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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, 05 October 15
Q1' 16 CFR SOUTH CHINA COAL SWAP CLOSED US$ 48.05 PER TON
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery down US$ 0.47 (0.96 %) per ton month over month.
A commodity swap is ...
Monday, 05 October 15
SMALL DECLINE IN 2014 SHIP OPERATING COSTS - MOORE STEPHENS
Total annual operating costs in the shipping industry fell by an average of 0.8% in 2014. This compares with the 0.3% average fall in costs recorde ...
Sunday, 04 October 15
THE INDO-INDIA FREIGHT MARKET REMAINS UNDER PRESSURE
COALspot.com: The BDI closed on Friday (2 Oct 2015) at 889 points, down by 54 points compared to previous Friday's closing ( 24 Sept 2015) of 9 ...
Friday, 02 October 15
COAL PRODUCTION IN THE UNITED STATES DECREASED THIS WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.5 million shor ...
Thursday, 01 October 15
SOUTH KOREA'S KOMIPO SEEKS SPOT BITUMINOUS COAL SUPPLIES
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender for 265,000 Metric Tons (MT) of minimum 4,600 kcal ...
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- Karbindo Abesyapradhi - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Deloitte Consulting - India
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- Mintek Dendrill Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Bharathi Cement Corporation - India
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- Ind-Barath Power Infra Limited - India
- McConnell Dowell - Australia
- Madhucon Powers Ltd - India
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- London Commodity Brokers - England
- Vedanta Resources Plc - India
- CIMB Investment Bank - Malaysia
- Antam Resourcindo - Indonesia
- Maheswari Brothers Coal Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Trasteel International SA, Italy
- Minerals Council of Australia
- ICICI Bank Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Power Finance Corporation Ltd., India
- Larsen & Toubro Limited - India
- Heidelberg Cement - Germany
- Star Paper Mills Limited - India
- Electricity Generating Authority of Thailand
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- Tamil Nadu electricity Board
- Oldendorff Carriers - Singapore
- Therma Luzon, Inc, Philippines
- Jindal Steel & Power Ltd - India
- Romanian Commodities Exchange
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Petron Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Indo Tambangraya Megah - Indonesia
- Coal and Oil Company - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- VISA Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- Aditya Birla Group - India
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- Energy Development Corp, Philippines
- Kumho Petrochemical, South Korea
- Simpson Spence & Young - Indonesia
- Vizag Seaport Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Samtan Co., Ltd - South Korea
- Videocon Industries ltd - India
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Grasim Industreis Ltd - India
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- Ministry of Mines - Canada
- Price Waterhouse Coopers - Russia
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- Aboitiz Power Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- The State Trading Corporation of India Ltd
- Independent Power Producers Association of India
- Coalindo Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Meenaskhi Energy Private Limited - India
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- Indian Oil Corporation Limited
- Gujarat Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Kapuas Tunggal Persada - Indonesia
- CNBM International Corporation - China
- Bulk Trading Sa - Switzerland
- AsiaOL BioFuels Corp., Philippines
- Commonwealth Bank - Australia
- Wood Mackenzie - Singapore
- Sarangani Energy Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Holcim Trading Pte Ltd - Singapore
- Global Green Power PLC Corporation, Philippines
- Riau Bara Harum - Indonesia
- Siam City Cement - Thailand
- Malabar Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- PetroVietnam Power Coal Import and Supply Company
- Africa Commodities Group - South Africa
- Carbofer General Trading SA - India
- Ministry of Transport, Egypt
- Baramulti Group, Indonesia
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Kartika Selabumi Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Sical Logistics Limited - India
- Anglo American - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Rio Tinto Coal - Australia
- GVK Power & Infra Limited - India
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Marubeni Corporation - India
- Goldman Sachs - Singapore
- Salva Resources Pvt Ltd - India
- Bhatia International Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Standard Chartered Bank - UAE
- Ministry of Finance - Indonesia
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- Parliament of New Zealand
- San Jose City I Power Corp, Philippines
- Mercuria Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Thai Mozambique Logistica
- Pendopo Energi Batubara - Indonesia
- Cement Manufacturers Association - India
- Formosa Plastics Group - Taiwan
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- Thiess Contractors Indonesia
- PowerSource Philippines DevCo
- Merrill Lynch Commodities Europe
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Australian Coal Association
- GMR Energy Limited - India
- Lanco Infratech Ltd - India
- IEA Clean Coal Centre - UK
- Krishnapatnam Port Company Ltd. - India
- TeaM Sual Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Kepco SPC Power Corporation, Philippines
- SMG Consultants - Indonesia
- Barasentosa Lestari - Indonesia
- Indogreen Group - Indonesia
- The University of Queensland
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Georgia Ports Authority, United States
- The Treasury - Australian Government
- Bhushan Steel Limited - India
- Bangladesh Power Developement Board
- Central Electricity Authority - India
- Bahari Cakrawala Sebuku - Indonesia
- Toyota Tsusho Corporation, Japan
- Intertek Mineral Services - Indonesia
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- Energy Link Ltd, New Zealand
- Kobexindo Tractors - Indoneisa
- Mercator Lines Limited - India
- Savvy Resources Ltd - HongKong
- India Bulls Power Limited - India
- Attock Cement Pakistan Limited
- Metalloyd Limited - United Kingdom
- Australian Commodity Traders Exchange
- OPG Power Generation Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- PTC India Limited - India
- Ambuja Cements Ltd - India
- Wilmar Investment Holdings
- Orica Australia Pty. Ltd.
- Medco Energi Mining Internasional
- White Energy Company Limited
- Bhoruka Overseas - Indonesia
- Essar Steel Hazira Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Xindia Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Central Java Power - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- Global Coal Blending Company Limited - Australia
- Sakthi Sugars Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Chettinad Cement Corporation Ltd - India
- New Zealand Coal & Carbon
- Global Business Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Meralco Power Generation, Philippines
- Sojitz Corporation - Japan
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