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News AbstractsDry Bulk Terminals Group – July 2016 – Issue 158

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

Dear Member,

Welcome to a selection of news extracts for July. I am Nic Ingle, the recently appointed Executive Director of DBTG. I would welcome any feedback on what you would like to see in it. Maybe more or less of something, regular features not currently covered, more or less pages or perhaps you are content with it as it stands. I am open to all and any suggestions so if you have any ideas, please let me know.

Nic

DIARY DATESExecutive Committee Meeting – 2nd September 2016

IMO CCC3 – 5-9 September 2016

IN THIS ISSUE

Shipping Matters Economy/Finance Terminals/Ports Piracy Shipbuilding Commodity Reports Bulk Carrier Fleet

SHIPPING MATTERS

Benita refloated after being grounded for five weeks - FP 25 July

After five weeks aground in Mauritius, Liberian-flagged

Greek-owned bulk carrier Benita was refloated on the

high tide at 1300 h local time on 23 July. Insurer London

P&I Club paid tribute to salvor Five Oceans Salvage

(FOS), which had “shown great skill and persistence

under challenging circumstances”.

FOS’ anchor handling tug supply vessels Coral Sea FOS

and Ionian Sea FOS towed the damaged vessel to deep

water 20 n miles offshore. A skeleton crew is on board

while the ship’s general condition and seaworthiness are

assessed.

Benita on the rocks

The vessel hit Îlot Brocus on the southeast coast of

Mauritius bow-first on 17 June. The hull was punctured

by a rock, creating a 3 × 2 × 1.5 m hole, according to Le

Mauricien newspaper. Reports from Mauritius suggest

that the vessel has been declared a constructive total loss.

The refloating was effected by sealing and pressurising

the damaged holds without any need to blast the rock

with explosive as had originally been proposed.

When the vessel grounded, a quantity of heavy fuel oil

spilled into the lagoon between Îlot Brocus and the beach

at Le Bouchon. Cleanup teams from the Mauritius

National Coast Guard (NCG) received technical

assistance and equipment from Swire Emergency

Response Services and made use of booms supplied by

1www.drybulkterminals.org


Scott Shipping. In the following weeks, 174 tonnes of

fuel and lubes were painstakingly pumped into containers

and airlifted to shore, 1 tonne at a time, by the helicopter

squadron of the Mauritius Police Force.

Despite the precautions, new releases of oil occurred on

21 July. London P&I said in a statement, “Some areas

that had previously been cleaned will be given renewed

attention after reports of new oil releases following the

repressurisation of the vessel’s cargo holds prior to

refloating.” The work is being carried out by Swire, the

NCG, Mauritian paramilitary Special Mobile Force, and

volunteers.

The insurer added, “Environmental monitoring of the Îlot

Brocus and surrounding coastline will continue by onsite

contractors and the Mauritian authorities to ensure that

there are no incidents of pollution following the

refloating.”

The Mauritian government has said that it intends to seek

compensation for damage caused to the lagoon, the

beach, and the livelihoods of local fishermen, adding to

the total cost of the salvage, which some estimates place

at up to USD5.5 million.

Despite the cheers from onlookers when Benita slipped

off the rocks on the afternoon of 23 July, not everyone

was pleased to see the vessel go. The stranded ship

brought unprecedented numbers of visitors to the tiny

village of Le Bouchon, creating a boom for local traders.

Quoted in L’Express, vendor Sharmeen Bucktowa said,

“I cried when I saw the ship leave.”

_____________________________________________

Chang Myung Shipping continues tonnage clearance – FP 13 July

South Korean bulker operator Chang Myung Shipping,

which filed for receivership on 11 April, has continued to

its fleet disposals and sales to cut losses.

Ships built in the 1990s have been scrapped. IHS

Maritime & Trade Sea-web data shows that in June,

1994-built Capesize bulker C. Queen was sold for scrap

at a price of USD5.45 million.

This is in addition to 1995-built C. Polaris, which was

scrapped in May.

In March, Chang Myung sold 1994-built C. Harmony for

USD303/ldt, 1999-built C. Triumph for USD6.4 million,

and 1986-built C. Oasis for USD286/ldt.

Besides these demolition sales, in February Chang

Myung sold 2008-built Capesize bulker C. Winner to

Vafias-controlled Transmed Shipping for USD11

million.

The sales leave Chang Myung with 17 bulk carriers, of

which many were built in the late 2000s, and one ferry,

Shidao. The company also jointly owns a 2009-built

VLCC with SK Shipping.

Chang Myung Vessel

Chang Myung is expected to present its rehabilitation

plan to the Seoul Central District Court on 15 July.

The company filed for receivership after five consecutive

annual losses, with a KRW433.78 billion (USD378.9

million) loss incurred in 2015.

Despite having sold nine ships for at least USD62 million

since October 2014, Chang Myung has remained short of

cash amid weak freight rates and the company struggled

to repay its debts.

At the time C. Triumph was sold, the company had a

residual loan of USD26.74 million, but the price for

which the ship was sold for scrap was less than one-

quarter of the residual loan amount. Likewise, the sale

price of C. Winner was less than 10% of a Capesize

newbuilding price.

Chang Myung’s latest financial statements show

shareholders’ equity stood at negative KRW295.5 billion.



The company had long-term debt of KRW738.76 billion

and a working capital deficit of KRW374.3 billion.

According to Chang Myung’s filing, its largest creditor

banks are Korea Exchange Bank, which is owed

KRW385.4 billion, NH Bank, which is owed KRW27.5

billion, Korea Development Bank, which is owed

KRW21.5 billion, and Shinhan Bank, which is owed

KRW10.5 billion.

_____________________________________________

Ship hits wall of Panama Canal renewing design concerns – BBC 26 July

A Chinese container ship has hit a wall of the recently-

widened Panama Canal, amid concerns that it has less

space for manoeuvres and could be unsafe. It is the third

accident of this kind since the multi-million dollar

expansion opened a month ago.

Surveyors inspect the damage

Workers' groups say the new locks are too small for safe

operations now that the canal can take ships three times

larger than before. The Panama Canal authority says it is

investigating the incident. The Xin Fei Zhou, owned by

China Shipping Container Lines, suffered a large gash in

its hull and is now undergoing repairs.

The new locks are designed for ships to use tugboats to

guide them through the canal. In the old canal

locomotives (known as "mules") would keep the ships

correctly aligned as they passed through. A study for the

International Transport Workers' Federation released

earlier this year concluded that the new lock chambers

were too small for the tugboats to be able to manoeuvre

properly.

Work on the expansion began in September 2007 and

was originally planned to finish in 2014. Following

delays caused by construction workers' strikes and

disputes over cost overruns, the date for completion was

pushed back to April 2016.

The first voyage through the new expanded canal was on

26 June.

_____________________________________________

Star Bulk remains firmly in the red in Q1 – SMN 1 July

The US’ largest public-listed dry bulk shipowner Star

Bulk stayed firmly in the red in the first quarter of the

year.

Star Bulk reported a first quarter net loss of $48.79m

compared to a loss of $40.18m in the same period in

2015. Losses in Q1 2016 were outstripped revenues of

$46.3m for the first three months of the year. In Q1 2015

Star Bulk reported revenues of $45.5m.

The steep losses coincided with a period where the dry

bulk shipping markets fell to the lowest levels on record.

“The first quarter of 2016 was the worst of the last 30

years, as freight rates remained below operating costs

and vessel values reached new lows across all dry bulk

vessel classes,” Petros Pappas ceo of Star Bulk

commented.

With the dry market not expected to recover substantially

until the second half of 2017 according to analysts Star

Bulk is looking to ensure it has enough cash to sustain

operations over the coming years.

“In the last few months we have entered into negotiations

with our banks, with which we have long standing

relationships, to defer principal payments and waive or

substantially relax financial covenants, so as to preserve

liquidity well into 2019,” Pappas said.



While negotiations are fianlised Star Bulk has standstill

agreements covering debt principal repayments as well as

certain covenants with its lenders until 31 August this

year.

Star Bulk had a fleet of 70 dry bulk vessels on the water

as of 29 June and five newbuildings on order for delivery

in 2017 and 2018.

Star Bulk Funnel

_________________________________________

No rebound in dry bulk this year as outlook labelled ‘extremely negative’ – FP 28 June

The dry bulk shipping outlook for the remainder of 2016

remains extremely negative with an unbalanced supply-

and-demand equation preventing any meaningful

rebound in pricing as too many vessels chase too few

shiploads, according to a new report by AlixPartners.

The consultancy said uncertainties about overall global

economic activity and trade, coupled with surplus

capacity and reduced demand for iron ore and coal from

both China and India had placed every company in the

dry bulk shipping industry at risk.

“Although vessel demolitions in 2016 are expected to hit

a record high of 40 million dwt, that won’t offset the 50

million new dwt expected to enter the fleet,”

AlixPartners said in its 2016 Dry Bulk Shipping Outlook

report. “Despite a modest bounce in pricing at the end of

the first quarter, the outlook for the remainder of the year

remains extremely negative.”

After a stable 2013–14, the dry bulk shipping industry

began a deep downturn in 2015. Industry financial

performance declined markedly from 2014, and

compared with 2013, the drop in operating performance

has been staggering, the report said.

“By 2014, the dry bulk sector appeared to have

stabilised, and it looked like companies had positioned

themselves to take advantage of any market rebound,

protecting themselves against further market erosion.

Unfortunately, that stable state broke down in 2015,

when four companies filed for protection and many

others sought out-of-court restructuring.

“Market pricing – reflected in the Baltic Dry Index,

which charts the costs of shipping raw materials globally

– sank once again as increased industry supply met

diminished global demand. These unbalanced

fundamentals continue to hobble the industry in 2016 and

show no signs of abating anytime in the near future.

The report said the industrywide decline could be

explained by a fairly straight-forward equation that few

companies have managed to solve: Weak Pricing +

Costly Operations + High Debt Loads = Distress.

Shipowners’ financial performance in the past few years

reflects the harsh proof of that. Even companies that were

restructured a few years ago were struggling, and Alix

Partners said the majority of companies surveyed for its

dry bulk shipping outlook were at risk of bankruptcy.

The first part of the equation – weak pricing and costly

operations – showed that industry revenues fell by more

than a third from 2014 to 2015, with less than 15% of the

companies surveyed in an AlixPartners study showing

revenue growth during the period. Bottom-line operating

performance was even worse, as overall EBITDA turned

negative.

“The declines in EBITDA margins and operating cash

flow are especially troubling because few companies

have been able to sustain positive results for either,” the

report noted. “A majority of companies surveyed had

negative EBITDA last year compared with less than 15%

in 2013. In addition, two-thirds of companies in our

study had negative operating cash flows compared with



just over one-third in 2013.”

AlixPartners said the severity of the slide was best shown

by comparing 2015 results with those of 2013, when dry

bulk new ship contracting was on the rise. Industry

revenue dropped 15%, but EBITDA slid 120% into

negative territory. Income losses went from

USD542 million in 2013 to USD2.8 billion in 2015.

“The grim numbers illustrate the collapse and pinpoint

the challenges the industry faces in projecting demand

accurately enough to pace supply,” according to the

shipping outlook.

The consultant’s report said China’s economic slowdown

was the cause of reduced demand for dry bulk shipping

because it makes about half the world’s steel, and iron

ore and coal make up a majority of dry bulk shipping.

The mix of larger stockpiles and reduced production

mean it’s unlikely Chinese iron ore imports will grow

enough in the near-term to make a material difference for

dry bulk shipowners.

Outside of core bulk steel inputs, the picture looks

equally dim. The China Coastal Bulk Freight Index, a

broad proxy for the country’s maritime shipping activity,

is at all-time lows and even well off its 2011–15 average.

This affects Capsize vessel operators more than other dry

bulk shipowners with spot rates falling by between 65-

80% between 2010 and 2016.

Valuations have been driven to all-time lows in

the first quarter of 2016 by sales of distressed assets and

a five-year-old Capesize vessel is currently priced at a

discount of almost 50% of a newbuilding. Although ship

recycler GMS said some of the numbers seen on ships

sold recently suggested a cash buyer confidence was

returning to the market.

“While supply has slowed over this past month, certain

owners have been compelled to sell their respective units

at lower overall rates, unable or unwilling to pass surveys

or even lay up their vessels in wait of the anticipated

fourth-quarter resurgence,” GMS said in a note.

That resurgence may still be some way off with

shipowners often their own worst enemies. Oversupply

remained the greatest industrywide problem and

AlixPartners said it was a real-life application of the

prisoner’s dilemma game theory problem: “The best

outcome for the group as a whole is achieved when no

one entity acts in its own self-interest, but it will happen

only if everyone acts selflessly, with owners scrapping or

at least idling a proportion of their individual fleets to

rebalance supply so as to boost demand.”

But shipowners would also have to stop building because

even though new vessels may be more efficient and more

desirable from a marketing perspective, the economics of

adding capacity remained counterproductive in the

current market.

“Practically speaking, we think it’s unlikely that enough

owners will, of their own volitions, behave in the

industry’s broadest interests to make a meaningful

impact.”

This gloomy prediction led to the report’s conclusion:

“Three years from now, demand may come back, but

shipowners should focus on the next 36 months and act

as though depressed demand is here to stay.”

_____________________________________



Dry bulk demand growth seen at 4%, exceeds forecasts – FP 30 June

Demand for dry bulk shipping has grown by almost 4%

so far this year, greater than anticipated. This was due to

stronger-than-expected Chinese iron ore and coal

imports, shipping analysts at Arctic in Oslo said.

In terms of tonne-miles, Chinese iron or and coal imports

have grown by 12% in the first five months of this year

compared with the same period in 2015, said Erik

Nikolai Stavseth and Andreas Wikborg, the Arctic

shipping analysts.

“The main driver for stronger demand has been Chinese

iron ore imports, which are tracking at 412 million tonnes

through to May 2016, some 9% above the first five

months in 2015. However, looking at tonne-mile

demand, our data show a whopping 13% growth in

tonne-miles on the same basis for Chinese iron ore,” the

two analysts said in a market report emailed to IHS Fairplay.

Coal imports, which had been expected to fall, have in

fact remained stable in the five month period

compared with last year, they said. “Historical data in the

period 2004–15 shows Chinese iron ore and coal imports

now make up about one-third of global dry bulk demand

and hence – assuming zero growth in all other trades –

global dry bulk demand is up by close to 4% year to

date,” the two analysts said.

Golden Ocean Group, the listed dry bulk shipping

company in John Fredriksen’s business empire, said in its

first quarter of 2016 (1Q16) interim report on 24 May

that imports of coal to China were very low at the

beginning of the year at around 13 million tonnes/month,

but picked up in March to 19 million tonnes/month,

which annualised is at around the same levels as last

year. “There are some signs of stability, and as many

Chinese mines are closing down and imports are a small

part of the total volumes, in the shorter term there could

also be some upside potential on these numbers,” the

company said.

The Arctic analysts said scrapping should remain at least

at 40 million dwt per year in both 2017 and 2018 to

rebalance the oversupply on the market. However, with

the 4% demand growth appears to be far higher than

most observers had expected and when coupled with

supply growth coming off, paint a picture of a dry bulk

market that is recovering faster than initially expected.

The news comes a day after shipping analysts pointed out

that recent Capesize transactions in the second-hand

market have been conducted at higher prices than what

they had estimated the vessels to be worth.

Great Eastern Shipping Company, the India-based bulk

shipping group, yesterday bought the 2011 Hyundai-built

Cape Althea from the Libera Corporation for

USD24.5 million, said shipping analysts at Pareto in

Oslo yesterday, citing broker sources.

“We currently model USD23 million for five year old

Capesizes; consequently this marks an uptick in values,”

said Eirik Haavaldsen, Oystein Dalby, and Tommy

Johannessen, the Pareto analysts, in a daily market

report.

The pace of both demolition sales and deliveries of

newbuildings has slowed down recently as at the end of

1Q16, the scrapping rate anticipated that 56 million dwt

or 7.2% of the fleet would leave the market on

annualised level.

In the year to date, 20.6 million dwt has left the market,

which translates to a 47 million dwt or 6.0% reduction in

tonnage supply on an annualised level through

demolition sales, said Nicolay Dyvik, Oyvind Berle, and

Petter Haugen, the DNB Markets’ shipping analysts, in a

report on 14 June.

However, the most remarkable deviation from forecasts

comes from the fact that only about 40% of the dry bulk

carrier newbuildings that have been due for delivery so

far this year have actually entered service. Net fleet

growth in the first five months of the current year has

only come to 3.0 million dwt or about 0.4%, the DNB

analysts noted.



The dry bulk market may be some way from return to

health, but news that the demand side may actually have

been fairly strong at the same time as the supply of

tonnage is not at least accelerating bodes well for better

times in the not-too-distant future.

_____________________________________

Dry bulk industry faces slow recovery, says U-Ming Marine - FP 8 July

U-Ming Marine believes the worst is over for the

battered dry bulk shipping sector, but the head of

Taiwan’s largest bulk shipowner warned that the market

faces a fragile recovery.

Ong Choo Kiat, president of U-Ming Marine, said that

even though the downturn in dry bulk shipping appeared

to be bottoming out, the excess in capacity meant the

recovery would be a long one.

“The continuing recovery of bulk shipping may still need

one or two years since it takes time to ease the glut

formed during the past decade,” he told reporters in

Taipei.

Low freight rates have prevailed for a long time in the

global shipping of bulk commodities, eroding

profitability, and Ong said surplus shipping capacity

remained with unstable demand. However, he was

optimistic that the worst was over because of

urbanisation in China, the demand for infrastructure

construction boosted by China’s One Belt, One Road

trade strategy, as well as rising demand from ASEAN,

Middle East, and South African economies.

This would improve the supply-demand balance in the

global bulk shipping market that would restructure and

adapt to the new norm of slower growth in China, he

noted.

The Baltic Dry Index (BDI) has moved above 600 during

the second quarter of 2016, way higher than its historical

low of 290 recorded on 10 February. Although freight

rates are still below the average fleet operating cost, U-

Ming Marine believes industry losses could have

bottomed out.

However, a survey by the Singapore Exchange (SGX)

indicated that the rebalancing of dry bulk shipping

demand and supply is not expected until 2018. The poll

revealed that market participants were no longer

forecasting a recovery in the second half of 2017, with

little meaningful improvement in demand and supply.

Demand for dry bulk shipping has grown by almost 4%

so far this year, greater than anticipated due to stronger-

than-expected Chinese iron ore and coal imports. In

terms of tonne-miles, Chinese iron ore and coal imports

have grown by 12% in the first five months of this year

compared with the same period in 2015, said Arctic

shipping analysts Erik Nikolai Stavseth and Andreas

Wikborg.

U-Ming Marine recorded a profit of TWD824.4 million

(USD25.5 million) last year, tumbling 60.5% compared

with 2014, with the Taiwan carrier’s annual revenue

declining by 13.8% year-on-year to TWD7.73 billion.

The bulk carrier plans to continue renewing its fleet by

employing more efficient vessels. As at the end of June,

U-Ming Marine operated a total of 39 vessels with

average age of 8.9 years, including 14 Capesizes, 16

Panamaxes, two Supermaxes, five cement carriers, and

two tankers.



_____________________________________

China's iron ore stockpiles hit 18-month high – FP 18 July

China imported 494 million tonnes of iron ore in the first

half of 2016, an increase of 9.1% year-on-year helping

take stockpiles to their highest levels in 18 months,

according to data from industry associations and China

authorities.

Shanghai Steelhome Information Technology (SSIT) said

stockpiles of iron ore at Chinese ports reached 104.5

million tonnes on 15 July, up 13% compared with the

first six months of 2015 hitting the highest level since

December 2014.

Data from China’s Bureau of Statistics showed June

crude steel output rose 1.7% year-on-year to 69.47

million tonnes, and the first half of 2016 saw steel output

totalling 559.9 million tonnes, with China’s struggling

steel mills limping towards profitability during the first

half.

Stockpiles of Iron Ore

Last week, iron ore prices climbed as high as USD58.8

per tonne, the highest since early May and up 37% from

the beginning of 2016. China Iron Ore Price Index

(CIOPI) stood at 198.77 points at the end of June, up

13.02 points since May.

However, the China Iron and Steel Association (CISA)

said steel output may decrease in the coming months as

steel prices start to drop with falling demand for iron ore.

Allowing for the glut in both the steel and iron ore

markets, the prices are not expected to continue rising.

The Commonwealth Bank of Australia forecasts iron ore

prices will fall back to USD40-45 per tonne in the second

half of the year.

China’s iron ore consumption is estimated to reach

1,026.9 million tonnes by 2020, and major steel mills

operating in Chinese provinces of Hebei, Jiangsu, and

Shandong are expected to cut back on production leading

to 733.5 million tonnes of steel output by 2020,

according to a report by Timetric.

______________________________________

Polaris Shipping plan listing in 1Q17 – FP 18 July

South Korea's Polaris Shipping is planning a listing on

the Korea Exchange within the first quarter of 2017,

reports IHS Fairplay.

Polaris Shipping, said to be the largest owner and

operator of very large ore carriers, had originally planned

a listing in 2016, but pushed it back due to weak financial

markets.

The company's CEO Kim Wan-joong is also its largest

shareholder, with a 40% stake. The rest of Polaris

Shipping's shares are held by Han Hee-seung, Hanwon

Maritime, Polaris Ocean Recovery Private Equity Fund,

Han Ji-yeung, and Park Sook-hee.

Polaris Shipping has reportedly engaged Mirae Asset

Daewoo to underwrite its planned listing.

A source from Polaris Shipping told IHS Fairplay, "Polaris Shipping has been discussing investors and

holders of redeemable convertible preference shares.

Should certain conditions be met, holders of the

redeemable convertible preference shares will be given

priority to convert these into ordinary shares after Polaris

Shipping is listed, on top of a cash reimbursement.

"While the company has been doing well, the downturn

affecting many shipping companies hit the performance

of shipping stocks so it might not be feasible to list this

year."



In October 2012, Polaris Shipping issued 330,434

redeemable convertible preference shares at a price of

KRW115,000 (USD104 at the time) each, paying an

annual interest of 13%. The shares would mature in five

years if Polaris Shipping is listed. Otherwise, the

maturity would be four years. If Polaris Shipping is not

listed by October this year, holders of the redeemable

convertible preference shares can request the company to

buy back the shares.

Founded in 2004, Polaris Shipping has concentrated on

contracts of affreightment and long-term shipping

contracts, counting Korea South-East Power Company,

South Korean steel-maker POSCO, and Brazilian miner

Vale among its customers.

Due to this, Polaris Shipping is viewed by observers as

one of the few South Korean shipping companies that are

still stable.

IHS Maritime & Trade's Sea-Web data shows that

Polaris Shipping owned 29 ships and had two chartered-

in vessels. Many of the ships have been committed to

long-term contracts lasting 9–20 years.

Even then, by 2017, the company’s debts are expected to

increase by KRW300 billion due to the construction of

four ships at Hyundai Heavy Industries Daehan

Shipbuilding.

As at 31 December 2015, Polaris Shipping's

shareholders' equity stood at KRW316.9 billion, while

long-term liabilities totalled KRW1.13 trillion. The

company also had a working capital deficit of

KRW140.8 billion. Polaris Shipping's net earnings for 2015 fell 16.5% to KRW54.27 billion

(USD46 billion) due to the challenging freight market.

In recent months, Polaris Shipping executed two bond

issues to raise USD29.8 million for working capital as it

prepares to expand its fleet.

_____________________________________________

Ship operators eye more nickel ore from Philippines – FP 24 July

The Philippines is becoming increasingly prominent in

seaborne nickel ore trade.

Since Indonesia banned the exports of raw ores to

develop its smelting industry in 2014, the Philippines has

become the dominant supplier of nickel ore to China.

The ore is used make nickel pig iron, a low-grade ferro-

nickel that China's steelmakers created as an alternative

to pure nickel in stainless steel production.

China is the world’s largest producer of stainless steel,

with its output having grown on average 20% per year

over the past five years.

With Indonesia out of the picture for raw ore exports,

China has been depending almost exclusively on the

Philippines for nickel ore; exports to China from the

Philippines increased 22% in 2014 to over 36 million

tonnes, before falling 4% in 2015.

China’s nickel ore imports from the Philippines rose to 3

million tonnes in May, a seven-month high, according to

customs data. That accounted for 97% of China’s nickel

ore imports that month.

The Philippines accounted for 98% of nickel ore imports

to China in 2015, with the cargoes loaded on Handymax

bulkers. China imported much smaller volumes from

Australia, Brazil, and Spain.

Consequently, several shipping lines have signed

contracts of affreightment (COA) with several nickel ore

mining companies in the Philippines.

Japanese shipping line Nippon Yusen Kabushiki Kaisha

(NYK) is now considering a COA with Philippine nickel

ore mining company Emir Mineral Resources, company

sources told IHS Fairplay.



NYK would use Handymax or Supramax bulkers to ship

the nickel ore from the Philippines to the China, but

details, such as the amount of cargoes, were not

disclosed.

In April 2012, Emir Mineral Resources applied for a

Mineral Production Sharing Agreement (MPSA) from

the Philippines government, relating to the exploitation

of chromite, nickel, and other minerals, over a 279 ha

area on Homomhon Island, Guiuan,

Eastern Samar Province. While this application has yet to

be approved, Emir was given a special permit to mine up

to 3 million tonnes of nickel ore in the same area for one

year from November 2015.

Emir mining and selling nickel ore, with buyers mainly

from China. Company sources said that most of its sales

are on free-on-board terms, meaning that the cargo

buyers are responsible for shipping.

The cargoes are mainly shipped on Supramax bulk

carriers from Guiuan, Philippines, to China. In the year to

date, Emir has made around 12 shipments, which equates

to around 660,000 tonnes of nickel ore sold thus far.

Despite the significant amount of nickel ore that China

imports, not every shipowner is keen to join the trade.

Nickel ore is considered a dangerous cargo because it is

prone to liquefaction, which could cause ships to capsize.

Due to this, ship operators who transport nickel ore told

IHS Fairplay that freight rates are usually USD1,000 to

USD2,000 per day higher than for other cargoes. Current

Supramax rates in Asia are around USD7,000/day.

Following several nickel ore liquefaction incidents, P&I

clubs have been quick to issue notices to remind

members of the risks of transporting it.

North of England P&I Club said, “Assessing whether a

cargo is safe to ship requires the transportable moisture

limit (TML) to be calculated. The TML is then compared

to the moisture content of the cargo, and provided the

TML is the higher figure, the cargo should be safe to

load. On voyage, the cargo can be agitated by wave

impact and engine vibration and, if there is sufficient

moisture present, the cargo will reach flow moisture

point (FMP) and liquefy. This may result in loss of

metacentric height from free-surface effect, sudden cargo

shifts, and structural impact damage from sloshing. For

this reason, the master must be completely satisfied that

testing has been carried out strictly according to the

procedures set out in the IMSBC (International Maritime

Solid Bulk Cargoes) Code.”

_____________________________________

Panamax rates rebound on Chinese coal imports FP – 23 July

Freight rates for Panamax bulk carriers have reached

levels not seen since May 2015, as a shortage of coal in

China has set off a surge in imports.

For the week-ended 17 July, timecharter equivalents rose

9% from the previous week to USD6,896 per day. Rates

for a Pacific round-voyage increased 13.9% from the

previous week to USD6,789 per day.

In June, China imported 21.75 million tonnes of coal,

boosting such imports to the highest in more than a year

as a government campaign to curb overcapacity slashed

domestic output by 16.6% in the same month.

China’s domestic coal output will fall by 280 million

tonnes this year as the government seeks to curtail

industrial overcapacity, according to China’s National

Development and Reform Commission.



Because of this, analysts expect China would need to

import more than 20 million tonnes of coal, or 260

Panamax loads, a month for the rest of the year.

According to ship broker Banchero Costa, during the

week ending 17 July, a 74,000-dwt Panamax bulker was

fixed to ship coal from Indonesia to south China for

USD6,250/day, while a 76,000-dwt Panamax bulker was

fixed at USD6,500/day to ship coal from the east coast of

Australia for delivery in the China-Japan-South Korea

range.

IHS McCloskey told IHS Fairplay that Chinese coal

production cuts have created some tightness in domestic

supply, resulting in a need for more imports.

Even though China’s electricity demand tends to be

higher in the summer due to more air-conditioning

requirements, domestic mining created a surplus of coal.

“The oversupply of coal is being aggressively tackled by

the Chinese government at the moment. There have also

been some mine accidents that resulted in a number of

mines being closed in order to do through safety checks.

That has also reduced domestic coal output,” said IHS

McCloskey.

A representative from Datang International (Hong

Kong), the coal trading arm of Datang International

Power Generation, told IHS Fairplay that the company

has been making four shipments a week since June,

compared with two a week previously.

Datang International Power Generation is a wholly-

owned subsidiary of China Datang Corporation, one of

the five largest state-owned power generation groups in

China.

The Hong Kong representative said, “Our parent

company needs more coal, and we have been sourcing

more cargoes from our main source, Indonesia, although

we import some volumes from Australia and Russia too.”

The significant growth in Panamax freight rates helped

the Baltic Dry Index (BDI) to surpass 700 points in the

week ended 17 July.

Greek broker Intermodal commented, “The fact that the

BDI managed to surpass the 700-point level after more

than two months is certainly supporting sentiment for the

remainder of the summer season ahead. The strong

performance of the Panamax rates, which resumed last

week, as well with another impressive jump in earnings

for the segment remain the backbone of hope for a

steadier market during the last two quarters of the year

compared to the same period in 2015.”

Bulker fixtures gain traction in US Gulf – FP 20 July

Backlogs of stored grain combined with forecasts of a

record harvest are helping vessel operators fill bulker

capacity in the US Gulf export market.

An average of 35 bulkers per week were loaded in the

region for the four weeks ending 7 July, according to the

US Department of Agriculture (USDA), with an average

of 54 vessels expected to be loaded through 19 July.

Those numbers were up 6% and 10%, respectively, from

the previous two months.

“We’re definitely seeing more grain activity,” George

Duffy, a New Orleans-based ship agent, told IHS Fairplay. “We’re usually finished [with the shipping

season] by late June or early July, but the high river in

January kept the harvest from moving, so we’ve had a

very steady flow over the last three months.”

Fast moving water caused by flooding on the upper

Mississippi River during the winter held up barge traffic

during the winter. The flooding subsequently dumped

sediment along the lower section between Baton Rouge

and New Orleans, Louisiana, where much of the nation’s



grain terminals are located, and which required river

pilots to lower draught restrictions.

For the week ending 7 July, total inspections of corn,

wheat, and soybeans for export reached 2.12 million

tonnes, up 7% from the previous week, up 43% from

2015, and 54% above the 3-year average, according to

the USDA. Ocean freight rates for shipping bulk grain

from the US Gulf to Japan for the same week were

USD31.25 per tonne, up 7% from the previous week.

Current projections from USDA estimate the winter

wheat harvest at 43.5 million tonnes, with a record yield

of 53.9 bushels per acre. As of 10 July, 66% of the winter

wheat was harvested in the major growing states,

according to the agency, slightly ahead of the 5-year

average of 65%.

“The bulker market has been depressed for a while and

we’re still not back to where it was couple years ago, but

in terms of fixtures, I think this will help,” Duffy said.

Luciana Salles, principal analyst at IHS Maritime &

Trade, has forecast a modest 0.5% growth for the dry

bulk sector in 2016.

___________________________________________

Alang ship recyclers on course for compliance - FP 26 July

Alang ship recyclers have been steadily gaining

international recognition for safe and clean scrapping.

By the end of next year it is hoped that 20% of its

members will receive certificates of compliance under

the Hong Kong Convention (2009), Ramesh Agarwal,

honorary secretary of the Ship Recycling Industries

Association (India) told IHS Fairplay.

There are about 130 ship recycling yards in Alang, of

which six to eight have certificates of compliance.

On the slow progress of ratifying the Hong Kong

Convention by India, Agarwal explained that the

government first wishes to see a high compliance rate

among Alang ship recyclers for the convention. He is

confident that this will be achieved “soon” because

according to him domestic guidelines in place are “more

stringent” than those laid down by the Hong Kong

Convention.

In a further boost to credibility of Indian recycling yards,

four yards in Alang have been certified by IRClass

Systems and Solutions based on EU standards. The

certification has been made in the capacity of an

‘Independent Verifier’ in accordance with requirements

of European Union Ship Recyling Regulation (EUSRR)

1257/2013.

“IR Class is amongst the first organisations in the world

to certify ship recycling yards according to EU standards

as an ‘Independent Verifier’,” parent Indian Register of

Shipping has said.

The four yards, which have met the standards set by the

EU and the Hong Kong Convention are Priya Blue

Industries, Shree Ram Vessel Scrap, R L Kalathia

Shipbreaking and Leela Ship Recycling.

While this is a shot in the arm for Indian recyclers,

Alang, which is considered the world’s biggest ship

scrapping facility, is at present starved of tonnage.

“We are not able to win discounts, which Chinese yards

get from owners and cannot quote the low prices of

Pakistani and Bangladesh ship recyclers,” Agarwal

explained, pointing out that heavy investments have been

made to streamline yards to confirm with international

safety and environmental standards.

As a result a paradoxical situation has arisen where the

yards are relatively clean and safe, but many operators

find rates of container ships and bulk carriers sent for

scrap (about USD250 to USD260) per ldt uneconomical.



Arrival of tankers to Aland have virtually dried up

because of domestic stipulation that vessels should be gas

free for hot work.

“Scrapping has hit an all-time low over the last few

months,” Agarwal said.

_____________________________________

Pirate attacks drop to 21-year low in H1 2016 – SMN 27th July

The number of piracy attacks dropped to a 21-year low in

the first half of 2016 according to watchdog the

International Maritime Bureau (IMB).

The number of piracy incidents worldwide reported to

the IMB in the first half of the year was 98 compared to

134 in the same period last year. It was also the lowest

number of attacks reported in the first six months of the

year since 1995.

“This drop in world piracy is encouraging news. Two

main factors are recent improvements around Indonesia,

and the continued deterrence of Somali pirates off East

Africa,” said Pottengal Mukundan, Director of IMB.

The number of incidents in Indonesia fell to 24 in the

first half of the year, compared to 54 in the first six

months of 2015. Mukundan urged continued vigilance

off Somalia where a combination of international Naval

patrols and private security deployed on merchant

effectively clamped down on a kidnap for ransom

problem that reached endemic proportions just a few

years ago.

However, there are still serious concerns about the rise in

kidnap for ransom cases off West Africa, where the

lower oil price has seen pirates switch their attention

from stealing oil cargoes to take the crew for ransom.

Overall 44 crew were kidnapped in the first half of 2016,

with Nigeria the blackspot with 24 seafarers kidnapped,

compared to 10 in the same period in 2015.

“In the Gulf of Guinea, rather than oil tankers being

hijacked for their cargo, there is an increasing number of

incidents of crew being kidnapped for ransom,”

commented Mukundan.

Nigerian piracy attacks are also noted for their violence

accounting for eight of nine attacks worldwide where

vessels were fired upon.

_____________________________________________

Jakarta to consider sea marshalls onboard coal-export tugs - SMN 15 July

Indonesia is considering deploying sea marshalls onboard

coal-exporting tugs and barges as it prioritizes

strengthening security for these vulnerable slow-moving

vessels that have been hit by a spate of hijackings in the

Southern Philippines this year, local reports said.

As much as 15% of coal deliveries from Indonesia to

neighboring countries use small vessels such as tugboats

and barges, as several destination ports cannot

accommodate bigger vessels. However, small vessels are

more prone to hijacking, Indonesian Foreign Affairs

Minister Retno Marsudi said.

The government is currently analyzing International

Maritime Organization (IMO) guidelines on the

deployment of sea marshalls to guard vessels delivering

goods across borders, she added.

“Hostage-taking cases always happen to tugboats and

barges and thus we have made them a priority to ensure



that kidnappings will not happen anymore and exports

can be delivered safely,” Retno said.

Jakarta has also deepened talks on sea corridors to help

boost safety. The sea corridors proposal was initiated

several months ago but has apparently been plagued by

lack of agreement between regional parties.

The officials will coordinate with related stakeholders,

including the Transportation Ministry, Indonesia

National Shipowners Association (INSA) and the

Indonesian Coal Mining Association (APB) to urge

sailors to be disciplined in taking safe sea routes, she

added.

___________________________________

Clarkson commentaries – DBTO (Volume 22, No 7 – July 2016)

Dry Bulk Supply & Demand Highlights

The bulkcarrier market remained at historically depressed

levels in 1H 2016, with bulker earnings averaging only

$4,824/day. Capesize earnings have risen slightly in

recent months, but remain close to typical operating

costs, with earnings averaging $7,041/day in June. While

secondhand bulker prices fell significantly in 2015,

prices seem to have bottomed out so far in 2016. The

guideline price for a 5 year old Capesize stood at

$24.75m at the end of June, up from

$23m in January, but down from $39m at end 2014.

Dry bulk trade growth is expected to remain weak in

2016, with volumes projected to grow by just 1%.

Stronger than expected Chinese demand for iron ore and

coal is helping to support overall trade growth, although

this is being partially offset by weaker iron ore and coal

imports into other Asian and European economies. Total

Chinese iron ore imports increased by 9% y-o-y in 1H

2016, and global seaborne iron ore trade is now projected

to grow by 3% in the full year.

Bulkcarrier demolition activity has slowed in recent

months, and totalled just 1.4m dwt in June. However,

total scrapping in 1H 2016 reached 292 ships of 22.1m

dwt, compared to 30.6m dwt in full year 2015. Strong

demolition activity has helped to limit bulkcarrier fleet

growth in 1H 2016 to just 0.7% in the year to date, with

expansion of 1.3% now expected in full year 2016.

Bulker contracting has remained very limited so far this

year, and by the start of July 2016, the bulkcarrier

orderbook had fallen to an eight year low of 114m dwt,

or 14.6% of the fleet.

Overall, the strong supply-side response to weak market

conditions is clearly helping to significantly limit

bulkcarrier fleet expansion. While recent demand

indicators in China have appeared slightly more positive,

global coal trade is still expected to decline this year, and

pressure remains on the global steel industry. The extent

of the oversupply in the bulkcarrier sector

suggests that the market is likely to remain subdued

while dry bulk trade growth continues to underperform.

******

Seaborne Iron Ore Trade Commentary

Total Chinese iron ore imports firmed 9% y-o-y in June

2016, to 82mt. Recent growth has reportedly been

supported by falling domestic iron ore output and firmer

levels of steel production, with steel output up 1% y-o-y

at 71mt in May 2016, the second highest volume on

record. However, ore imports may come under pressure

in the coming months due to high stocks at ports.

Additionally, Chinese manufacturing and construction

activity have shown signs of easing recently, which may

also impact ore import demand as steel mills struggle to

find domestic buyers. Indeed, Chinese steel products

exports rose 23% y-o-y to 11mt in June, as domestic

mills seem to be increasingly turning to foreign markets.

Furthermore, Beijing plans to fine provincial

governments which fail to make progress in cutting steel

output this year, in a bid to push through 45mt of steel



capacity cuts in 2016. Overall, Chinese seaborne iron ore

imports are now expected to rise 5% in full year 2016,

although continued weakness in domestic iron ore output

could continue to provide some support.

******

Iron Ore News

Global seaborne iron ore trade is currently projected to

grow 3% to around 1,402mt in 2016, largely driven by a

firm increase in Chinese iron ore

imports in the year to date. Meanwhile, seaborne iron ore

imports into other Asian countries are projected to drop

3% to 242mt in 2016, reflecting the pressure on steel

producers in the region. Similarly, financial pressure on

steel producers is expected to contribute to a 3% drop in

iron ore shipments into the EU-27 to around 107mt in

2016.

On the export side, a number of major iron ore producers

are continuing to expand ore production, and have raised

shipments to China. In Australia, total iron ore shipments

increased 6% y-o-y to total 321mt in January-May 2016,

with export growth partly supported by the ramp up of

production at Roy Hill after the project came online in

Q4 2015, with output at the mine targeted to reach

55mtpa by the end of 2016. Meanwhile, Rio Tinto’s iron

ore production in Australia reportedly increased by 10%

y-o-y in 1H 2016 to reach 161mt. Total iron ore

shipments from Port Hedland reached a record 42mt in

June 2016, with over 80% of this volume destined for

China. Overall, total Australian iron ore exports are

projected to grow by 5% in full year 2016 to around

807mt.

Brazilian iron ore exports increased 6% y-o-y to reach

177mt in the first six months of 2016. The growth was

largely accounted for by shipments to China, which

increased 24% y-o-y to 98mt in during the period.

However, total iron ore shipments from Brazil fell by 9%

y-o-y in June 2016. Furthermore, ongoing investigations

at Samarco, following the environmental disaster in early

November 2015, now make any resumption of the

company’s iron ore mining output in the current calendar

year increasingly unlikely. Total Brazilian iron ore

exports are projected to increase by 5% in full year 2016

to total 381mt.

******

Seaborne Coking Coal Trade Commentary

Global seaborne metallurgical coal trade is currently

projected to drop 3% to around 241mt in full year 2016.

The projected decline is partly driven by expectations of

an 11% fall in coking coal shipments into the EU-27 to

around 34mt in 2016. This reflects the pressure on the

region’s steel producers from depressed steel prices and

imports of Chinese steel products. Indeed, combined EU-

27 steel output fell 6% y-o-y to 69mt in January to May

2016. The decline in European coking coal import

demand has been most evident in the UK, where the

shuttering of several major steel works contributed to a

50% y-o-y decline in coking coal imports in the first five

months of the year. Meanwhile, seaborne coking coal

imports across Asia are currently expected to drop 1% to

around 175mt in full year 2016, despite an upward

revision to the Chinese import projection, to 7% growth.

Many Asian steel manufacturers outside of China are

continuing to struggle with the impact of relatively weak

steel prices and the record levels of Chinese steel

products that have been exported in the year to date.

******

Coking Coal News

Chinese seaborne coking coal imports rose 24% y-o-y to

reach 14mt in the first five months of 2016. This was

largely supported by an increase in the country’s steel

output in recent months and reductions in domestic

coking coal output. Beijing has targeted 280mt in total

coal capacity production cuts this year and recently

announced plans to punish regional governments for any



delays to mine closures. This has seen coking coal

inventories at CISA member steel mills reportedly drop

to 11.7 days of consumption in early July, the lowest

level since 2012 when records

began. The mining output cuts have also inflated

domestic coal prices, boosting the competitiveness of

imported coal. However, given the ongoing pressure on

China’s steel industry and the potential for excess crude

steel capacity to be cut this year, Chinese coking coal

import demand is likely to soften in 2H 2016.

Nevertheless, given the firm increase in 1H 2016,

Chinese seaborne coking coal imports are currently

projected to rise 7% to 38mt in full year 2016.

Indian seaborne coking coal imports fell 7% y-o-y to

19mt in the first five months of 2016. The country’s

coking coal import demand has been largely undermined

by the flow of steel products imports from China in the

year to date. This drove a 2% y-o-y decline in Indian

crude steel output in Q1 2016, prompting the Indian

government to respond in late February by introducing

minimum steel pricing levels. These contributed to an

improvement in Indian steel output in Q2 2016, with

output during the period up 5% y-o-y. India’s coking coal

imports have followed a

similar pattern. Having fallen 19% y-o-y in Q1 2016,

coking coal shipments into India grew 16% y-o-y in the

following two months. Overall, current projections

indicate a 1% y-o-y drop in Indian coking coal imports to

47mt in full year 2016, reflecting expectations for a

gradual recovery in imports throughout 2H 2016.

******

Seaborne Thermal Coal Trade Commentary

Chinese total coal imports rose 31% y-o-y to an 18-

month high of 22mt in June 2016, supported partly by

Beijing’s measures to reduce domestic coal output.

Reports indicate that cuts in statutory working days for

Chinese coal mines have had a significant impact, with

Chinese coal output reportedly down 10% y-o-y in 1H

2016. However, the easing pace of Chinese thermal

power generation and measures to curb air pollution are

expected to exert pressure on the country’s thermal coal

imports in the coming months. Chinese thermal power

generation fell by 2% y-o-y in January-May 2016,

reflecting both weak industrial demand and pressure

from renewable energy sources, with generation of wind

and hydro-power rising 20% y-o-y in the period. Coal

consumption in the southern Yangtze River region was

also disrupted by a super-typhoon in early July.

Furthermore, Beijing is reportedly expected to introduce

a ban on additional thermal power plant construction in

the coming years, as part of its 13th Five Year Plan.

Overall, Chinese steam coal imports are currently

expected to drop 1% to around 127mt in 2016.

******

Steam Coal News

Global seaborne thermal coal trade is currently projected

to drop 2% y-o-y to around 864mt in 2016. The expected

decline is largely due to an projected 12% fall in

shipments into the EU, reflecting the impact of

environmental policies such as the Large Combustion

Plant Directive. The UK has led the region’s steam coal

import decline in the year to date, with thermal coal

shipments into the country falling over 80% y-o-y to 2mt

in January-May 2016. Meanwhile, total Asian seaborne

steam coal imports are currently projected to fall 1% in

full year 2016, largely driven by a drop in shipments into

India and China.

Indian steam coal imports are projected to drop 6% y-o-y

to 157mt in 2016. Despite an improvement in the pace of

growth in Indian coal-fired power generation this year (to

13% y-o-y in 1H 2016, up from 4% in 2015), availability

of domestically produced coal remains high, and the

Indian government still appears keen to reduce reliance

on imports. Coal mines are reportedly opening at a rate

of one per month, and with national coal stockpiles



swelling to over 90mt in May 2016, Coal India is even

considering exporting coal to Bangladesh. India’s Coal

Ministry has also reportedly asked state-owned and

operated thermal power producers to cease importing

coal in favour of domestically produced material. The

surplus of domestically produced coal has also halted

plans to start up Ultra Mega Power Plants (UMPPs) in

India, with four projects with a combined production

capacity of 16GW reportedly cancelled. There remain

questions over whether plans to start up other UMPPs in

India will go ahead.

The South Korea government has come under pressure to

reduce the country’s growing air pollution levels,

particularly in regard to fine dust emissions. In early July

2016, Seoul announced plans to invest heavily in

renewable energy and to shut 10 ageing coal-fired power

plants by 2025, in a bid to cut greenhouse gas emissions.

In 2016, South Korean steam coal imports are projected

to drop 2% to 99mt.

******

Grain Trade News

Global wheat and coarse grain trade is projected to drop

3% to around 319mt in 2016/17, following a 2% rise in

2015/16. The decline in 2016/17 is partly expected to be

due to a 28% drop in total Chinese grain imports to

around 15mt, largely due to a rise in Chinese domestic

grain output, coupled with the country’s swelling

stockpiles. This is expected to contribute to a 6% drop in

total grain imports into Asia in 2016/17. Meanwhile,

imports into the Middle East are currently projected to

drop 1% to 51mt in 2016/17, with a slump in Iranian

grain import demand expected to spearhead the decline.

Elsewhere African grain imports are currently projected

to rise 1% in 2016/17, with shipments into Morocco

expected to rise around 28%, due to the impact of poor

weather conditions on domestic harvests. Finally, total

grain shipments into North America are expected to rise

5% in 2016/17, supported by growing Mexican maize

import demand.

In Egypt, the world’s leading wheat importer, an ongoing

dispute regarding levels of ergot fungus in imported

wheat has led to uncertainty ahead of the country’s peak

wheat importing season. The country’s Central

Quarantine Administration enforced a zero tolerance

policy for ergot contamination in early 2016. Having

consequently replaced the head of the Quarantine

Administration, the Egyptian Prime Minister announced

in early June 2016 that wheat imports with the

internationally accepted 0.05% ergot content would be

accepted. However, legal technicalities have since

prevented a ministerial decree from enforcing

international standards and in early June 2016, a cargo of

wheat from the US became the latest to be rejected by

Egyptian port authorities due to a reported 0.006% ergot

content. Nonetheless, Egyptian wheat imports are

currently projected to rise 3% to 11.5mt in 2016/17.

******

Grain Export News

Favourable weather conditions contributed to a

substantial increase in Ukrainian winter wheat yields in

the 2015/16 crop year, despite major political

disruptions. Wheat exports from Ukraine increased 50%

to reach a record 16.8mt in 2015/16, supported by

favourable currency movements and increasing wheat

import demand in northern Africa. However, unusually

dry weather conditions in autumn 2015 resulted in a

significant drop in wheat planting in Ukraine’s south

eastern Steppe Zone, leading to a substantial cut to the

country’s winter wheat yield prospects for 2016/17, with

harvesting starting in June. While weather conditions

improved substantially in spring 2016, the disruptions to

potential crop yields have resulted in a projected 38%

decline in Ukrainian wheat exports in the 2016/17 crop

year, to a three year low of 10.5mt.



******

Minor Bulk Trades

Chinese bauxite imports rose 18% y-o-y in the first five

months of 2016, to around 22mt. This was supported by

firm growth in shipments from Malaysia in Q1 2016.

Yet, in July 2016, the Malaysian government extended a

ban on bauxite mining in the Pahang province. This was

the second extension to the country’s bauxite production

ban, first introduced in January 2016 for an initial

threemonth period. Malaysian bauxite exports have

declined substantially in recent months, with miners only

able to ship existing stockpiles. In May 2016, Chinese

bauxite imports from Malaysia fell 50% y-o-y to 0.1mt.

However, China has largely managed to secure bauxite

imports from alternative sources in recent months. For

example, shipments to China from Guinea exceeded

3.5mt in January-May 2016, compared to 0.3mt in full

year 2015. Overall, Chinese bauxite imports are currently

projected to rise 4% in full year 2016, to around 58mt.

******

Bulk Carrier FleetThe pace of Capesize demolition slowed to a seven

month low in June 2016, with four units of a combined

0.7m dwt removed from the fleet. This compared to the

2.3m dwt of Capesize capacity scrapped in January 2016.

However, in the first six months of the year, a total of 66

Capesizes of 11.3m dwt were scrapped, compared to

15.4m dwt sold for demolition in full year 2015. With

Capesize deliveries totalling 12.1m dwt in the first six

months of the year, the strong pace of demolition sales so

far in 2016 has helped to keep total Capesize fleet

capacity largely steady in the year to date at 309m dwt.

The average age at which Capesizes have been scrapped

in 1H 2016 stood at 20.4 years.

Fleet Watch – To 1st July 2016Capesize vessels:

64 delivered

66 scrapped

30 ordered

During June 2016, the Panamax orderbook decreased for

a seventh consecutive month, dropping to a nine year

low, in terms of capacity, by the start of July. The

orderbook consisted of 277 units of a combined 22.7m

dwt at start July, representing 11.6% of the fleet, the

lowest percentage since early 2003. The decline in the

Panamax orderbook arose from a dearth of contracting

activity in the sector in the first half of the year. In total,

only two Kamsarmaxes were reportedly ordered in 1H

2016. Meanwhile, Panamax deliveries have continued at

a similar pace to 1H 2015 so far this year, with 72 units

of a combined 6.0m dwt entering the fleet in the first six

months of 2016.

Fleet Watch – To 1st July 2016Panamax vessels:

72 delivered

80 scrapped

2 ordered

At the start of July 2016, the Handysize fleet stood at

3,291 units of a combined 93.0m dwt, up 1% in terms of

capacity since the start of the year. Demolition in the

Handysize sector has slowed by 38% y-o-y in 1H 2016 in

capacity terms, with 85 units of a combined 2.4m dwt

sold for scrap. Meanwhile, Handysize deliveries totalled

83 ships of a combined 3.0m dwt. This was the lowest

volume of Handysize deliveries in the first half of a year

since 2009. Total Handysize fleet capacity is expected to

increase by 0.9% in full year 2016, and shrink marginally

in 2017. Meanwhile, growth in the Handymax fleet is

expected to slow to 4.8% in full year 2016 in capacity

terms, although this would still represent the fastest

growth of all of the bulker sectors.

Fleet Watch – To 1st July 2016Handymaxes:

118 delivered



61 scrapped

1 ordered

Handysizes:

83 delivered

85 scrapped

1 ordered

And Finally.......

As the new boy at DBTG, I wanted to bring something a little lighter to the news extracts. Therefore, I will try and bring something interesting, amusing or challenging to the end of each edition.

*****

First, the picture below was sent to us recently by a member who, when sending it, expressed their surprise at the image but can anyone out there offer an explanation as to what that surprise was? All answers to us here at [email protected] please and we will reveal what the surprise was in the August issue.

If anyone has an interesting or unusual image that we can use for a future edition, contact us at the same address.



*****

Secondly, a maths problem to keep you engaged when having a coffee:

Using only addition, how can you make Eight ‘8’s’ equal 1,000?

Answer in the next edition.

*****

Lastly, I saw this clue in a cross word recently and after a bit of head scratching, I got the right answer, can you?

Question:

A, B, C, D, E, F, G...............P, Q, R, S, T, U, V, W, X, Y, Z. (5 letters)

Again, the answer in the next edition....

Further Information:

Clarkson Research: www.crsl.comFairplay: www.fairplay.co.ukFearnleys: www.fearnresearch.comPort Strategy: www.portstrategy.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 Mob: +44 7595 457042E-mail: info@drybulkterminals. org


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