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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, 25 August 15
INDONESIA MINERS' NPLS TO RISE FURTHER, BANK RISKS BUILD - FITCH
The NPLs of Indonesian mine and mine services companies are likely to rise further in the short term, says Fitch Ratings, after reaching multi-year ...
Tuesday, 25 August 15
MINER'S EARNINGS DROP ON FALLING COAL PRICES; Q2'16 FOB RICHARDS BAY COAL SWAP CLOSED AT $ 52.23 A TON
COALspot.com: API4 FOB Richards Bay Coal swap for delivery 4Q' 2015 declined month over month and week over week.
The 4Q swap was down US$ ...
Monday, 24 August 15
FOB NEWCASTLE COAL SWAPS HIT FRESH LOW, DIPPING BELOW $42 A TON
COALspot.com: API 5 FOB Newcastle Coal swap for 4Q’ 2015 delivery down $ 2.20 per MT (-5.01%) month over month to US$ 41.70 per mt. The swap ...
Monday, 24 August 15
Q1'16 CFR SOUTH CHINA COAL SWAP CLOSED AT $ 48.65 PMT
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery declined just US$ 1.89 (3.74%) per MT month over month.
A commodity ...
Monday, 24 August 15
IS CHINA'S STEEL EXPORTS ENOUGH TO SUPPORT THE FREIGHT MARKET? - BIMCO
No, it’s not enough, you will need lower Chinese iron ore production too in order to keep growing imports of iron ore into China that will su ...
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- Antam Resourcindo - Indonesia
- Bhatia International Limited - India
- Standard Chartered Bank - UAE
- Kideco Jaya Agung - Indonesia
- Energy Link Ltd, New Zealand
- Kaltim Prima Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Coastal Gujarat Power Limited - India
- Posco Energy - South Korea
- Thai Mozambique Logistica
- The State Trading Corporation of India Ltd
- Minerals Council of Australia
- Sinarmas Energy and Mining - Indonesia
- Formosa Plastics Group - Taiwan
- ASAPP Information Group - India
- Global Green Power PLC Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Makarim & Taira - Indonesia
- Power Finance Corporation Ltd., India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- Orica Mining Services - Indonesia
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Merrill Lynch Commodities Europe
- London Commodity Brokers - England
- Indika Energy - Indonesia
- Commonwealth Bank - Australia
- International Coal Ventures Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Heidelberg Cement - Germany
- Latin American Coal - Colombia
- Eastern Energy - Thailand
- Global Business Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- AsiaOL BioFuels Corp., Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tata Chemicals Ltd - India
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- GMR Energy Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Deloitte Consulting - India
- Mercator Lines Limited - India
- Bukit Makmur.PT - Indonesia
- Larsen & Toubro Limited - India
- Riau Bara Harum - Indonesia
- Georgia Ports Authority, United States
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- ICICI Bank Limited - India
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Electricity Authority - India
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- Bangladesh Power Developement Board
- PowerSource Philippines DevCo
- Ministry of Finance - Indonesia
- Romanian Commodities Exchange
- Edison Trading Spa - Italy
- Savvy Resources Ltd - HongKong
- Cigading International Bulk Terminal - Indonesia
- Carbofer General Trading SA - India
- Sakthi Sugars Limited - India
- Meralco Power Generation, Philippines
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- PTC India Limited - India
- Energy Development Corp, Philippines
- Marubeni Corporation - India
- Parliament of New Zealand
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Xindia Steels Limited - India
- Semirara Mining Corp, Philippines
- Mintek Dendrill Indonesia
- Kobexindo Tractors - Indoneisa
- Dalmia Cement Bharat India
- CIMB Investment Bank - Malaysia
- Grasim Industreis Ltd - India
- European Bulk Services B.V. - Netherlands
- Timah Investasi Mineral - Indoneisa
- Bharathi Cement Corporation - India
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Kumho Petrochemical, South Korea
- IEA Clean Coal Centre - UK
- Electricity Generating Authority of Thailand
- Ambuja Cements Ltd - India
- McConnell Dowell - Australia
- The Treasury - Australian Government
- Sical Logistics Limited - India
- Independent Power Producers Association of India
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Renaissance Capital - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Oldendorff Carriers - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Eastern Coal Council - USA
- Toyota Tsusho Corporation, Japan
- Wood Mackenzie - Singapore
- Economic Council, Georgia
- Rashtriya Ispat Nigam Limited - India
- Lanco Infratech Ltd - India
- Kepco SPC Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- PNOC Exploration Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- Attock Cement Pakistan Limited
- Chamber of Mines of South Africa
- Price Waterhouse Coopers - Russia
- Bhoruka Overseas - Indonesia
- Meenaskhi Energy Private Limited - India
- South Luzon Thermal Energy Corporation
- Binh Thuan Hamico - Vietnam
- SMC Global Power, Philippines
- Kohat Cement Company Ltd. - Pakistan
- White Energy Company Limited
- Siam City Cement - Thailand
- Madhucon Powers Ltd - India
- Sojitz Corporation - Japan
- The University of Queensland
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- LBH Netherlands Bv - Netherlands
- Simpson Spence & Young - Indonesia
- Samtan Co., Ltd - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- OPG Power Generation Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- New Zealand Coal & Carbon
- SMG Consultants - Indonesia
- Africa Commodities Group - South Africa
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- Salva Resources Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- CNBM International Corporation - China
- Gujarat Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Global Coal Blending Company Limited - Australia
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- Gujarat Sidhee Cement - India
- Electricity Authority, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Australian Commodity Traders Exchange
- Medco Energi Mining Internasional
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- Malabar Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Interocean Group of Companies - India
- Siam City Cement PLC, Thailand
- Indian Energy Exchange, India
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- GAC Shipping (India) Pvt Ltd
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Coal Association
- Port Waratah Coal Services - Australia
- Maharashtra Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Orica Australia Pty. Ltd.
- Ceylon Electricity Board - Sri Lanka
- Maheswari Brothers Coal Limited - India
- Billiton Holdings Pty Ltd - Australia
- Anglo American - United Kingdom
- Straits Asia Resources Limited - Singapore
- Ministry of Mines - Canada
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Bhushan Steel Limited - India
- Globalindo Alam Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- Parry Sugars Refinery, India
- MS Steel International - UAE
- Jaiprakash Power Ventures ltd
- Mercuria Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Coal and Oil Company - UAE
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