News Abstracts

Dry Bulk Terminals Group – October 2016 – Issue 161

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 the selection of news extracts for October 2016. As mentioned in the September issue, the next AAPA congress will be held in Merida Mexico 29th November to 2nd December. The congress will bring together Port Operators from across the USA and Latin America and DBTG has negotiated a discount for any members that wish to attend. Please contact me directly if you wish to take advantage of the discount.

I will there representing DBTG so please do let me know if any of you are attending so that we can meet in person.

The DBTG Spring meeting will be held at the end of March 2017 in Gijon in Northern Spain. I am currently working on the itinerary but will contact you all with the dates as soon as they are confirmed.

During the second week of October, DBTG Chairman Han Ozturk and me, met with Secretary General of the IMO, Kitack Lim. The meeting was an opportunity to discuss the Dry Bulk Terminal industry and the important role it plays in world shipping as well as reinforce the DBTG/IBTA relationship with the IMO. Mr. Lim’s interest in and knowledge of what you all do was extensive and he confirmed what we all know - that Dry Bulk is the life blood of the industry.

DBTG Chairman Han Ozturk, Secretary General Kitack Lim and DBTG Executive Director Nic Ingle at the IMO

Readers of the September edition will have seen that the Ballast Water Management Convention will enter force in early September 2017. Many members are not aware of this Convention but DBTG is already investigating what it might mean for you. There are a couple of extracts relating to it in this edition.

I hope the following extracts are of interest to you – if they are not then remember that it is only 8 weeks to Christmas!

Nic Ingle - Executive Director

DIARY DATES

  • AAPA Mexico, 29 November – 2 December
  • Intermodal Europe, 15-17 November
  • TOC Middle East, 6-7 December

IN THIS ISSUE

Shipping Matters

Economy/Finance/Trade

Commodities

Terminals/Ports

Ballast Water Management

Freight Market

SHIPPING MATTERS

Diana Shipping delays taking over newbuild bulker pair at CSSC yards - SMN 3rd Oct

Greece’s Diana Shipping Inc. has come to an agreement with China Shipbuilding Trading Company and Jiangnan Shipyard, subsidiaries of China State Shipbuilding Corp (CSSC), to extend the delivery dates of two newbuild dry bulk carriers.

The delivery period of one newcastlemax bulker has been delayed from 29 September this year to between 26-30 December 2016, while the second sister unit has been pushed back from 30 November this year to between 13-20 March 2017.

The global dry bulk shipping market is awashed with capacity and freight rates have stayed under pressure, leading to many owners seeking to push back deliveries of new bulkers.

At present, Diana Shipping’s fleet consists of 46 dry bulk vessels. The company expects to take delivery of one newbuildingkamsarmax bulker during the fourth quarter of 2016.

Safe Bulkers sells newbuild pair to chairman Hajioannou for $46m – SMN 4th Oct

Safe Bulkers has sold two newbuildings to its chairman PolysHajioannou for $46m to preserve liquidity.

The New York Stock Exchange-listed dry bulk shipowner is selling a panamaxnewbuilding for $21.5m and a kamsarmax for $24.5m to Hajioannou chairman and ceo of the company. The vessels are being built in Japan and are due for delivery in first quarter 2017.

Safe Bulkers will record an impairment loss of $16.6m on the transaction, which it said was done to “substantially preserve its liquidity position”. “Consistent with our efforts to preserve liquidity through arrangements with our commercial lenders and maintenance of a lean operational profile, these transactions have allowed the Company to continue to

minimize its cash outflows for capital expenditures,” said LoukasBarmparis, president of Safe Bulkers.

Abu Dhabi Ports launch automated vessel management system – SMN 4th Oct

Abu Dhabi Ports (ADP) has flicked the switch on its new digital vessel management system.

Through its port community system, Maqta Gateway, the new system offers complete automation of all vessel management processes and services across ADP’s network of commercial terminals including its flagship Khalifa Port.
Vessel registration, voyage declaration, vessel call requests and requests for port clearance, marine services and berth shifting are among the formalities controlled by the Maqta Gateway.

“The Vessel Management System was built around the needs of local industries and will play an integral role in streamlining and facilitating the import and export activities at our commercial ports, further boosting Abu Dhabi’s position as a leading maritime trade hub in the region,” ADP’s ceo Capt. Mohamed Juma Al Shamisi said.

“This is closely connected to our support of the digital transformation mandate of Abu Dhabi’s government services as we constantly strive to introduce new ways that ease the process of doing business in the Emirate.”

Shipping agents representing vessels operating in Khalifa Port, Musaffah Port, Zayed Port and the Free Ports undertook training on the new system last month ahead of its full implementation.

Dr Noura Al Dhaheri, gm of Maqta Gateway, believes it will transform the logistics supply chain and ultimately enhance the competitiveness of Abu Dhabi’s maritime and trade industries.

“Our team has conducted extensive research and studies to improve the traditional vessel management operations through utilising best-in-class practices which were then adjusted to the local industry needs before being implemented to all of our commercial ports,” she said.

Pacific Basin vessel earnings outperform market in Q3 – 7th Oct

Dry bulk shipowner Pacific Basin has reported that their daily time-charter earnings (TCE) for supramaxes and handysizes have outperformed the freight market indices during the third quarter.

Pacific Basin racked in TCE earnings of $7,360 per day for supramax vessels and $7,040 for handysize vessels in the third quarter, and its year-to-date average supramax and handysize daily net TCE earnings rose to $6,430 and $6,400, surpassing the BSI and BHSI by 21% and 44% respectively.

However, dry bulk freight market indices for all bulk carrier types have only started improving from historically low base seen in the first quarter, allowing Pacific Basin to easily outperform the market.

“The market benefitted from seasonally strong US grain export volumes during the third quarter, as well as increased iron ore and coal imports into China. However, the market remains depressed oversupplied with vessels, and conditions are still challenging for shipowners,” the shipowner commented.

As at 30 September 2016, Pacific Basin has secured cover for the final quarter of 2016 with 75% of its 4,950 contracted supramax revenue days at around $7,460 per day, and 74% of its 10,910 contracted handysize revenue days at around $7,960 per day.

Pacific Basin believed that more scrapping is required for the market to return to a healthier balance from loss-making freight levels at present.

“While self-correcting supply-side dynamics forced surplus capacity out of the market place in the extremely weak first half of the year, scrapping reduced in the third quarter and it is expected that the global dry bulk fleet will register a small net growth in capacity for the full year 2016,” the company said.

“The entry into force of the ballast water management convention in September 2017 will add to existing pressures on owners to scrap older and poorly performing ships, and thus shrink the oversupply, rather than invest in costly ballast water treatment systems and dry-docking.”

India’s JNPT to tap on solar energy for power – SMN 30th Sept

India’s Jawaharla Nehru Port Trust (JNPT) will tap on solar energy by installing solar power plant on several rooftops in the surrounding township and commercial premises, reports said.

The use of solar energy will allow the port to reduce its dependency on conventional electricity from the grid.

“This green initiative by JNPT is part of its push towards becoming the most sustainable energy generation port organisation in India,” India’s ministry of shipping said in a statement.

JNPT is expected to get a payback on its investment on rooftop solar within 2.5 years, the local media reported.

“This 822 kWp of solar rooftop capacity is being installed at an expense of INR45m ($674,000), supported by a 15% subsidy from SECI (ministry of new and renewable energy),” said the statement from the ministry of shipping.

JNPT is India’s largest container port, handling more than 4m teu of box volumes a year.

Dry bulk FFA market: Silence is golden SMN10th Oct

You could have heard a pin drop in the dry bulk freight market during Golden Week - with the exception of the forward freight agreement market.

FFAs have roared away through the week with trading volume increasing at an exponential rate. On Monday, the total FFA volume got off to a slow start with 255 lots traded across platforms like Singapore Stock Exchange (SGX) and Nasdaq.

After that the trading volume rocketed off to hit a remarkable 2,265 lots done - a nine fold increase overnight at 4 October 2016. The flurry of trading activities was carried over to Wednesday as well, recording at 4,340 lots, or nearly doubled the volume traded on the previous day. “There are lot of buyers entering the market recently,” said an FIS broker based in Asia.

The surge of enquiries may be trying to secure fixtures for the year-end or last quarter shipping seasons. However, the hype and excitement of the traded volume differed from ship-sizes as the market slumbered on the lull of the China’s Golden week holidays.

Capesize spot rates started the week sluggishly before they shook off the Chinese festive mood and booked a gain of $453 to hit $12,017 by mid-week. The improvement was due to increased enquiry seen in the Atlantic and the firming rates for the West Australia to East Asia route.

There remain concerns that the tonnage count in the North Atlantic will be plentiful and that this will cap the rises. However in the short term, the paper market is largely ignoring the speculation, apart from some mini sell-offs for profit-taking toward the end of the week. By contrast panamaxes were caught frolicking in the Chinese beaches during the week-long holiday. Spot rates stayed relatively flat as index drifted back and forth, before steadying itself near the end of the week.

A similar story was seen on supramax as the market thinned with limited activity amid China’s week-long holiday. The paper market remained static with limited activity throughout the day and Oct contract was seen trading $7,300 and the Q4 at $7,100. Meanwhile, the handysize market went on its own getaway during the Chinese holidays and stayed muted throughout the week.

As saying goes, “To rest is to prepare for a longer journey ahead”, the dry bulk freight may be going for its own retreat before heading for an uptick when the market resumes next week.

Dry bulk FFA market: The Chinese are coming (back) – SMN 14th Oct

After a week-long break, the Chinese participants swapped their baijiu for business suits and ties and came back to the trading floors and with their return brought the prospect of a post-Golden week market uptick.

Fired by the Chinese resurgence, market got off to a punchy start before hitting the brakes as Baltic Dry Index (BDI) hovered just above the 900 points level at 906 points on Wednesday, down 16 points as compared to Tuesday.

This “losing-steam” scenario was then played repeatedly in the FFA markets. First, paper got off to a slow start with around 775 lots exchanged hands on 10 October, Monday,which was a stark contrast to last Friday’s volume of nearly 2,000 lots traded.

Then, the trading volume went ballistic to hit 3,170 lots on Tuesday before winding down to 2,260 lots on Wednesday. This peak–trough cycle reflected the kind of impact that the Chinese participants held in the market; first beginning with a flurry of activity before settling down to a more realistic level.

As such, the capesize spot charter rate declined steadily at the start of the week with gradual losses from $14,013 on Monday down to $13,140 recorded on Wednesday, losing over $873 in just three days.

On the contrary, panamax spot rates had defied gravity and booked steady gains from $5,839 on Monday to reach $6,114 by mid-week trading. Trade sources indicated that there are more enquiries coming from Indonesia and Australia especially on coal shipments that inevitably drove up the rates. Meanwhile, gains are also seen in kamsarmax where rates were heard at $7,000 daily for rounds.

On the other hand, supramax and handysize rates did not catch on to the Chinese uptick, and remained statics throughout the week. For instance, supramax spot rates started the week lethargically at $7,076, then ended $7,048 by Wednesday, a change of just $28. However, the supramaxes lethargy may wear off with positive development in near term.

“Supramax paper like the larger vessels was subject to some positive momentum as we saw rates increase throughout the day,” said an FIS freight broker based in Asia.

He believed that the prompt has started to push with physical reports of better fixtures and a seemingly tightening Atlantic market.

Handysize spot rates however seem immune to the post-Golden week uptick with spot trading relatively unchanged at the range of $5,912 - $5,935.

So it is “business as usual” for Chinese traders, as they found their way back to the markets this week. On their return, they brought along some short-lived vitality, like a Sichuan hot pot: hot and spicy on the first taste before the numbness set in.

Chinese shipbuilding orderbook continues to deflate as growth slows for new deals – SMN 18th Oct

The shipbuilding orderbook at China’s shipyards has continued to deflate in the first nine months of 2016 as newbuilding deals slowed amid the protracted recession of the shipbuilding industry.

From January to September this year, the order backlog at Chinese shipyards was recorded at 109.3m dwt of vessel capacity, a drop of 18.1% year-on-year and down 11.2% compared to end-2015, according to figures from China Association of the National Shipbuilding Industry (Cansi).

The latest nine-month order backlog also shrank from 114.21m dwt seen in the January-August 2016 period, and was down from 123.04m dwt registered as at end-2015.

New orders received at Chinese yards inched up 2% year-on-year to 18.52m dwt in the first nine months, as the severely oversupplied market curbed newbuildorders, Cansi data showed. This compared to a sharp 18.7% year-on-year surge in new orders for the January-August 2016 period.

In completed tonnage, Chinese shipbuilders produced 24.93m dwt of vessel capacity from January to September 2016, a fall of 15.1% compared to the same period of 2015.

Fifty-one leading Chinese yards, monitored by Cansi, controlled more than 90% of the market share with 16.94m dwt of new orders received in the first nine months, down 18.3% compared to the year-ago period.

The 51 leading yards completed 23.38m dwt of new vessel tonnage in the nine-month period, down 13.5% year-on-year, and sat on a combined orderbook of 107.08m dwt as at end-September 2016.

A wider cluster of 94 main yards, also monitored by Cansi, booked a combined completed shipbuilding value of RMB121bn ($17.95bn) in the first nine months, a decrease of 3.2% from the year-ago level.

Among the total value, shipbuilding accounted for RMB84bn, repairs accounted for RMB5.3bn and equipment took up RMB4.8bn.

The 94 main shipyards also booked a combined revenue of RMB228bn in the first nine months, a decline of 4%, and a profit of RMB2.42bn, plummeting 26.7%.

Thoresen Shipping scraps elderly bulk carrier – SMN 21st Oct

Thoresen Shipping Singapore (TSS) has sold a 1994-built dry bulk carrier at a price of $2.72m to the scrapyard.

Thoresen Thai Agencies (TTA), parent of TSS, announced to the Bangkok Stock Exchange that the ship is the 42,529-dwt Thor Energy, which has been sent to the yard on 20 October.

After the sale for scrap of Thor Energy, the Thoresen fleet will consist of 20 vessels with an average size of 52,555 dwt and an average age of 11.43 years.

“The sale is in line with prevailing dry bulk shipping conditions, in which older vessels become less competitive and less able to meet operating costs,” TTA stated, adding that the sale is in line with TTA’s strategy to improve efficiency of the fleet and its fleet renewal program.