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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, 28 September 15
Q1'16 CFR SOUTH CHINA COAL SWAP ROSE 2.73 PER CENT M-M
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery moved upward US$ 1.45 (3.04 %) per ton month over month.
A commodity ...
Sunday, 27 September 15
THE PANAMAX INDEX FELL 1.19 PCT WEEK OVER WEEK
COALspot.com: The BDI closed Friday (25/09/2015) at 943 points, down by 17 points compared to previous Friday closing (18/09/2015). The BDI wa ...
Friday, 25 September 15
COAL PRODUCTION IN THE U.S. FOR THE WEEK ENDING SEPTEMBER 19 ROSE 2.5% PER CENT W-W
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.8 million shor ...
Wednesday, 23 September 15
CAPESIZE: SPOT RATES HAVE INCREASED MORE THAN 70 PER CENT DURING LAST WEEK
Dry Bulk owners, always look at September as the time that the market “signals” what lies ahead for the remainder of the year. The Chin ...
Wednesday, 23 September 15
INDONESIA: NEW REGULATION APPLIES FINAL INCOME TAX TO MINERAL AND COAL SALES - FLORENCE GRACIA SANTOSO
To increase state revenue from the mining sector, the Government of Indonesia has imposed a new final income tax on any sale of mineral and coal, a ...
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- CIMB Investment Bank - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Bukit Makmur.PT - Indonesia
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- CNBM International Corporation - China
- Standard Chartered Bank - UAE
- Vijayanagar Sugar Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- Larsen & Toubro Limited - India
- Iligan Light & Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Minerals Council of Australia
- Indika Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Globalindo Alam Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Coastal Gujarat Power Limited - India
- PTC India Limited - India
- Singapore Mercantile Exchange
- Parry Sugars Refinery, India
- Energy Development Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- European Bulk Services B.V. - Netherlands
- Meenaskhi Energy Private Limited - India
- Indian Energy Exchange, India
- Australian Commodity Traders Exchange
- Anglo American - United Kingdom
- Electricity Generating Authority of Thailand
- Ministry of Finance - Indonesia
- Planning Commission, India
- MS Steel International - UAE
- Goldman Sachs - Singapore
- Tamil Nadu electricity Board
- Sical Logistics Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bharathi Cement Corporation - India
- ICICI Bank Limited - India
- Central Electricity Authority - India
- VISA Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bangladesh Power Developement Board
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Aditya Birla Group - India
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- Carbofer General Trading SA - India
- PNOC Exploration Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Power Finance Corporation Ltd., India
- Port Waratah Coal Services - Australia
- Formosa Plastics Group - Taiwan
- Videocon Industries ltd - India
- Agrawal Coal Company - India
- Ceylon Electricity Board - Sri Lanka
- SMC Global Power, Philippines
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- Vizag Seaport Private Limited - India
- Salva Resources Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Rio Tinto Coal - Australia
- Medco Energi Mining Internasional
- The University of Queensland
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- San Jose City I Power Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Malabar Cements Ltd - India
- Dalmia Cement Bharat India
- AsiaOL BioFuels Corp., Philippines
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- Cigading International Bulk Terminal - Indonesia
- Central Java Power - Indonesia
- Orica Australia Pty. Ltd.
- TeaM Sual Corporation - Philippines
- Indonesian Coal Mining Association
- Kapuas Tunggal Persada - Indonesia
- Cement Manufacturers Association - India
- Grasim Industreis Ltd - India
- Kideco Jaya Agung - Indonesia
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Gujarat Sidhee Cement - India
- Borneo Indobara - Indonesia
- Georgia Ports Authority, United States
- New Zealand Coal & Carbon
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement - Thailand
- Tata Chemicals Ltd - India
- Kumho Petrochemical, South Korea
- Kaltim Prima Coal - Indonesia
- Marubeni Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Indian Oil Corporation Limited
- Therma Luzon, Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Independent Power Producers Association of India
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Mintek Dendrill Indonesia
- Coalindo Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Energy Link Ltd, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Heidelberg Cement - Germany
- Posco Energy - South Korea
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- Interocean Group of Companies - India
- Price Waterhouse Coopers - Russia
- Parliament of New Zealand
- Essar Steel Hazira Ltd - India
- Electricity Authority, New Zealand
- Renaissance Capital - South Africa
- Ambuja Cements Ltd - India
- Africa Commodities Group - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Intertek Mineral Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- The Treasury - Australian Government
- Wood Mackenzie - Singapore
- Altura Mining Limited, Indonesia
- Global Business Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Manunggal Multi Energi - Indonesia
- Latin American Coal - Colombia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Baiduri Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Billiton Holdings Pty Ltd - Australia
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- Barasentosa Lestari - Indonesia
- Ministry of Mines - Canada
- Makarim & Taira - Indonesia
- Metalloyd Limited - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vedanta Resources Plc - India
- Bhushan Steel Limited - India
- Coal and Oil Company - UAE
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- Kobexindo Tractors - Indoneisa
- Ind-Barath Power Infra Limited - India
- GMR Energy Limited - India
- Straits Asia Resources Limited - Singapore
- Binh Thuan Hamico - Vietnam
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- Uttam Galva Steels Limited - India
- Star Paper Mills Limited - India
- Gujarat Mineral Development Corp Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Baramulti Group, Indonesia
- SMG Consultants - Indonesia
- Ministry of Transport, Egypt
- Thai Mozambique Logistica
- Maharashtra Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Orica Mining Services - Indonesia
- Chamber of Mines of South Africa
- LBH Netherlands Bv - Netherlands
- Australian Coal Association
- PowerSource Philippines DevCo
- Lanco Infratech Ltd - India
- GVK Power & Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- Pendopo Energi Batubara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Banpu Public Company Limited - Thailand
- Commonwealth Bank - Australia
- Trasteel International SA, Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Kepco SPC Power Corporation, Philippines
- Mercator Lines Limited - India
- Edison Trading Spa - Italy
- GAC Shipping (India) Pvt Ltd
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ASAPP Information Group - India
- White Energy Company Limited
- Kohat Cement Company Ltd. - Pakistan
- Wilmar Investment Holdings
- Antam Resourcindo - Indonesia
- Attock Cement Pakistan Limited
- Eastern Coal Council - USA
- Gujarat Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
- Savvy Resources Ltd - HongKong
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