chettinad Cement Corporation Ltd - India
- Borneo Indobara - Indonesia
- Sical Logistics Limited - India
- International Coal Ventures Pvt Ltd - India
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Coalindo Energy - Indonesia
- Sakthi Sugars Limited - India
- Heidelberg Cement - Germany
- Gujarat Sidhee Cement - India
- Ceylon Electricity Board - Sri Lanka
- Medco Energi Mining Internasional
- Ministry of Transport, Egypt
- The University of Queensland
- Ambuja Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- South Luzon Thermal Energy Corporation
- TNB Fuel Sdn Bhd - Malaysia
- ASAPP Information Group - India
- Kaltim Prima Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Semirara Mining and Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Jindal Steel & Power Ltd - India
- Aboitiz Power Corporation - Philippines
- Bharathi Cement Corporation - India
- Renaissance Capital - South Africa
- Banpu Public Company Limited - Thailand
- Price Waterhouse Coopers - Russia
- Sarangani Energy Corporation, Philippines
- Africa Commodities Group - South Africa
- Orica Australia Pty. Ltd.
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- CIMB Investment Bank - Malaysia
- Cigading International Bulk Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Kumho Petrochemical, South Korea
- Edison Trading Spa - Italy
- CNBM International Corporation - China
- Gujarat Mineral Development Corp Ltd - India
- Intertek Mineral Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- The Treasury - Australian Government
- Mintek Dendrill Indonesia
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Vedanta Resources Plc - India
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Mjunction Services Limited - India
- Deloitte Consulting - India
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- Ministry of Finance - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Meralco Power Generation, Philippines
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- GVK Power & Infra Limited - India
- Jaiprakash Power Ventures ltd
- New Zealand Coal & Carbon
- Kobexindo Tractors - Indoneisa
- Interocean Group of Companies - India
- Bukit Asam (Persero) Tbk - Indonesia
- Petron Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Mercuria Energy - Indonesia
- Thai Mozambique Logistica
- Vizag Seaport Private Limited - India
- Orica Mining Services - Indonesia
- Georgia Ports Authority, United States
- SN Aboitiz Power Inc, Philippines
- Australian Coal Association
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- Iligan Light & Power Inc, Philippines
- Minerals Council of Australia
- Global Business Power Corporation, Philippines
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- India Bulls Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhushan Steel Limited - India
- Independent Power Producers Association of India
- Formosa Plastics Group - Taiwan
- Planning Commission, India
- Riau Bara Harum - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- TeaM Sual Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Makarim & Taira - Indonesia
- Antam Resourcindo - Indonesia
- Electricity Authority, New Zealand
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Videocon Industries ltd - India
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- Wilmar Investment Holdings
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Energy Development Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Alfred C Toepfer International GmbH - Germany
- San Jose City I Power Corp, Philippines
- Siam City Cement PLC, Thailand
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Asmin Koalindo Tuhup - Indonesia
- IHS Mccloskey Coal Group - USA
- Posco Energy - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Savvy Resources Ltd - HongKong
- Baramulti Group, Indonesia
- Madhucon Powers Ltd - India
- Economic Council, Georgia
- Australian Commodity Traders Exchange
- Meenaskhi Energy Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- Sojitz Corporation - Japan
- Attock Cement Pakistan Limited
- Global Coal Blending Company Limited - Australia
- Gujarat Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Central Electricity Authority - India
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Maheswari Brothers Coal Limited - India
- Energy Link Ltd, New Zealand
- Ministry of Mines - Canada
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Baiduri Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Carbofer General Trading SA - India
- VISA Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Indian Energy Exchange, India
- Bulk Trading Sa - Switzerland
- Grasim Industreis Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Dalmia Cement Bharat India
- Tamil Nadu electricity Board
- Bhatia International Limited - India
- Rashtriya Ispat Nigam Limited - India
- Metalloyd Limited - United Kingdom
- IEA Clean Coal Centre - UK
- Eastern Coal Council - USA
- Lanco Infratech Ltd - India
- Cement Manufacturers Association - India
- Indogreen Group - Indonesia
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Parry Sugars Refinery, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
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