News AbstractsDry Bulk Terminals Group – August 2016 – Issue 159

For your personal interest and information.These News Abstracts are compiled by the DBTG Secretariat from direct sources. Publications including Fairplay (FP),and various international agencies, as well as the research division of Clarkson and Fearnleys. They cover a wide range of issues of direct and indirect relevance to dry bulk terminal operators as well as the aims and activities of the DBTG.

Dear Member,

Welcome to the selection of news extracts for August 2016. August is traditionally the month when many take a break and I am aware that many of you have done just that. Sadly the time away from our desks is all too short but I trust that those who have taken some time off enjoyed their break.Recently, Intercargo produced the final draft of the 2005-2015 Bulk Carrier Casualty Report which makes fascinating reading. Interesting articles about it are sparse but the report can be read here.

DIARY DATES Executive Committee Meeting – 2nd

September 2016 IMO CCC3 – 5-9 September 2016 World maritime Day 29th September

IN THIS ISSUE

Shipping Matters Economy/Finance/Trade Commodities Terminals/Ports Maritime Safety Shipbuilding

Freight Market

SHIPPING MATTERS

Benita sinks on the way to Alang – FP 1st August

Liberian-flagged bulk carrier Benita sank on 31 July while

under tow about 93.5 n miles off Mauritius.

No one was on board the vessel, which was being towed

to Alang for recycling by Five Oceans Salvage (FOS) AHTS

Ionian Sea FOS.

In a statement, FOS said that the vessel turned over at

the stern at 1335 h local time. The tug had already

activated the towage quick-release system when the

crippled ship took a severe stern trim. The ship went

down in 4,400 m of water at 1730 h local time.

According to the statement, no debris or pollution was

observed, but Ionian Sea FOS remained on the scene to

check for any pollution.

Benita ran aground on Îlot Brocus on the southeast

coast of Mauritius, on 17 June after power was disabled

following a fight between two crew members. The

42,717 dwt Greek-owned vessel, built in 1998 and

owned by Bluefin Maritime, was in ballast at the time,

en route from Paradip, India, to Durban, South Africa,

with 23 crew members. No crew member was hurt as a

result of the grounding, but Filipino 4th engineer Alvin

Maderse underwent emergency hospital treatment for

injuries received in the fight.

The hull was breached and the engine room flooded,

causing pollution of the beach and lagoon at Le

Bouchon, which is close to an environmentally sensitive

marine park and a Ramsar site. Mauritian environment

minister Alain Wong undertook dives to inspect the hull.

The Mauritian authorities initiated the country’s oil spill

contingency plan and held daily multi-agency crisis

meetings to deal with the emergency. FOS salvors

pumped heavy fuel oil into 1 tonne drums, which were

airlifted to shore by the Mauritius Police Force’s

helicopters. Swire Emergency Response led the anti-

pollution efforts, using booms supplied by locally based

Scott Shipping.

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News AbstractsDry Bulk Terminals Group – August 2016 – Issue 159

Benita when aground

After the environment ministry vetoed a plan to free the

ship using small quantities of explosive to break the hard

basalt rock that had penetrated the hull, FOS sealed the

affected hold and refloated the vessel at high tide on 23

July. Ionian Sea FOS and Coral Sea FOS towed the vessel

to deepwater beyond Mauritian territorial limits, where

it was declared a constructive total loss.

The Mauritian shipping ministry will be focusing its

accident investigation on competing claims about the

incident timeline. Benita’s master, Captain Eduardo

Cadiz, said he alerted the National Coast Guard (NCG) at

2200 h local time on 16 June, but NCG claims he merely

requested a medevac for injured Maderse. At 0530 h

local time, when Benita was 3.6 n miles from the coast,

Cadiz radioed that the ship had no power and asked

permission to anchor, but both anchors were lost and

the ship drifted to the shore. The NCG maintains that it

was only at 0630 h local time, when the ship was

aground, that the captain issued a distress call.

Local paper Le Défi quoted an NCG officer in the

Maritime Rescue Co-ordination Centre as saying, “If the

captain had explained his problem, we would have sent

the commandos and sent a tug to his rescue.”

The alleged aggressor who triggered the incident,

Filipino national Omar Palmes Taton, remains in custody

and faces charges of assault and endangering

navigation. The other crew members are expected to be

flown home shortly.

Benita’s grounding is just the latest in a series of

maritime incidents affecting Mauritius. On 5 August

2011 Vandomar Shipping’s bulker Angel 1 suffered a

blackout en route from China to Côte d'Ivoire and

grounded on the coral reef off Poudre D’Or, in northeast

Mauritius. On 25 November, FOS succeeded in refloating

the vessel, which was towed off the reef by Coral Sea

FOS. The following day Angel 1 sank – coincidentally,

also in 4,400 m of water.

Environmentalists on the Indian Ocean island fear that

the risk of oil spills will escalate if the government goes

ahead with its pledge – reinforced in last week’s budget

– to develop Port Louis into a bunkering hub.

SGX makes $103.5m bid for the Baltic Exchange – SMN 5th August

The Singapore Exchange (SGX) is making a GBP77.6m

($103.49m) all cash bid for the Baltic Exchange following

over two months of exclusive discussions.

SGX said on Thursday it had agreed with the Baltic

Exchange to offer GBP160.41 in cash per basic Baltic

share. The Baltic is owned by 380 shareholders, many

from the shipping industry.

It is expected that shareholders would receive a final

cash dividend of GBP18.80 per share, conditional on the

acquisition proceeding. This would bring the total

valuation of the Baltic GBP86.7m.

“The Baltic Exchange will now consult its major

shareholders to secure their support for SGX’s offer,”

the Baltic said. “Subject to receiving sufficient support,

and to it receiving the endorsement of the Baltic

Exchange Board, it is expected that a scheme of

arrangement will then be circulated to shareholders and

a general meeting will be announced, for shareholders

to vote on an offer from SGX.”

The move forward with a formal bid by SGX follows a

new agreement between the Baltic and its shipbroker

panelists last week.

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News AbstractsDry Bulk Terminals Group – August 2016 – Issue 159

The move by SGX to buy London-headquartered Baltic,

founded in 1744, is being seen as yet another sign that

the gravity of shipping is shifting eastwards.

However, SGX has made a number of commitments in

its bid including maintaining Baltic’s London

headquarters at St Mary Axe, to preserve the Baltic’s

current ethos as a membership organisation with

member representation whose market activities are

governed by the Baltic Code, and maintain membership

subscriptions and data fee levels for members for five

years.

SGX has rapidly built up a position in the dry freight

derivative clearing market with over the last 18 months,

and its market share topped 50% in March.

Thornico launches new dry bulk shipping firm – SMN 2nd August

Denmark’s family-owned conglomerate Thornico has

launched a new dry bulk shipping firm Thorco Bulk,

which will primarily operate in the handysize and

supramax segments.

Thornico said the new company will be an asset-light

operator, and will be led by former Western Bulk

employees Marc Slinger, Rene Mikkelsen and Uffe

Hansen.

“Rene, Marc and Uffe have a great track record, great

know-how and expertise within the field and

furthermore, an eye for sound business practice. We

thus believe that the business model is sound and puts

us in a great position to capitalise on any synergies,”

Thor Stadil and Christian Stadil, owners of Thornico,

jointly said in a statement.

Thorco Bulk, up and running on 1 August, will work

alongside Thornico’s existing shipping business Thorco,

which is focused on project-oriented business.

Thor Stadil said the expansion into the dry bulk segment

seems natural and complements the existing business.

“During the last years, the lines between the different

shipping segments have been fading and especially bulk

is a growing part of the business.

“We are very strong within project and as the segments

overlap, it makes sense to expand the business to get

closer to our clients and thus be able to serve them with

a wider range of services.”

The two Thorco companies will be separate subsidiaries

of Thornico, each running their businesses

independently within bulk and project, though the sister

firms will collaborate closely.

The management team of Thorco Bulk

US Great Lakes and vessel discharges…a complicated mix – SMN 2nd August

Chaotic ballast water and vessel discharge issues have

attracted the attention of the American Great Lakes Port

Association (AGLPA), an organization representing the

interests of commercial port users, and the ports

themselves, on the US side of the Great Lakes.

The AGLPA was originally formed to support efforts to

promote exports of grain cargoes, seeks to support the

economic vibrancy of the region, and maritime trade

generally. At its just finished meeting, held along the

waterfront in Chicago, its major action item was a letter

to the US.Senate Armed Services Committee chair urging

the Committee to confer its blessing on language that

would “simplify chaotic ballast water discharge

regulations that plague commercial shipping”.

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News AbstractsDry Bulk Terminals Group – August 2016 – Issue 159The House of Representatives, in its version of a Defense

Reauthorization bill (Title XXXVI of H.R. 4909), has

included language that would bring about the adoption

of uniform incidental discharge regulations throughout

the US including the eight states along the Great Lakes

where waterborne cargo is loaded and discharged.

The letter is signed by ports including Cleveland, Detroit,

Chicago and almost a dozen others. The key phrase: “No

State or political subdivision thereof may adopt or

enforce any statute or regulation of the State or political

subdivision with respect to a discharge incidental to the

normal operation of a vessel after the date of enactment

of this Act.”

Comparable language is also found in another pair of

bills, the “Vessel Incidental Discharge Act (S. 373/H.R.

980), which the AGLPA describes as: “legislation to

create consistent national standards for the regulation

of ships’ ballast water and to establish clear and

exclusive federal jurisdiction over ballast water

regulation to be administered by the U.S. Coast Guard.”

The bills cover discharges of ballast water, deferring to

rules established by the Coast Guard, but also a wide

range of other discharges resulting from normal vessel

operation (the lengthy list includes, among many others,

effluent from scrubbers, for example) where the

individual states have weighed in.

An AGLPA position paper on the issues hints at the

jumbled regulatory landscape, starting with rules on

ballast water exchanges going back to 1990, followed on

with rules applying to ships entering the Saint Lawrence

Seaway - the path from the Lakes out to the Atlantic

Ocean - that were implemented around the same time

as the IMO’s yet to come into force Ballast Water

Management Convention.

In the US, a parallel set of rules, enacted under the Clean

Water Act (and administered by a different body- the

Environmental Protection Agency, or EPA), delineated

another set of rules and best practices, under the Vessel

General Permit, for ocean going vessels trading in the

Lakes and in the western part of the Seaway.

Meanwhile, Tthree of the eight states on the Great

Lakes have their own bespoke permitting regimes for

vessel discharges. AGLPA’s position paper also cites

three Federal agencies looking at ballast water issues-

the Coast Guard, the EPA, and the Saint Lawrence

Seaway Development Corp, which works in parallel with

a different entity on the Canadian side.

Sound confusing? Well, it is. Hence, the push for

uniformity amidst a system where individual states can

enact their own rules until they are compelled by

Federal law to legislate harmonized rules.

Euroseas cancels newbuild at Dayang yard, tweaks deal at Yangzijiang – 4th AugustEuroseas has made changes to its new shipbuilding deals

by commencing arbitration over the cancellation of a

new bulker contract and changing a firm order to an

option.

Euroseas, bulker and container vessels owner and

operator, said it has terminated a contract on the

construction of a ultramax vessel at Sinopacific

Shipbuilding’s Dayang shipyard.

The ultramax vessel was originally scheduled for delivery

in the second quarter, but faced excessive construction

delays. The Sinopacific Dayang shipyard has seen its

cashflow dried up leading to unpaid wages and stalled

operations amid the severe shipbuilding industry

downturn.

“The company has demanded the return of its progress

payments and other expenses as specified in the

newbuilding contract and secured by refund guarantees.

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News AbstractsDry Bulk Terminals Group – August 2016 – Issue 159The parties have referred the matter to arbitration,”

Euroseas stated.

Euroseas added it has a second newbuilding contract for

a similar ultramax vessel with the same Chinese yard

which is also facing significant delays.

Separately, the shipowner has changed a firm

shipbuilding contract for a kamsarmax vessel into an

option at another Chinese yard Yangzijiang Shipbuilding.

The newbuilding, yet to be built, is originally scheduled

for delivery in the second quarter of 2018.

Euroseas has now acquired the option from Yangzijiang

to decide whether to continue with building the

kamsarmax, or build a different type of vessel, or credit

the payment already made as part of the original

contract ($2.77m) to acquire a different vessel from the

yard, or decide to cancel the shipbuilding contract

without any additional cost. Euroseas has until 31

December 2016 to decide.

Euroseas has taken delivery of a similar kamsarmax

vessel, Xenia, in February this year.

Golden Ocean delays six capesize newbuilds – SMN 25th August

John Fredriksen’s Golden Ocean has delayed the delivery

of six capesize newbuildings as it reports a $107.5m first

half loss.

In its six financial statement Golden Ocean said that in

June it had entered into an agreement with one yard to

delay the delivery of six newbuildings by seven to nine

months per vessel. The shipowner has six capesize

newbuildings on order from New Times Shipbuilding,

out of a total of 12 new vessels it has contracted with

yards in China.

Of the 12 vessels under construction one has been sold

and will be delivered to new owners when it is delivered

from by the shipyard in the fourth quarter of 2016.

Golden Ocean will receive $46.2m in net sales proceeds

when the newbuilding is delivered.

The company has outstanding commitments of $372.7m

on its newbuilding programme.

“Following the equity issue and renegotiation with banks

in February this year, the company’s main focus is

discussions with the yards on delaying the newbuilding

orders,” Golden Ocean said.

“Golden Ocean has good support from the yards and has

already postponed many newbuilding orders and

negotiations are ongoing for further delays.”

The company reported a loss of $107.5m for first half of

2016 compared to $110.9m for the same period a year

earlier. In the second quarter of 2016 it made loss of

$39.2m compared to a $68.2m loss in the same period a

year earlier.

While the bulk market remains depressed Golden Ocean

is seeing some improvement in spot rates. “Based on

the contract cover for the third quarter and spot rates

obtained so far into the quarter, we expect the

operating result for the third quarter to improve relative

to the second quarter of this year,” it said.

Merchant fleet remain on Red Sea alert despite piracy false alarm – SMN 3rd August

Ships transiting the Red Sea have been cautioned to

remain vigilant despite a reported piracy attack north of

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News AbstractsDry Bulk Terminals Group – August 2016 – Issue 159the Bab-el-Mandeb Strait recently turning out to be false

alarm.

A cable laying vessel reported being fired upon by 16

assailants armed with rocket-propelled grenades (RPGs)

and AK47 assault rifles west of Yemen’s Jazirat al Hanish

al Kabir islands on July 22.

Armed security on board the merchant vessel returned

warning shots and a nearby warship reportedly

acknowledged the master’s distress call, scrambling

media to report a piracy scare.

However the incident, near position 13’ 37” N - 042’ 35”

E, proved to be an encounter with local Yemeni Security

Forces according to United Kingdom Marine Trade

Operations (UKMTO) who were alerted in the immediate

aftermath and have since investigated the episode.

“The combined military assessment of the incident

reported in the Southern Red Sea 22nd July, concludes

this was not an attack or act of attempted piracy but an

encounter with local Yemeni Security Forces from the

Hanish Islands investigating a ship conducting legitimate

operations and responding to warning shots from the

on-board Armed Security Team,” UKMTO reports.

UKMTO urged mariners to “remain vigilant when

transiting the area and report any suspicious activity to

UKMTO” despite the isolated incident.

The warning has been echoed by UK-based maritime

security specialists Protection Vessels International (PVI)

who say the threat of attacks targeting merchant vessels

transiting the Gulf of Aden and the Red Sea remains.

“There have been several reports of suspicious activity

in the region in 2016, including sightings of ladders and

weapons on board vessels that indicate the continued

presence of violent criminal groups in the High Risk

Area,” PVI said.

The Hanish Islands enjoy a hotly disputed history with

Ethiopia, Eritrea and Yemen all claiming sovereignty at

different times. Last year the archipelago was reportedly

the scene of intense fighting between forces loyal to

former president Ali Abdullah Saleh and Houthi

insurgents and forces loyal to acting president Abd

Rabbuh Mansur Hadi, the latter backed by Gulf Arab

coalition forces.

“Reported incidents of piracy since early 2014 have

clustered around the Gulf of Aden and southern Red

Sea, suggesting that the threat originates in Yemen,

although the identity of the attackers remains unclear,”

PVI said of the July 22 episode where the cable layer was

steaming at just 0.5 knots north of the Bab-el-Mandeb

Strait.

Last month’s attack comes after piracy watchdog

International Maritime Bureau (IMB) reported attacks

dropped to a 21-year low in the first half of 2016.

However, IMB director Pottengal Mukundan urged

continued vigilance off Somalia despite the kidnap for

ransom problem cooling due to the presence of

international Naval patrols and private security

deployed on merchant vessels.

“Ships need to stay vigilant, maintain security and report

all attacks, as the threat of piracy remains, particularly

off Somalia and in the Gulf of Guinea," he said.

Joint Venture Brings Together Top Global Shipbroker and Nordic Investment Bank – SSY 29th June

Simpson Spence Young, the world’s largest independent

shipbroker, and Carnegie AS, the leading Nordic

investment bank, have today announced the signing of

an agreement establishing a Joint Venture (JV) to

strengthen and broaden their offering to the global

shipping industry. The new company is called SSY

Carnegie LLP.

SSY Carnegie has been formed to identify and execute

transaction opportunities in the global shipping finance

arena. It will concentrate on debt and equity capital

markets, Mergers and Acquisitions (M&As) and IPOs.

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News AbstractsDry Bulk Terminals Group – August 2016 – Issue 159The new LLP will share research intelligence and

undertake joint marketing activities.

Mark Richardson, Vice Chairman of Simpson Spence

Young, and Christian Begby, Managing Director of

Carnegie AS, are signatories of the JV. SSY Carnegie will

employ its own staff located in Simpson Spence Young’s

London offices.

The JV is established as a separate legal entity and

registered in the UK as a LLP. Simpson Spence Young and

Carnegie AS each own 50 per cent of the company.

Commenting on the JV, Mark Richardson Vice Chairman

of Simpson Spence Young, said: “This deal will enable

our brokers to offer their clients access to competitive

financing to facilitate the transaction of physical Sales

and Purchase and chartering deals. We can now provide

our clients with an integrated offering of physical and

derivative broking, together with a strong financial

component.”

Christian Begby, Managing Director of Carnegie AS, said:

“The agreement will utilise the market strength and

global reach of Simpson Spence Young and the global

placing power of Carnegie. We are very excited by the JV

and are currently busy recruiting staff with an

investment banking background and shipping

knowledge to work for the new venture.”

Simpson Spence Young Chairman John Welham said:

“We believe this JV provides a strong financial and

reputational upside for both parties. Additionally it will

greatly benefit our customers, both for new financing

requirements and in certain cases to assist in finding

creative solutions for debt restructuring and financial

workouts. It will also lift both our companies’ profiles

not only in the shipping arena but also in the private and

public equity and debt markets.”

EBS expands storage space at Port of Rotterdam – WC 17th June

European Bulk Services (EBS) is expanding its covered

storage capacity at the Port of Rotterdam.

Supported by a long-term contract, the capacity will be

enlarged with 60 000 cbm. The expansion involves the

construction of a shed for various dry bulk materials that

need to be stored in covered storage. The infrastructure

will be constructed on the existing terminal at the

Laurenshaven.

Construction of the shed at the Laurenshaven will start

in the summer of 2016 and is expected to be operational

as of 1Q17. A new shed for agribulks is also planned at

the Europoort terminal.

“We are excited to develop this expansion project,

which confirms EBS’s philosophy of providing extremely

efficient infrastructure to our customers. The new sheds

will be built in line with the terminal’s high standards for

safety and flexibility,” said Taco de Vries, Director

Business Development Dry Bulk HES International.

Jan Vogel, CEO of HES International, added: “This new

investment underlines the strategy of HES International

and the commitment of its shareholders to grow further

in the dry bulk segment, and strengthen our position in

the covered storage of all dry bulk cargo”.

Maybulk widens first half loss to $16m – SMN 22 August

Malaysian Bulk Carriers (Maybulk) widened first half

losses to MYR64.9m ($16.2m) from MYR44.4m in the

previous corresponding period, mainly due to negative

contribution from its OSV unit PACC Offshore Services

Holdings (POSH) and the persistent weak dry bulk

market.

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News AbstractsDry Bulk Terminals Group – August 2016 – Issue 159Revenue meanwhile also dipped slightly to MYR108.9m

from MYR109.9m in the first half of 2015. On a quarterly

basis losses nearly doubled to MYR40.1m in the second

quarter from MYR21.3m previously while revenue

dipped to MYR55.4m from MYR58.1m previously.

The dry bulk segment widened its loss by 9% to

MYR61.4m compared to a MYR56.1m loss in the first

half of 2015. This was due to a 29% drop in charter rates

earned, Maybulk said in a stock market announcement.

Profit from the tanker segment however rose to

MYR14.9m in the first half but this was partially due to

the extraordinary gain from sale of vessels. Excluding

this, tanker segment profit was MYR11.8m compared to

MYR5.2m previously, mainly due to improved charter

rates earned as average TCE rates rose to $14,961 per

day from $13,519 per day previously.

Profit from the ship brokerage and management

segment however rose by two thirds to MYR864,000

from MYR521,000 previously due to higher fees earned

and lower expenditure.This however remained a small

proportion of overall income.

Maybulk's offshore unit POSH reported a loss of $13.1m

in the first half against a profit of $6.1m previously,

mainly due to lower contributions from its OSV segment

and higher provisions for doubtful debts as the offshore

services market continues to struggle with weak oil

prices.

Maybulk's share of POSH results amounted to a loss of

MYR11.5m in the first half, against a profit of MYR4.7m

in the same period last year.

Looking ahead, Maybulk said the dry bulk market

continues to remain difficult, and although the spot

rates for dry bulk have increased from the s average in

the second quarter of 2016, there is continued

nervousness in the global economy and the recovery of

the dry bulk market remains uncertain.

Meanwhile in the oil and gas sector, with lower capex by

oil majors and oilfield operators continuing to seek

further reductions in their operating cost there has been

downward pressure on vessel utilisation and charter

rates which will continue to negatively impact the POSH

Group’s financial performance, Maybulk said.

All considered Maybulk said, the board is of the view

that the outlook for the remainder of the year remains

difficult and the group is expected to report a loss forthe

full year.

Pan Ocean makes first half profit of $84.2m – SMN 17 August

The once-embattled Pan Ocean has continued to build

up its earnings with a profit in the first half of 2016,

reversing from the loss in the same period of last year.

In the six months ended 30 June 2016, Pan Ocean

posted a profit of $84.21m, as against the loss of

$55.44m in the previous corresponding period.

First half revenue inched up by 2.2% year-on-year to

$758.51m.

The South Korean shipowner has exited a two-year long

debt rehabilitation process after it entered into

receivership in June 2013.

On the 2016 outlook, Pan Ocean said the chronic

oversupply of tonnages and slow demand would set

further scrapping of tonnages which could relieve

current supply and demand imbalance, and possibly

improve the market with any seasonal implication such

as the grain season of the northern hemisphere nations.

Precious Shipping sells two elderly bulkers for scrap – SMN 16th August

Bangkok-based dry bulk shipowner Precious Shipping

has sold two elderly bulk carriers to the demolition yard

for a total price of $2.42m.

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News AbstractsDry Bulk Terminals Group – August 2016 – Issue 159Precious Shipping announced the sale of the 1994-built,

23,732-dwt Suchada Naree at a price of $1.28m, and the

disposal of the 1996-built, 18,596-dwt Apisara Naree for

$1.14m.

The company said the move is “in accordance with the

company’s strategy to rejuvenate its fleet by selling its

older vessels and acquiring younger and bigger vessels.”

Both the vessels have been delivered to the scrapyard

on 12 August.

Thoresen Shipping reports Q2 loss of $5.6m – SMN 11th August

Bangkok-based Thoresen Shipping has concluded its

second quarter results with a loss amid the weak dry

bulk shipping market.

The bulk shipping arm of Thoresen Thai Agencies (TTA)

reported a quarterly loss of THB196.2m ($5.6m),

representing a 90% fall compared to the same period of

last year.

Thoresen Shipping said its average time charter

equivalent rate in the second quarter was at $5,079 per

day, a decline of 19% year-on-year. The company’s

owned fleet utilisation rate remained high at 100%

despite the weak market condition.

During the second quarter, the company sent the

39,042-dwt Thor Wave and the 39,087-dwt Thor Wind

for scrap as part of its overall drive to raise fleet

efficiency and for renewal.

As at end-June 2016, Thoresen Shipping owned 21

vessels with an average size of 52,078 dwt and an

average age of 11.6 years.

Chalermchai Mahagitsiri, president and ceo of TTA, said:

“For dry bulk operator Thoresen Shipping, revenues and

EBITDA edged up slightly from first quarter 2016.”

However, he added that the shipping sector continue to

remain sluggish in view of the weak Baltic Dry Index

(BDI).

Malaysia announces big tax incentives for shipyard industry – SMN 10th August

Malaysia has unveiled a generous new tax incentive

scheme to help boost its shipbuilding industry, local

reports said.

The Ministry of International Trade and Industry (Miti)

has introduced an incentive scheme giving tax

exemptions to existing and new shipbuilding and ship

repair companies in Malaysia.

According to Miti, new companies will be able to enjoy

either pioneer status with a 70% income tax exemption

on their statutory income for a period of five years, or

an investment tax allowance of 60% on the qualifying

capital expenditure (capex) incurred within five years

from the date the first qualifying capex is incurred.

Existing shipbuilding and ship repair companies will be

given an investment tax allowance of 60% on the

additional qualifying capex incurred within a period of

five years. All applications will be evaluated by the

Malaysian Investment Development Authority.

Although there are 100 registered shipyards in Malaysia,

currently only six large shipyards have repair yard

capacity of more than 600 tonnes. These are Malaysia

Marine and Heavy Engineering Holdings Bhd, Boustead

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News AbstractsDry Bulk Terminals Group – August 2016 – Issue 159Naval Shipyard, Sabah Shipyard, SapuraKencana

Petroleum Bhd, Nam Cheong and Muhibbah Marine

Engineering.

Previously, incentive schemes for the shipbuilding and

ship repair industry were for projects located in the

Eastern Corridor, and the states of Sabah, Sarawak,

Perlis, Kelantan, Terengganu, Pahang as well as the

district of Mersing in Johor, to boost industry in these

areas.

Companies were eligible for Pioneer Status with an

income tax exemption of 100% of their statutory income

for a period of five years, or an investment tax

allowance of 100% on the qualifying capex incurred

within a period of five years. All these schemes ended in

2010 however.

The new incentives are applicable to all areas in

Malaysia, with the objective of boosting the overall

growth of the industry in line with the Malaysian

Shipbuilding and Ship Repair Industry Strategic Plan

2020 and the 11th Malaysia Plan.

“I strongly urge both local and foreign investors to

capitalise on these new incentives. Despite the sluggish

momentum in the offshore oil and gas industry, which

has suppressed demand for ships and offshore

structures, Malaysia has the pull factor to become the

leading nation in the shipbuilding and ship repair

industry," said minister for trade and industry Mustapa

Mohamed.

“We want to encourage the industry players to further

build their capabilities and capacities to meet the

challenges in the competitive global landscape. Local

players, especially, should enhance their value-add

offering by strengthening their innovation capacity in

developing new products and production methods. This

includes employing local design engineering capability

either in-house or outsourcing from the available design

house providers,” the minister was quoted saying.

Miti said the shipbuilding and ship repair industry has

been identified as one of the sectors to support

Malaysia’s economic growth. Focus areas include the

production of small vessels for recreation, sports and

leisure boats, the production of vessels of 30,000

deadweight tonnes and below for coastal shipping, the

fabrication of offshore structures and the production of

tugs and pusher craft for export.

Under the 6th entry point project of the Economic

Transformation Programme, the government aims to

develop in-country design capabilities for offshore

support vessels by training up to 160 engineers and

technicians in shipbuilding and ship repair through

Boustead Heavy Industries Corp and Boustead Naval

Shipyard.

Glencore Grain takes Diana Shipping panamax on short-term time charter – SMN 9th August

Athens-based Diana Shipping expects to generate

$1.67m after fixing its Panamax bulker Ismene to

Glencore Grain on a short term time charter contract.

The gross charter rate is $5,850 per day, minus a 5%

commission paid to third parties, for a period of

between 10-13 months, the Greece dry bulk shipping

specialist said. The charter commenced August 7.

Ismene is a 77,901 dwt Panamax dry bulk vessel built in

2013.

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News AbstractsDry Bulk Terminals Group – August 2016 – Issue 159

Diana Shipping’s fleet currently consists of 46 dry bulk

vessels (2 Newcastlemax, 14 Capesize, 3 Post-Panamax,

4 Kamsarmax and 23 Panamax). The Company also

expects to take delivery of one new-building

Newcastlemax dry bulk vessel during the third quarter of

2016, as well as one new-building Newcastlemax dry

bulk vessel and one new-building Kamsarmax dry bulk

vessel during Q4.

The combined carrying capacity of Diana’s fleet,

excluding the three undelivered, is approximately 5.2

million dwt with a weighted average age of 7.8 years.

Courage Marine switching to secondary listing in Singapore – SMN 4th August

Dry bulk shipowner Courage Marine has proposed to

convert its listing status on the main board of Singapore

Exchange (SGX) from a primary listing to a secondary

listing, while maintaining its primary listing status on the

Hong Kong Stock Exchange (HKSE).

Courage Marine decided on this proposal in view of high

compliance costs, trading volume, and its business and

shareholders profile.

Due to Courage Marine’s dual primary listing on SGX and

HKSE, the company is required to comply with the listing

rules of both exchanges. The conversion to a secondary

listing on SGX “will enable the company to substantially

reduce its legal and compliance costs, as well as free up

resources for other critical aspects of its business,

growth and operations”, Courage Marine stated.

The company noted that for the last three financial

years, the total and average daily trading volumes of its

shares on SGX has been consistently and significantly

lower than that on HKSE, pointing to a lesser need to

maintain the primary listing in Singapore.

In addition, Courage Marine stated that its principal

place of business is in Hong Kong, and the listing

conversion would help reflect the geographical business

profile of the company.

The company also has an issued share capital comprising

127,058,928 ordinary shares, with the bulk of the shares

of approximately 89.97% being registered under the

company’s share registrar in Hong Kong for trading,

leaving only 10.03% for trading in Singapore.

Courage Marine said it has received an in-principle

approval from SGX for the listing conversion.

“The conversion is expected to streamline the

company’s compliance obligations, create efficiencies in

resources, allow the company greater flexibility in its

activities, and better reflect the shareholder profile and

geographic business profile of the company, without any

adverse effect on shareholders,” Courage Marine said.

In the first quarter, Courage Marine reported a loss of

$1.49m amid a difficult dry bulk shipping market.

More dry bulk scrapping needed to avoid repeat of BDI all time low – SMN 2nd August

Precious Shipping warns that if dry bulk scrapping does

not increase in the second half of the year owners could

again be faced with the all time low rates seen in

February.

In its second quarter newsletter Precious Shipping

Managing Director Khalid Hashim noted that the Baltic

Dry Index (BDI) had bounced back from the “misery” of

290 point in February to the “lofty” level of over 700

points in July (although it currently stands at 656 points).

However, it was still extremely hard for owners to avoid

negative cashflow unless they had extremely low

operating costs.

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News AbstractsDry Bulk Terminals Group – August 2016 – Issue 159

Khalid Hashim

Looking at the increase in the BDI in the first half of the

year Hashim said that based on numbers from China in

the period there were no reasons justify the current

surge.

Instead the scrapping of 22.74m dwt of bulker tonnage

in the first half, compared to 20.5m dwt in the same

period in 2015, combined with virtually all newbuilding

orders being delayed or converted to other ship types,

had helped reduce pressure on the supply side resulting

in a gradual rise of the BDI.

However, it was noted that scrapping had slowed to a

crawl by the end of Q2 resulting in 0.84% fleet growth in

the first half of the year when negative fleet growth had

been expected based on Q1 scrapping numbers.

Hashim warned: “If scrapping doesn’t accelerate in the

second half of this year then the BDI will start to drop

from the current levels and we may be faced, once

again, with rates that equal the all time low reached in

February.”

The warning echoes that of Bimco at the start of June

when it stated that zero fleet growth would be required

over the next few years to bring dry bulk shipping back

into profitability by 2019. Bimco president, Philippe

Louis-Dreyfus said the industry needed to “demolish and

enormous number of ships”.

Meanwhile, Precious Shipping reported a second

quarter net loss of $13.48m compared to $12.03m in the

same period in 2015.

Seafarer health - It’s the life you lead – SMN 1st July

“There’s old captains and there’s bold captains, but

there’s no old, bold captains” – is an ancient saying

beloved of people who lecture about navigational

safety. Its equivalents, advocating the somewhat

unfashionable virtue of prudence, will be found, in every

language, all over the world.

But whether they are cautious or reckless, it seems that

because of the lifestyle provided by their profession, not

enough captains and indeed other seafarers are

enjoying a healthy old age. Commentators shouldn’t

become too personal, but I have seen too many of my

old shipmates dying well before their allotted span.

There is more interest in the “wellbeing” of seafarers

today and it’s not before time.

But is there a connection between the lives people live

afloat and their long-term health? Some really quite

disturbing findings have emerged from the three year

“Martha” project undertaken by Warsash Maritime

Academy with partners in Denmark and China. This

follows on from the Horizon Project which used

simulator voyages to establish the reality of fatigue as a

maritime hazard and chronicle the deterioration of

performance, notably during periods of 6 on- 6off

watchkeeping.

Martha has instead used some 1,000 volunteer officers

engaged in real voyages over many months to study the

effects of long term fatigue, in a variety of different ship

types and voyage patterns. They have kept diaries of

their work and rest periods, these being validated by

wrist worn “Actigraphs” which record activity in a “non-

floggable” fashion.

Questionnaires and interviews have provided further

data and the researchers are confident that a far greater

understanding of the nature and consequences of

fatigue, as opposed to “mere” sleeplessness, has

emerged as their analysis progressed.

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News AbstractsDry Bulk Terminals Group – August 2016 – Issue 159

Long periods of watchkeeping and irregular sleep

patterns over 6-7 month voyages, it has been

established, “drain the batteries” of the body in a way

that may cause long-term health problems. There are

obvious safety concerns. While the symptoms of fatigue

might have become better known – behavioural

changes, forgetfulness, fretfulness and irritability being

just some of these - the research has provided more

useful information on the causes. Factors contributing to

fatigue range from fears about job security and stress, to

the shipboard environment, quality of life aboard ship,

heavy port work, irregular working hours, uncertainty

about tour lengths, the burden or paperwork and stress

of inspections, along with concern about the capabilities

of shipmates.

But it is perhaps the contribution of the health

professionals involved in the study which ought to

concern those in the management of ships and shipping

companies. Too many seafarers from all around the

world, and in every age-range, exhibit chronic health

effects which could be life-shortening. Large numbers

suffer from cardio-vascular problems – 50% of those

studied showed signs of hypertension, while even cadets

showed signs of obesity.

Diet, nutrition, energy expenditure all showed

deficiencies, with an increasingly sedentary lifestyle,

allied to the effects of fatigue, and were all noted by the

medical researchers. It seemed somewhat ironic that

the findings of the Martha research were announced in

Warsash, just a couple of days after the global

celebrations of the “Day of the Seafarer”, one of the

purposes of which seemed to be to encourage more

recruitment. “Live afloat and die before your time!” – is

not a desirable recruiting slogan.

Martha seems to suggest that responsible employers of

seafarers ought to be taking its findings with the utmost

seriousness. It could be that manning levels or

watchkeeping patterns need to be examined, while the

more deep thinking might consider the contribution of

design, diet and the shipboard working environment to

the seafarer’s sedentary lifestyle. The data seems clear

enough and difficult to dispute. Now, the reaction of the

more responsible in the industry needs to be positive

and prompt.

Courage Marine looks to business diversification – SMN 19th August

Dry bulk shipowner Courage Marine has entered into a

non-binding memorandum of understanding to acquire

BDG Entertainment as part of a business diversification

move.

Amid the sluggish conditions in the global dry bulk

shipping sector, Courage Marine is attempting to acquire

BDG Entertainment, which is principally engaged in the

business of artist management and artist training centre

management in South Korea.

“As mentioned in the interim results announcement of

the company for the six months ended 30 June 2016,

the group will continue to explore other investment

opportunities which can contribute a new source of

income to the group,” Courage Marine said.

“The group will also step up its effort in improving the

financial performance of the group’s existing business

and will continue to look for attractive

13www.drybulkterminals.org

News AbstractsDry Bulk Terminals Group – August 2016 – Issue 159investment/business opportunities that can broaden the

group’s income base and bring substantial value to

shareholders of the company,” it added.

In the first half of 2016, Courage Marine posted a loss of

$3.3m, narrowing from the wider deficit of $17.1m in

the year-ago period.

Calculating Maritime Risk

Formed in 2001 to improve global marine safety

standards, RightShip helps their customers manage

marine risk by identifying and eliminating substandard

ships from their supply chains.

RightShip provides ship vetting and risk management

services for more than 270 customers globally, across all

maritime sectors. In 2015 alone RightShip vetted just

under 3.4 billion tons of cargo and removed over 900

ships from customer supply chains.

After 15 years of working within the original risk

management platform, the Ship Vetting Information

System (SVISTM), RightShip has spent the better part of

three years developing an augmented risk management

platform, RightShip Qi, that harnesses big data,

predictive analytics and real-time risk assessments to

better target substandard maritime performance.

When asked about the reason for replacing a system

that wasn’t ‘broken’, RightShip CEO Warwick Norman

said that “The platform we developed in 2001 has

served us well, and has undoubtedly helped avoid many

preventable maritime incidents; however the data sets

we are working with now are too vast and complex to be

intelligently analysed using pre-existing technology.

RightShip Qi provides our customers with the

opportunity to take better advantage of the data

available now, further reducing their risk and improving

efficiency.”

Warwick Norman, CEO RightShip

Turning ‘big data’ into useful information

“The shipping industry has lagged behind others in its

exploitation of big data,” Norman comments. “For

example, big data has been analysed extensively within

other industries to provide predictions – think casinos,

or a sporting event such as Wimbledon, where player

statistics are instantaneously analysed and a player’s

preparation is as much about reviewing the opponent’s

stats to exploit their weaknesses as it is practicing on the

court. In retail, data analysis has resulted in superior

merchandising, supply chain management and

successful multi-channel marketing in order to increase

operating margins by more than half. Just as it has for

these industries, harnessing big data will provide big

benefits to RightShip and our maritime customers.”

The data that must be analyzed in order to deliver

accurate and reliable vessel risk assessment is

characteristic of big data in general in that it is high-

volume, and comes from a variety of sources in a variety

of formats and definitions.

RightShip’s significant investment in developing good,

clean data has taken a considerable amount of time,

however according to Norman “in the end we have the

most accurate set of vessel and industry data out there.

RightShip delivers value to our customers by

transforming silos of raw data into useful information,”

he explains. “We look at ourselves as being agile: we are

able to return our customers’ own data to them with

14www.drybulkterminals.org

News AbstractsDry Bulk Terminals Group – August 2016 – Issue 159added value. Our objective is to refine our capability to

predict the likelihood of a vessel having a casualty.”

Completing the Risk Profile

There are many factors which determine a vessel’s

associated risk.

Using ‘golden records’ developed by a complex data

management process, RightShip feeds the combination

of vessel, inspection and incident data into a web

application for online access by both in-house users, as

well as RightShip customers.

The mastered data goes into the data mining and

predictive analytics tools with which RightShip Qi

determines risk ratings for each vessel; that is, to predict

the likelihood of a vessel having a casualty in the future,

based on known data.

This prediction takes many variables into account - for

example, linking a track record of poor inspection results

to specific operators or vessel characteristics; or,

alternatively, rating a vessel highly if it gets awards for

‘green’ operation and has very few incidents and a good

inspection record.

Looking Ahead

The major benefit to RightShip’s customers is

undoubtedly the development of more accurate risk

models that will improve their ability to identify sub-

standard vessels. This enhanced accuracy leads to

providing more sophisticated insights and reporting

capabilities for customers. It has also provided the basis

for RightShip’s predictive analytics tool, RightShip Qi,

which is currently being rolled out to customers.

Norman concludes “RightShip Qi enables us to cement

our role as leaders and innovators in the maritime

industry. Ultimately, it helps us in our mission to ensure

that more sailors, ships and cargo arrive safely at their

destination.”

Clarkson commentaries – DBTO (Volume 22, No 8 – August 2016)Dry Bulk Supply & Demand Highlights

While average bulkcarrier earnings reached a nine

month high of $6,447/day in July 2016, this was 24%

down on average earnings in the preceding five years,

highlighting the depression in the market. Average

Capesize spot earnings fell 1% m-o-m in July, while

average earnings in all other bulker sectors rose m-o-m.

Total Chinese iron ore imports increased 3% y-o-y to

88mt in July 2016: the second highest volume on record.

This continued to support global seaborne iron ore

trade, which is currently projected to rise 3% in full year

2016.

A combination of financial pressure on steel mills and

the impact of environmental regulations cut EU coal

import demand in 1H 2016. Coal shipments into the

region are projected to drop 15% to around 141mt in

2016, driving a 2% slide in global seaborne coal trade.

Global grain and soybean trade has recently been hit by

supply disruptions. Flooding in France is expected to

reduce EU wheat exports in the coming months, while

Brazilian soybean exports have dropped, partly due to

domestic shortages. The projection for combined grain

and soybean trade growth in 2016 has been revised

down to 3%, to a total of 469mt.

Bulkcarrier demolition fell to a 19 month low of 0.8m

dwt in July 2016. Nevertheless, following a firm start to

the year, bulker demolition in full year 2016 is projected

to challenge the 2012 record of 33.4m dwt and help to

limit supply-side expansion this year.

A dearth in bulkcarrier contracting in the year to date

saw the bulker orderbook drop to 111.3m dwt by the

start of August 2016, down 17% since the start of the

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News AbstractsDry Bulk Terminals Group – August 2016 – Issue 159year. This was equivalent to 14.2% of the bulker fleet,

representing a 13 year low.

Dry bulk trade is projected to increase around 0.8% in

full year 2016, in contrast to an expected 1.5%

expansion in the bulkcarrier fleet. Overall, given the

current depressed fundamentals and expectations of

continued oversupply in the bulkcarrier sector, the

outlook for the near future remains challenging.

******

Seaborne Iron Ore Trade CommentaryGlobal seaborne iron ore trade is projected to increase

3% to around 1,401mt in 2016, driven by firm Chinese

import demand in the year to date. On the supply side,

the growth has largely been supported by a ramp up in

iron ore shipments by the major Australian and Brazilian

miners. Australian iron ore exports rose 5% y-o-y in 1H

2016, boosted by the addition of Roy Hill’s output from

November 2015. Meanwhile, Brazilian iron ore exports

rose 6% y-o-y in 1H 2016, despite the suspension of

Samarco’s mining licence in November 2015. Combined

iron ore shipments from Brazil and Australia accounted

for around 83% of global iron ore exports in 2015 and

tumbling iron ore spot prices in early 2016 helped to

secure further market share gains in the year to date.

However, an increase in iron ore spot prices in recent

months has provided a boost to many smaller producers

around the globe. As such, seaborne iron ore exports

from Canada, Mauritania and India are among the

featured exporting nations with positive growth

projections for 2016.

******

Iron Ore News

Total Chinese iron ore imports reached 88mt in July

2016, which was up 3% y-o-y and represented the

second highest monthly total on record. This

contributed to an 8% y-o-y rise in Chinese iron ore

imports to 582mt in the first seven months of the year,

despite a 1.5% drop in the country’s steel output, to

402mt. The discrepancy was due to two main factors.

Firstly, the displacement of domestic output, which has

been undermined by both volatile prices and

government pressure to close capacity. Around 790

Chinese mines were reportedly closed in January to May

2016, while the country’s domestic iron ore production

is estimated to have dropped around 7% y-o-y in the

first seven months of the year. The second driving factor

for the discrepancy was firm iron ore stockpiling in the

year to date. Iron ore inventories at 41 key Chinese

ports reached a record 105mt by the first week of

August 2016, up 9% since the start of the year. This

volume was equivalent to 18% of the country’s total iron

ore import volumes in the first seven months of 2016

and represents a downside risk to the country’s iron ore

import demand in the coming months. Overall, current

projections indicate a 6% rise in the country’s seaborne

iron ore imports in full year 2016, to around 994mt.

Iron ore shipments into the EU have come under

pressure in the year to date, reflecting the financial

strain on steel mills across the region. Seaborne steel

products shipments into the EU rose 17% y-o-y to 13mt

in January to May, despite the introduction of a number

of tariffs in recent months. This influx has contributed to

a series of steel mill closures across Europe in the year

to date. The decline in EU iron ore imports has been

most pronounced in the UK and France, with volumes

falling 35% and 17% y-o-y respectively in the first five

months of the year. Looking forward, EU iron ore

imports are projected to drop 4% to 106mt in full year

2016.

******

Seaborne Coking Coal Trade Commentary

Global seaborne coking coal trade is projected to drop

4% to around 239mt in full year 2016, which would

represent a four year low. The driving force for this is a

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News AbstractsDry Bulk Terminals Group – August 2016 – Issue 159projected 12% plunge in coking coal shipments into the

EU, to around 33mt. This is largely due to price

pressures on steel producers in the region, with EU

crude steel output dropping 6% y-o-y in 1H 2016.

However, the EU is by no means alone, with a decline in

coking coal imports and steel production increasingly

representing the global norm in the year to date. China

provides a clear exception to this trend, with a 17% y-o-y

increase in seaborne coking coal imports in 1H 2016,

despite a 1.5% drop in the country’s steel output in the

same period. This has largely been due to the tighter

domestic Chinese coal market, following a series of mine

closures in the past twelve months. However, given

expectations of a softening real estate market and

easing steel consumption, Chinese seaborne coking coal

import expansion is expected to slow throughout 2H

2016, towards a 7% growth projection in the full year, to

a total of around 38mt.

******

Coking Coal News

Indian coking coal imports fell 7% y-o-y to 19mt in

January-May 2016, driven by the impact of a flood of

cheap Chinese steel products imports in Q1 2016.

However, the introduction of minimum steel pricing

levels appears to be supporting Indian steel mills. The

country’s steel output rose 5% y-o-y to 8mt in June,

while reports indicate an uptick in Indian coking coal

imports in recent months. However, there are growing

concerns for India’s long term coking coal import

demand, with the country’s state owned miner

announcing plans to produce 70mt of metallurgical coal

domestically by 2020. Overall, Indian coking coal imports

are projected to fall 4% y-o-y to 46mt in 2016.

Australian coking coal exports are estimated to have

risen 2% y-o-y to around 70mt in January-May 2016.

This partly reflected a low base in early 2015, due to a

number of disruptions in New South Wales. Several

coking coal miners with large-scale operations in

Australia have come under financial pressure in the year

to date, reporting a decline in earnings in 1H 2016. In

early August, Peabody announced plans to cut its coking

coal output in Australia by over 50% to 7mt by 2020,

citing market pressures. Despite this, current projections

indicate 1% growth in Australian coking coal exports to

around 156mt in full year 2016.

US seaborne coking coal exports fell 26% y-o-y in the

first five months of the year, reflecting the severe

financial pressure on US coal miners, many of which

typically have relatively high production costs and have

been particularly affected by volatile global prices. With

few expectations for an uptick in US miners’ fortunes,

despite hopes of increasing US Gulf– Pacific trade

following the Panama canal expansion, the projection

for US seaborne coking coal exports in full year 2016 has

been revised down to a 24% y-o-y decline, to a nine year

low of around 29mt.

******

Seaborne Thermal Coal Trade Commentary

Global seaborne thermal coal imports are currently

projected to drop 2% to around 872mt in 2016. This is

expected to be largely driven by a 16% slump in steam

coal shipments into the EU, largely due to the impact of

environmental policies. The Large Combustion Plant

Directive has resulted in a series of coal-fired power

plant closures across the EU this year and current

forecasts indicate a drop of over 20mt in steam coal

shipments into the region, to around 108mt in 2016. The

UK is expected to account for the lion’s share of this

regional decline, with the carbon price floor scheme

severely undermining coal’s competitiveness, against

cheap gas imports. Current projections indicate a 70% drop in UK steam coal imports to around 5mt in 2016. Furthermore, shipments into the region’s leading coal importer, Germany, have also slid somewhat in recent months, while a number of the country’s smaller power plants are scheduled for decommissioning

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News AbstractsDry Bulk Terminals Group – August 2016 – Issue 159in 2H 2016. As such the projection for German seaborne steam coal imports in full year 2016 has been revised down to a 1% drop to around 39mt.

******

Steam Coal News

Indian steam coal imports fell 13% y-o-y to 64mt in the

first five months of 2016. Favourable exchange rates,

coupled with the steep rise in India’s environment tax,

have contributed to a shift in Indian buyer preferences

for lower volumes of high quality, premium steam coal.

This shift led to a 26% y-o-y decline in Indian steam coal

imports from Indonesia in January to May 2016, in

contrast to a 27% y-o-y rise in premium steam coal

shipments from South Africa in the same period.

Meanwhile, Coal India’s output rose 6% y-o-y to 325mt

in the first seven months of 2016, equivalent to almost

double total Indian steam coal imports in full year 2015,

pressuring coal import demand. Looking forward, a

recent weakening rupee, coupled with Indian price

sensitivity is likely to provide increasing support to

highvolume, low-quality steam coal shipments from

Indonesia in the coming months. As such, current

projections indicate a 6% drop in total Indian steam coal

imports to 157mt in full year 2016.

Chinese total coal imports rose 7% y-o-y to 129mt in

January-July 2016. The government has taken measures

to reduce the country’s supply glut, by closing around

95mt of Chinese coal mining capacity, contributing to a

6% y-o-y drop in coal output in January to July 2016.

This, combined with a 2% y-o-y rise in power

consumption in 1H 2016, has supported Chinese steam

coal imports in the year to date. Overall, current

projections indicate a 4% rise in Chinese seaborne steam

coal imports to around 133mt in 2016.

Turkey introduced a $15/t import tax on steam coal

imports in late July 2016. The move came as a surprise

to many, given the Turkish governments’ previous

measures to support the country’s coal fired power

generation. It is unclear what the impact will be on the

country’s thermal coal import demand in the coming

months. For the time being, current projections indicate

an 8% y-o-y rise in Turkish steam coal imports to around

19mt in full year 2016, following a firm 1H 2016.

******

Grain Imports - Grain Trade News

Global wheat and coarse grain trade is projected to drop

5% to 324mt in 2016/17. The decline is partly

expected to be due to a 7% drop in total Asian grain

imports, largely driven by a significant decline in

shipments into China. Meanwhile, total grain shipments

into the Middle East are currently projected

to decline around 3% in 2016/17, driven by a drop in

import demand in the region’s two largest importing

nations: Iran and Saudi Arabia. Elsewhere, grain

shipments into Africa are expected to drop 2% in the

current crop year, despite a projected 1% rise in

Egyptian grain imports in the period. South African

grain imports are projected to drop 16%, reflecting a

recovery from weak domestic output in 2015/16.

Finally, the decline in global grain trade is set to be

exacerbated by poor wheat harvests in the EU, which

are projected to result in a drop of around 15% in the

region’s total grain exports in 2016/17.

******

Grain Trade News

In late July 2016, Japan and South Korea suspended

imports of several US wheat varieties. This was due to

concerns of unapproved genetically modified organisms

present in imported product from the US, following the

recent discovery of 22 cases of genetic modification in

Washington State. Following extensive testing by South

Korea’s Ministry of Food and Drug Safety, the country

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News AbstractsDry Bulk Terminals Group – August 2016 – Issue 159lifted its restrictions on imports of US wheat in mid-

August. Meanwhile, tests are ongoing in Japan. Between

them, South Korean and Japanese total wheat imports

reached 9.9mt in 2015/16, equivalent to 21% of total

wheat shipments into Asia in the period. Despite the

recent disruptions, wheat imports into Japan and South

Korea combined are expected to rise 4% to around

10.3mt in 2015/16, supported by attractive wheat

prices, relative to alternative grains.

******

Grain Exports - Export News

Rain damage and fungus contamination have severely

damaged wheat harvests in France, the European

Union’s leading grain producer. Reports indicate that the

country’s wheat harvests are currently on track to drop

20% to a thirty year low of around 34mt in the 2016/17

crop year. EU wheat farmers have already been put

under increasing pressure in recent months by firm

competition from the Black Sea region, with farmers in

Russia and the Ukraine supported by bumper harvests

and more favourable exchange rates. Finally, a number

of French wheat shipments were rejected by Egyptian

port authorities in 1H 2016, due to the confusion

regarding the latter’s inconsistent ergot fungus

contamination policies. Overall, the decline in French

wheat output is expected to contribute to a 14% drop in

EU wheat exports to around 29mt in 2016/17.

******

Minor Bulk Trades Commentary

The US is the world’s leading scrap metal exporter,

accounting for an average 23% of global seaborne scrap

exports since 2011. However, the country’s scrap metal

exports, which entail a long list of metals, including

scrap copper, aluminium and steel, have been in

consistent decline since 2011, largely due to a gradual

slide in global demand. Recently, a strong US dollar has

put additional pressure on the country’s scrap metal

exporters, undermining their global competitiveness.

Indeed, the US’s share of scrap metal shipments into

Turkey, by far the world’s leading scrap metal importer,

dropped from an average 25% in 2011-2015, to only

18% in 1H 2016. This trade has been displaced by

increasing shipments from Russia and the EU. Overall,

the US’s seaborne scrap metal exports fell 13% y-o-y to

6mt in the first six months of the year and current

projections indicate a 10 year low of just over 11mt in

full year 2016.

******

Bulkcarrier Fleet Commentary

Following the 30 Valemax vessel orders placed over

March and April 2016, Capesize contracting slumped

once again in May-July. Conversely, Capesize deliveries

rose 16% y-o-y in the first seven months of the year, to

13.1m dwt. Given the divergent trends in Capesize

contracting and deliveries, the Capesize orderbook

dropped to 202 units of a combined 47.8m dwt by the

start of August. This was down 3% since the start of the

year in terms of tonnage and represented a

nine year low in terms of vessel numbers. As a

percentage of fleet capacity, the Capesize orderbook

dropped to a 13 year low of 13.9% by the start of March

2016, before rising to 15.4% by the start of August.

******

Fleet Watch – To 1st August 2016Capesize vessels:

69 delivered

66 scrapped

30 ordered

Panamax demolition activity dropped to a nine month

low in July 2016, with 4 units of a combined 0.3m dwt

removed from the fleet. This was down 20% y-o-y in

terms of tonnage. Demolition in the sector has eased

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News AbstractsDry Bulk Terminals Group – August 2016 – Issue 159steadily over the past 5 months, despite continued

pressire on coal and grain trade and depressed Panamax

earnings in the year to date. Despite the recent

slowdown, scrapping activity in the Panamax sector

increased 47% y-o-y, in terms of tonnage, to 85 units of

a combined 6.1m dwt in the first seven months of the

year. Overall, current projections indicate that total

Panamax demolition will challenge the 2012 record of

8.7m dwt in full year 2016.

******

Fleet Watch – To 1st August 2016

Panamax vessels:

80 delivered

85 scrapped

2 ordered

By the start of August 2016, both the Handysize and

Handymax orderbooks dropped to the lowest levels in

over 9 years in terms of capacity. The Handysize

orderbook consisted of 329 units of a combined 11.8m

dwt at start August, down 23% since the start of the

year in terms of tonnage. Meanwhile, the Handymax

orderbook consisted of 490 units of a combined 29.7m

dwt, down 25% since the start of 2016 in dwt. As wa the

case in the Capesize sector, the slump in the Handymax

and Handysize orderbooks was driven by a dearth in

contracting in the year to date. However, in contrast to

the Capesize sector, Handysize and Handymax

deliveries both declined in January to July, down 16% y-

o-y and 24% y-o-y, respectively, in terms of tonnage.

******

Fleet Watch – To 1st August 2016Handymaxes:

135 delivered

66 scrapped

2 ordered

Handysizes:

88 delivered

92 scrapped

1 ordered

******

And Finally.......

The addition of something more entertaining is perhaps a new concept in this newsletter. So new that no-one responded to the teasers in the July issue. This was a little disappointing as it means that either no-one read (the last page of) the newsletter or you all read it but couldn’t work out the answers.

However, no responses did mean that I got to keep the prizes so it wasn’t all bad!

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News AbstractsDry Bulk Terminals Group – August 2016 – Issue 159

*****

July Answer.....

Last month I showed you a picture and asked what the surprise was relating to it. The picture showed a set of rail wagon wheels that were found at the bottom of another wagon that was fully loaded with coal! It appears that the full wagon was used when it was empty, to assist in collecting some parts but this set of wheels was never unloaded, the wagon was then re-used and the wheels only discovered on emptying the contents.

*****

I also asked you how you can reach 1,000 using just eight 8s.

The answer is;

888+88+8+8+8=1,000

*****

The last teaser was to find a 5 letter word given the clue: A, B, C, D, E, F, G...............P, Q, R, S, T, U, V, W, X, Y, Z.

To get the answer you should focus on what is missing, namely H, I, J, K, L, M, N & O, or put another way H through to O, or H to O, or H20 – H2O being the chemical symbol for the answer which is ‘water’

August Teasers......

The picture this month is a little unusual. All you need to do is study the picture and spot how many unsafe practices you can see.

*****

The maths question this month: Given four 9s, use an equation to total 100.

*****

I will leave it at two for this month. Answers to info@drybulkterminals.org please and I will reveal the answers in the September issue.

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

21www.drybulkterminals.org