News Abstracts Dry Bulk Terminals Group – July 2016 – Issue 158 For your personal interest and information. These News Abstracts are compiled by the DBTG Secretariat from direct sources. Publications including Fairplay (FP),and various international agencies, as well as the research division of Clarkson and Fearnleys. They cover a wide range of issues of direct and indirect relevance to dry bulk terminal operators as well as the aims and activities of the DBTG. ______________________________________ ________ Dear Member, Welcome to a selection of news extracts for July. I am Nic Ingle, the recently appointed Executive Director of DBTG. I would welcome any feedback on what you would like to see in it. Maybe more or less of something, regular features not currently covered, more or less pages or perhaps you are content with it as it stands. I am open to all and any suggestions so if you have any ideas, please let me know. Nic DIARY DATES Executive Committee Meeting – 2 nd September 2016 IMO CCC3 – 5-9 September 2016 IN THIS ISSUE Shipping Matters Economy/Finance Terminals/Ports Piracy Shipbuilding Commodity Reports Bulk Carrier Fleet SHIPPING MATTERS Benita refloated after being grounded for five weeks - FP 25 July After five weeks aground in Mauritius, Liberian-flagged Greek-owned bulk carrier Benita was refloated on the high tide at 1300 h local time on 23 July. Insurer London P&I Club paid tribute to salvor Five Oceans Salvage (FOS), which had “shown great skill and persistence under challenging circumstances”. FOS’ anchor handling tug supply vessels Coral Sea FOS and Ionian Sea FOS towed the damaged vessel to deep water 20 n miles offshore. A skeleton crew is on board while the ship’s general condition and seaworthiness are assessed. 1 www.drybulkterminals.org
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News AbstractsDry Bulk Terminals Group – July 2016 – Issue 158
For your personal interest and information. These News Abstracts are compiled by the DBTG Secretariat from direct sources. Publications including Fairplay (FP),and various international agencies, as well as the research division of Clarkson and Fearnleys. They cover a wide range of issues of direct and indirect relevance to dry bulk terminal operators as well as the aims and activities of the DBTG.______________________________________________
Dear Member,
Welcome to a selection of news extracts for July. I am Nic Ingle, the recently appointed Executive Director of DBTG. I would welcome any feedback on what you would like to see in it. Maybe more or less of something, regular features not currently covered, more or less pages or perhaps you are content with it as it stands. I am open to all and any suggestions so if you have any ideas, please let me know.
Nic
DIARY DATESExecutive Committee Meeting – 2nd September 2016
Polaris Shipping has reportedly engaged Mirae Asset
Daewoo to underwrite its planned listing.
A source from Polaris Shipping told IHS Fairplay, "Polaris Shipping has been discussing investors and
holders of redeemable convertible preference shares.
Should certain conditions be met, holders of the
redeemable convertible preference shares will be given
priority to convert these into ordinary shares after Polaris
Shipping is listed, on top of a cash reimbursement.
"While the company has been doing well, the downturn
affecting many shipping companies hit the performance
of shipping stocks so it might not be feasible to list this
year."
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News AbstractsDry Bulk Terminals Group – July 2016 – Issue 158
In October 2012, Polaris Shipping issued 330,434
redeemable convertible preference shares at a price of
KRW115,000 (USD104 at the time) each, paying an
annual interest of 13%. The shares would mature in five
years if Polaris Shipping is listed. Otherwise, the
maturity would be four years. If Polaris Shipping is not
listed by October this year, holders of the redeemable
convertible preference shares can request the company to
buy back the shares.
Founded in 2004, Polaris Shipping has concentrated on
contracts of affreightment and long-term shipping
contracts, counting Korea South-East Power Company,
South Korean steel-maker POSCO, and Brazilian miner
Vale among its customers.
Due to this, Polaris Shipping is viewed by observers as
one of the few South Korean shipping companies that are
still stable.
IHS Maritime & Trade's Sea-Web data shows that
Polaris Shipping owned 29 ships and had two chartered-
in vessels. Many of the ships have been committed to
long-term contracts lasting 9–20 years.
Even then, by 2017, the company’s debts are expected to
increase by KRW300 billion due to the construction of
four ships at Hyundai Heavy Industries Daehan
Shipbuilding.
As at 31 December 2015, Polaris Shipping's
shareholders' equity stood at KRW316.9 billion, while
long-term liabilities totalled KRW1.13 trillion. The
company also had a working capital deficit of
KRW140.8 billion. Polaris Shipping's net earnings for 2015 fell 16.5% to KRW54.27 billion
(USD46 billion) due to the challenging freight market.
In recent months, Polaris Shipping executed two bond
issues to raise USD29.8 million for working capital as it
prepares to expand its fleet.
_____________________________________________
Ship operators eye more nickel ore from Philippines – FP 24 July
The Philippines is becoming increasingly prominent in
seaborne nickel ore trade.
Since Indonesia banned the exports of raw ores to
develop its smelting industry in 2014, the Philippines has
become the dominant supplier of nickel ore to China.
The ore is used make nickel pig iron, a low-grade ferro-
nickel that China's steelmakers created as an alternative
to pure nickel in stainless steel production.
China is the world’s largest producer of stainless steel,
with its output having grown on average 20% per year
over the past five years.
With Indonesia out of the picture for raw ore exports,
China has been depending almost exclusively on the
Philippines for nickel ore; exports to China from the
Philippines increased 22% in 2014 to over 36 million
tonnes, before falling 4% in 2015.
China’s nickel ore imports from the Philippines rose to 3
million tonnes in May, a seven-month high, according to
customs data. That accounted for 97% of China’s nickel
ore imports that month.
The Philippines accounted for 98% of nickel ore imports
to China in 2015, with the cargoes loaded on Handymax
bulkers. China imported much smaller volumes from
Australia, Brazil, and Spain.
Consequently, several shipping lines have signed
contracts of affreightment (COA) with several nickel ore
mining companies in the Philippines.
Japanese shipping line Nippon Yusen Kabushiki Kaisha
(NYK) is now considering a COA with Philippine nickel
ore mining company Emir Mineral Resources, company
sources told IHS Fairplay.
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News AbstractsDry Bulk Terminals Group – July 2016 – Issue 158
NYK would use Handymax or Supramax bulkers to ship
the nickel ore from the Philippines to the China, but
details, such as the amount of cargoes, were not
disclosed.
In April 2012, Emir Mineral Resources applied for a
Mineral Production Sharing Agreement (MPSA) from
the Philippines government, relating to the exploitation
of chromite, nickel, and other minerals, over a 279 ha
area on Homomhon Island, Guiuan,
Eastern Samar Province. While this application has yet to
be approved, Emir was given a special permit to mine up
to 3 million tonnes of nickel ore in the same area for one
year from November 2015.
Emir mining and selling nickel ore, with buyers mainly
from China. Company sources said that most of its sales
are on free-on-board terms, meaning that the cargo
buyers are responsible for shipping.
The cargoes are mainly shipped on Supramax bulk
carriers from Guiuan, Philippines, to China. In the year to
date, Emir has made around 12 shipments, which equates
to around 660,000 tonnes of nickel ore sold thus far.
Despite the significant amount of nickel ore that China
imports, not every shipowner is keen to join the trade.
Nickel ore is considered a dangerous cargo because it is
prone to liquefaction, which could cause ships to capsize.
Due to this, ship operators who transport nickel ore told
IHS Fairplay that freight rates are usually USD1,000 to
USD2,000 per day higher than for other cargoes. Current
Supramax rates in Asia are around USD7,000/day.
Following several nickel ore liquefaction incidents, P&I
clubs have been quick to issue notices to remind
members of the risks of transporting it.
North of England P&I Club said, “Assessing whether a
cargo is safe to ship requires the transportable moisture
limit (TML) to be calculated. The TML is then compared
to the moisture content of the cargo, and provided the
TML is the higher figure, the cargo should be safe to
load. On voyage, the cargo can be agitated by wave
impact and engine vibration and, if there is sufficient
moisture present, the cargo will reach flow moisture
point (FMP) and liquefy. This may result in loss of
metacentric height from free-surface effect, sudden cargo
shifts, and structural impact damage from sloshing. For
this reason, the master must be completely satisfied that
testing has been carried out strictly according to the
procedures set out in the IMSBC (International Maritime
Solid Bulk Cargoes) Code.”
_____________________________________
Panamax rates rebound on Chinese coal imports FP – 23 July
Freight rates for Panamax bulk carriers have reached
levels not seen since May 2015, as a shortage of coal in
China has set off a surge in imports.
For the week-ended 17 July, timecharter equivalents rose
9% from the previous week to USD6,896 per day. Rates
for a Pacific round-voyage increased 13.9% from the
previous week to USD6,789 per day.
In June, China imported 21.75 million tonnes of coal,
boosting such imports to the highest in more than a year
as a government campaign to curb overcapacity slashed
domestic output by 16.6% in the same month.
China’s domestic coal output will fall by 280 million
tonnes this year as the government seeks to curtail
industrial overcapacity, according to China’s National
Development and Reform Commission.
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News AbstractsDry Bulk Terminals Group – July 2016 – Issue 158
Because of this, analysts expect China would need to
import more than 20 million tonnes of coal, or 260
Panamax loads, a month for the rest of the year.
According to ship broker Banchero Costa, during the
week ending 17 July, a 74,000-dwt Panamax bulker was
fixed to ship coal from Indonesia to south China for
USD6,250/day, while a 76,000-dwt Panamax bulker was
fixed at USD6,500/day to ship coal from the east coast of
Australia for delivery in the China-Japan-South Korea
range.
IHS McCloskey told IHS Fairplay that Chinese coal
production cuts have created some tightness in domestic
supply, resulting in a need for more imports.
Even though China’s electricity demand tends to be
higher in the summer due to more air-conditioning
requirements, domestic mining created a surplus of coal.
“The oversupply of coal is being aggressively tackled by
the Chinese government at the moment. There have also
been some mine accidents that resulted in a number of
mines being closed in order to do through safety checks.
That has also reduced domestic coal output,” said IHS
McCloskey.
A representative from Datang International (Hong
Kong), the coal trading arm of Datang International
Power Generation, told IHS Fairplay that the company
has been making four shipments a week since June,
compared with two a week previously.
Datang International Power Generation is a wholly-
owned subsidiary of China Datang Corporation, one of
the five largest state-owned power generation groups in
China.
The Hong Kong representative said, “Our parent
company needs more coal, and we have been sourcing
more cargoes from our main source, Indonesia, although
we import some volumes from Australia and Russia too.”
The significant growth in Panamax freight rates helped
the Baltic Dry Index (BDI) to surpass 700 points in the
week ended 17 July.
Greek broker Intermodal commented, “The fact that the
BDI managed to surpass the 700-point level after more
than two months is certainly supporting sentiment for the
remainder of the summer season ahead. The strong
performance of the Panamax rates, which resumed last
week, as well with another impressive jump in earnings
for the segment remain the backbone of hope for a
steadier market during the last two quarters of the year
compared to the same period in 2015.”
Bulker fixtures gain traction in US Gulf – FP 20 July
Backlogs of stored grain combined with forecasts of a
record harvest are helping vessel operators fill bulker
capacity in the US Gulf export market.
An average of 35 bulkers per week were loaded in the
region for the four weeks ending 7 July, according to the
US Department of Agriculture (USDA), with an average
of 54 vessels expected to be loaded through 19 July.
Those numbers were up 6% and 10%, respectively, from
the previous two months.
“We’re definitely seeing more grain activity,” George
Duffy, a New Orleans-based ship agent, told IHS Fairplay. “We’re usually finished [with the shipping
season] by late June or early July, but the high river in
January kept the harvest from moving, so we’ve had a
very steady flow over the last three months.”
Fast moving water caused by flooding on the upper
Mississippi River during the winter held up barge traffic
during the winter. The flooding subsequently dumped
sediment along the lower section between Baton Rouge
and New Orleans, Louisiana, where much of the nation’s
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News AbstractsDry Bulk Terminals Group – July 2016 – Issue 158
grain terminals are located, and which required river
pilots to lower draught restrictions.
For the week ending 7 July, total inspections of corn,
wheat, and soybeans for export reached 2.12 million
tonnes, up 7% from the previous week, up 43% from
2015, and 54% above the 3-year average, according to
the USDA. Ocean freight rates for shipping bulk grain
from the US Gulf to Japan for the same week were
USD31.25 per tonne, up 7% from the previous week.
Current projections from USDA estimate the winter
wheat harvest at 43.5 million tonnes, with a record yield
of 53.9 bushels per acre. As of 10 July, 66% of the winter
wheat was harvested in the major growing states,
according to the agency, slightly ahead of the 5-year
average of 65%.
“The bulker market has been depressed for a while and
we’re still not back to where it was couple years ago, but
in terms of fixtures, I think this will help,” Duffy said.
Luciana Salles, principal analyst at IHS Maritime &
Trade, has forecast a modest 0.5% growth for the dry
bulk sector in 2016.
___________________________________________
Alang ship recyclers on course for compliance - FP 26 July
Alang ship recyclers have been steadily gaining
international recognition for safe and clean scrapping.
By the end of next year it is hoped that 20% of its
members will receive certificates of compliance under
the Hong Kong Convention (2009), Ramesh Agarwal,
honorary secretary of the Ship Recycling Industries
Association (India) told IHS Fairplay.
There are about 130 ship recycling yards in Alang, of
which six to eight have certificates of compliance.
On the slow progress of ratifying the Hong Kong
Convention by India, Agarwal explained that the
government first wishes to see a high compliance rate
among Alang ship recyclers for the convention. He is
confident that this will be achieved “soon” because
according to him domestic guidelines in place are “more
stringent” than those laid down by the Hong Kong
Convention.
In a further boost to credibility of Indian recycling yards,
four yards in Alang have been certified by IRClass
Systems and Solutions based on EU standards. The
certification has been made in the capacity of an
‘Independent Verifier’ in accordance with requirements
of European Union Ship Recyling Regulation (EUSRR)
1257/2013.
“IR Class is amongst the first organisations in the world
to certify ship recycling yards according to EU standards
as an ‘Independent Verifier’,” parent Indian Register of
Shipping has said.
The four yards, which have met the standards set by the
EU and the Hong Kong Convention are Priya Blue
Industries, Shree Ram Vessel Scrap, R L Kalathia
Shipbreaking and Leela Ship Recycling.
While this is a shot in the arm for Indian recyclers,
Alang, which is considered the world’s biggest ship
scrapping facility, is at present starved of tonnage.
“We are not able to win discounts, which Chinese yards
get from owners and cannot quote the low prices of
Pakistani and Bangladesh ship recyclers,” Agarwal
explained, pointing out that heavy investments have been
made to streamline yards to confirm with international
safety and environmental standards.
As a result a paradoxical situation has arisen where the
yards are relatively clean and safe, but many operators
find rates of container ships and bulk carriers sent for
scrap (about USD250 to USD260) per ldt uneconomical.
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News AbstractsDry Bulk Terminals Group – July 2016 – Issue 158
Arrival of tankers to Aland have virtually dried up
because of domestic stipulation that vessels should be gas
free for hot work.
“Scrapping has hit an all-time low over the last few
months,” Agarwal said.
_____________________________________
Pirate attacks drop to 21-year low in H1 2016 – SMN 27th July
The number of piracy attacks dropped to a 21-year low in
the first half of 2016 according to watchdog the
International Maritime Bureau (IMB).
The number of piracy incidents worldwide reported to
the IMB in the first half of the year was 98 compared to
134 in the same period last year. It was also the lowest
number of attacks reported in the first six months of the
year since 1995.
“This drop in world piracy is encouraging news. Two
main factors are recent improvements around Indonesia,
and the continued deterrence of Somali pirates off East
Africa,” said Pottengal Mukundan, Director of IMB.
The number of incidents in Indonesia fell to 24 in the
first half of the year, compared to 54 in the first six
months of 2015. Mukundan urged continued vigilance
off Somalia where a combination of international Naval
patrols and private security deployed on merchant
effectively clamped down on a kidnap for ransom
problem that reached endemic proportions just a few
years ago.
However, there are still serious concerns about the rise in
kidnap for ransom cases off West Africa, where the
lower oil price has seen pirates switch their attention
from stealing oil cargoes to take the crew for ransom.
Overall 44 crew were kidnapped in the first half of 2016,
with Nigeria the blackspot with 24 seafarers kidnapped,
compared to 10 in the same period in 2015.
“In the Gulf of Guinea, rather than oil tankers being
hijacked for their cargo, there is an increasing number of
incidents of crew being kidnapped for ransom,”
commented Mukundan.
Nigerian piracy attacks are also noted for their violence
accounting for eight of nine attacks worldwide where
vessels were fired upon.
_____________________________________________
Jakarta to consider sea marshalls onboard coal-export tugs - SMN 15 July
Indonesia is considering deploying sea marshalls onboard
coal-exporting tugs and barges as it prioritizes
strengthening security for these vulnerable slow-moving
vessels that have been hit by a spate of hijackings in the
Southern Philippines this year, local reports said.
As much as 15% of coal deliveries from Indonesia to
neighboring countries use small vessels such as tugboats
and barges, as several destination ports cannot
accommodate bigger vessels. However, small vessels are
more prone to hijacking, Indonesian Foreign Affairs
Minister Retno Marsudi said.
The government is currently analyzing International
Maritime Organization (IMO) guidelines on the
deployment of sea marshalls to guard vessels delivering
goods across borders, she added.
“Hostage-taking cases always happen to tugboats and
barges and thus we have made them a priority to ensure
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News AbstractsDry Bulk Terminals Group – July 2016 – Issue 158
that kidnappings will not happen anymore and exports
can be delivered safely,” Retno said.
Jakarta has also deepened talks on sea corridors to help
boost safety. The sea corridors proposal was initiated
several months ago but has apparently been plagued by
lack of agreement between regional parties.
The officials will coordinate with related stakeholders,
including the Transportation Ministry, Indonesia
National Shipowners Association (INSA) and the
Indonesian Coal Mining Association (APB) to urge
sailors to be disciplined in taking safe sea routes, she
added.
___________________________________
Clarkson commentaries – DBTO (Volume 22, No 7 – July 2016)
Dry Bulk Supply & Demand Highlights
The bulkcarrier market remained at historically depressed
levels in 1H 2016, with bulker earnings averaging only
$4,824/day. Capesize earnings have risen slightly in
recent months, but remain close to typical operating
costs, with earnings averaging $7,041/day in June. While
secondhand bulker prices fell significantly in 2015,
prices seem to have bottomed out so far in 2016. The
guideline price for a 5 year old Capesize stood at
$24.75m at the end of June, up from
$23m in January, but down from $39m at end 2014.
Dry bulk trade growth is expected to remain weak in
2016, with volumes projected to grow by just 1%.
Stronger than expected Chinese demand for iron ore and
coal is helping to support overall trade growth, although
this is being partially offset by weaker iron ore and coal
imports into other Asian and European economies. Total
Chinese iron ore imports increased by 9% y-o-y in 1H
2016, and global seaborne iron ore trade is now projected
to grow by 3% in the full year.
Bulkcarrier demolition activity has slowed in recent
months, and totalled just 1.4m dwt in June. However,
total scrapping in 1H 2016 reached 292 ships of 22.1m
dwt, compared to 30.6m dwt in full year 2015. Strong
demolition activity has helped to limit bulkcarrier fleet
growth in 1H 2016 to just 0.7% in the year to date, with
expansion of 1.3% now expected in full year 2016.
Bulker contracting has remained very limited so far this
year, and by the start of July 2016, the bulkcarrier
orderbook had fallen to an eight year low of 114m dwt,
or 14.6% of the fleet.
Overall, the strong supply-side response to weak market
conditions is clearly helping to significantly limit
bulkcarrier fleet expansion. While recent demand
indicators in China have appeared slightly more positive,
global coal trade is still expected to decline this year, and
pressure remains on the global steel industry. The extent
of the oversupply in the bulkcarrier sector
suggests that the market is likely to remain subdued
while dry bulk trade growth continues to underperform.
******
Seaborne Iron Ore Trade Commentary
Total Chinese iron ore imports firmed 9% y-o-y in June
2016, to 82mt. Recent growth has reportedly been
supported by falling domestic iron ore output and firmer
levels of steel production, with steel output up 1% y-o-y
at 71mt in May 2016, the second highest volume on
record. However, ore imports may come under pressure
in the coming months due to high stocks at ports.
Additionally, Chinese manufacturing and construction
activity have shown signs of easing recently, which may
also impact ore import demand as steel mills struggle to
find domestic buyers. Indeed, Chinese steel products
exports rose 23% y-o-y to 11mt in June, as domestic
mills seem to be increasingly turning to foreign markets.
Furthermore, Beijing plans to fine provincial
governments which fail to make progress in cutting steel
output this year, in a bid to push through 45mt of steel
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News AbstractsDry Bulk Terminals Group – July 2016 – Issue 158
capacity cuts in 2016. Overall, Chinese seaborne iron ore
imports are now expected to rise 5% in full year 2016,
although continued weakness in domestic iron ore output
could continue to provide some support.
******
Iron Ore News
Global seaborne iron ore trade is currently projected to
grow 3% to around 1,402mt in 2016, largely driven by a
firm increase in Chinese iron ore
imports in the year to date. Meanwhile, seaborne iron ore
imports into other Asian countries are projected to drop
3% to 242mt in 2016, reflecting the pressure on steel
producers in the region. Similarly, financial pressure on
steel producers is expected to contribute to a 3% drop in
iron ore shipments into the EU-27 to around 107mt in
2016.
On the export side, a number of major iron ore producers
are continuing to expand ore production, and have raised
shipments to China. In Australia, total iron ore shipments
increased 6% y-o-y to total 321mt in January-May 2016,
with export growth partly supported by the ramp up of
production at Roy Hill after the project came online in
Q4 2015, with output at the mine targeted to reach
55mtpa by the end of 2016. Meanwhile, Rio Tinto’s iron
ore production in Australia reportedly increased by 10%
y-o-y in 1H 2016 to reach 161mt. Total iron ore
shipments from Port Hedland reached a record 42mt in
June 2016, with over 80% of this volume destined for
China. Overall, total Australian iron ore exports are
projected to grow by 5% in full year 2016 to around
807mt.
Brazilian iron ore exports increased 6% y-o-y to reach
177mt in the first six months of 2016. The growth was
largely accounted for by shipments to China, which
increased 24% y-o-y to 98mt in during the period.
However, total iron ore shipments from Brazil fell by 9%
y-o-y in June 2016. Furthermore, ongoing investigations
at Samarco, following the environmental disaster in early
November 2015, now make any resumption of the
company’s iron ore mining output in the current calendar
year increasingly unlikely. Total Brazilian iron ore
exports are projected to increase by 5% in full year 2016
to total 381mt.
******
Seaborne Coking Coal Trade Commentary
Global seaborne metallurgical coal trade is currently
projected to drop 3% to around 241mt in full year 2016.
The projected decline is partly driven by expectations of
an 11% fall in coking coal shipments into the EU-27 to
around 34mt in 2016. This reflects the pressure on the
region’s steel producers from depressed steel prices and
imports of Chinese steel products. Indeed, combined EU-
27 steel output fell 6% y-o-y to 69mt in January to May
2016. The decline in European coking coal import
demand has been most evident in the UK, where the
shuttering of several major steel works contributed to a
50% y-o-y decline in coking coal imports in the first five
months of the year. Meanwhile, seaborne coking coal
imports across Asia are currently expected to drop 1% to
around 175mt in full year 2016, despite an upward
revision to the Chinese import projection, to 7% growth.
Many Asian steel manufacturers outside of China are
continuing to struggle with the impact of relatively weak
steel prices and the record levels of Chinese steel
products that have been exported in the year to date.
******
Coking Coal News
Chinese seaborne coking coal imports rose 24% y-o-y to
reach 14mt in the first five months of 2016. This was
largely supported by an increase in the country’s steel
output in recent months and reductions in domestic
coking coal output. Beijing has targeted 280mt in total
coal capacity production cuts this year and recently
announced plans to punish regional governments for any
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News AbstractsDry Bulk Terminals Group – July 2016 – Issue 158
delays to mine closures. This has seen coking coal
inventories at CISA member steel mills reportedly drop
to 11.7 days of consumption in early July, the lowest
level since 2012 when records
began. The mining output cuts have also inflated
domestic coal prices, boosting the competitiveness of
imported coal. However, given the ongoing pressure on
China’s steel industry and the potential for excess crude
steel capacity to be cut this year, Chinese coking coal
import demand is likely to soften in 2H 2016.
Nevertheless, given the firm increase in 1H 2016,
Chinese seaborne coking coal imports are currently
projected to rise 7% to 38mt in full year 2016.
Indian seaborne coking coal imports fell 7% y-o-y to
19mt in the first five months of 2016. The country’s
coking coal import demand has been largely undermined
by the flow of steel products imports from China in the
year to date. This drove a 2% y-o-y decline in Indian
crude steel output in Q1 2016, prompting the Indian
government to respond in late February by introducing
minimum steel pricing levels. These contributed to an
improvement in Indian steel output in Q2 2016, with
output during the period up 5% y-o-y. India’s coking coal
imports have followed a
similar pattern. Having fallen 19% y-o-y in Q1 2016,
coking coal shipments into India grew 16% y-o-y in the
following two months. Overall, current projections
indicate a 1% y-o-y drop in Indian coking coal imports to
47mt in full year 2016, reflecting expectations for a
gradual recovery in imports throughout 2H 2016.
******
Seaborne Thermal Coal Trade Commentary
Chinese total coal imports rose 31% y-o-y to an 18-
month high of 22mt in June 2016, supported partly by
Beijing’s measures to reduce domestic coal output.
Reports indicate that cuts in statutory working days for
Chinese coal mines have had a significant impact, with
Chinese coal output reportedly down 10% y-o-y in 1H
2016. However, the easing pace of Chinese thermal
power generation and measures to curb air pollution are
expected to exert pressure on the country’s thermal coal
imports in the coming months. Chinese thermal power
generation fell by 2% y-o-y in January-May 2016,
reflecting both weak industrial demand and pressure
from renewable energy sources, with generation of wind
and hydro-power rising 20% y-o-y in the period. Coal
consumption in the southern Yangtze River region was
also disrupted by a super-typhoon in early July.
Furthermore, Beijing is reportedly expected to introduce
a ban on additional thermal power plant construction in
the coming years, as part of its 13th Five Year Plan.
Overall, Chinese steam coal imports are currently
expected to drop 1% to around 127mt in 2016.
******
Steam Coal News
Global seaborne thermal coal trade is currently projected
to drop 2% y-o-y to around 864mt in 2016. The expected
decline is largely due to an projected 12% fall in
shipments into the EU, reflecting the impact of
environmental policies such as the Large Combustion
Plant Directive. The UK has led the region’s steam coal
import decline in the year to date, with thermal coal
shipments into the country falling over 80% y-o-y to 2mt
in January-May 2016. Meanwhile, total Asian seaborne
steam coal imports are currently projected to fall 1% in
full year 2016, largely driven by a drop in shipments into
India and China.
Indian steam coal imports are projected to drop 6% y-o-y
to 157mt in 2016. Despite an improvement in the pace of
growth in Indian coal-fired power generation this year (to
13% y-o-y in 1H 2016, up from 4% in 2015), availability
of domestically produced coal remains high, and the
Indian government still appears keen to reduce reliance
on imports. Coal mines are reportedly opening at a rate
of one per month, and with national coal stockpiles
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News AbstractsDry Bulk Terminals Group – July 2016 – Issue 158
swelling to over 90mt in May 2016, Coal India is even
considering exporting coal to Bangladesh. India’s Coal
Ministry has also reportedly asked state-owned and
operated thermal power producers to cease importing
coal in favour of domestically produced material. The
surplus of domestically produced coal has also halted
plans to start up Ultra Mega Power Plants (UMPPs) in
India, with four projects with a combined production
capacity of 16GW reportedly cancelled. There remain
questions over whether plans to start up other UMPPs in
India will go ahead.
The South Korea government has come under pressure to
reduce the country’s growing air pollution levels,
particularly in regard to fine dust emissions. In early July
2016, Seoul announced plans to invest heavily in
renewable energy and to shut 10 ageing coal-fired power
plants by 2025, in a bid to cut greenhouse gas emissions.
In 2016, South Korean steam coal imports are projected
to drop 2% to 99mt.
******
Grain Trade News
Global wheat and coarse grain trade is projected to drop
3% to around 319mt in 2016/17, following a 2% rise in
2015/16. The decline in 2016/17 is partly expected to be
due to a 28% drop in total Chinese grain imports to
around 15mt, largely due to a rise in Chinese domestic
grain output, coupled with the country’s swelling
stockpiles. This is expected to contribute to a 6% drop in
total grain imports into Asia in 2016/17. Meanwhile,
imports into the Middle East are currently projected to
drop 1% to 51mt in 2016/17, with a slump in Iranian
grain import demand expected to spearhead the decline.
Elsewhere African grain imports are currently projected
to rise 1% in 2016/17, with shipments into Morocco
expected to rise around 28%, due to the impact of poor
weather conditions on domestic harvests. Finally, total
grain shipments into North America are expected to rise
5% in 2016/17, supported by growing Mexican maize
import demand.
In Egypt, the world’s leading wheat importer, an ongoing
dispute regarding levels of ergot fungus in imported
wheat has led to uncertainty ahead of the country’s peak
wheat importing season. The country’s Central
Quarantine Administration enforced a zero tolerance
policy for ergot contamination in early 2016. Having
consequently replaced the head of the Quarantine
Administration, the Egyptian Prime Minister announced
in early June 2016 that wheat imports with the
internationally accepted 0.05% ergot content would be
accepted. However, legal technicalities have since
prevented a ministerial decree from enforcing
international standards and in early June 2016, a cargo of
wheat from the US became the latest to be rejected by
Egyptian port authorities due to a reported 0.006% ergot
content. Nonetheless, Egyptian wheat imports are
currently projected to rise 3% to 11.5mt in 2016/17.
******
Grain Export News
Favourable weather conditions contributed to a
substantial increase in Ukrainian winter wheat yields in
the 2015/16 crop year, despite major political
disruptions. Wheat exports from Ukraine increased 50%
to reach a record 16.8mt in 2015/16, supported by
favourable currency movements and increasing wheat
import demand in northern Africa. However, unusually
dry weather conditions in autumn 2015 resulted in a
significant drop in wheat planting in Ukraine’s south
eastern Steppe Zone, leading to a substantial cut to the
country’s winter wheat yield prospects for 2016/17, with
harvesting starting in June. While weather conditions
improved substantially in spring 2016, the disruptions to
potential crop yields have resulted in a projected 38%
decline in Ukrainian wheat exports in the 2016/17 crop
year, to a three year low of 10.5mt.
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News AbstractsDry Bulk Terminals Group – July 2016 – Issue 158
******
Minor Bulk Trades
Chinese bauxite imports rose 18% y-o-y in the first five
months of 2016, to around 22mt. This was supported by
firm growth in shipments from Malaysia in Q1 2016.
Yet, in July 2016, the Malaysian government extended a
ban on bauxite mining in the Pahang province. This was
the second extension to the country’s bauxite production
ban, first introduced in January 2016 for an initial
threemonth period. Malaysian bauxite exports have
declined substantially in recent months, with miners only
able to ship existing stockpiles. In May 2016, Chinese
bauxite imports from Malaysia fell 50% y-o-y to 0.1mt.
However, China has largely managed to secure bauxite
imports from alternative sources in recent months. For
example, shipments to China from Guinea exceeded
3.5mt in January-May 2016, compared to 0.3mt in full
year 2015. Overall, Chinese bauxite imports are currently
projected to rise 4% in full year 2016, to around 58mt.
******
Bulk Carrier FleetThe pace of Capesize demolition slowed to a seven
month low in June 2016, with four units of a combined
0.7m dwt removed from the fleet. This compared to the
2.3m dwt of Capesize capacity scrapped in January 2016.
However, in the first six months of the year, a total of 66
Capesizes of 11.3m dwt were scrapped, compared to
15.4m dwt sold for demolition in full year 2015. With
Capesize deliveries totalling 12.1m dwt in the first six
months of the year, the strong pace of demolition sales so
far in 2016 has helped to keep total Capesize fleet
capacity largely steady in the year to date at 309m dwt.
The average age at which Capesizes have been scrapped
in 1H 2016 stood at 20.4 years.
Fleet Watch – To 1st July 2016Capesize vessels:
64 delivered
66 scrapped
30 ordered
During June 2016, the Panamax orderbook decreased for
a seventh consecutive month, dropping to a nine year
low, in terms of capacity, by the start of July. The
orderbook consisted of 277 units of a combined 22.7m
dwt at start July, representing 11.6% of the fleet, the
lowest percentage since early 2003. The decline in the
Panamax orderbook arose from a dearth of contracting
activity in the sector in the first half of the year. In total,
only two Kamsarmaxes were reportedly ordered in 1H
2016. Meanwhile, Panamax deliveries have continued at
a similar pace to 1H 2015 so far this year, with 72 units
of a combined 6.0m dwt entering the fleet in the first six
months of 2016.
Fleet Watch – To 1st July 2016Panamax vessels:
72 delivered
80 scrapped
2 ordered
At the start of July 2016, the Handysize fleet stood at
3,291 units of a combined 93.0m dwt, up 1% in terms of
capacity since the start of the year. Demolition in the
Handysize sector has slowed by 38% y-o-y in 1H 2016 in
capacity terms, with 85 units of a combined 2.4m dwt
sold for scrap. Meanwhile, Handysize deliveries totalled
83 ships of a combined 3.0m dwt. This was the lowest
volume of Handysize deliveries in the first half of a year
since 2009. Total Handysize fleet capacity is expected to
increase by 0.9% in full year 2016, and shrink marginally
in 2017. Meanwhile, growth in the Handymax fleet is
expected to slow to 4.8% in full year 2016 in capacity
terms, although this would still represent the fastest
growth of all of the bulker sectors.
Fleet Watch – To 1st July 2016Handymaxes:
118 delivered
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News AbstractsDry Bulk Terminals Group – July 2016 – Issue 158
61 scrapped
1 ordered
Handysizes:
83 delivered
85 scrapped
1 ordered
And Finally.......
As the new boy at DBTG, I wanted to bring something a little lighter to the news extracts. Therefore, I will try and bring something interesting, amusing or challenging to the end of each edition.
*****
First, the picture below was sent to us recently by a member who, when sending it, expressed their surprise at the image but can anyone out there offer an explanation as to what that surprise was? All answers to us here at [email protected] please and we will reveal what the surprise was in the August issue.
If anyone has an interesting or unusual image that we can use for a future edition, contact us at the same address.
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News AbstractsDry Bulk Terminals Group – July 2016 – Issue 158
*****
Secondly, a maths problem to keep you engaged when having a coffee:
Using only addition, how can you make Eight ‘8’s’ equal 1,000?
Answer in the next edition.
*****
Lastly, I saw this clue in a cross word recently and after a bit of head scratching, I got the right answer, can you?
Question:
A, B, C, D, E, F, G...............P, Q, R, S, T, U, V, W, X, Y, Z. (5 letters)
DBTG members are active world-wide so please contribute any interesting items from your own daily reading for inclusion in future issues of News Abstracts.Please send by e-mail to the Secretariat address below=================DBTG SecretariatTel: +44 1273 933817 Mob: +44 7595 457042E-mail: info@drybulkterminals. org