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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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Monday, 12 October 15
BDI WEIGHED DOWN BY CAPE
COALspot.com: The BDI (Baltic Dry Index) has come back down again this week. The BDI is a benchmark index used to assess the overall cost of moving ...
Sunday, 11 October 15
TANKER SHIPPING: MORE OPTIMISM IN SIGHT FOR TANKERS IN THE WINTER SEASON - BIMCO
Demand:
2015 has been the year of the tanker. The fundamental improvements with slow supply-side growth for some years coupled with low oil pri ...
Friday, 09 October 15
US WEEKLY COAL OUTPUT UP 1.2 PERCENT TO 17.7 MMST
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.7 million shor ...
Thursday, 08 October 15
CAPESIZE: MOST PEOPLE AGREE A SPIKE IN RATES WILL HAPPEN; WHEN, HOW LONG AND HOW SUBSTANTIAL? - FEARNLEYS
Cape
Depressives start of the fourth quarter, with c3 approaching USD 12 pmt and c5 presently in the mind 5's. According to Fearnleys ship br ...
Wednesday, 07 October 15
U.S. COAL EXPORTS FOR THE FIRST SEVEN MONTHS DOWN 21 PER CENT COMPARED WITH THE SAME PERIOD IN 2014 - EIA
Coal Supply
Lower U.S.’s domestic coal consumption and reduced exports contribute to a forecast decline of 89 million short tons (M ...
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- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- Uttam Galva Steels Limited - India
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
- Holcim Trading Pte Ltd - Singapore
- Kepco SPC Power Corporation, Philippines
- Coal and Oil Company - UAE
- Siam City Cement PLC, Thailand
- Star Paper Mills Limited - India
- Larsen & Toubro Limited - India
- Maheswari Brothers Coal Limited - India
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- Indika Energy - Indonesia
- Goldman Sachs - Singapore
- Bukit Makmur.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Trasteel International SA, Italy
- Rashtriya Ispat Nigam Limited - India
- Heidelberg Cement - Germany
- Timah Investasi Mineral - Indoneisa
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sojitz Corporation - Japan
- Vijayanagar Sugar Pvt Ltd - India
- Mercator Lines Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Formosa Plastics Group - Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- GMR Energy Limited - India
- Bukit Baiduri Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- IHS Mccloskey Coal Group - USA
- Binh Thuan Hamico - Vietnam
- Grasim Industreis Ltd - India
- OPG Power Generation Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Parry Sugars Refinery, India
- Vizag Seaport Private Limited - India
- India Bulls Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- White Energy Company Limited
- Kumho Petrochemical, South Korea
- Ambuja Cements Ltd - India
- Siam City Cement - Thailand
- Ministry of Transport, Egypt
- Makarim & Taira - Indonesia
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Medco Energi Mining Internasional
- Bukit Asam (Persero) Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Parliament of New Zealand
- Global Green Power PLC Corporation, Philippines
- Electricity Authority, New Zealand
- Wood Mackenzie - Singapore
- Anglo American - United Kingdom
- McConnell Dowell - Australia
- Sical Logistics Limited - India
- CIMB Investment Bank - Malaysia
- Cement Manufacturers Association - India
- Semirara Mining Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- CNBM International Corporation - China
- Merrill Lynch Commodities Europe
- Bhushan Steel Limited - India
- Oldendorff Carriers - Singapore
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Bayan Resources Tbk. - Indonesia
- Jaiprakash Power Ventures ltd
- Directorate Of Revenue Intelligence - India
- Tata Chemicals Ltd - India
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- Australian Commodity Traders Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- Chamber of Mines of South Africa
- Billiton Holdings Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Essar Steel Hazira Ltd - India
- Marubeni Corporation - India
- SMC Global Power, Philippines
- SN Aboitiz Power Inc, Philippines
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- Videocon Industries ltd - India
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- Riau Bara Harum - Indonesia
- Commonwealth Bank - Australia
- Indian Energy Exchange, India
- Vedanta Resources Plc - India
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Maharashtra Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- Thai Mozambique Logistica
- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Java Power - Indonesia
- Australian Coal Association
- Bhoruka Overseas - Indonesia
- Posco Energy - South Korea
- Central Electricity Authority - India
- London Commodity Brokers - England
- Indogreen Group - Indonesia
- Samtan Co., Ltd - South Korea
- Port Waratah Coal Services - Australia
- Ind-Barath Power Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- Toyota Tsusho Corporation, Japan
- Straits Asia Resources Limited - Singapore
- Indonesian Coal Mining Association
- The State Trading Corporation of India Ltd
- Iligan Light & Power Inc, Philippines
- Edison Trading Spa - Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kaltim Prima Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- Salva Resources Pvt Ltd - India
- Energy Development Corp, Philippines
- Antam Resourcindo - Indonesia
- MS Steel International - UAE
- Directorate General of MIneral and Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Finance - Indonesia
- Intertek Mineral Services - Indonesia
- Therma Luzon, Inc, Philippines
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Deloitte Consulting - India
- Africa Commodities Group - South Africa
- Bharathi Cement Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bhatia International Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kalimantan Lumbung Energi - Indonesia
- Mercuria Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indo Tambangraya Megah - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Leighton Contractors Pty Ltd - Australia
- Petron Corporation, Philippines
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- Wilmar Investment Holdings
- Eastern Coal Council - USA
- Eastern Energy - Thailand
- Orica Mining Services - Indonesia
- Orica Australia Pty. Ltd.
- Meenaskhi Energy Private Limited - India
- Lanco Infratech Ltd - India
- PTC India Limited - India
- Indian Oil Corporation Limited
- Latin American Coal - Colombia
- Altura Mining Limited, Indonesia
- Kideco Jaya Agung - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Coalindo Energy - Indonesia
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- PowerSource Philippines DevCo
- Standard Chartered Bank - UAE
- Krishnapatnam Port Company Ltd. - India
- Ministry of Mines - Canada
- Bulk Trading Sa - Switzerland
- Interocean Group of Companies - India
- Agrawal Coal Company - India
- Price Waterhouse Coopers - Russia
- Sinarmas Energy and Mining - Indonesia
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- Meralco Power Generation, Philippines
- Simpson Spence & Young - Indonesia
- Aditya Birla Group - India
- Sindya Power Generating Company Private Ltd
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- VISA Power Limited - India
- Minerals Council of Australia
- PNOC Exploration Corporation - Philippines
- Attock Cement Pakistan Limited
- Kobexindo Tractors - Indoneisa
- Madhucon Powers Ltd - India
- GVK Power & Infra Limited - India
- Carbofer General Trading SA - India
- Georgia Ports Authority, United States
- GAC Shipping (India) Pvt Ltd
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