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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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Tuesday, 15 September 15
API 5 FOB NEWCASTLE COAL SWAP FOR 4Q' 2015 DELIVERY CLOSED AT $42.71 PER TON ON 11 SEPT, SGX DATA SHOWS
COALspot.com: API 5 FOB Newcastle Coal swap for 4Q’ 2015 delivery declined $0.94 per MT (-2.15%) month over month to US$ 42.71 per mt. The sw ...
Monday, 14 September 15
Q1'16 CFR SOUTH CHINA COAL SWAP DECLINED $1.80 PMT M-M
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery declined just US$ 1.62 (3.21 %) per MT month over month.
A commodity ...
Monday, 14 September 15
MOODY'S LOWERS COMMODITY PRICE ASSUMPTIONS ON MACRO, INDUSTRY FACTORS
COALspot.com: Moody's Investors Service has lowered its base metal price assumptions for 2015-17 as slowing growth in China, lower oil prices, ...
Sunday, 13 September 15
FREIGHT RATES ARE EXPECTED TO BE SOFT NEXT WEEK
COALspot.com: The BDI decreased further by 6.51 per cent or 57 points since last Friday and closed at 818 on 11 September 2015 while the cape index ...
Friday, 11 September 15
SHIPPING MARKETS SHOW MIXED EMOTIONS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has managed to show marginal improvements over the past few days, with the Capesize segment faring better than smaller dry bulk ...
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- San Jose City I Power Corp, Philippines
- Xindia Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Wood Mackenzie - Singapore
- Ambuja Cements Ltd - India
- Electricity Generating Authority of Thailand
- MS Steel International - UAE
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Meralco Power Generation, Philippines
- Sinarmas Energy and Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Power Finance Corporation Ltd., India
- Riau Bara Harum - Indonesia
- Electricity Authority, New Zealand
- Bayan Resources Tbk. - Indonesia
- GMR Energy Limited - India
- Meenaskhi Energy Private Limited - India
- Straits Asia Resources Limited - Singapore
- Aditya Birla Group - India
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Australian Commodity Traders Exchange
- Salva Resources Pvt Ltd - India
- Siam City Cement - Thailand
- Altura Mining Limited, Indonesia
- Barasentosa Lestari - Indonesia
- The University of Queensland
- White Energy Company Limited
- European Bulk Services B.V. - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Bhatia International Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- Bangladesh Power Developement Board
- OPG Power Generation Pvt Ltd - India
- Star Paper Mills Limited - India
- Indian Energy Exchange, India
- Miang Besar Coal Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- Oldendorff Carriers - Singapore
- Carbofer General Trading SA - India
- Latin American Coal - Colombia
- Indika Energy - Indonesia
- Baramulti Group, Indonesia
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Kobexindo Tractors - Indoneisa
- Renaissance Capital - South Africa
- Kideco Jaya Agung - Indonesia
- Central Electricity Authority - India
- Savvy Resources Ltd - HongKong
- Petrochimia International Co. Ltd.- Taiwan
- Interocean Group of Companies - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- India Bulls Power Limited - India
- PowerSource Philippines DevCo
- Manunggal Multi Energi - Indonesia
- Anglo American - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Gujarat Sidhee Cement - India
- Billiton Holdings Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Madhucon Powers Ltd - India
- Goldman Sachs - Singapore
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- CNBM International Corporation - China
- Mercator Lines Limited - India
- Thai Mozambique Logistica
- Bhushan Steel Limited - India
- Dalmia Cement Bharat India
- McConnell Dowell - Australia
- Jorong Barutama Greston.PT - Indonesia
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Energy Development Corp, Philippines
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Indian Oil Corporation Limited
- Marubeni Corporation - India
- Bukit Makmur.PT - Indonesia
- Ministry of Finance - Indonesia
- Essar Steel Hazira Ltd - India
- Sical Logistics Limited - India
- Ind-Barath Power Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- Siam City Cement PLC, Thailand
- Edison Trading Spa - Italy
- Kartika Selabumi Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- Sindya Power Generating Company Private Ltd
- Holcim Trading Pte Ltd - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Global Coal Blending Company Limited - Australia
- Energy Link Ltd, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Vedanta Resources Plc - India
- Bukit Asam (Persero) Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Economic Council, Georgia
- Maheswari Brothers Coal Limited - India
- Chettinad Cement Corporation Ltd - India
- Global Green Power PLC Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Wilmar Investment Holdings
- Mintek Dendrill Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Business Power Corporation, Philippines
- Agrawal Coal Company - India
- Singapore Mercantile Exchange
- New Zealand Coal & Carbon
- Samtan Co., Ltd - South Korea
- Thiess Contractors Indonesia
- Tamil Nadu electricity Board
- Rio Tinto Coal - Australia
- Iligan Light & Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Lanco Infratech Ltd - India
- Romanian Commodities Exchange
- Kumho Petrochemical, South Korea
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- Ceylon Electricity Board - Sri Lanka
- GVK Power & Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Independent Power Producers Association of India
- Rashtriya Ispat Nigam Limited - India
- Central Java Power - Indonesia
- London Commodity Brokers - England
- Coalindo Energy - Indonesia
- Larsen & Toubro Limited - India
- Uttam Galva Steels Limited - India
- Chamber of Mines of South Africa
- Georgia Ports Authority, United States
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- IHS Mccloskey Coal Group - USA
- Makarim & Taira - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Orica Mining Services - Indonesia
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Tata Chemicals Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Australian Coal Association
- Heidelberg Cement - Germany
- Ministry of Transport, Egypt
- Therma Luzon, Inc, Philippines
- Planning Commission, India
- Malabar Cements Ltd - India
- VISA Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Medco Energi Mining Internasional
- Commonwealth Bank - Australia
- Pendopo Energi Batubara - Indonesia
- SN Aboitiz Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Vizag Seaport Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Cement Manufacturers Association - India
- Bharathi Cement Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Deloitte Consulting - India
- Banpu Public Company Limited - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate General of MIneral and Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Port Waratah Coal Services - Australia
- Parliament of New Zealand
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Cigading International Bulk Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Standard Chartered Bank - UAE
- ASAPP Information Group - India
- Indo Tambangraya Megah - Indonesia
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Formosa Plastics Group - Taiwan
- Intertek Mineral Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Trasteel International SA, Italy
- SMC Global Power, Philippines
- Simpson Spence & Young - Indonesia
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
- Indonesian Coal Mining Association
- PTC India Limited - India
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