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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, 17 September 15
MARKET INSIGHT - KONSTANTINOS KONTOMICHIS
Having experienced, as it was much anticipated, a poor 1st half combined with negative forecasts, summer, in sharp contrast, proved to be more hope ...
Wednesday, 16 September 15
SLOWER GROWTH IN WORLD COAL DEMAND AND LOWER INTERNATIONAL COAL PRICES LED A DECLINE IN INDONESIAN COAL PRODUCTION
COALspot.com: Slower growth in world coal demand particularly China and lower international coal prices have led to a decline in Indonesian coal pr ...
Wednesday, 16 September 15
HIGHER TAXES COULD LEAD GREEK SHIP OWNERS OUT OF THE COUNTRY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
A potential taxation overhaul of the shipping industry in Hellas, which could see the loss of particular tax benefits for ship owners, could lead t ...
Tuesday, 15 September 15
WORLD SEABORNE TRADE: ENTERING INTO A ROLE REVERSAL? - CLARKSONS
Over the past decade, world seaborne trade growth has been dominated by dry bulk and container trade. However, developments in the global economy t ...
Tuesday, 15 September 15
Q2'16 RICHARDS BAY COAL SWAPS DIP TO $ 51.10 PER TON
COALspot.com: API4 FOB Richards Bay Coal swap for delivery 4Q' 2015 declined week over week and month over month.
The 4Q swap was down US$ ...
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- Formosa Plastics Group - Taiwan
- Commonwealth Bank - Australia
- Coastal Gujarat Power Limited - India
- Pendopo Energi Batubara - Indonesia
- White Energy Company Limited
- Jaiprakash Power Ventures ltd
- Bhatia International Limited - India
- Dalmia Cement Bharat India
- Meralco Power Generation, Philippines
- Bayan Resources Tbk. - Indonesia
- Indonesian Coal Mining Association
- Vizag Seaport Private Limited - India
- Sojitz Corporation - Japan
- Barasentosa Lestari - Indonesia
- PTC India Limited - India
- Central Electricity Authority - India
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
- San Jose City I Power Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Mercator Lines Limited - India
- International Coal Ventures Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- Riau Bara Harum - Indonesia
- Straits Asia Resources Limited - Singapore
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- London Commodity Brokers - England
- Toyota Tsusho Corporation, Japan
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Economic Council, Georgia
- Samtan Co., Ltd - South Korea
- OPG Power Generation Pvt Ltd - India
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
- Kumho Petrochemical, South Korea
- Salva Resources Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Romanian Commodities Exchange
- Semirara Mining Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Mercuria Energy - Indonesia
- Planning Commission, India
- Africa Commodities Group - South Africa
- Ceylon Electricity Board - Sri Lanka
- Bukit Asam (Persero) Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Binh Thuan Hamico - Vietnam
- Borneo Indobara - Indonesia
- McConnell Dowell - Australia
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Semirara Mining and Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Australian Coal Association
- Antam Resourcindo - Indonesia
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- GVK Power & Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ind-Barath Power Infra Limited - India
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- Manunggal Multi Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Karbindo Abesyapradhi - Indoneisa
- Karaikal Port Pvt Ltd - India
- Edison Trading Spa - Italy
- Australian Commodity Traders Exchange
- Star Paper Mills Limited - India
- Sakthi Sugars Limited - India
- Deloitte Consulting - India
- Wood Mackenzie - Singapore
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- Petron Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Lanco Infratech Ltd - India
- Indian Oil Corporation Limited
- MS Steel International - UAE
- Maheswari Brothers Coal Limited - India
- Alfred C Toepfer International GmbH - Germany
- Aditya Birla Group - India
- The University of Queensland
- Orica Mining Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Intertek Mineral Services - Indonesia
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- Savvy Resources Ltd - HongKong
- Indo Tambangraya Megah - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- Indogreen Group - Indonesia
- Aboitiz Power Corporation - Philippines
- Georgia Ports Authority, United States
- Global Business Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- PowerSource Philippines DevCo
- Iligan Light & Power Inc, Philippines
- Siam City Cement - Thailand
- Sree Jayajothi Cements Limited - India
- Posco Energy - South Korea
- TeaM Sual Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- IHS Mccloskey Coal Group - USA
- Coal and Oil Company - UAE
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Goldman Sachs - Singapore
- Malabar Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Bhushan Steel Limited - India
- Electricity Generating Authority of Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Kalimantan Lumbung Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Gujarat Mineral Development Corp Ltd - India
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Finance - Indonesia
- Anglo American - United Kingdom
- Singapore Mercantile Exchange
- Sarangani Energy Corporation, Philippines
- Grasim Industreis Ltd - India
- SN Aboitiz Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Wilmar Investment Holdings
- Altura Mining Limited, Indonesia
- Kartika Selabumi Mining - Indonesia
- Tata Chemicals Ltd - India
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- Bhoruka Overseas - Indonesia
- Attock Cement Pakistan Limited
- Globalindo Alam Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- Baramulti Group, Indonesia
- Chamber of Mines of South Africa
- Medco Energi Mining Internasional
- Ministry of Mines - Canada
- Independent Power Producers Association of India
- Ambuja Cements Ltd - India
- Tamil Nadu electricity Board
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- SMG Consultants - Indonesia
- Bharathi Cement Corporation - India
- Merrill Lynch Commodities Europe
- Orica Australia Pty. Ltd.
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- Central Java Power - Indonesia
- Bangladesh Power Developement Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indika Energy - Indonesia
- Eastern Energy - Thailand
- Krishnapatnam Port Company Ltd. - India
- SMC Global Power, Philippines
- Global Green Power PLC Corporation, Philippines
- The Treasury - Australian Government
- GN Power Mariveles Coal Plant, Philippines
- South Luzon Thermal Energy Corporation
- Gujarat Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Metalloyd Limited - United Kingdom
- Power Finance Corporation Ltd., India
- VISA Power Limited - India
- Energy Link Ltd, New Zealand
- Interocean Group of Companies - India
- Thai Mozambique Logistica
- CNBM International Corporation - China
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
- Port Waratah Coal Services - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- Trasteel International SA, Italy
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