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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, 03 September 15
MINISTRY OF ENERGY AND MINERAL RESOURCES OF INDONESIA TO REVISE HBA METHODOLOGY
COALspot.com: Ministry of Energy and Mineral Resources (ESDM) in process to revise Indonesian Coal Price Reference (HBA) and expected to complete b ...
Thursday, 03 September 15
THE CHINESE STOCK MARKET AND THE CHINESE ECONOMY CONTINUE TO SUBSTANTIALLY AFFECT TRADING - INTERMODAL
The last week of the summer season saw the BDI dipping further on the back of another significant drop in rates for Capes, which brought the market ...
Wednesday, 02 September 15
PORT OF NEWCASTLE SHIPPED 13.46 MMT OF COAL IN JULY; UP 0.66 PER CENT M-O-M
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.224 billi ...
Wednesday, 02 September 15
SHIPPING MARKET INSIGHT - GEORGE ILIOPOULOS
In the beginning of the summer period SnP activity was firm with numerous buyers, coming mainly from Greece and the Far East, inspecting ships and ...
Tuesday, 01 September 15
FOB INDONESIA COAL SWAPS FURTHER SLIDE TO US$ 40.62 PMT; DECLINE 5.34 PERCENT M-O-M
COALspot.com: Indonesian coal swap for delivery 4Q 2015 declined month on month and slightly dropped week over week.
The 4Q swap was declined ...
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- Lanco Infratech Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Energy Development Corp, Philippines
- Standard Chartered Bank - UAE
- Directorate General of MIneral and Coal - Indonesia
- Indonesian Coal Mining Association
- PTC India Limited - India
- OPG Power Generation Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Ceylon Electricity Board - Sri Lanka
- CNBM International Corporation - China
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Kalimantan Lumbung Energi - Indonesia
- SMC Global Power, Philippines
- Cigading International Bulk Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Independent Power Producers Association of India
- Wilmar Investment Holdings
- Meralco Power Generation, Philippines
- Xindia Steels Limited - India
- Coastal Gujarat Power Limited - India
- Aboitiz Power Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Alfred C Toepfer International GmbH - Germany
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- The Treasury - Australian Government
- Bukit Asam (Persero) Tbk - Indonesia
- Georgia Ports Authority, United States
- Petrochimia International Co. Ltd.- Taiwan
- Bulk Trading Sa - Switzerland
- Sical Logistics Limited - India
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
- Deloitte Consulting - India
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- Bangladesh Power Developement Board
- ASAPP Information Group - India
- Intertek Mineral Services - Indonesia
- Essar Steel Hazira Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- Ministry of Transport, Egypt
- Bahari Cakrawala Sebuku - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Africa Commodities Group - South Africa
- Maheswari Brothers Coal Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Metalloyd Limited - United Kingdom
- Chamber of Mines of South Africa
- Therma Luzon, Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Aditya Birla Group - India
- IHS Mccloskey Coal Group - USA
- Australian Coal Association
- Chettinad Cement Corporation Ltd - India
- Antam Resourcindo - Indonesia
- MS Steel International - UAE
- Coal and Oil Company - UAE
- Uttam Galva Steels Limited - India
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- Jindal Steel & Power Ltd - India
- Toyota Tsusho Corporation, Japan
- Gujarat Mineral Development Corp Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Electricity Generating Authority of Thailand
- New Zealand Coal & Carbon
- Mercuria Energy - Indonesia
- Wood Mackenzie - Singapore
- Star Paper Mills Limited - India
- Bhushan Steel Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Mjunction Services Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bayan Resources Tbk. - Indonesia
- Energy Link Ltd, New Zealand
- Port Waratah Coal Services - Australia
- VISA Power Limited - India
- Global Business Power Corporation, Philippines
- Videocon Industries ltd - India
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Ministry of Finance - Indonesia
- Agrawal Coal Company - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GVK Power & Infra Limited - India
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Siam City Cement PLC, Thailand
- Sindya Power Generating Company Private Ltd
- Price Waterhouse Coopers - Russia
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- PNOC Exploration Corporation - Philippines
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Minerals Council of Australia
- Altura Mining Limited, Indonesia
- Global Coal Blending Company Limited - Australia
- Thai Mozambique Logistica
- Renaissance Capital - South Africa
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Tata Chemicals Ltd - India
- White Energy Company Limited
- Parry Sugars Refinery, India
- Indogreen Group - Indonesia
- Kumho Petrochemical, South Korea
- LBH Netherlands Bv - Netherlands
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- The University of Queensland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMG Consultants - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Central Electricity Authority - India
- Marubeni Corporation - India
- India Bulls Power Limited - India
- Economic Council, Georgia
- Romanian Commodities Exchange
- Vijayanagar Sugar Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Binh Thuan Hamico - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- Eastern Energy - Thailand
- Indika Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Timah Investasi Mineral - Indoneisa
- Jaiprakash Power Ventures ltd
- Carbofer General Trading SA - India
- Indo Tambangraya Megah - Indonesia
- Mintek Dendrill Indonesia
- McConnell Dowell - Australia
- CIMB Investment Bank - Malaysia
- Banpu Public Company Limited - Thailand
- Barasentosa Lestari - Indonesia
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- Global Green Power PLC Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- Malabar Cements Ltd - India
- IEA Clean Coal Centre - UK
- Anglo American - United Kingdom
- Sarangani Energy Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Latin American Coal - Colombia
- Siam City Cement - Thailand
- Borneo Indobara - Indonesia
- Merrill Lynch Commodities Europe
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- Directorate Of Revenue Intelligence - India
- Jorong Barutama Greston.PT - Indonesia
- Edison Trading Spa - Italy
- Coalindo Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Planning Commission, India
- Ministry of Mines - Canada
- Bukit Makmur.PT - Indonesia
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Heidelberg Cement - Germany
- Krishnapatnam Port Company Ltd. - India
- International Coal Ventures Pvt Ltd - India
- Goldman Sachs - Singapore
- TeaM Sual Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Indian Oil Corporation Limited
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- Central Java Power - Indonesia
- Medco Energi Mining Internasional
- San Jose City I Power Corp, Philippines
- Bhatia International Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petron Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Dalmia Cement Bharat India
- Sojitz Corporation - Japan
- Commonwealth Bank - Australia
- Orica Australia Pty. Ltd.
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- GMR Energy Limited - India
- Cement Manufacturers Association - India
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- Orica Mining Services - Indonesia
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