News Abstracts Dry Bulk Terminals Group – February 2017 – Issue 165 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. Welcome to the selection of news extracts for February 2017. Time really does fly, where did January go? The Spring meeting is just under 4 weeks away and planning for it continues. I sent a more detailed speaker list to you all 10 days ago and there have been a couple of additions to that since it was sent to you. Registration for the Spring meeting in Gijon (28 th and 30 th March) as well as the extra terminals tours in Santander on the 27 th , are looking strong. However, I am aware that some of you intend to come but have yet to submit a registration form. Can I urge those who fit in to this category to complete the form and get it to Julia as soon as possible please. The deadline date that the hotel held rooms for us has now passed too so if you are coming but have not yet booked the hotel, please secure your rooms so as to avoid disappointment. Failure to book the Abba Playa hotel means you won’t be staying where the cool people are! All the details for the meeting remain on the DBTG website at http://www.drybulkterminals.org /event/2017-dbtg-operational- and-technical-seminar- including-agm/ Last week it was my pleasure to spend a few days visiting DBTG Members in The Netherlands. I spent time in both Amsterdam and Rotterdam and courtesy of Executive Committee Member Jan de Wit, was given a fascinating tour of several terminals, witnessing firsthand, the bulk operations of our Members. The downside was the terrible weather that came with storm Doris which not only made standing up tricky but also cancelled all flights including mine back to the UK. There are 1 www.drybulkterminals.org
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News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165
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.
Welcome to the selection of news extracts for February 2017. Time really does fly, where did January go?
The Spring meeting is just under 4 weeks away and planning for it continues. I sent a more detailed speaker list to you all 10 days ago and there have been a couple of additions to that since it was sent to you.
Registration for the Spring meeting in Gijon (28th and 30th March) as well as the extra terminals tours in Santander on the 27th, are looking strong. However, I am aware that some of you intend to come but have yet to submit a registration form. Can I urge those who fit in to this category to complete the form and get it to Julia as soon as possible please.
The deadline date that the hotel held rooms for us has now passed too so if you are coming but have not yet booked the hotel, please secure your rooms so as to avoid disappointment. Failure to book the Abba Playa hotel means you won’t be staying where the cool people are!
All the details for the meeting remain on the DBTG website at http://www.drybulkterminals.org/event/2017-dbtg-operational-and-technical-seminar-including-agm/
Last week it was my pleasure to spend a few days visiting DBTG Members in The Netherlands. I spent time in both Amsterdam and Rotterdam and courtesy of Executive Committee Member Jan de Wit, was given a fascinating tour of several terminals, witnessing firsthand, the bulk operations of our Members.
The downside was the terrible weather that came with storm Doris which not only made standing up tricky but also cancelled all flights including mine back to the UK. There are worse places to be stranded over night....
Considering it was the shortest month, there was a lot of news in February. That means that this edition of the Newsletter is a little longer than usual. One story tells of senior shipping executives being held to account over wrong doing. Generally that means losing one’s job however in this instance a death sentence was handed out!
Finally, as always, if there is anything contained in this Newsletter that you would like to discuss further, please don’t hesitate to contact me.
The Chinese shipowner was declared bankrupt by a local
court in October 2016 due to mounting debts. The
parent firm Zhejiang Shipping had itself completed a
restructuring last year, leaving its subsidiaries Wenzhou
Shipping, Taizhou Shipping and Wuzhou Shipbuilding all
bankrupt.
What’s on the horizon for South America? – DBN Feb 21st
South America is in many ways the backbone for the dry
bulk shipping market. While China of course drives dry
bulk commodity demand, it is South America where a
particularly large amount of commodity supply comes
from. South America is blessed with an abundance of
iron ore, coal and grain – and also minor bulk cargoes,
including sugar. All of these cargoes are shipped to
buyers around the world on a daily basis. Also incredibly
important for the dry bulk shipping market is that the
vast majority of these cargoes are exported from the
Atlantic Basin. This is significant as it is here where spot
vessel supply most often becomes tight (as dry bulk
vessels are most often delivering their cargoes to buyers
in Asia, where they then become available in the spot
chartering market for another voyage).
The long-haul nature of many South American
commodity exports, combined with the wide-variety of
dry bulk commodities produced in South America,
makes South America a crucial region for the dry bulk
shipping market. All of the dry bulk vessel classes are
affected by production of South American commodities,
along with any supply disruptions and logistical
problems that, from time-to-time, arise in South
America. South America’s primary dry bulk exporting
nations, Brazil, Colombia and Argentina, are still
developing countries and are prone to more disruptions
than seen with major developed exporters, such as
Australia. Indigenous tribes in recent years have gone as
far as blocking major Brazilian iron ore railroads, which
in turn has led to vessel congestion surges at major
Brazilian iron ore ports. South American truckers and
other workers are also well known for their strikes,
while sudden increases in South American grain port
congestion has become fairly common. Vessels
grounding on the Parana River, where grain vessels
traverse en masse, is another logistical problem often
seen in South America.
Iron ore
Iron ore exports are a major component in the capesize
market and Brazilian iron ore shipments are perhaps the
most significant cargo capable of leading to sharp
changes in capesize shipping rates. While Australia is the
world’s largest exporter of iron ore cargoes, Brazil is the
world’s second largest iron ore exporter. In addition, it is
very significant that Brazil’s iron ore exports are shipped
out of the Atlantic Basin – as in times of tight spot vessel
supply, surges in Brazilian iron ore shipment activity
traditionally leads to strength in capesize rates (the vast
majority of Brazil’s iron ore is shipped in capesize
vessels). Overall, Brazilian iron ore shipments are a
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News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165major driver of the great volatility that is historically
seen in the capesize market.
Last year, Brazilian iron ore exports (which are shipped
primarily to buyers in Asia) climbed to a record of
366 million short t. This large increase primarily came as
a result of Vale and Anglo American ramping up
production. Last year’s record Brazilian iron ore
production marked a year-on-year increase of 21 million
short t (6%); this year another record is likely to be set.
At the time of writing, 2016 Brazilian iron ore exports
are on pace to climb to approximately 384 million short
t. This would mark a year-on-year increase of 18 million
short t (5%). Steady growth in Brazilian iron ore
production and exports are expected during the
upcoming years, primarily due to Vale’s plans to roll out
additional iron ore production from its long-waited S11D
mine.
Overall, the demand for Brazilian iron ore (and all iron
ore) has remained strong, even during times when
Chinese steel production has fallen. Demand has also
remained strong even at times when China’s iron ore
port stockpiles have been at very high levels. A key
Commodore Research view has been that Chinese iron
ore imports (including demand for Brazilian iron ore) has
been set to remain strong, and China has continued to
show the world that it has remained happy to purchase
as much iron ore as global miners want to sell. So far,
there still has been absolutely no decline in Chinese iron
ore import demand, and the outlook for both Brazilian
iron ore exports and overall iron ore demand remains
promising. Looking longer-term, one of the most
significant possible headwinds on the horizon for the dry
bulk market regarding Brazilian iron ore exports is the
possibility of Vale (and others) potentially ordering new
valemaxes. In addition, there still remains talk that China
and Brazil want to jointly construct a trans-Amazonian
railroad in Brazil. The proposed new railroad would be
used to rail iron ore mined in Brazil to the western part
of the country, and then iron ore would be shipped out
of the Pacific Basin. This would cut down the distance
that vessels carrying Brazilian iron ore would have to
travel when exporting iron ore to China and other
buyers in Asia. In addition, Brazilian iron ore shipments
would no longer be an Atlantic Basin cargo. Such a
change in the nature of Brazilian iron ore exports would
be damaging to the capesize market, but there still has
been no progress made regarding building this potential
new railroad. In addition, it would take many years for
construction to be completed, and the overall outlook
for the proposed trans-Amazonian railroad remains
unlikely.
Siwertell secures order for a next generation, road-mobile ship unloader – DBN Feb 15th
Siwertell, part of Cargotec, has secured an order for a
next generation, road-mobile ship unloader for an
undisclosed client. The 10 000 S trailer-based, diesel-
powered unit will be used to unload cement at a rated
capacity of 300 tph. It will join the customer's existing
Siwertell 10 000 S road-mobile unloader, which it has
been operating successfully since 2015.
"This contract adds to our growing list of repeat orders
for road-mobile units," said Jörgen Ojeda, Siwertell
Director of Mobile Unloaders. "The customer is very
satisfied with the performance and reliability of its
existing unit and turning to Siwertell technology once
again was not a difficult decision.
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News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165
"Customers like the operational flexibility road-mobile
unloaders offer, particularly for discharging ships at
multiple locations. The road-mobile unit is an excellent
choice in this case because the customer does not have
its own terminal. It rents space at an available jetty
when a cement vessel is due," Ojeda added.
The road-mobile unloader is completely autonomous
and does not require any installations on the jetty. It is
quick and easy to deploy and when the unloading
operation is finished the unit is folded up and driven
back to the customer's premises ready for its next
operation. The dust-free, environmentally-friendly
operation means that there are no jetty clean-up costs.
The new unit will be equipped with a dust filter and a
double-bellows system, allowing uninterrupted
discharge when changing between trucks or rail wagons.
It will be constructed at Siwertell's premises in Bjuv,
Sweden, with delivery scheduled for March 2017.
The customer has signed a Siwertell Service Contract
that covers both units. It includes two inspection and
service visits each year, along with remote support and
trouble-shooting via modem connection. It also provides
valuable discounts for spare parts.
"All our products are inherently robust and reliable, but
proper care and maintenance are important for a long
working life with minimal downtime," said Ojeda. "Our
service contracts provide a cost-effective way for
owners to protect their investments and get the best
results from them."
Drewry: improving demand could ease oversupply in dry bulk shipping – DBN Feb 13th
With contraction in vessel supply and healthy demand
growth, the dry bulk shipping market is expected to
recover from 2017 onwards, according to the latest
edition of the Dry Bulk Forecaster, published by global
shipping consultancy Drewry.
An impressive outlook for dry bulk demand coupled with
a small orderbook of newbuilds as a percentage of the
total fleet capacity will ensure a sustained recovery in
the dry bulk market. Earnings in the dry bulk market are
expected to improve from 2017 with a narrowing
supply-demand gap. Demand is projected to grow at a
healthy pace of 3% while supply is expected to grow by
about 1% from 2017, making the dry bulk segment an
interesting market to invest in.
The growth in demand originates from a rise in iron ore
and thermal coal trade. Coal demand is expected to rise
mainly from developing Asian countries, including
Vietnam, South Korea, Taiwan and China. The rise in
Chinese domestic steel consumption will provide
employment to VLOCs and capesize vessels carrying iron
ore in the market. On the other hand, Vale’s new project
S11D has become the most cost effective iron ore
mining project and will increase iron ore supply from
Brazil increasing total tonne-miles; this will help demand
for bigger vessels in the long term.
The supply side is projected to grow by just 1% from
2017 because of high scrapping and a thin orderbook.
The environmental regulations on Ballast Water
Treatment System (BWTS) will become effective in
September 2017 and IMO’s regulation on use of low
sulfur fuel oil in 2020, which will result in high scrapping
of old tonnages. Ship owners will prefer to scrap their
old tonnage, with low earnings potential, than incur
additional cost on scrubber and Ballast Water Treatment
Systems. On the other hand, a contracting orderbook
and low future new orderings due to limited financing
availability are keeping a check on future deliveries. At
this point in time, the orderbook as a percentage of the
total fleet, which is a strong indicator of future deliveries
currently stands at a decade low.
“The outlook for the dry bulk shipping market continues
to be positive as the supply and demand gap continues
to narrow. Charter rates are expected to improve for
most of the dry bulk segments in 2017 with the steepest
recovery expected in capesize segment. Average charter
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News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165rates are expected to rise from $8000 per day in 2016 to
$12 800 per day level in 2017 and will further improve
from 2018,” commented Rahul Sharan, Drewry’s lead
analyst for dry bulk shipping.
Clarkson commentaries – DBTO (Volume 23, No 2 – February 2017)Dry Bulk Supply & Demand Highlights
Difficult dry bulk market conditions persisted in January
2017, with average bulker earnings dropping 13% m-o-m
to a three month low and a historically subdued level of
$7,785/day. While Capesize earnings increased 9% m-o-
m in January supported by firm iron ore shipments into
China, earnings across the other bulkcarrier sectors
declined fairly sharply m-o-m.
Continued subdued bulker earnings have reflected the
oversupply situation in the sector, despite supplyside
measures such as firm scrapping activity in 1H 2016. The
pace of bulker demolition also eased in recent months
and a sharp m-o-m rise in deliveries saw a net addition
of 86 vessels, or 8.8m dwt, into the bulkcarrier fleet in
January 2017. Looking forward, bulkcarrier fleet
expansion is still expected to remain limited at around
1.9% in full year 2017, compared to a 5% pa. average in
the preceding five years.
On the demand side, China has maintained its firm pace
of dry bulk imports recorded throughout 2016, with
total iron ore and coal imports into the country up 12%
y-o-y and 64% y-o-y respectively in January 2017. While
China has the potential to continue to stimulate dry bulk
trade growth in the coming months, there is uncertainty
given the potential impact of Beijing’s policy changes
regarding domestic steel capacity and coal output.
Given the uncertainty in China, combined with
expectations of static dry bulk imports across most other
key regions, current projections indicate global seaborne
dry bulk trade growth of around 2.0% in 2017, a slight
improvement on the pace in the past two years, but
nevertheless historically subdued.
Overall, conditions in the bulkcarrier market remained
difficult in January, given the ongoing oversupply
situation. Looking forward, while continued supply side
measures are expected to help ease the pace of
bulkcarrier fleet expansion, the oversupply will still take
some time to be absorbed, especially given expectations
of relatively sluggish levels of dry bulk trade growth for
at least the near future.
Seaborne Iron Ore Trade
CommentaryGlobal seaborne iron ore trade is estimated to have
increased 4% to 1.4bn tonnes in 2016. This largely
reflected the unexpectedly firm increase in Chinese iron
ore import demand to reach a record 1bn tonnes, which
offset the decline in iron ore shipments into most other
key importing regions in Europe and across Asia. Looking
forward, current projections indicate a further 4% rise in
global seaborne iron ore trade to around 1.5bn tonnes
in 2017. This is expected to be largely driven by a firm
increase in output and shipments of competitively
priced iron ore cargoes from the major miners in Brazil
and Australia. In Brazil, the addition of output from
Vale’s S11D, which shipped its maiden iron ore cargo in
January 2017, is expected to contribute to an 8%
increase in the country’s total seaborne iron ore exports
to around 400mt. Meanwhile, current projections
indicate a 3% rise in Australian iron ore shipments to
834mt in 2017, supported by the ramp up in output
from Roy Hill towards an expected rate of 50mtpa by
the end of the year.
Iron Ore NewsHaving hit a record high of over 1.0bn tonnes in 2016,
Chinese iron ore imports continued at a firm pace into
early 2017. Provisional customs data indicates that total
Chinese iron ore imports increased 12% y-o-y to hit
92mt in January 2017. This represented a record high for
January and was above the monthly average of imports
in 2016. The firm pace of iron ore shipments into China
26www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165in January reflected the country’s continued cuts to
domestic iron ore output and an ongoing rise in
stockpiling activity at Chinese ports. Iron ore inventories
at key Chinese ports were up 24% y-o-y at 116mt at the
start of January 2017 and reports indicate a continued
build-up in recent weeks. However, there are early
indications that growth in the country’s steel output has
eased slightly, with the pace of steel production at CISA
member mills dropping to a six month low of 593mtpa
in mid-January 2017. Nevertheless, current projections
indicate a 5% increase in Chinese seaborne iron ore
imports to around 1,063mt in 2017.
Japanese customs data indicates that the country’s iron
ore imports dropped 1% to a five year low of 130mt in
2016. This partly reflected pressure on the country’s
steel manufacturers given the low steel price
environment and an influx of competitively priced
Chinese steel products exports in 1H 2016. This led to a
1% drop in the country’s crude steel output in the
period. While Chinese steel products exports dropped
somewhat in 2H 2016, supporting a boost in Japan’s
steel production, the recovery was insufficient to drive
overall growth in the country’s iron ore import demand
in full year 2016. This was also partly due to the
significant rise in global iron ore prices in Q4 2016,
which encouraged an increase in destocking activity in
Japan. Looking forward, Japanese iron ore imports are
projected to remain relatively static in 2017.
Seaborne Coking Coal Trade
Commentary
Global seaborne coking coal trade is estimated to have
dropped 2% to total 245mt in 2016. This was largely
driven by an estimated 11% decline in coking coal
shipments into the EU to a seven year low of around
33mt. Steel producers in the region came under severe
financial pressure, given the flood of competitively
priced steel products exports from China into the global
market, combined with a depressed steel price
environment in the period. While Chinese steel products
exports dropped in 2H 2016, EU steel output remained
sluggish until Q4 2016 and declined 2% in full year 2016.
Looking forward, EU crude steel output is expected to
stabilise in 2017, contributing to relatively steady
seaborne coking coal import demand into the region. EU
steel producers are expected to be supported by a
number of tariffs on steel products imports, including
duties on Chinese and Taiwanese steel tubing and
welding fittings, introduced in January 2017. This
stabilisation in EU coking coal import demand is
projected to contribute to a 1% rise in global seaborne
coking coal trade to around 247mt in 2017.
Coking Coal NewsGlobal coking coal price levels rose significantly to hit
multi-year highs in 2H 2016 driven by restrictions on
Chinese domestic output, the country’s firm import
demand and speculative trading on coal futures
markets. Indeed, the benchmark daily Australian FOB
coking coal price more than trebled from $100/t in late
July 2016, to exceed $310/t by the end of November.
However in recent weeks, global coking coal price levels
have fallen relatively sharply, with the Australian FOB
spot price down to $150/tonne by mid-February 2016.
This partly reflected the increase in Chinese domestic
coal output in the final months of 2016, as Beijing scaled
back its restrictions on mining output capacity, first
introduced in March 2016. Data released by the Chinese
National Bureau of Statistics indicates that the country’s
coking coal output totalled 31mt in December 2016,
which was 13% above China’s average monthly output
throughout the rest of the year. Furthermore, as coking
coal prices rose firmly in 2H 2016, especially for high
quality Australian product, Chinese buyers turned to
alternative import sources. Coking coal railings from
Mongolia rose 83% y-o-y to a record 3mt in December
2016, which was also 50% above Chinese coking coal
imports from Australia in the period. While falling price
levels are expected to support Chinese demand for
Australian and other seaborne imported coking coal in
the coming months, there remains a degree of
uncertainty given the potential impact of policy
decisions on China’s domestic coking coal output. Yet,
27www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165provisional reports released in mid-February indicate
that the China Coal Association is likely to reintroduce a
276-day annual output cap on domestic coal mines in
March 2017, which if ratified would likely provide
support to the country’s coking coal import demand in
2017. Current projections indicate a 3% rise in Chinese
seaborne coking coal imports to 37mt in full year 2017.
Seaborne Thermal Coal Trade
CommentaryGlobal seaborne steam coal trade is estimated to have
remained fairly static at 890mt in 2016, reflecting firm
growth in Chinese imports balancing out a drop in
shipments into other regions. Beijing’s measures to
reduce China’s coal mining output, including a 276
working day cap, boosted the country’s steam coal
import demand. While the government reversed its
mining restrictions in October 2016, domestic coal
output grew at a sluggish rate in Q4 2016. Chinese
seaborne steam coal imports rose 28% to 165mt in full
year 2016, while customs data has indicated further
robust growth in January 2017. Looking forward, while
there is uncertainty regarding Chinese steam coal import
demand, reports indicate the likely reintroduction of the
276-day policy in the coming months, which could boost
the country’s steam coal imports. Current projections
indicate a 2% increase in Chinese steam coal imports to
around 168mt in 2017, although there are still a range of
possible scenarios. Overall, global seaborne steam coal
trade is projected to remain fairly steady at around
893mt in 2017.
Steam Coal NewsSeveral major Indonesian coal mining companies have
announced plans to raise their output in 2017, in a bid
to take advantage of still firm global steam coal prices.
The Indonesian government also recently raised
its national coal production target for 2017 to 470mt,
which would be up around 14% from the country’s
estimated output in 2016. While this may appear
promising for the country’s export growth, an increasing
proportion of output is to be set aside for domestic
consumption, while Indonesian coal exports have
recently also faced a series of disruptions. Road closures
have affected coal deliveries in South Kalimantan and
difficult weather conditions disrupted transfers from
barges to larger vessels off the coast of Borneo Island.
Furthermore, while still firm, steam coal prices have
been sliding in recent months, with the Indonesian
4,700Kcal FOB steam coal spot price at $57/t at the start
of February 2017, down 19% since early December
2016. Finally, there is uncertainty regarding demand for
Indonesian coal among key importing nations, such as
India. Overall, current projections indicate a 1% drop in
Indonesian steam coal exports to around 350mt in 2017.
Indian domestic steam coal production increased 6% y-
o-y to hit a ten month high of 56mt in January 2017.
While firm, the output level remained somewhat short
of the country’s notoriously ambitious production
targets, which was partly owing to India’s slower than
expected coal fired power generation growth and
ongoing destocking activity in recent months. Indeed by
the start of January 2017, steam coal stockpiles at key
Indian power plants stood at 21mt, which was down
around 40% y-o-y. Nevertheless, India’s continued
domestic output growth is expected to undermine the
country’s steam coal import demand in the coming
months. Furthermore, reports indicate that Indian
buyers have reportedly been put off the steam coal
import market given the current high price environment.
Overall, Indian steam coal imports are projected to drop
4% to a four year low of around 149mt in 2017.
Grain Imports
Grain Trade NewsGlobal wheat and coarse grain trade is expected to drop
1% to 340mt in the 2016/17 crop year. This largely
reflects expectations for reduced import demand in a
number of major grain importing countries. In China,
suitable weather conditions have supported harvests,
while destocking activity has been firm. The country’s
grain imports are projected to drop 34% to around 15mt
in 2016/17. This is projected to contribute to a 6% drop
28www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165in grain imports into Asia to 110mt in the crop year.
Meanwhile, total grain shipments into the Middle East
are projected to drop 2% to 53mt in 2016/17, reflecting
easing import demand in Iran and Saudi Arabia.
Elsewhere, total grain imports into Africa are projected
to drop 1% to 75mt in 2016/17, although this is
expected to be driven by a decline in imports into a
range of smaller importing countries in the region, while
Egyptian grain imports are projected to rise 1% to 21mt.
Grain Imports
Grain Trade NewsTotal Indonesian grain imports are projected to drop
21% to 10mt in 2016/17. This partly reflects the
impact of the government’s measures to increase
domestic production and reduce the country’s reliance
on imported animal feed and wheat. Indonesian wheat
harvests are projected to reach around 10mt in
2016/17, in line with the country’s historical record. The
government has also enforced restrictions on the
country’s corn imports, centralising purchases and
introducing a 1mt per annum cap on imported volumes.
Jakarta has announced its intentions to eradicate the
country’s coarse grain imports which stood at 3mt in
2015/16, by the end of the 2017/18 crop year. While
this is widely regarded as an ambitious target, the
overall drive towards self-sufficiency is expected to
undermine Indonesian grain import demand in the
coming years.
Grain Exports
Grain Export NewsAustralian wheat harvests have excelled in recent
months, particularly in areas of Western Australia
where plentiful rain and favourably cool temperatures
contributed to record yields. Total Australian wheat
harvests are expected to reach around 34mt in the
2016-17 crop year, overshadowing the country’s
previous record of 30mt set in 2011/12. With the
country’s wheat inventories also nearing record levels,
Australia’s growing surplus is expected to further
stimulate the country’s wheat exports throughout 1H
2017, largely to markets across South East Asia. Current
projections indicate a 46% rise in total Australian wheat
exports to 23mt in 2016/17. This is expected to dampen
wheat prices and potentially undermine shipments from
the Black Sea into South East Asia. Overall, global wheat
trade is projected to rise 1% to around 166mt in
2016/17.
Minor Bulk Trades
CommentaryGlobal seaborne fertiliser trade dropped 2% to around
151mt in 2016. The steepest decline among the featured
fertilisers was in seaborne urea trade, which fell 7% to a
three year low of 36mt in 2016. This reflected the global
oversupply of nitrogen fertilizers and the impact of the
subsequent low price environment on urea producers.
Indeed, significant levels of urea output capacity in
China, the world’s leading urea exporter, was shuttered
in 2016, which was also due to firming anthracite prices
inflating output costs. By the end of 2016, only 52% of
Chinese urea capacity was reportedly active, which was
down from 62% at the end of 2015. Looking forward,
continued price pressures are expected to result in
further urea capacity cuts in China. Current projections
indicate a 30% drop in the country’s urea shipments to
around 6mt in 2017, accounting for around 18% of
global seaborne urea exports.
Bulkcarrier Fleet
CommentaryIn January 2017, 16 Capesizes of a combined 3.2m dwt
were delivered into the fleet, while 8 units of a
combined 1.8m dwt were scrapped. The net addition of
8 vessels and 1.4m dwt in January 2017 saw the
Capesize fleet reach 1,660 units of a combined 316.6m
dwt by the start of February. This represented a 2.1% y-
o-y expansion in the Capesize fleet in terms of dwt: the
largest y-o-y rise in the sector’s fleet since May 2015.
Meanwhile, the Capesize orderbook stood at 149 units
of a combined 37.3m dwt at the start of February, which
29www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165was the smallest size since March 2006 in terms of dwt.
This represented 11.8% of the fleet, compared to 14.9%
at the start of February 2016.
Fleet Watch – Full Year 2016
Capesize vessels:
16 delivered 8 scrapped 0 ordered
CommentaryJanuary 2017 was the 11th consecutive month with no
Panamax vessels reported ordered, despite the
guideline newbuild price for a 75-77,000 dwt unit having
stood at $24m since June 2016. This compared to the
peak of $55m in mid-2007. The dearth in newbuilding
activity since February 2016 represents the longest
inactive period in the sector in at least 20 years, which
has significantly contributed to a contraction in the size
of the Panamax orderbook. Indeed, at the start of
February 2017, there were 161 Panamax units of a
combined 13.3m dwt on order. This was the smallest
size of the Panamax orderbook since June 2003, both in
terms of dwt and unit numbers.
Fleet Watch – Full Year 2016
Panamax vessels:
27 delivered 3 scrapped 0 ordered
CommentaryIn January 2017, 42 of the 104 units delivered into the
bulkcarrier fleet were Handymax vessels. These
combined to a total of 2.6m dwt, which was the largest
monthly total of Handymax deliveries in five years. Of
those vessels entering the Handymax fleet in January,
33 units of a combined 2.1m dwt were Ultramaxes (60-
70,000 dwt) highlighting the popularity of contracting
activity in this size range in recent years. This
represented over 80% of Handymaxes delivered in
January 2017 in terms of tonnage, which was closely in
line with the share of Ultramaxes remaining in the total
Handymax orderbook at the start of February 2017. In
contrast, Ultramaxes accounted for only 22% of total
Handymax fleet capacity at the start of February.
Fleet Watch – Full Year 2016Handymaxes:
42 delivered 2 scrapped 0 ordered
Handysizes:
19 delivered 5 scrapped 0 ordered
Commodity Countdown
Minor Bulk Trade: Indonesia Back In The Game?
Seaborne minor bulk trade is estimated to have
remained steady at best in 2016, making it the third
consecutive uninspiring year of minor bulk trade growth
following the introduction of Indonesia’s refined mineral
export ban in January 2014. Indonesia is now set to
restart bauxite and nickel ore exports in 2017 which,
given the country’s previous key role, may help to
change minor bulk trade dynamics.
Two Distinct Periods
Seaborne minor bulk trade is estimated to have dropped
0.3% to 1,851mt in 2016, partly due to a sharp drop in
bauxite and nickel ore shipments. This contributed to
average seaborne minor bulk trade growth of only 0.5%
pa. in 2014-16, compared to 4.9% pa. in 2011-13. This
notable drop in the pace of total minor bulk trade
growth between the two periods coincided with the
introduction of Indonesia’s mineral export ban in 2014.
A Big Presence On The Pitch
In the three years prior to the ban, Indonesian minor
bulk exports grew by an average of 35% pa, accounting
for almost a third of total minor bulk trade growth. This
30www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165expansion was driven by a firm rise in the country’s
bauxite and nickel ore shipments, which hit a combined
120mt in 2013, accounting for 64% of global seaborne
exports of these commodities. The majority of this
volume was shipped to China, with buyers building up
stockpiles ahead of the mineral export ban.
A Decision To Bow Out
In January 2014, Indonesia introduced its ban on
unprocessed mineral exports, including bauxite and
nickel ore, in a bid to promote the country’s processing
industry. The emergence of alternative exporters such as
the Philippines and Malaysia failed to fill the gap left by
Indonesia, leading to an average 12% pa. Drop in
combined seaborne bauxite and nickel ore trade in
2014-16, compared to a 29% pa. rise in 2011-13. Overall,
while declining trade in agribulks, scrap metal and some
other commodities have also undermined recent minor
bulk trade growth, the disruption to bauxite and nickel
ore trade which followed the Indonesian mineral export
ban accounted for over 75% of the change in overall
minor bulk trade growth between the two periods.
Back In The Game
Then in January 2017, Jakarta unexpectedly relaxed its
mineral export ban. Given ongoing disruptions to
Malaysian and Philippine mineral exports, Indonesia’s
return may provide a well timed source of minor bulk
trade growth. In the short-term the impact is likely to be
limited, with Indonesian exports of nickel ore and
bauxite expected to displace shipments from other
exporters and total around 10-15mt combined in 2017.
However, given the country’s previous role as the key
bauxite and nickel ore exporter, the longer-term
implications may be more significant. So, while a wide
range of commodities contribute to global seaborne
minor bulk trade, volatility in seaborne bauxite and
nickel ore trade as a result of Indonesian export policy
has been a key factor in shaping overall minor bulk trade
growth trends in recent years. Looking forward, while
the impact of Indonesia’s return may at first be fairly
gradual, it has the potential to change the minor bulk
game,
And Finally.......
I am not convinced that many of you make it this far through the Newsletter however I get the odd frustrated e-mail so purely for my amusement here are a couple of teasers for this month.
January Answers
*****
I asked:
The maths:
If you take 3 apples from a bag containing 5, how many do you have?
Answer: You took 3 apples out so you have 3
*****
And a logic puzzle:
What can run but never walks, has a mouth but never talks, has a head but never weeps, has a bed but never sleeps
Answer: A river!
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News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165
*****
The maths question this month:
To the nearest cubic centimetre, how much soil is there in a 3m x 2m x 2m hole?
*****
And a logic puzzle this month:
Which seven letter word contains thousands of letters?
*****
That is it for February. I hope to see you all in Gijon...........
Answers to [email protected] please and I will reveal the answers in the March issue.
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 Fax: + 44 1273 933715E-mail: info@dry bulkterminals. org