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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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Wednesday, 30 September 15
Q1'16 FOB INDONESIA COAL SWAP FALLS $1.25 A TON AS SLIDE CONTINUES
COALspot.com: Indonesian coal swap for delivery Q4 2015 declined month on month and week over week.
The Q4 swap declined $ 0.72 (-1.78%) per t ...
Wednesday, 30 September 15
NEW BUILDING MARKET INSIGHT
COALspot.com: This year has been, beyond any doubt, a rather strenuous one for the newbuilding market. Ordering activity with regards to Dry Bulker ...
Tuesday, 29 September 15
FOB RICHARDS BAY COAL SWAPS ARE SLIDING
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q4' 2015 declined week over week and month over month.
The Q4 swap was down US$ ...
Monday, 28 September 15
API 5 FOB NEWCASTLE COAL SWAPS UP $2.15 IN ONE MONTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery increased $2.10 per ton (5.15%) month over month to US$ 42.93 per ton. The ...
Monday, 28 September 15
CAPESIZE FLEET INCREASES BY JUST 1 VESSEL DURING LAST 12 MONTHS, IN POSITIVE SIGN FOR DRY BULK SHIPPING MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
After a rather tumultuous period, the shipping industry and more particular the dry bulk market has started to adjust to the new realities of globa ...
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- GAC Shipping (India) Pvt Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- India Bulls Power Limited - India
- Petron Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- VISA Power Limited - India
- McConnell Dowell - Australia
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Planning Commission, India
- Kobexindo Tractors - Indoneisa
- Economic Council, Georgia
- Krishnapatnam Port Company Ltd. - India
- Chettinad Cement Corporation Ltd - India
- Global Business Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- London Commodity Brokers - England
- IHS Mccloskey Coal Group - USA
- Energy Development Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Therma Luzon, Inc, Philippines
- Carbofer General Trading SA - India
- Altura Mining Limited, Indonesia
- ASAPP Information Group - India
- Directorate General of MIneral and Coal - Indonesia
- Eastern Coal Council - USA
- Iligan Light & Power Inc, Philippines
- Agrawal Coal Company - India
- Indian Energy Exchange, India
- Sree Jayajothi Cements Limited - India
- Kideco Jaya Agung - Indonesia
- Orica Australia Pty. Ltd.
- Central Java Power - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- CNBM International Corporation - China
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Georgia Ports Authority, United States
- Offshore Bulk Terminal Pte Ltd, Singapore
- Heidelberg Cement - Germany
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Jaiprakash Power Ventures ltd
- Sakthi Sugars Limited - India
- Ministry of Transport, Egypt
- Tamil Nadu electricity Board
- Ministry of Finance - Indonesia
- TeaM Sual Corporation - Philippines
- Electricity Authority, New Zealand
- Vedanta Resources Plc - India
- IEA Clean Coal Centre - UK
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Latin American Coal - Colombia
- Orica Mining Services - Indonesia
- Bharathi Cement Corporation - India
- LBH Netherlands Bv - Netherlands
- Edison Trading Spa - Italy
- SMC Global Power, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Wilmar Investment Holdings
- Banpu Public Company Limited - Thailand
- Maheswari Brothers Coal Limited - India
- Toyota Tsusho Corporation, Japan
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- Australian Coal Association
- Tata Chemicals Ltd - India
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- Sindya Power Generating Company Private Ltd
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- TNB Fuel Sdn Bhd - Malaysia
- Posco Energy - South Korea
- Salva Resources Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Meralco Power Generation, Philippines
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- Mjunction Services Limited - India
- Madhucon Powers Ltd - India
- OPG Power Generation Pvt Ltd - India
- Mercuria Energy - Indonesia
- Gujarat Sidhee Cement - India
- Straits Asia Resources Limited - Singapore
- Intertek Mineral Services - Indonesia
- Romanian Commodities Exchange
- Kalimantan Lumbung Energi - Indonesia
- Star Paper Mills Limited - India
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aditya Birla Group - India
- Bhushan Steel Limited - India
- Semirara Mining and Power Corporation, Philippines
- Trasteel International SA, Italy
- Bukit Baiduri Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Cement Manufacturers Association - India
- Indonesian Coal Mining Association
- Samtan Co., Ltd - South Korea
- Thai Mozambique Logistica
- Bukit Makmur.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Coalindo Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- Interocean Group of Companies - India
- Videocon Industries ltd - India
- Sarangani Energy Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- GMR Energy Limited - India
- Sinarmas Energy and Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Mercator Lines Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Deloitte Consulting - India
- Pipit Mutiara Jaya. PT, Indonesia
- Holcim Trading Pte Ltd - Singapore
- GVK Power & Infra Limited - India
- San Jose City I Power Corp, Philippines
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Thiess Contractors Indonesia
- Independent Power Producers Association of India
- Power Finance Corporation Ltd., India
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- The State Trading Corporation of India Ltd
- Sical Logistics Limited - India
- Ministry of Mines - Canada
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Parry Sugars Refinery, India
- Africa Commodities Group - South Africa
- Bulk Trading Sa - Switzerland
- Borneo Indobara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wood Mackenzie - Singapore
- Indika Energy - Indonesia
- Mintek Dendrill Indonesia
- Parliament of New Zealand
- New Zealand Coal & Carbon
- Gujarat Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- PTC India Limited - India
- Xindia Steels Limited - India
- Simpson Spence & Young - Indonesia
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Grasim Industreis Ltd - India
- Barasentosa Lestari - Indonesia
- Commonwealth Bank - Australia
- Kapuas Tunggal Persada - Indonesia
- Rio Tinto Coal - Australia
- Port Waratah Coal Services - Australia
- The University of Queensland
- Leighton Contractors Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Minerals Council of Australia
- Goldman Sachs - Singapore
- Kaltim Prima Coal - Indonesia
- PowerSource Philippines DevCo
- PNOC Exploration Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Pendopo Energi Batubara - Indonesia
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- Bhoruka Overseas - Indonesia
- Indogreen Group - Indonesia
- Ind-Barath Power Infra Limited - India
- Coal and Oil Company - UAE
- Medco Energi Mining Internasional
- Baramulti Group, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Malabar Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
- Global Coal Blending Company Limited - Australia
- Larsen & Toubro Limited - India
- Formosa Plastics Group - Taiwan
- ICICI Bank Limited - India
- Uttam Galva Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Bhatia International Limited - India
- Standard Chartered Bank - UAE
- Eastern Energy - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- European Bulk Services B.V. - Netherlands
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Jorong Barutama Greston.PT - Indonesia
- Energy Link Ltd, New Zealand
- SN Aboitiz Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
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