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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, 01 September 15
FOB RICHARDS BAY COAL SWAPS STILL SLIDING; Q2'16 DELIVERY LOST AROUND 6 PERCENT M-O-M
COALspot.com: API4 FOB Richards Bay Coal swap for delivery 4Q' 2015 gain week over week but declined month over month.
The 4Q swap was dow ...
Monday, 31 August 15
API 5 FOB NEWCASTLE COAL SWAP GAINS WEEK OVER WEEK
COALspot.com: API 5 FOB Newcastle Coal swap for 4Q’ 2015 delivery down $ 1.85 per MT (-4.23%) month over month to US$ 41.87 per mt. The swap ...
Monday, 31 August 15
Q1'16 CFR SOUTH CHINA COAL SWAP ENDS DOWN MORE THAN 4 PERCENT MONTH OVER MONTH
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery declined just US$ 1.91 (3.78%) per MT month over month.
A commodity ...
Sunday, 30 August 15
THE DRY BULK MARKET UNDOUBTEDLY REMAINS WEAK & VOLATILE THIS WEEK
COALspot.com: The BDI slipped further down this week, moving closer to 900 level. This week’s BDI falls 9.15 pct and closed at 903 points. Wh ...
Friday, 28 August 15
DRY BULK SHIP OWNER OPTIMISTIC ABOUT FUTURE PROSPECTS OF THE MARKET: NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Dry bulk ship owner Golden Ocean appeared optimistic on the long term prospects of the dry bulk market, mainly thanks to an expected resolution of ...
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- San Jose City I Power Corp, Philippines
- ICICI Bank Limited - India
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- Bahari Cakrawala Sebuku - Indonesia
- Intertek Mineral Services - Indonesia
- Global Business Power Corporation, Philippines
- Trasteel International SA, Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Georgia Ports Authority, United States
- Parliament of New Zealand
- Bulk Trading Sa - Switzerland
- Indonesian Coal Mining Association
- Xindia Steels Limited - India
- Chamber of Mines of South Africa
- Bukit Makmur.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- Formosa Plastics Group - Taiwan
- Planning Commission, India
- White Energy Company Limited
- CIMB Investment Bank - Malaysia
- Sree Jayajothi Cements Limited - India
- Larsen & Toubro Limited - India
- Indo Tambangraya Megah - Indonesia
- Binh Thuan Hamico - Vietnam
- Aboitiz Power Corporation - Philippines
- Electricity Generating Authority of Thailand
- South Luzon Thermal Energy Corporation
- Agrawal Coal Company - India
- Gujarat Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Miang Besar Coal Terminal - Indonesia
- Vizag Seaport Private Limited - India
- VISA Power Limited - India
- Tamil Nadu electricity Board
- PetroVietnam Power Coal Import and Supply Company
- Australian Commodity Traders Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Riau Bara Harum - Indonesia
- Toyota Tsusho Corporation, Japan
- Port Waratah Coal Services - Australia
- Therma Luzon, Inc, Philippines
- Singapore Mercantile Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Ministry of Transport, Egypt
- Kobexindo Tractors - Indoneisa
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- Posco Energy - South Korea
- Semirara Mining and Power Corporation, Philippines
- Baramulti Group, Indonesia
- Jindal Steel & Power Ltd - India
- TeaM Sual Corporation - Philippines
- Indian Energy Exchange, India
- Iligan Light & Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Kideco Jaya Agung - Indonesia
- Meralco Power Generation, Philippines
- Standard Chartered Bank - UAE
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Wood Mackenzie - Singapore
- Sical Logistics Limited - India
- Kapuas Tunggal Persada - Indonesia
- IHS Mccloskey Coal Group - USA
- LBH Netherlands Bv - Netherlands
- Kaltim Prima Coal - Indonesia
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- Madhucon Powers Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- Africa Commodities Group - South Africa
- Mercuria Energy - Indonesia
- Grasim Industreis Ltd - India
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- Deloitte Consulting - India
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- Energy Link Ltd, New Zealand
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Gujarat Sidhee Cement - India
- Rashtriya Ispat Nigam Limited - India
- Energy Development Corp, Philippines
- Edison Trading Spa - Italy
- Global Coal Blending Company Limited - Australia
- Bhoruka Overseas - Indonesia
- The Treasury - Australian Government
- Eastern Energy - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Romanian Commodities Exchange
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- Savvy Resources Ltd - HongKong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Latin American Coal - Colombia
- Central Electricity Authority - India
- Dalmia Cement Bharat India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Goldman Sachs - Singapore
- Anglo American - United Kingdom
- PNOC Exploration Corporation - Philippines
- Parry Sugars Refinery, India
- Gujarat Mineral Development Corp Ltd - India
- Sarangani Energy Corporation, Philippines
- Vedanta Resources Plc - India
- Tata Chemicals Ltd - India
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PowerSource Philippines DevCo
- Neyveli Lignite Corporation Ltd, - India
- Meenaskhi Energy Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- PTC India Limited - India
- The University of Queensland
- Altura Mining Limited, Indonesia
- Ceylon Electricity Board - Sri Lanka
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Coal Council - USA
- Bharathi Cement Corporation - India
- Coastal Gujarat Power Limited - India
- Samtan Co., Ltd - South Korea
- Thiess Contractors Indonesia
- MS Steel International - UAE
- Sindya Power Generating Company Private Ltd
- Oldendorff Carriers - Singapore
- SMG Consultants - Indonesia
- Sojitz Corporation - Japan
- Price Waterhouse Coopers - Russia
- Thai Mozambique Logistica
- Coalindo Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Cement Manufacturers Association - India
- Power Finance Corporation Ltd., India
- The State Trading Corporation of India Ltd
- Mercator Lines Limited - India
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- New Zealand Coal & Carbon
- Ministry of Mines - Canada
- GMR Energy Limited - India
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- Ind-Barath Power Infra Limited - India
- Indian Oil Corporation Limited
- Maharashtra Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- International Coal Ventures Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Electricity Authority, New Zealand
- Makarim & Taira - Indonesia
- Siam City Cement - Thailand
- Star Paper Mills Limited - India
- Rio Tinto Coal - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- European Bulk Services B.V. - Netherlands
- Ministry of Finance - Indonesia
- Malabar Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Borneo Indobara - Indonesia
- Carbofer General Trading SA - India
- McConnell Dowell - Australia
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- Pipit Mutiara Jaya. PT, Indonesia
- Heidelberg Cement - Germany
- Merrill Lynch Commodities Europe
- Ambuja Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Vijayanagar Sugar Pvt Ltd - India
- Petron Corporation, Philippines
- Indika Energy - Indonesia
- Aditya Birla Group - India
- IEA Clean Coal Centre - UK
- Kumho Petrochemical, South Korea
- Australian Coal Association
- Salva Resources Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- London Commodity Brokers - England
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