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News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168
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.
Hello and welcome to the selection of news extracts from May 2017. At last the sun has come out in the UK after what seemed to be weeks of clouds and cold weather. Of course after 3 nice days we have thunder storms but that is better than the cold!
I have been back from my Mexico/USA trip for a couple of weeks now and whilst my Spanish is fading, my reasons for going are not.
I thoroughly enjoyed visiting NAEGA in Washington, who gave me a warm welcome and a tour of their new offices. We are very keen to renew our Memorandum of Understanding with NAEGA and I hope to have more news on this shortly.
I also visited Miami to see Rafael Diaz-Balart, the Latin American co-ordinator for the AAPA. The 2017 Congress in Punta del Este, Uruguay, is being held 6th to 9th November and we are teaming up with them for the next DBTG meeting which will follow them on 9th & 10th.
I will be speaking at the AAPA Congress in Uruguay and all of the DBTG Members I have spoken to so far have all told me that Uruguay is on their list of places to visit so I really do hope that as many of you as
possible will be able to attend not just the DBTG meeting the AAPA Congress too.
As I advised in the March edition, the next DBTG meeting will be held in Punta del Este in Uruguay on the 9th and 10th November. Our meeting will run immediately after the AAPA Latin American Congress (6th – 8th). In a few days I will visit the AAPA in Miami to discuss our partnership on this venture, please watch this space for more detail in future editions.
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.
Nic Ingle - Executive [email protected]
DIARY DATES MAST Asia, 17th-19th May, Tokyo Nor-Shipping, 30th May – 2nd June, Oslo CWC World LNG & Gas, 20th June,
Houston TOC Europe, 27th June, Amsterdam
IN THIS ISSUE
Shipping Matters Economy/Finance/Trade Commodities Terminals/Ports Freight Markets
SHIPPING MATTERS
1www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168
Poor cyber security on vessels provides backdoor to corporate systems: Inmarsat – SMN 30th April
A lack of cyber security onboard vessels can act as
backdoor for hackers to get into onshore corporate
systems.
While cyber security has become a lot more in focus
onshore in offices for shipping companies the level of
protection onboard vessels is yet to catch up, leaving a
vulnerability for cyber criminals to exploit.
“Centrally on a ship there is not a lot of that is of true
value but if somebody can use that ship as a backdoor
into a corporate environment,” Peter Broadhurst, senior
vice president safety and security for Inmarsat, told
Seatrade Maritime News at Sea Asia 2017.
“What we see is a lot of C level executives are saying our
company needs to be secure because we’ve got a lot of
financial information, so they company secure. But then
they allow all these ships to connect to the company
infrastructure and they don’t consider them as
something that needs to secure,” he said.
“They need to broaden their horizons when it comes to
cyber, take a more complete of the picture, or else they
will just compromise themselves.”
Incidents onboard are caused by the same reasons as on
land with phishing attacks the most common threat, and
Broadhurst said seafarers needed to be trained in cyber
security.
“It’s very easy for the seafarer with no training on that
just to click on the link or the attachment and you’re
infected, and you don’t know you’re infected and then it
starts to proliferate across the vessel,” he explained.
Similarly malicious software can be brought onboard via
laptops or mobile devices belonging to the seafarer.
The resulting attacks can see systems both on the vessel
and onshore hijacked by ransomware, or confidential
data stolen and sold on the Dark Web.
“That can lead to financial loss and most definitely leads
to reputational loss which in shipping is really a problem.
From a cargo perspective if you can’t give that kind of
level of certainty you’ll not be the choice of cargo
owner,” Broadhurst warned.
Inmarsat will be rolling out its Unified Threat
Management solution which will inspect all incoming
traffic and local area network extensions on the vessel.
He said that if an individual client on the ship is
compromised the system will quarantine it, identify the
problem computer, which allows for the company to fix
the problem.
Dry bulk tonnage glut sees signs of shrinking: Precious Shipping – SMN 2nd May
The lingering tonnage glut that is troubling the global
dry bulk shipping market may soon see a considerable
deflation to match demand, in view of increasing trade
flows coupled with upcoming IMO regulations that
would accelerate scrapping of older ships, according to
Precious Shipping.
Khalid Hashim, managing director of Precious Shipping,
noted that while the global dry bulk fleet has continued
to grow in 2016 and over the first quarter of 2017, the
Baltic Dry Index (BDI) has also risen.
“This can only mean that trade flows have increased
more than the supply side or, conversely, that balance
between supply and demand is not that far off,” Hashim
commented.
Last year the dry bulk fleet grew by 18.51m dwt. In the
first quarter of 2017 the fleet grew by 12.29m dwt.
“Further, the Ballast Water Management (BWM)
convention and the ‘clean’ oil convention should
combine to put a massive dent in the supply side
2www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168between the years 2018 and 2020 inclusive,” Hashim
observed.
The IMO BWM Convention is set to enter into force in
September this year while the ‘clean’ oil convention is
the global 0.5% cap on fuel sulphur content that will be
enforced in 2020.
The regulatory pressures from the BWM convention is
expected to increase scrapping significantly in 2018 to
around 35-40m dwt. “If we were to apply a slippage
factor of 50% and scrapping of 37.5m dwt then we
would get a negative fleet growth of minus 2.23% and a
year ending fleet of 784.76m dwt in 2018,” he said.
On the 2020 sulphur cap regulation, Hashim believed
that the median vessel in 2020 is a vessel without
scrubber. “This implies a significant cost saving for
vessels equipped with scrubbers, but also a 10-15%
speed reduction for the median vessel using expensive
(clean) fuel which will reduce overall transportation
supply,” he said.
However if scrapping is not strong enough in 2018/2019
despite the IMO regulations, then the market would be
dependent solely on the demand side, Hashim said.
China will continue to be a major market for dry bulk
shipping but there are uncertainties due to reduced
consumption of coal and higher domestic steel output,
while at the same time domestic coal output and
inventory are low and demand for steel continues to be
needed for ongoing infrastructure development.
Meanwhile, dry bulk shipowner Precious Shipping has
significantly narrowed its first quarter loss to $1.7m
compared to the deficit of $34.04m in the same period
of 2016.
The reduced loss was partly due to Precious Shipping
generating a 79% year-on-year jump in average earnings
per day per ship at $8,588 during the first quarter.
Dryships stays in red in Q1 – SMN 11th May
Dryships Inc. has stayed in the red for the first quarter of
2017 but it managed to significantly narrow its loss
compared to the year-ago period, and looks forward to
strengthening its bottomline with an expanded fleet.
Net loss for the quarter ended 31 March 2017 was
recorded at $10.71m compared to the bigger deficit of
$107.15m in the same period of 2016. The wider loss in
the year-ago period was due mainly to equity losses of
$45.71m in Ocean Rig, which Dryships sold its stake to
an Ocean Rig subsidiary.
Revenue for the first three months this year was
registered at $11.81m, down 30.6% year-on-year.
“Dryships has come a long way since last year when we
were fighting for the company’s survival,” commented
George Economou, chairman and ceo of Dryships.
“Since then we have cleaned up the company’s balance
sheet and almost doubled our fleet by acquiring modern
quality assets. With this rapid expansion phase behind
us we look forward to taking delivery of the vessels we
have acquired in the last few months at historically low
asset values and starting to generate revenue that will
improve our bottomline and demonstrate the earnings
capacity of our fleet over the next few quarters.”
The company’s latest vessel acquisition was made on
Wednesday when it entered into an agreement with an
entity affiliated with Economou to acquire one 158,000-
3www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168dwt suezmax tanker currently under construction in
China at a price of around $64m, with delivery
scheduled in May this year.
Over the last six months, Dryships has raised
approximately $570m of equity for the purpose of
acquiring modern vessels in various segments.
On aggregate, the company entered into agreements to
acquire 17 vessels of which 12 are with unaffiliated third
parties, with an average age of two years for a total cost
of around $765.5m.
Dryships is waiting to take delivery of seven dry bulk
carriers, one VLCC, one aframax and one suezmax during
the second quarter, and four VLGCs between June to
December.
Dry bulk freight: Still the servant of the Chinese demand cycle – SMN 12th May
It is hard to break the chain-links between the dry bulk
markets from the general health of China’s economy. In
common with a lower China Purchasing Managers' Index
(PMI) seen in April, the Baltic Dry Index (BDI) has
stumbled to the current level of 1,000 from the 1,100
points last month.
Perhaps the BDI is just following its routine of recording
higher rates during spring time before a summer lull
with a later pick up again during fall, ahead of the winter
restocking. This pattern has followed the construction
activities of China with religious fervor, as China is the
world’s bigger importer of raw materials, accounting
nearly half of the global share.
However, it seems that the seasonal peak and lull
periods are getting shorter and harder to predict. In
April, China’s imports of iron ore went down by 3.7%
month-on-month to a total of 83.27m tonnes, according
to Thomson Reuters Supply Chain and Commodity
Forecasts. Similarly, the country’s imports of coal also
fell in April to 18.95m tonnes, down 2.8% month-on-
month due to cyclone-related logistics problems in
Queensland, Australia.
Despite the slowing picture of seaborne trade, capesize
FFA rates had been ascendance this week, hitting
$12,446 on Tuesday, up $364 on a day-on-day basis.
“The capesize paper market gave up some of yesterday’s
gains despite the physical continuing to nudge higher in
both basins,” explained a FIS freight forward broker
based in Asia.
The panamax market meanwhile stagnated to a slide by
$12 day-on-day to $8,100 on Tuesday, likewise
supramax rates retreated by $12 to $8,842, while
handysize rates decreased by $70 to $7,435.
“Despite the uncertainty around the physical outlook,
current support, although patchy does seem to be
holding and the general tone is more optimistic,” added
the FIS FFA broker.
Fortescue Metals Group’s ceo Nev Power seemed to
share this market optimism as well and giving the
Chinese economy a vote of confidence during a recent
media conference. In his opinion, China remains the key
demand driver of iron ore for the long term, proven by
its track record of average production of nearly 800m
tonnes per year - or almost half the world’s steel output.
Besides China, Power expects that the rest of Asia to
remain a vibrant market for iron ore and steel
consumption. Despite the scaling down of iron ore
prices from the peak $95 per tonne seen early this year
to the $67 per tonne level, the FMG’s ceo still felt that
the current price levels are still “very strong”.
It seems freight rates will still bend to the mood of the
Chinese economy – a reality not lost on the authorities.
Having just pledged to keep economic growth at 6.5%
this year, the Chinese still have a trump card up their
sleeve in the shape of the ‘One Belt, One Road’ project.
4www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168Despite being a long term project, the participating
members are meeting in Beijing this weekend and the
result may give a further lift to seaborne raw materials,
in turn driving support for the freight market. And if that
does not happen, the country’s steel demand will still be
supported by Chinese policy makers anyway - to ensure
consistent growth ahead of the elections to be held later
in the year.
Rickmers Maritime bondholder drops injunction blocking fleet sale to Navios – SMN 17th May
A disgruntled individual bondholder of bankrupt
Rickmers Maritime has dropped a suit aimed blocking
the sale of the trust’s fleet to Navios Maritime Partners.
On Monday bondholder Kwok Kian Tow Peter filed an
injunction with the Singapore High Court to block the
sale of Rickmers Maritime fleet of 14 boxships to Navios
Partners. A hearing was originally fixed for Monday and
then adjourned to Friday.
“The plaintiff has on the 17 May 2017 withdrawn his
application and discontinued his court case against the
trust with leave from the High Court with no order as to
costs,” Rickmers Trust Management (RTM) said in a
statement to the Singapore Exchange on Wednesday.
RTM had raised strong objection to the injunction which
it described as “unprecedented in the history of the
bond market in Singapore”.
On Wednesday RTM urged “all creditor parties to
abstain from actions that may jeopardize or delay the
orderly wind-up of the Trust, which could adversely
impact value and timing of any recoveries”.
On 21 April this year Navios Partners announced it
would buy Rickmers Maritime’s fleet of 14
containerships for $113m. The Singapore shipping trust
is in the process of winding-up after failing to agree a
financial restructuring with its bondholders and other
creditors.
Updated: Disgruntled Rickmers Maritime bondholder seeks to block fleet sale to Navios Partners – SMN 15th May
A Rickmers Maritime Trust bondholder has brought an
“unprecedented” injunction in attempt to stop the sale
of its fleet to Navios Maritime Partners.
Although the Singapore-listed trust had filed to be
wound-up the saga with its bondholdlers continues with
an individual bondholder Kwok Kian Tow Peter filing an
injunction to block the sale of Rickmers Maritime fleet to
Navios Partners, unit Navios Partners Containers Inc.
Kwok holds the minimum amount SGD250,000 of
Rickmers Maritime’s SGD100m notes which the trust
failed to redeem in April 2017.
A court hearing was fixed for Monday 15 May, but
adjourned until 22 May with directions to the parties to
exchange affidavits before the new hearing date.
Last December bondholders blocked a proposed
financial restructuring of Rickmers Maritime leading to
the eventual move to wind-up the trust in April this
year.
“The plaintiff has not previously communicated with the
trustee-manager as to this matter and the injunction
application was completely unanticipated by the trust,”
Rickmers Trust Management told the Singapore
Exchange.
“The trustee-manager is of the view that the injunction
application is wrongful and seriously jeopardises the
unsecured creditors’ partial recovery of their
investment.”
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News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168
It said that Kwok had violated the deeds of the trust by
making a legal application on his own rather than via
notes trustee DB International Trust (Singapore).
“This is unprecedented in the history of the bond market
in Singapore and, if allowed, will disrupt the bond
market processes, negate its longstanding legal
foundations and open up a floodgate for individual
noteholders to commence disruptive legal action on
their own, completely disregarding the terms of the
Notes Trust Deed,” RTM stated.
“In his application for the injunction, the plaintiff also
seeks to be exempted from an undertaking as to
damages to be provided to the court in case the
injunction is found to be wrongful. This is highly
unorthodox and would seriously and irreparably harm
the orderly winding up process of the trust if the
injunction is to proceed against all known norms.”
On 21 April this year Navios Partners announced it
would buy Rickmers Maritime’s fleet of 14
containerships for $113m.
“Such sale, assuming it closes within a reasonable
amount of time (as is expected), will result in up-front
cash recoveries, soon after closing, of approximately
between 8% to 10% to unsecured creditors payable
through an escrow arrangement comprising of some
$20m from the sales proceeds and cash on hand, to the
extent said cash is not used to settle vessel payables and
wind-up costs,” RTM claimed.
Thoresen Shipping buys secondhand supramax for $7.9m – SMN 17th May
Thoresen Shipping Singapore has purchased an 11-year-
old supramax bulk carrier at a price of $7.9m as part of
the shipowner’s ongoing fleet renewal plan.
The vessel acquired by Thoresen Shipping is the 54,170-
dwt Karaweik, built at a Japanese shipyard in 2006,
according to an announcement made Thoresen Thai
Agencies (TTA), parent firm of Thoresen Shipping.
The vessel, to be renamed Thor Future, has been
handed over to the new owner on Tuesday. The
previous registered owner of the supramax was
Panama-based Lucretia Shipping, part of Japan’s
Santoku Shipping group.
“The acquisition is part of TTA’s ongoing fleet renewal
plan to develop a fleet of modern and standard dry bulk
vessels and increase our operating efficiencies. TTA’s
short term fleet objective is to have a mix of handymax
and supramax vessels,” TTA stated.
With the addition of the latest supramax, the Thoresen-
owned fleet comprises of a total of 20 ships with an
average size of 52,908 dwt and an average age of 11.8
years.
Cash rich shipowners inking newbuilding orders with Greeks to the fore – SMN 17th May
Liquidity problems for shipbuilders and shipowners have
played into the hands of the cash rich says Seasure
6www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168Shipbroking's VesselsValue (VV) platform and has
resulted in a flurry of orders this year, with Greek
interests to the fore.
VV data early May shows Greek owners have placed 35
orders worth just under $2bn for new bulkers and
tankers in the first four months of the year.
Furthermore, VV estimates the value of the orders
exceeds by some $550m the actual reported value of
the vessels spent at the shipbuilding yard.
And, there are still a number of multi-ship contracts said
to be under negotiation.
According to VesselsValue Deals database, globally 119
orders have been placed since the start of 2017, with
eight Greek owners among those placing orders. After
the 35 inked by Greeks, US-based operators have placed
14 orders, Singapore owners booked 10 vessels,
Norwegians eight and Dutch six, to round out the top
five ordering countries.
Lou Kollakis' Chartworld Shipping leads the way with 12
bulkers and two tankers ordered, for $309m, but worth
according to VV, some $417m.
VV said: "Many in the shipping industry are worried
there is an imbalance of supply and demand between
the number vessels currently on the water and the
amount of cargoes. This situation does not look to
improve in the near future as there is just under 66m
dwt of tankers and bulkers to be delivered during the
rest of 2017, representing 47% of the current bulker and
tanker order book."
It goes on to explain that over the last five years, a major
source of finance and investment in the newbuilding
market came from the private equity sector which
invested heavily to capitalise in the post-crash market
downturn.
"Today the preference from the private equity sector is
to invest in tonnage already delivered and on the water
so an immediate return on their investment can be
realised. This led to a lack of newbuilding finance
available and resulted in a gap in deliveries at the major
shipyards and therefore increased appetite from them
to take orders.
"In early 2017 the cash rich Greek community took
advantage of this, securing a number of orders at
competitive prices. As we progress through 2017, yard
capacity has reduced but continued buying demand
from the private sector remains. This is one of the major
factors that has led to the increase in newbuilding prices
over the past five months," says VV.
Dry bulk freight market: BDI falls off the 1,000 mark – SMN 19th May
“Nervousness” has set into the freight market, sending
the Baltic Dry Index (BDI) to fall off the 1,000 point mark
again.
The BDI had slumped under 1,000 points to hit 960
points on Wednesday, 17 May 2017, down 20 day-on-
day. The decline had been ongoing for almost a month
since 18 April 2017 at 1,294 points.
The cause for this “nervousness” might draw for China’s
slowing construction activities whereas the shipments of
iron ore and coal were at lower demand. As such,
capesize rates have plunged since the start of the week,
from $12,385 on Monday to settle $11,737 on
Wednesday, dropping 5% in matter of days.
“An incredibly nervous capesize market was seen on
Tuesday (17 May 2017),” observed a FIS forward freight
agreement (FFA) broker.
According to him, the capesize rates rose first as
rumours hit the market that the VLOC conversions had
been rejected by the Korean registry. However, the
optimism soon dissipated as there was no forthcoming
confirmation on the matter.
7www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168“Essentially the paper curve is left flat day-on-day while
the physical market, too, seems to have bottomed out.”
he added.
Similar story was seen in panamax rates as well with
rates recorded at $7,445 on Wednesday, slipping 5%
from starting position of $7,870 on Monday.
“The lack of enquiry in both basins continues to fuel the
bearish sentiment on panamax paper with little respite
as the index continues to edge lower,” commented a
Singapore-based FIS FFA broker.
Some interim stability was seen then on Tuesday before
it was tested again at the morning trading session of
Wednesday. Eventually, the panamax rates had
hunkered down after another gloomy index saw sellers
giving up their positions with declines witnessed across
the curve.
It was all not rosy for the supramax market as well, as
rates retreated to $8,733 on Wednesday, down $71
from $8,804 on Monday.
“We witnessed further declines across the curve on
supramax paper with Q3 trading down to $8,300 low
while further out we came lower on limited trading as
buyers seemed happy to hold off.” observed a FIS FFA
broker on the Monday session.
In the meantime, he noticed that the sellers seem to
have the habit of finalizing the deals near toward the
close despite the flat index and sharp discounts
presented at the start of trading sessions.
On the contrary, little changes were seen in the
handysize market with flat rates starting at $7,370 on
Monday before scaling down to $7,313 by mid-week.
Despite the general bearish market outlook, there are
also plenty to look up as well. For instance, there is an
iron ore price rally at the moment, thanks to the upticks
in Chinese rebars and futures market.
Thus, analysts from Credit Suisse had forecasted the
price rally to sustain for the months ahead and
predicted a price of $70 per mt for Q3. The upgrade in
forecast also highlighted that the Chinese authorities
will maintain for a “strong and stable economy” before
the 19th Party Congress meeting later in the year.
Moreover, the seaborne coking coal prices have fallen to
a “sensible level” or near to the pre-Cyclone Debbie
level, which was way below the China’s domestic coals
prices. Thus, this price difference might arouse the
buying interests of the Chinese mills to import more
cargoes and lift freight rates in near term.
Greek shipowners lead global fleet growth since 2010 – SMN 22nd May
Though the rate of growth of the world fleet has slowed
over the past seven years it is still considerable, and is
often the case when something to do with shipping is in
expansion mode, Greek shipowners are among the
drivers.
Rate of growth of the global fleet has slowed over the
last seven years, from a peak of 8.6% in 2010 to 3.1% in
2016. Still, the overall fleet capacity has increased 391m
gt more than the 355m gt added in the previous decade.
Led by Greek interests, growth has been driven by
owners from 10 nations that are responsible for 75% of
all of the growth, but some smaller players are also in
the mix.
A report by Clarkson Research Services reveals Greek
owners have been responsible for the largest volume of
fleet growth since the start of 2010, with 89.3m gt
entering the Greek-owned fleet in this period,
cementing their position as the largest owner nation,
having overtaken the Japanese in 2013.
The Greek growth is the result of a sustained level of
deliveries and secondhand purchases in recent years,
much of the buying involving previously owned Japanese
tonnage.
8www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168
The Chinese owned fleet has grown by the second
largest total since 2010 (73.7m gt), whilst the Japanese
fleet has increased 32.2m gt.
Of the 10 national fleets to have grown most in tonnage
since the start of 2010, nine are amongst the largest
owner nations as of 1 May.
Only Canadian owners are not part of the 10, ranking
13th with 24.5m gt, highlighting recent growth has been
driven by countries with established fleets.
The exception to this trend are German owners, who
own the fourth largest fleet with 85.4m gt, but have
experienced a 12% reduction in tonnage since 2013. A
telling statistic on the state of the German shipowning
sector.
The global fleet has increased 44% in gt terms in the
seven years, with all regions seeing a sustained level of
growth. The European and Asia/Pacific fleets have
grown almost equally, 164m gt and 168m gt
respectively.
However, there have been some notable differences in
the diversity of this growth. European growth has been
primarily driven by Greek owners, whose fleet has
grown 74% in gt terms since 2010, equivalent to 54% of
European growth. By comparison, Norwegian and Italian
growth has only accounted for 9% and 7% of European
growth respectively.
In contrast, Asian fleet growth has been driven by a
wider set of nations. Whilst Chinese owners account for
44% of total Asia/Pacific fleet growth in gt terms,
owners in Japan (19% share of growth), Singapore
(10%), South Korea (9%) and Taiwan (6%) have
experienced notable fleet growth since 2010.
Outside the largest owner countries, there have also
been some notable developments amongst smaller
owner nations. The Omani owned fleet has increased
257% in tonnage terms since 2010, whilst the Swiss,
Bermudan and Kuwaiti fleets have all more than
doubled in size. With total fleet growth slowing, some of
these smaller owner nations are becoming more
influential in regional and global growth patterns.
Norway offering international owners financing on retrofit equipment – SMN 24th May
Norway is offering credit to international shipowners
who buy retrofit systems such as ballast water
management from Norwegian suppliers.
Export Credit Norway it had assembled a specialised
team and tailor-made financing solution to support
vessel owners who need to retrofit equipment such as
gas exhaust cleaning systems, ballast water treatment
systems and new coating systems.
Export Credit Norway will offer up to 85% of the value of
retrofit equipment purchased by international
shipowners from Norway, with the equipment having to
have a minimum of 30% Norwegian content. The
maturity of loans will be between 5 – 8.5 years.
“Money is tight and access to reasonably priced capital
is a challenge for many players in the international
shipping and maritime industries at the moment. Hence,
attractive financing of retrofit equipment could make
9www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168the investment less demanding for many vessel
owners,” said Olav Einar Rygg, Export Credit Norway’s
director of lending, Ocean Industries.
Owners have complained about the lack of available
financing for equipment required to meet new
environmental regulations with as many as 60,000
vessels worldwide will need to retrofit scrubber systems
by 2020 and ballast water treatment systems by 2021.
For owners looking to retrofit several vessels Export
Credit Norway can offer a credit frame agreement to
cover the entire fleet.
“Our aim is to make the financing process as smooth and
efficient as possible, so that vessel owners can focus
their time on core business. That is why we offer a credit
frame agreement which essentially covers numerous
vessel retrofits under the same loan facility,” said Rygg.
Dry bulk FFA market: Ground Zero or a long and winding road? – SMN 26th May
The Baltic Dry Index (BDI) continues to be battered by
falling freight rates, dragging itself through another
week of sub-1000 point action.
Hardly living up to the dry bulk market’s “year of
recovery” scenario, BDI has retreated from its zenith
above 1,300 points in April 2017 and was back to 934
points on Wednesday, well below its starting point of
953 points recorded in January 2017.
Reaching ‘ground zero’ so early in what should be the
middle of the seasonal high driven by Chinese
construction activities may be discouraging for trade
participants. But while it might mean that the slowdown
in Chinese economy is very real, it may simply imply that
the summer construction activities have yet to hit full
throttle.
“It's way too early to call the next direction but the lack
of appetite to cross the spread, suggests that the whole
paper market is in limbo waiting for fresh news,”
reported an FIS Capesize FFA broker.
Struggling with the tone of market inactivity, capesize
rates stood at $12,177 by midweek, down $281 or 2.2%
from the starting point of $12,458 on Monday. Going
forward, capesize rates could resume this downward
slide in view of the upcoming Chinese public holidays
later in May and early June.
Public holidays affected European traders this week.
“With holidays coming up over the next few days, the
Capesize market has felt like being ringside at a one-
sided boxing contest,” added an Asia-based FFA broker.
Following the lead of capesize rates, the panamax rates
also retreated to $6,823 on Wednesday, down $49 as
compared to $6,872 recorded on Monday. A similar
story was in the supramax market which dropped to
$8,577 on Wednesday 2017, down $90 from $8,667 at
the start of the week, while handysize rates dropped by
$210 or 2.8% to $7,057 on Wednesday.
Despite the lethargy, overall, the dry bulk market is still
in a better shape than last year’s doldrums. A sustained
recovery of the dry bulk sector may not involve many
quick fixes but rather resembles a long and winding road
ahead.
The 2017 fundamentals are improving, in particularly on
the demand side, with dry bulk trade slated to grow
about 2% during this year. The key drivers of the growth
10www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168lie heavily on the shoulders of seaborne iron ore trade
which is estimated to grow by 4% in 2017.
On the supply side, ship scrapping has gained
momentum over the past years, with around 28.8m
deadweight of bulk carriers recycled in 2016 alone.
However, 2016 demolition volumes were still 4% lower
when compared to the 30.5m deadweight removed
from the fleet in 2015.
Another positive is that India is stepping up its game on
steel production which may drive more imports of
seaborne raw materials, thus boosting tonne-miles that
support freight market earnings. According to the World
Steel Association, India’s steel production grew 9.3%
year-on-year in March 2017, and the country currently
accounts around 9% of total global output.
To make high quality steel, India is expected to import
increased volumes of high-quality coking coal from
Australia. Currently, its imports of Australian coking
coals are almost on par with demand from China and
Japan, accounting around 20-25% of Australian coking
coal exports on monthly basis.
For now though, as summer beats down on London, an
FIS broker summed up what the long road to recovery
could mean for the dry bulk market. “It will be a long
hard summer for all concerned if the market stays in this
rut but at least for the time being we have sunshine,
cricket and a bottle of Provencal Rose. Bottoms up!”
Bold move on coal – PSM 5th May
Last month, Port of Amsterdam took a bold move for a
landlord port authority: it announced its ambition to end
handling coal by 2030, writes Peter de Langen.
At almost 20m tonnes, coal still accounted for 25% of
Amsterdam’s total throughput of around 80 million
tonnes in 2014. It also accounted for a substantial part
of the revenues of the port authority.
Clearly, the throughput of coal is declining due to a shift
away from coal-fired power plants, and the coal-hungry
steel industry is stagnating in North-West Europe. The
UK - which is sometimes served by Dutch ports -
announced its intention to close coal-fired power plants
in 2025, while the Netherlands also agreed to close
down some coal-fired power plants. So coal is already a
declining segment.
In 2016, Amsterdam handled 16m tonnes of coal.
Consequently, the port’s two coal terminals were
unhappy with the announcement.
There are, in my view, two main interpretations of this
move. First, some might argue that as the port
authority, Amsterdam does not operate the terminal
and has no influence on the use of coal, hence it is not in
the position to set such an ambition. On the other hand,
the port authority as the developer of the port complex
has to make choices to make sure that the ‘portfolio’ of
activities in the port complex is viable in the long run.
To be the ‘last port standing’, that is the last port that
handles coal, is not an attractive prospect. It is doubly
unattractive for a metropolitan port such as Amsterdam,
which has a large capacity to develop new economic
activities at brownfield sites.
I believe that Port of Amsterdam took the right step in
setting this ambition; it provides clarity to all
stakeholders and also is a platform for attracting new
activities, shaping Amsterdam’s future as a post-fossil
era metropolitan port.
AAPA concern over proposed port funding cuts – PSM 25th May
11www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168US President Donald Trump has sent Congress a 2018
budget request which, says the American Association of
Port Authorities (AAPA), signals the decline for most
federally funded, port-related programmes.
Among the budget proposals for next year is to
eliminate the US Department of Transportation’s
Transportation Investment Generating Economic
Recovery (TIGER) grants programme, which last year
awarded American ports US$61.8 million in grants to
make infrastructure improvements.
Port of Long Beach
AAPA President and CEO Kurt Nagle, told Port Strategy
that US ports are obviously concerned that the
transportation infrastructure they depend on for goods
movement get a high priority in the president’s
proposed $1 trillion infrastructure initiative.
“We’re at a point in time when the demands on our
seaports and the supporting multimodal and security
infrastructure has never been higher,” he said.
“TIGER is the only federal multimodal transportation
grant program that has been able to be that tool for
ports, although the president has recommended
eliminating it in fiscal 2018.”
He explained that AAPA members have identified $29
billion in onsite multimodal landside infrastructure
needs and a combined $66 billion for both landside and
waterside port infrastructure over the next decade.
In addition to the TIGER grant cuts, President Trump has
proposed that the Department of Homeland Security’s
Port Security Grant Program (PSGP), which Congress last
funded at $100 million, would see funding reduced to
$47.8 million, a cut of 52%.
Mr Nagle added: “Our member ports take security very
seriously. A reduction in port security funding and CBP
personnel sends the wrong message to the “bad guys”
that America’s ports could become vulnerable.”
Trump has also proposed cutting the overall
Environmental Protection Agency’s (EPA) budget by
31%, while the EPA’s Diesel Emissions Reduction Act
(DERA) grants, which helps ports invest in cleaner
equipment and CO2 reduction strategies, could see an
83% reduction.
NS United wins another Vale CVC, to order VLOC – FP 31st May
Japanese bulk carrier owner-operator NS United Kaiun
Kaisha will order a 400,000 dwt Very large ore carrier
(VLOC) after winning a 25-year consecutive voyage
charter (CVC) with Brazilian mining giant Vale.
This is the second such contract for NS United, which
won its first Vale contract in December 2016.
The company will order a vessel at a compatriot
shipbuilder for delivery by September 2020. The vessel
from the earlier contract is being built by Japan Marine
United for delivery in 2019.
NS United’s other vessels comprise tankers, general
cargo ships, and bulk carriers ranging from Handysizes to
Capesizes.
NS United was formed from the merger of Shinwa Kaiun
Kaisha and Nippon Steel Shipping in 2010. Details as to
where the VLOC will be built were not released but it is
likely to be a Japanese shipyard. The ship is expected to
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News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168be delivered to NS United in 2019, when the CVC is
scheduled to commence.
Under the CVC, NS United will ship an aggregate of 40
million tonnes of iron ore from Vale’s terminals in Brazil
to China. The company said, “Under our medium-term
management plan, we are promoting the expansion of
our transportation of raw materials for steel
production.”
Vale, the world’s largest mining group, has signed CVCs
with companies such as COSCO China Shipping, China
Merchants Energy Shipping, ICBC Financial Leasing, and
South Korean bulk carrier owner-operator Pan Ocean.
The shipping deals are in line with Vale’s ambitions to
increase iron ore exports to China. Vale is also
reportedly in talks with Chinese sovereign fund China
Investment Corp in relation to a multibillion dollar deal
to sell part of its future iron ore output for as long as 30
years.
China's coal imports up 33% to nearly 90 million tonnes in Q1 – FP 30th May
China’s coal imports have grown 33% year on year (y/y)
to 89.5 million tonnes in the first quarter of 2017, amid
healthy demand for power generation and a ban on coal
imports from North Korea.
Steam coal and lignite collectively accounted for a
majority 71% of these imports, increasing 27% y/y to
63.9 million tonnes within this period. Coking coal
imports have seen an equally strong increase, rising 52%
y/y to reach 25.6 million tonnes from January to April.
Italian shipbroker Banchero Costa commented that the
bullish import volume can be attributed in part to
greater demand from China’s thermal power generation,
which increased close to 8% y/y in the first four months
of the year to reach 1,476 TWh. This has corresponded
with a recovery in dry bulk freight rates from historic
lows in February 2016.
Indonesia, Australia, and Russia have benefited the most
from the surge in Chinese steam coal and lignite imports
seen this year, increasingly 35%, 37%, and 67%
respectively y/y in the first quarter of 2017.
“Coal imports have also increased to make up for the
shortfall in domestic coal output last year, which
decreased a rather drastic 9.4% y/y to 3.36 billion
tonnes in 2016. Due to the large scale of China’s
domestic coal production and consumption, even small
changes in their local situation are known to have a
disproportionate impact on coal imports,” Banchero
Costa said.
In March, China implemented a ban on coal imports
from North Korea in response to the latter’s growing
belligerence. This resulted in North Korean coal
shipments to China falling 62% y/y to just over 2 million
tonnes in January–April.
However, it is uncertain if this bullish factor will
continue, as domestic coal production has been starting
to recover with output in the first four months of 2017,
now up 2.5% y/y at 1.1 billion tonnes. This point was
echoed by Norwegian bulk carrier operator Torvald
Klaveness.
“With domestic Chinese availability improving, imports
in May and June will be under pressure. The general
activity level/electricity consumption/hydro production
will be the main drivers for overall coal demand in China
in the second half of 2017. However, the most
important drivers for Chinese coal imports will be
government policies,” said Torvald Klaveness.
13www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168The Chinese government, noted Torvald Klaveness, has
been mulling limiting imports of low-quality coal to
boost the prices of domestically mined coal.
While coking coal import demand has been driven by
China’s steel output, which has grown 4.5% y/y to 273.5
million tonnes in January–April 2017, softening steel
prices could change the situation.
Steel prices have started to show some weakness on
steel demand concerns after Beijing imposed fresh curbs
on lending in real estate, making the outlook more
uncertain for China’s steel output and coking coal
imports. The World Steel Association has also released a
forecast of flat steel demand growth in China this year.
For coking coal, imports from Australia and Mongolia
have increased 35% and 92% respectively y/y in the first
quarter of 2017. While China imported no coking coal
from the United States for 2016, the country imported
800,000 tonnes of US coking coal during the first four
months of 2017.
Stellar Daisy loss: Families of four seafarers get up to USD980,000 each – FP 29th May
Polaris Shipping said on 26 May that it had agreed and
paid a compensation of KRW800 million (USD714,925)
to KRW1.1 billion to each of the families of four of eight
South Korean seafarers who are believed to have gone
down with an ore carrier Stella Daisy in the South
Atlantic near Uruguay on 31 March.
The payment was made nearly two weeks after Polaris
Shipping settled the compensation amounts with the
families of 17 of the 22 missing crew and the two
survivors from the Stellar Daisy incident.
This compensation that Polaris Shipping has paid is the
highest ever amount for a shipping accident. The
company said that it remains in discussions with the
families of the other seafarers.
Families of the other five seafarers are demanding that
Polaris Shipping continue with the search efforts,
although the company has scaled down the search by
removing commercial ships from the effort.
The two survivors, both Filipinos, have returned to their
families in the Philippines, but remained hired by Polaris
through their crewing agency.
"We hope we will reach an amicable settlement with the
remaining bereaved families," said Polaris.
Polaris has come under fire for reporting the accident to
the government 12 hours after the company was
notified of the emergency. This suggests that Polaris
missed the "golden time" to evacuate all the crew.
The loss of Stellar Daisy has also sparked concerns over
the safety of such converted bulk carriers. Shortly after
the disaster, another Polaris ore carrier, Stellar Unicorn,
had to be diverted to Cape Hope for repairs to a cracked
hull, lending more fuel to the speculation.
As of 20 April, Polaris Shipping had initiated inspections
on all its ore carriers, amid growing concern over the
safety of its fleet. On 8 May, cracks were found on
another of the company's vessels, the Stellar Queen.
On 25 May, the Busan Coast Guard raided Polaris
Shipping's offices in Seoul and Busan, taking away
records of voyages and ship repairs.
Same ballast water risk areas cut opportunities for sales – FP 17th May
Ever since the ballast water management convention
was agreed in 2004, there has been criticism of the need
for all ships to one day manage ballast water because
many trade only within specific areas and pose no risk at
all.
Criticism of the convention itself is not valid for two
reasons. At the discretion of the flag state, convention
need not apply to ships that operate exclusively in the
waters of that state or between the high seas and
waters of that state. The second reason is that under
14www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168Regulation A4, there has always been the possibility for
exemptions to be granted to ships that operate between
specific ports and locations.
The wording of Regulation A4 has been interpreted as
allowing for what are known as same risk areas (SRAs)
that can be established by neighbouring states if it is
decided that the risk of transfer of invasive species is
acceptable. This implies that a risk assessment should be
carried out and Guideline G7 details the recommended
process for this.
For a long time, this possible exemption may have been
at the back of shipowners’ minds but could not be acted
on unless and until the port states involved put in hand
the process of assessing the risk and establishing SRAs
with their neighbours. There are several areas which fall
into this category – Northern Europe, the
Mediterranean, Southeast Asia, and the coastlines of the
North and South Americas.
There are moves afoot to establish SRAs with the subject
having been discussed at the past three MEPC meetings.
In Northern Europe, Denmark is taking the lead and has
presented many papers to the IMO’s MEPC meetings. In
Southeast Asia, Singapore is in the driving seat, but has
Indonesia, Malaysia, Thailand, and Vietnam along as co-
drivers. The United States is outside the IMO
convention, but can exempt its own flag vessels should it
desire to. SRAs will again be on the agenda at MEPC 71
in July, but more relevance will be given to the revision
of the G8 guidelines.
Flag states acting alone or with others could declare an
SRA, providing the IMO is advised and it can be shown
that the risk assessment has been carried out. However,
time is running out for any to be in place before 8
September, when the convention comes into full effect.
Owners of vessels that might benefit from any future
SRA may well decide that rather than fork out on
installing a system immediately, they will take
advantage of the option to decouple the IOPP certificate
from the survey cycle and buy themselves a further five
years, by which time the issue of SRAs will likely have
been settled.
The majority of the ships involved are either ferries or
smaller vessels, such as feeder container vessels, ro-ro
cargo vessels, general cargo ships, handy bulkers, and
product and chemical tankers. Small they may be, but in
numeric terms they make up a very large percentage of
the world fleet. The exact number is difficult to pin
down, but a number of estimates of between 20,000
and 30,000 have been mentioned various times.
If a substantial number of these are able to benefit from
SRAs, the impact on system makers’ projected incomes
will be significant. For ships that operate across two
SRAs, the option of one of the container-based systems,
such as those offered by Damen and others, may extend
further the number of ships that decide against installing
a ship-specific system.
Costa Concordia captain begins 16-year jail sentence – FP 15th May
Former Costa Concordia master Francesco Schettino has
spent his first weekend in prison after Italy’s top appeal
court upheld a 16-year prison sentence pronounced
against him in 2015 and upheld by an appeal court last
year.
Schettino’s defence lawyer is continuing to claim that
Schettino has been made a scapegoat for the sinking of
the cruise ship in January 2012 with the loss of 32 lives,
however, and says that he is considering appealing to
the European Court of Human Rights.
“As always, Italy needs to find a scapegoat,” lawyer
Saverio Senese told journalists after the Court of
Cassation ruling in Rome on Friday. “I believe that in
15www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168Schettino’s trial there were a number of violations of the
defendant’s defence rights.”
He said that Schettino, 56, had reported to the Rebibbia
prison in Rome as soon as he was told of the verdict to
avoid media coverage of his transfer to prison in
handcuffs.
Costa Concordia master Francesco Schettino
An Italian paper, Il Messagero, quoted Schettino as
saying from prison that he was going back to being a
ship’s “boy” after having worked his way up from the
bottom in the maritime profession to being a master.
“So, as soon as I got here, I cleaned the dirty bathroom
and I thought, okay, I have to react. I will start over a
ship boy.”
Schettino was originally given a 16-year prison sentence
by a court in Grosseto, Tuscany, in February 2015 after
having been found guilty of multiple homicide, causing a
shipwreck, and abandoning his ship while passengers
and crew were still on board.
That sentence was upheld in May last year by an appeal
court in Florence but Schettino and his legal team
decided to challenge the appeal court judgement before
the Italian supreme court, the Court of Cassation.
Schettino’s decision to “salute” the island of Giglio with
a close sail-by has been largely blamed for the grounding
and sinking of the giant cruise ship, which was carrying
more than 4,000 passengers and crew.
But Schettino and his team sought an acquittal, arguing
that organisational failings on the part of vessel operator
Costa Crociere had been largely responsible for the
accident and its aftermath, along with errors by
Schettino’s helmsman and the Italian coastguard.
However, at a hearing before the Court of Cassation last
month, prosecutor Francesco Salzano dismissed
Schettino’s defence, saying that the accident had been
“a shipwreck of such immense proportions and
characterised by such gross negligence and obvious
procedural violations” that no mitigating circumstances
could be admitted for his actions.
Schettino had failed to alert the crew to the situation
after the initial collision so that they could launch the
lifeboats and save the passengers and then, after leaving
the ship, had not even kept in radio contact with his
officers or try to keep himself informed about the fates
of the 2,000 people still aboard the vessel.
There have been claims, however, that other Costa
Concordia crew members and a Costa Crociere executive
were treated too leniently for their roles in the accident.
Costa Crociere itself was also allowed to enter into a
plea bargain under which it paid a USD1.1 million fine to
escape prosecution.
Taking the blame – SMN 16th May
What is the worst thing that can possibly happen to you
in your profession? How have you prepared for this
eventuality, both technically and psychologically, so that
you don’t go to pieces in extremis?
If you are a master mariner, it is difficult not to put
yourself in the position of Captain Francesco Schettino,
as his ship’s systems died in front of his eyes following
the contact with the rock off the Isle of Giglio on that
fateful evening in January 2012. How, you might ask,
would I have coped in the terrifying knowledge that my
ship was holed, flooding, out of control and that my
decisions could lead several thousand people to a
watery grave?
Throughout your career, aboard every ship you have
sailed in, you have undertaken drill after drill, dutifully
practising mustering passengers, regularly lowering
lifeboats, even undertaking “desktop” damage control
exercises. In more recent years, you will have spent time
on simulators. But in the back of your mind, you may
16www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168well have thought, as you watched the passengers being
instructed in the use of their lifejackets, or the boats
sent away on a smooth harbour exercise, that such drills
barely scratched the surface of what “could”, just
possibly, happen. And even if you had a fertile
imagination, you would have probably put to the back of
your mind any scenario which would have matched the
the frightful reality of the situation on Costa Concordia,
onthat awful night.
Could you remain rational and a fully functional
individual as the ship drifted, listed, lost all electrical
power? Could you take all the right decisions, at the
time they were needed, as the terrible messages of a
worsening situation flooded in, as the sea filled her
compartments?
It might be argued that those in charge of the gigantic
cruise ships, some of which now have more than 7,000
souls aboard, have responsibilities unlike those faced by
anyone else on land, sea or air. They are trained along,
with their crews, to minimise risks, to prevent awful
things happening. But before January 2012, was the
training sufficient?
In the armed forces, training is prolonged, intensive and
is designed to ensure that only the most capable reach
high command. Those in charge of major warships will
have faced the most searching examinations of their
professionalism, with drills that really are horribly
realistic, involving simulated battle damage and mass
casualties, to ensure that they can cope with the worst
case scenarios.
By contrast, those in commercial shipping know that
they cannot require hundreds of passengers, including
the old and infirm, to board boats and rafts in the
middle of a cruise they have paid to enjoy. They cannot
fill the accommodation with mock smoke or extinguish
all the electrics, just to provide a realistic emergency
drill. You do the best you can, and hope for the best.
Is all this an effort to promote sympathy for Francesco
Schettino, as, all appeals against the master’s 16 year
gaol sentence have failed and he is now a prisoner?
There were 32 people who lost their lives in this
significant marine casualty and their relatives want to
see justice done. But there are questions about this case
which will not go away, despite the assurances from
operators that lessons have been learned and
precautions to prevent any repetition put in place.
And it is difficult to consider it fair that whatever the
master’s failings, he alone should suffer so
disproportionately for mistakes made that evening.
After all, there was a bridge “team” operating the ship,
and an organisation which did not function as it ought to
have done. And in any reasonable system of justice,
there is a difference between errors of judgement and
wilful, criminal negligence. And with his ship in its death
throes, it is worth recalling that her master was a human
being and not a robot.
Braemar profits hit by technical division restructuring costs – SMN 10th May
Braemar Shipping Services 2016 profits for the year
ended 28 February 2017 were hit restructuring costs for
its technical division.
Braemar reported a GBP3.5m profit for the year ended
28 February 2017 compared to GPB13.8m in the
previous year.
The last financial year saw Braemar being hit by GBP3m
in restructuring costs mainly relating to its technical
division. “Tough action was taken in the Technical
division to restructure our businesses and address the
cost base in this economic climate. Despite this we have
maintained our core skills and capabilities and, as a
result, are well placed for the future,” said David
Moorhouse, chairman of Braemar.
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News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168
The restructuring of the technical division, which was led
by a new management team, is expected to lead to
GBP6m in annual cost savings starting from 2017/18.
On the positive side Braemar booked a GBP1.7m profit
from the sale of its shares inthe Baltic Exchange which
was sold to the Singapore Exchange last year.
Commenting on its shipbroking business Braemar said:
“Shipbroking division achieved a resilient performance
in difficult market conditions, with increased transaction
volumes in almost all areas.”
The e-revolution and dry bulk chartering – SMN 5th May
An e-revolution is stirring waves among the forward
freight agreements (FFA) market on whether to turn on
the plug to an electronic platform or maintain status
quo.
This issue has been discussed over the Singapore Iron
Ore week 2017, with market participants from shipping,
iron ore, coal trading houses and miners all putting their
best foot forward to advance the market into the future.
“You cannot ignore the benefits of shipping FFAs,”
opined John Banaszkiewicz, the managing director of
Freight Investor Services (FIS).
So far, the FFAs have been a good hedging tool against
the volatile market with many linkages to the physical
market. To Banaszkiewicz, nowadays both traders and
brokers alike prefer more “colours” or indicators to track
shipments and trading lots.
Thus, in complying with brokerage and trading wish-lists,
the FFA may push for electronic platforms with fixing of
vessels done at the platforms just like in the
commodities markets.
“Having a screen (on Baltic Exchange) will definitely
improve fixing and chartering of vessels,” said Mark
Jackson, ceo of Baltic Exchange.
He urged that not because the ship fixing market is not
efficient enough, but have a trading screen will bring
every market participants together and might improve
volumes and allow transparency that attract more new
entries into the shipping market. But, with or without
the electronic platform, Jackson assured trade
participants that Baltic Exchange will still operate
“business as usual”, catering to the interests of all the
stakeholders firsthand.
However, the challenges lie in convincing the existing
market participants to embark on this new front for
digitalization. For instances, mining companies have
seen FFA as a compliment in trade but not a
requirement yet. And many ship-owners still prefer
traditional methods of vessel fixing.
“Shipowners/charterers need to work more closely with
miners and mills alike to reduce market volatility,” said
Ye Weilong, executive vice president of China COSCO
Shipping Corporation Limited.
Ye explained that the all three participants, the ship-
owners/charterers, miners and mills are joined like a
supply chain and any cracks among the chain-links will
imply wild price swings and affected any party’s
profitability.
For now, the Chinese business conglomerate and state-
own enterprise headquartered in Shanghai will have an
open mind in exploring the usage of FFA in shipping. Ye
claimed that the company has yet to conduct research
and neither possesses much experience into the field
18www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168but he does not rule out the usage of FFA as time
matures.
“There is a lot new money coming in to the shipping
sector,” highlighted Banaszkiewicz.
He indicated that these new funding will provide ship-
owners the availability to purchase vessels and expand
their fleets, which may also called for trading in long-
term FFA contracts. As such, an e-platform might take
center stage to link all these stakeholders together to
manage risk and the steered away from the prices
fluctuations of the market in the future. But till then, the
market still needs lot of nurturing in tested and proven
methods with much dialogue to progress in the
digitalized sphere.
“We will do our best to educate the market in
conducting workshops and seminars on FFA to involve
more players in the market,” Banaszkiewicz concluded.
Inmarsat’s FleetXpress passes 10,000 ship milestone – SMN 4th May
Inmarsat has marked the first anniversary of the
introduction of FleetXpress with the news that more
than 10,000 ships have committed to use the high-
performance maritime communications service.
FleetXpress offers the advantage of combining
Inmarsat’s high-speed, high capacity broadband services
via Ka-band (Global Xpress) and reliable, safety level
services via L-band (FleetBroadband) into a single
commercial package.
“The demand for Fleet Xpress has been unprecedented
since its launch at the end of March
2016, demonstrating that the market has been truly
ready for the connected ship and
the network supporting maritime business applications”
said Ronald Spithout, president of Inmarsat Maritime.
The demands of crew welfare and operational efficiency
mean that shipping is coming to see high-speed and
continuous connectivity as “imperatives rather than
aspirations,” he added.
Inmarsat points out that several of its service provider
partners such as Navarino, Speedcast, Marlink and
Tototheo Group have already integrated Fleet Xpress
into their portfolios, helping achieve the 10,000-vessel
landmark. Inmarsat is also transitioning more than 2,600
XpressLink installations to Fleet Xpress and will convert
clients previously scheduled for connection to
XpressLink to Fleet Xpress by end 2018.
As a further value-add to Fleet Xpress, Inmarsat plans to
roll out a cyber security solution this year. Jointly
developed with Singtel and its cyber security
arm Trustwave, the managed Unified Threat
Management (UTM) solution will “help customers to
become more cyber resilient while adopting the Internet
of Things and the benefits of Big Data aboard their
fleet,” the company said.
Dryships acquires another kamsarmax for $24m – SMN 30th April
Dryships has inked an agreement with an unaffiliated
third party to acquire one 82,129 dwt kamsarmax bulker
carrier built in 2014.
The company will finance the total gross purchase price
of approximately $24m and expects to take delivery of
this vessel during the second quarter of 2017.
The announcement comes as Dryships has also taken
delivery from of the previously announced 113,644 dwt
aframax newbuilding tanker.
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News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168
George Economou, chairman and ceo, said: “We are
very excited to have started taking delivery of our
previously announced acquisitions and also continue to
grow our fleet with a new acquisition of one more
modern vessel.
“The DryShips new era has official started and is
expected to be accretive to our earnings and cash
flows.”
Pirate attacks up in Q1 as Somali hijackings return – SMN 9th May
A rising incidence of maritime crime with 48 criminal
incidents reported in just the first quarter “poses real
danger to the maritime industry,” warns UK-based
maritime security security specialist MAST (Maritime
Asset Security & Training).
Political instability and harsh living conditions in Somalia
and Yemen have contributed to a return of maritime
attacks in that part of the world, with 22 incidents
reported in Q1, it says. This despite the “substantial
suppression’ of piracy by the international community
that took place since the problem was at its peak there
in 2012.
The latest rise in the number of attacks means that the
Indian Ocean area has become “a potentially dangerous
route for commercial vessels and trade into Europe
again,” according to MAST coo Gerry Northwood,
former Royal Navy counter-piracy commander
But the problem is not geographically confined since
Southeast Asia has also seen a rise in attacks with 17
maritime crime incidents recorded across Indonesia, the
Philippines and Malaysia in Q1, while other criminal
activity occurred in South Asia (4) and South America
(5).
Of the 48 incidents in the first three months of this year,
36 involved a ship being boarded by unknown assailants
resulting in a robbery, with some cases leading to the
ship being hijacked.
Damen in groundbreaking 3D printed propellor project – SMN 16th May
Damen Shipyards Group is looking to make a major
move forward with 3D printing in the shipping industry
with a 3D printed, class approved propellor.
Damen has joined a cooperative consortium with
RAMLAB, Promarin, Autodesk and Bureau Veritas (BV) to
develop the world’s first class approved 3D printed
ship’s propeller, dubbed the WAAMpeller.
The propeller will be based on a Promarin design that is
typically found on a Damen Stan Tug 1606. The
1,300mm diameter propeller weighs roughly 180kg.
Damen's involvement in the project resulted from one
of its inhouse student research programmes.
“Three students from Delft Technical University were
investigating the potential of 3D printing for us. They
brought us into contact with the other members of the
consortium,” explained Kees Custers, project engineer in
Damen’s Research & Development department.
Port of Rotterdam’s RAMLAB will fabricate the
WAAMpeller from a bronze alloy using the Wire Arc
Additive Manufacturing (WAAM) process and BV will be
involved in classing the propellor.
20www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168
The first propellor is expected to be 3D printed this
summer and followed by full-scale trials.
“We will be performing a comprehensive programme
that will include bollard pull and crash test scenarios.
Our ambition is to demonstrate that the research phase
for 3D printing in the maritime sector is over, and that it
can now be effectively applied in operations,” Custers
said.
ABB leads electrification of ‘world’s largest emission-free ferries’ – SMN 17th May
Work is underway at Öresund Dry Docks in Sweden on
electrification of two Scandlines/HH Ferries vessels, set
to become what are claimed will be the world’s largest
emission-free ferries.
ABB Marine will deliver batteries, an energy storage
control system and Onboard DC Grid technology for the
vessels, as well as revolutionary “robot” stations at
either end of the route that will automatically plug in
the ferry to shoreside power when it arrives, thereby
maximising the charging period.
ABB is following a controlled progression towards
autonomous shipping “through a step-by-step
development process” that is advancing from isolated
operations towards connected, integrated, remote and
finally autonomous operations, explained senior vp
Sakari Sorsimi, head of ABB business unit Marine and
Ports, Finland.
The company is one of the leading pioneers in the
digitalisation of shipping and has already opened
Integrated Operation Centers in Asia (Singapore),
Europe (Helsinki and Billingstad, Norway) and the US
(Miami) where ship data is received and monitored.
Currently data from some 600 connected vessels is
being monitored, with Carnival Cruise Lines among
ABB’s reference clients. An internal ABB study had
shown that remote monitoring of machinery reduced
maintenance costs by 50%.
Suicide the top cause of seafarer deaths – SMN 18th May
The UK P&I Club is putting the spotlight on seafarer
mental health with suicide the cause of 15% of deaths at
sea.
As a career seafarers are second most at risk from
suicide Anuj Velankar, senior loss prevention advisor, UK
P&I Club, told a seminar in Singapore on Tuesday. The
career with the highest risk was being a veterinary
physician, which was explained due to a tendency
towards self-medication and a ready access to drugs.
In the case of seafarers young age, isolation and the
impact of social media were all cited as factors. Velankar
noted that there were constantly reports of younger
crew onboard, who were not experienced – “these are
the people most at risk of mental health issues”.
The result of mental health issues among seafarers is
that suicide is the highest cause of fatalities at sea,
accounting for 15% of deaths according to the UK P&I
Club. “This what kills the most number of seafarers,”
Velankar stated.
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News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168
Young seafarers such as cadets were seen as particularly
at risk. “When you look at cadets the figures are even
more horrifying,” he said. Some 40% of 11 deaths of
cadets over the last 10 years came as the result of
suicide.
He highlighted the case of an 18 year South Korean
cadet who disappeared off the coast of India one month
into a 10 month contract, in an apparent suicide. Other
crew members noted he had seemed depressed and a
diary found in his possessions gave a picture of very
depressed mental state.
In terms of the causes of depression among seafarers
Velankar said they were looking at social media, work
stress, and hours of work and rest.
In the terms of social media, whereas in the past
seafarers had very little contact with home, now were
aware of all the problems happening at home.
“Maybe ignorance was bliss,” commented Lee Wai Pong,
regional advisor, UK P&I Club, who previously served as
a captain.
With smaller crews social media also combines with an
issue of isolation for seafarers.
“This is an issue we need to focus on,” said Velankar.
Master of containership commits suicide on voyage to UK – SMN 25th May
The Master of a containership committed suicide on a
voyage from New York to Tilbury in the UK.
The Apostleship of the Sea said the containership, Santa
Bettina, was a week into its voyage when the master
apparently took his own life on board, leaving its crew
members distraught and traumatised.
AoS port chaplain Fr Colum Kelly along with two
chaplains from other seafarer charities went onboard
the vessel when it arrived in Tilbury on 21 May to
provide support to the crew.
“All three of us spent time listening to the crew and of
the stress that they had been feeling during the voyage.
It emerged the death took place one week into the
voyage. It was the first time the crew had sailed with
that captain so they knew very little about him,” said Fr
Colum.
“His body was laid in his sealed cabin for the remainder
of the voyage. Particularly distressed was the young
seafarer who had discovered the body. It was the first
time he had seen a corpse.”
A Mass was said at the request of the crew. A new Polish
Master, who has previously worked with the crew and
was well liked, has now joined the vessel.
Last week suicide was highlighted as the top cause of
deaths among seafarers accounting for 15% of all
fatalities according the UK P&I Club.
Konecranes races ahead - inks partnership with F1 driver Bottas – SMN 22nd May
Racing ahead Konecranes has become the “official
partner” of Finnish Formula 1 driver Valtteri Bottas.
The agreement, announced in Madrid after the Spanish
Grand Prix at Konecranes annual management
conference, sees a global marketing cooperation
between the handling equipment provider and the race
winning F1 driver until March 2018.
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News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168
Panu Routila and Valtteri Bottas
“Valtteri has all the makings of a true champion and
we’re thrilled to work together with him on this
mutually-beneficial co-operation,” says Panu Routila,
ceo of Konacranes. “It’s still early in the 2017
motorsports season and Valtteri already has some great
results with his new team, which makes the partnership
even more exciting.”
The partnership encompasses web, social media,
outdoor advertising, videos, and events, and Bottas will
Konecranes logo on his personal website and social
media domains, as well as on his race overalls.
“I’m very happy to make an agreement of this kind with
Konecranes, a company that aligns so well with my
background and what I personally believe in,” says
Bottas. “This is about having proud roots in Finland, yet
working around the world. About using cutting-edge
technology and purpose-built equipment that brings
together some of the best engineering and teamwork on
the planet.”
Bottas drives for the Mercedes F1 team and is currently
running third in the world championship.
The Konecranes and Valtteri Bottas partnership can be
followed at powermeetscontrol.com, and in social
media with the #powermeetscontrol hashtag
Bottas has previously competed in a welding
competition and we await with interest to see if the
Konecranes partnership will feature racing rail mounted
gantry cranes.
Cargo stranded in Chile customs strike – SMN 26th May
Chile’s customs association (National Association of
Customs Officers of Chile- ANFACH) called an indefinite
strike last Wednesday that is affecting Chilean ports,
airports and borders and causing disruption and delays
top freight movement up and down its 6,000 km-long
Pacific coastline. Striking workers number around 1,900.
Day one of the strike saw some 850 Bolivian trucks
struck at the border unable to cross into Chile, reported
Xinhua. According to the Bolivian president of exporters,
Wilfredo Rojo, the strike prevented Bolivia from moving
goods worth $5m a day to and from Chile.
Only special cases attended, such as those related to
humanitarian support and dangerous cargo, said
ANFACH.
"The Government represented by the Undersecretary of
the Treasury has not known the protocols of agreement
signed with ANFACH on 28 May 2015 and 23 November
2016, when presenting a counter proposal that does not
take over the commitments acquired with the customs
workers. Consequently, we call for an indefinite National
Stop of activities from 08:00 hrs. Of Wednesday 24 May
2017 ", the union said in a statement.
The National Customs Service informed that in order to
ensure operational continuity and ensure the flow of
foreign trade and the circulation of vehicles and
passengers, the entity implemented a contingency plan
at all border control points, ports and airports.
This coordination work is implemented from Arica in the
North of Chile to Punta Arenas in the South to facilitate
the completion of customs formalities, giving priority to
the dispatch of dangerous, perishable or emergency
cargoes, as medicines, the entity said. In addition, this
plan monitors in detail the status of all control points
23www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168where Customs is present, in order to respond quickly to
any demands for attention that may arise in the context
of the contingency.
Although port workers are currently not under strike,
but some shipments may be delayed due to industrial
action by other public sector services.
The National Agricultural Society [SNA] warned of the
negative effects of the strike by public sector workers,
especially of the Agriculture and Livestock Service [SAG].
Spain: Second time lucky – PSM 5th May
Spain is about to launch a second attempt to reform its
stevedoring industry in order to put it on a more
competitive footing and thereby achieve compliance
with European Union (EU) requirements.
Early in April, Inigo de la Serna, Minister of Public
Works, Spain, declared that the Government would
present a Royal Decree with associated regulations that
will reflect the results of the mediation that followed
Spain’s Parliament voting against the original port labour
reform initiative in mid-March. At the time of writing,
the precise date of the presentation of the new law to
Parliament was unclear with some parties expecting it in
late April and others in early May.
In the immediate aftermath of the rejection of the
original Royal Decree, the unions Coordinadora, UGT,
CCOO, CIG and CGT agreed to suspend planned strikes
and together with port employers to engage with a
Mediator to find a solution to the reform initiative. From
the Government perspective this was also critical in
order to avoid significant fines from the EU due to non-
compliance with EU law. Indeed, early in April the Court
of Justice of the European Union communicated to the
Spanish Government its intention to implement
disciplinary proceedings which could see the imminent
implementation of daily fines of up to €134,000.
Arriving at a mediated solution satisfactory to both
sides as well as government has, however, not been
easy.
At the end of March, the stevedoring unions and port
employers discussed an agreement on various aspects of
labour reform including the reduction of stevedoring
salaries by 10%. The average port worker salary in Spain
is high, at €68,000. The government was not, however,
supportive of these arrangements.
The main stumbling block for government is related to
worker compensation for retrenchment/early
retirement and it is cargo-handlers' body ANESCO’s wish
to establish templates for this with these to be written
into law. The Spanish Government stated immediately
following the release of the proposals that they would
be “contrary to the European ruling” which in December
2014 initiated the process of the liberalisation of
member state’ port sector labour arrangements.
The reaction of the unions to the government stance
was, as might be expected, one of significant indignation
with the unions saying that they were ready to embrace
reforms that seek to achieve a more competitive port
sector, but that the government is not supportive of
their efforts and those of the employers.
In arriving at a ‘solution’, ANESCO has had to factor in
the ongoing threats by stevedoring unions of strikes,
slow working and other measures that serve to damage
the sectors profitability. The Valencia Port Stevedoring
Society (SEVASA), for example, estimates losses of
€2.5m per day resulting from union measures designed
to resist port sector reforms. This includes major losses
arising from vessels having to be diverted to other ports
– 17 vessels at the time of writing – with these diverted
to Barcelona, Sines, Portugal and Gioia Tauro, Italy.
SEVASA further highlights the potential for long-term
damage to the Valencia brand, both nationally and
internationally.
24www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168 Undoubtedly, key port employers would like to see a
more comprehensive reform package but achieving this
in the face of continual threats of slow working and all-
out strikes is extremely challenging. Equally, ANESCO
has suffered from not being an entirely unified body. It is
well known that certain port employers in Barcelona and
Algeciras are closer to port unions and not so ardent in
their pursuit of port sector reforms; they benefit by not
being heavily targeted for industrial actions against the
proposed reforms.
*******
PRESS RELEASES
Siwertell signs unloader order for new UK biomass-fuelled power plant
25th May
25 May 2017 – Coldharbour Marine, developer of a
unique in-tank, in-voyage and inert gas-based ballast
water treatment system for large tankers, bulkers and
LNG vessels, has signed an agreement with Sembcorp
Marine that will see the latter offer the Coldharbour
GLD™ BWT as part of the Sembcorp Marine Green
Technology Retrofit (GTR) solutions for ship owners.
The GTR solutions provide carefully evaluated ballast
water treatment systems from a select group of
equipment manufacturers with whom Sembcorp Marine
is working closely. Coupled with expert technical
assistance from Sembcorp Marine, the GTR solutions
ensure that ship owners are able to select and install the
most appropriate technology for their vessels.
Coldharbour CEO Andrew Marshall said: “We are
delighted to sign this agreement with Sembcorp Marine.
We have always maintained that no single technology is
suitable for all vessel types and for all operating
requirements. Our ballast water treatment systems
target the largest vessels with the highest pumping
rates, largest ballast volumes and longest ballast legs.
For many ballast water treatment technologies, these
three elements combined would have translated into a
perfect storm of terminal delays and unrecoverable
costs for owners, which by comparison, would make the
initial cost of installing a ballast water treatment system
pale into insignificance.”
Mr Marshall said the Coldharbour GLD™ system carries
full International Maritime Organization type-approval
issued by the UK Maritime and Coastguard Agency;
Lloyd’s Register type-approval; and US Coast Guard
Alternate Management Systems acceptance. It is
currently undergoing full US Coast Guard type-approval.
As the global marine industry prepares for the
implementation of the Ballast Water Convention on
September 8th this year, there is still a considerable
level of confusion and uncertainty surrounding the
questions of suitable equipment choice for different
types of vessel and securing a successful retrofit
installation strategy.
Addressing these concerns, Sembcorp Marine Executive
Vice President and Head of Repairs and Upgrades Lee-
Lin Wong said the company had examined various
ballast water technologies and established
collaborations with the best manufacturers around the
world over the past 24 months.
She said: “Our one-stop GTR solutions have everything
needed to achieve successful ballast water treatment
outcomes – from the analysis of requirements, system
selection, scanning and engineering, to full installation
and commissioning of equipment. We are confident that
ship owners working with us and our chosen equipment
partners such as Coldharbour, will no longer be
confused by ballast water treatment requirements.”
Ms Wong added that Sembcorp Marine’s GTR solutions
will also include ultra-violet and electro-chlorination-
based systems so as to offer the most suitable
25www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168technologies for all vessel types and operating
requirements.
*******
CARGOTEC CORPORATION
17 MAY
Siwertell, part of Cargotec, has signed a contract with
the Spanish-Korean consortium, TR-Samsung, for a
Siwertell ship unloader to support a new biomass-
fuelled power plant under construction in Teesside,
Middlesbrough, UK. The order was booked in Cargotec's
fourth quarter 2016 order intake and the delivery will
take place in October 2018.
"The plant's owners want to employ the best available
technology for its new facility," says Peter Goransson,
Siwertell Sales Manager & Senior Advisor. "It's crucial
that the high-capacity fuel-delivery system overcomes
the challenges of safety, cargo degradation and
environmental impact."
Limited space meant that the structural footprint of the
unloader had to be as small as possible, while the tail-
end of the gantry had to be able to move aside to allow
passage behind the equipment.
"We provided extensive references demonstrating our
ability to meet the owner's high standards and design
criteria," says Mr Goransson. "Important factors
included compliance with environmental directives, a
proven track record of good reliability and safety, high
through-vessel discharge rates and the ability to handle
sensitive products with minimal cargo degradation or
breakages."
Siwertell will deliver a tailor-made, rail-mounted ST
790-type D Siwertell unloader, which will be located
close to the 299MW plant in Teesport. It will discharge
wood pellets and wood chips to a matched Siwertell
jetty conveyor with a movable transfer trolley, supplied
as part of the contract. Siwertell biomass unloaders are
also equipped with a new-generation safety system to
mitigate the risks of fire and dust explosion when
handling biomass in an enclosed space.
The unloader has a rated average capacity of 1,200t/h
and a maximum rate of 1,320t/h, designed to meet the
plant's requirements of 16,000 tonnes/day. It is
equipped with a dual truck loading system for
continuous direct truck loading at a rate of 300t/h. This
is a redundancy feature that allows operations to
continue if the shore conveying system fails.
*********Clarkson commentaries – DBTO (Volume 23, No 5 – May 2017)Dry Bulk Supply & Demand HighlightsIn April 2017, average bulker earnings remained
relatively steady m-o-m at $11,096/day, with lower
Capesize and Supramax earnings offset by improved
earnings in the Panamax and Handysize sectors. Overall,
bulker earnings remained notably above the 2016
average of $6,218/day and more in line with the
$10,765/day average in the post-financial downturn
period of 2010-16. Meanwhile, the pace of increase in
26www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168bulker asset prices has slowed in recent weeks,
following robust gains in March. At the end of April, the
bulker secondhand price index stood at 106 points, up
3% m-o-m, and up 30% compared to the end of 2016.
Growth in seaborne dry bulk trade is projected to
improve in 2017 to 3.3%, from around 1% in 2016. This
largely reflects firm Chinese demand, with China’s total
iron ore and coal imports up 13% y-o-y in January-April.
Some support to Asian dry bulk volumes is also likely to
emerge from China’s ‘One Belt One Road’ programme.
However, there remain concerns over the sustainability
of strong growth in Chinese dry bulk imports in 2H 2017,
particularly given uncertainty in China’s real estate
market. Meanwhile, although seaborne coking coal
trade has been disrupted in recent months by the
impact of Cyclone Debbie on Australian exports, global
coking coal trade is still projected to grow moderately in
2017.
Bulkcarrier demolition eased further in April, with 6m
dwt scrapped in the first four months of 2017, down
68% y-o-y. Deliveries have also slowed, with 19m dwt
delivered in January-April, down 10% y-o-y. Overall, the
bulker fleet is expected to grow by around 3% in 2017,
compared to an average 5% p.a. in 2012-16.
Overall, continued conservative fleet growth and robust
Chinese dry bulk imports have helped to improve the
fundamental balance in the dry bulk market in the year
to date. While there remains uncertainty over the
outlook, especially regarding the sustainability of strong
Chinese dry bulk import growth, 2017 so far has clearly
seen tangible market improvements from the
historically depressed conditions seen throughout most
of 2016.
Seaborne Iron Ore Trade
CommentaryGlobal seaborne iron ore trade is projected to increase
5% to 1.5 billion tonnes in 2017. This is expected to be
largely driven by the increasing availability of high
quality and low cost iron ore from Australia and Brazil,
as major iron ore miners in both countries ramp up
production and exports. Current projections indicate a
respective 4% and 6% increase in Australian and
Brazilian iron ore exports in 2017, to reach a combined
1.2 billion tonnes. This is expected to account for around
three quarters of growth in global seaborne iron ore
trade in 2017. On the demand side, Chinese seaborne
iron ore imports are projected to increase 7% to around
1.1 billion tonnes in 2017, driven by the country’s
increasing steel consumption. Iron ore shipments into
other Asian countries are expected to grow at a more
conservative rate of 1% to stand at around 243mt in
2017. Elsewhere, following three consecutive years
decline in seaborne iron ore imports into the EU,
shipments into the region are projected to increase 3%
to around 107mt in 2017.
Iron Ore NewsWhile increasing iron ore shipments from Brazil are
expected to be a key driver of global seaborne iron ore
trade expansion in 2017, the pace of the country’s
overall iron ore export growth in the year to date was
cut by a 17% y-o-y decline in April. Iron ore shipments
from Brazil hit a two year low of 13mt in April,
contributing to a total 64mt in the first four months of
the year. This represented a 1% y-o-y rise, compared to
7% y-o-y in Q1 2017. The sharp decline in April partly
reflected port disruptions, with an accident at the port
of Itaguai (42mtpa throughput) suspending activity for
10 days. Four Capesize vessels preparing to load ore at
the terminal were consequently reintroduced into the
market and sent to alternative ports. Following recent
disruptions, the forecast for the country’s iron ore
exports in 2017 has been revised down to 393mt.
However, this would still represent a 6% increase,
reflecting expectations of a continued ramp-up in output
in the remaining months of the year. Of particular note
is Vale’s S11D mine, which started operations in
December 2016 and produced 2.5mt for export in Q1
2017. The pace of output at the mine is expected to
reach around 20mtpa in 2017, towards a target of
90mtpa by 2020.
27www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168Iron ore shipments from India increased more than
threefold y-o-y to stand at 11mt in the first three
months of 2017. This represented the largest volumes of
Indian iron ore exports in a Q1 period, since before the
government’s crackdown on iron ore mining in early
2012. After several years of minimal exports from the
country, India’s top exporting state of Goa resumed iron
ore output in August 2015 and production and exports
have gradually ramped-up ever since. The sharp increase
in exports in the year to date reflects Indian iron ore
miners’ responses to the high global iron ore price
environment. Current projections indicate a five year
high in Indian iron ore exports of around 31mt in full
year 2017.
Seaborne Coking Coal Trade
CommentaryGlobal seaborne coking coal trade is projected to
increase 2% to 255mt in 2017. This is expected to be
largely driven by a 10% rise in coking coal shipments into
China, reflecting the country’s firm domestic steel
consumption and recovering steel output in the year to
date. Indeed, Chinese seaborne import demand is
expected to account for over 60% of growth in global
seaborne coking coal imports in 2017. Elsewhere, coking
coal shipments into the EU are expected to increase 2%
to around 35mt in 2017. On the supply side, shipments
of coking coal from Australia, which have accounted for
over 60% of seaborne coking coal exports in recent
years, were disrupted by Cyclone Debbie in March. This
is expected to result in a 2% decline in Australian coking
coal exports to around 155mt in 2017. However,
increasing seaborne coking coal exports from the US and
Russia are expected to offset the loss from disrupted
Australian coking coal exports in full year 2017. For
more detail regarding Cyclone Debbie’s impact on global
seaborne coking coal trade, see Commodity Countdown,
below.
Coking Coal NewsIndian coking coal imports declined 6% y-o-y to 9.9mt in
the first three months of 2017. This reflected
Indian steel producers’ responses to highly inflated
coking coal prices in Q1 2017. Furthermore, India’s
domestic coking coal output continues to increase, with
the state-backed Coal India announcing an 8%
production growth target to 60mt in the 2017/18
financial year. While this target is widely seen as
optimistic, rising domestic output is nonetheless likely to
undermine the country’s coking coal import demand in
the coming years. Yet, Indian coking coal imports are still
projected to recover in the remaining months of 2017,
with many of the country’s steel producers expected to
respond to a correction in global coking coal prices.
Furthermore, India’s increasing steel output, which rose
14% y-o-y to 26mt in Q1 2017, is expected to continue
to stimulate the country’s coking coal import demand in
the coming months. Current projections indicate a
marginal increase in Indian coking coal imports to
around 47mt in full year 2017.
Chinese seaborne coking coal imports increased 30% y-
o-y to reach 11mt in the first three months of
the year. This partly reflected a 4% y-o-y decline in the
country’s domestic coking coal production to 102mt in
the period, despite Beijing’s surprise decision not to
reintroduce production caps on the country’s coal
miners in February. Firm Chinese coking coal demand in
the year to date has also been driven by the country’s
robust steel demand, which saw Chinese crude steel
output rise 4% y-o-y to 200mt in the first three months
of the year. However, there are increasing concerns
regarding the drivers of Chinese steel demand,
particularly for the country’s real estate development in
the coming months. As such, current projections
indicate a 10% increase in Chinese coking coal imports
to 39mt in full year 2017, accounting for a slowdown in
the remaining months of the year.
Seaborne Thermal Coal Trade
CommentaryGlobal seaborne steam coal trade is projected to
increase 3% to around 915mt in 2017. This is expected
to be largely driven by a 9% rise in steam coal shipments
into China, to around 180mt in 2017. Indeed, Chinese
28www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168import demand is expected to offset a respective 5%
and 9% decline in steam coal shipments into India and
Hong Kong in 2017, supporting a 3% increase in total
Asian steam coal imports to around 724mt in the full
year. Elsewhere, seaborne steam coal shipments into
the EU are projected to drop 3% to an
eighteen year low of 100mt in 2017, largely reflecting
easing coal demand and an ongoing shift to gas fired
power generation, especially in Germany and the UK.
However, French steam coal import demand has been
very firm in the year to date, largely reflecting the
impact of disruptions to the country’s nuclear power
generation in recent months. On the supply side, global
seaborne steam coal trade is expected to be largely
supported by a 2% increase in shipments from Australia
to around 228mt, while US steam coal exports are
projected to rise 21% to around 18mt.
Steam Coal NewsChinese seaborne steam coal imports rose 35% y-o-y to
40mt in Q1 2017. This reflected the slower than
expected growth in domestic coal output, despite
Beijing’s decision not to reintroduce a 276-day annual
production cap on the country’s coal mining industry in
February. Chinese steam coal output reached 669mt in
Q1 2017, representing a 1.5% y-o-y rise: somewhat short
of the country’s steam coal consumption growth.
Indeed, Chinese thermal power generation rose 8% y-o-
y to 1.1 GWh in Q1 2017. However looking forward,
Chinese steam coal import growth is expected to ease,
partly due to expectations of a crackdown on low quality
imported coal and lignite, designed to support domestic
coal prices and subsequently the country’s coal miners.
Current projections indicate a 9% y-o-y increase in
Chinese seaborne steam coal imports to 180mt in 2017.
South Korea’s recently elected President Moon Jaein has
outlined plans to shift the country’s power
generation portfolio towards gas and renewables, to the
cost of coal and nuclear power generation. This is
expected to result in the closure of around five of South
Korea’s 50 coal fired power plants in the coming 18
months, undermining the country’s steam coal import
demand in the coming years. However, such measures
would be unlikely to impact the country’s steam coal
imports in 2017. Current projections indicate a 4% rise in
South Korean steam coal imports to 105mt in 2017,
following a sharp rise of around 20% y-o-y in the first
three months of the year. However, import demand is
expected to be impacted by the introduction of a new
coal import tax in early April 2017, which is expected to
disproportionately impact low quality coal.
Indian steam coal imports are projected to decline 5% to
a five year low of around 140mt in 2017. This largely
reflects expectations of a continued ramp-up in the
country’s domestic steam coal output, with Coal
India’s output up 6% y-o-y to 215mt in the first three
months of the year. This exceeded growth in India’s coal
fired power generation, which reached 2% y-o-y.
Grain Imports
Grain Trade NewsGlobal wheat and coarse grain trade is projected to
decline 1% to around 342mt in the 2017/18 crop
year. The projected slowdown largely reflects
expectations of a 3% decline in global wheat trade,
from an expected historic high of 171mt in 2016/17
down to around 166mt. Of particular note is a projected
9% drop in wheat shipments into Asia in 2017/18. This
largely reflects projections for an improved harvest in
India and the reintroduction of the country’s import
duty contributing to a 69% drop in wheat imports into
India to 2mt in 2017/18. Conversely, global corn trade is
projected to grow 1% to total 139mt in 2017/18. This is
expected to be driven by a firm rise in shipments from
Brazil, following an improved harvest in early 2017. Total
corn shipments into Asia are projected to rise 3% to
around 47mt in 2017/18, supported by increasing
demand in a number of developing countries in the
region.
Grain Imports
Grain Trade News
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News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168Total wheat and coarse grain imports into Sub- Saharan
countries are expected to drop 6% to around 27mt in
the 2017/18 crop year, which would represent the
lowest level since 2014/15. This partly reflects
projections for a continued slowdown in South Africa’s
grain import demand, largely given the country’s
growing grain stockpiles and expected healthy corn
harvests. Reports indicate significant improvements to
the country’s field conditions in recent months. Current
projections indicate a 35% drop in South Africa’s total
grain imports to 3mt in 2017/18. Meanwhile, total grain
imports into Zimbabwe are projected to drop 15% to
around 1mt in 2017/18, while imports into Ethiopia are
projected to drop to 1.6mt, down 16% from the 2016/17
crop year. Grain import demand in both countries is
expected to be undermined by improved domestic
wheat and corn harvests.
Grain Exports
Grain Export NewsBrazil’s corn harvest is currently projected to rise 37% to
92mt in 2016/17, which would represent a record high
for the country. This reflects the planting of higher than
expected volumes of safrinha corn within the optimum
timeframe in Brazil’s central state of Mato Grosso, which
accounts for around two thirds of the country’s total
corn output. Looking forward, the record volumes of
Brazilian corn are expected to enter the market in the
coming months, suppressing domestic corn prices and
stimulating the country’s exports. Current projections
indicate an 85% rise in the country’s total corn exports
to 27mt in 2017/18, although this partly reflects a
particularly low base in 2016/17, due to disrupted
output. This would see Brazil cement its position as the
world’s second largest corn exporter, behind the US
which is projected to export 49mt in 2017/18.Minor Bulk Trades
CommentaryFollowing a 13% y-o-y decline in 1H 2016, scrap metal
shipments from the US increased 22% y-o-y in the
remaining six months of the year. This initial decline,
followed by a recovery largely reflected the levels of
competition from Chinese steel products exports, which
were firm in the first six months of 2016, but declined
somewhat in 2H 2016. Overall US seaborne scrap
exports increased 4% to stand at 12.5mt in full year
2016, accounting for around 13% of global scrap
exports. This firm momentum from the world’s leading
scrap exporter in the latter half of 2016 also continued
into early 2017, with shipments up 22% y-o-y in the first
three months of the year. Much of the growth was
supported by shipments to China itself, which rose 160%
y-o-y to 0.3mt in Q1 2017. Looking forward, current
projections indicate a 35% y-o-y increase in US scrap
exports to around 15mt in full year 2017.
Bulkcarrier Fleet
Commentary– Capesize Fleet TrendsIn the first four months of 2017, the pace of Capesize
newbuild deliveries eased somewhat. In total, 39
Capesize units of a combined 7.8m dwt entered the fleet
in the period, representing a two year low. Meanwhile,
the dearth in Capesize contracting activity continued in
the opening months of 2017. Indeed, there have only
been two Capesize orders with a combined 0.5m dwt
placed since April 2016. As a result, the Capesize
orderbook has contracted in the past 12 months. At the
start of May 2017, the Capesize orderbook consisted of
122 units of a combined 31.7m dwt, representing an
eleven year low and a 40% y-o-y decline in terms of
tonnage.
Fleet Watch – To 1st May 2017Capesize vessels:
39 delivered 15 scrapped 0 ordered
Commentary – Panamax Fleet TrendsAt the start of May 2017, the Panamax fleet consisted of
2,494 units of a combined 200m dwt. In terms of
tonnage, this represented a 2% increase since the start
of the year, compared to an average growth rate of
below 1% per annum in 2015 and 2016. The growth in
30www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168the Panamax sector in the year to date has been
supported by a significant reduction in the levels of
demolition activity, with a total of 14 units, of a
combined 1.0m dwt removed from the fleet in January-
April, representing a 79% y-o-y drop in terms of
tonnage. Meanwhile, Panamax deliveries totalled 61
units of a combined 5.0m dwt in the first four months of
the year, in line with the pace of deliveries throughout
2016.
Fleet Watch – To 1st May 2017Panamax vessels:
61 delivered 14 scrapped 11 ordered
Commentary – Handysize/Handymax Fleet TrendsBy the start of May 2017, the size of the Handysize
orderbook had contracted to the point of totalling only
208 units of a combined 7.3m dwt. In terms of tonnage,
this represented an eleven year low and a 24% decline
since the start of the year. The contraction in the
Handysize orderbook reflected the sharp decline in the
levels of newbuilding interest in the sector since the
start of 2016. Indeed, in total only nine Handysize units
of a combined 0.2m dwt have been reported ordered in
the sixteen month period since the start of 2016, only
three of which have been placed in 2017. This compared
to an average of 178 Handysize vessels, or 6.2m dwt in
terms of tonnage, contracted on an annual basis in the
period 2011-15.Fleet Watch – To 1st May 2017Handymaxes:
80 delivered 21 scrapped 5 ordered
Handysizes:
41 delivered 30 scrapped 3 ordered
Commodity Countdown
Estimating The Impact Of Debbie’s Disruption Down UnderAustralian coal exports often face weather disruptions
early in the year. However in March 2017, Cyclone
Debbie caused levels of damage not seen since Cyclone
Yasi in 2011, which resulted in an 18% drop in the
country’s coking coal exports that year. As Australia
accounts for over 60% of seaborne coking coal exports,
even the less severe damage from Cyclone Debbie may
have global consequences.
The Damage In ContextIn February 2011, Cyclone Yasi severely damaged coking
coal mines in Queensland, Australia, resulting in a 26mt
drop in the country’s coking coal exports and a 4%
decline in seaborne coking coal trade in the full year.
While Cyclone Debbie, which hit Queensland in March
2017, also damaged coal mines, the impact was less
significant than in 2011 and most mines reopened
within a week. However, this time heavier damage was
sustained by the rail lines connecting coal mines to
Dalrymple Bay and Hay Point.
The Immediate, Local ImpactIn perhaps the clearest indication yet for the scale of
disruption, the 129mtpa Goonyella rail network’s
operator made a 12mt downward revision to its coking
coal railing guidance for the financial year ending in June
2017, following the network’s five week closure in the
aftermath of Cyclone Debbie. There is greater
uncertainty regarding the overall impact on Australia’s
coking coal exports in the full year, largely given that
much depends on the recovery of volumes railed in 2H
2017. Reported estimates for the impact on Australian
coking coal exports in full year 2017 vary between 5mt
and 20mt.
‘Worst Case’ Global Scenario?Given the uncertainty regarding Australian coking coal
exports, there are a range of possible scenarios for the
global impact. In a high-case disruption scenario,
reflecting a drop of 12mt y-o-y in Australian coking coal
exports in Q2 2017, coupled with a slow 2H recovery (in
31www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168line with 2011’s), total Australian exports in 2017 could
fall 13mt, equivalent to 5% of global seaborne coking
coal trade in 2016.
A More Likely Outcome?However, assuming that Australia’s exports recover
more quickly in 2H 2017 than in 2011, it has been
suggested that Australian exports in full year 2017 could
drop around 4mt. Under this ‘base case’ scenario,
shipments by other exporters are also expected to rise
due to high coking coal prices. Indeed, US miners who
took advantage of high prices in 2011, raising exports by
24% to 59mt, have again boosted exports recently.
Projections indicate a 17% rise in US coking coal exports
to 39mt in 2017, driven by greater long-haul exports to
Asia. Combined with Russian export growth, this is
projected to support a 2% rise in global seaborne coking
coal trade in 2017, and a 3% rise in terms of tonne-
miles. So, Cyclone Debbie is set to affect seaborne
coking coal trade in 2017, with disruption recently
evident. However, even a ‘worst-case’ scenario indicates
a lesser impact on Australian exports than in 2011. In
addition, given rising shipments from other exporters,
the overall impact could be relatively limited, with global
coking coal trade still projected to grow at a moderate
pace in the full year.
And Finally.......
I had a couple of amusing captions for the picture in the April issue, most asking if the driver was sober or not! I don’t think Smit have anything to worry about just yet...
I thought this month I would ask you a few more puzzling questions so here goes;
1. What occurs once in a minute, twice in a moment and never in one thousand years?
*****
2. What has 4 eyes but can’t see?
*****
3. What starts with the letter “t”, is filled with “t” and ends in “t”?
*****
32www.drybulkterminals.org
News AbstractsDry Bulk Terminals Group – May 2017 – Issue 168
4. How do you make the number one disappear?
*****
Please feel free to send me any weird or strange pictures and I will try and fit them in.
*****
That is it for May.
Pictures and answers to [email protected] please!
Nic
Further Information:
Clarkson Research: www.crsl.comFairplay: www.fairplay.co.ukFearnleys: www.fearnresearch.com
==================FUTURE ABSTRACTS
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
33www.drybulkterminals.org