Friday Big Picture Report
Carmichael Coal Mine
Carmichael & its Relationship to Indian Coal Consumption
Adani’s proposed $16.5bn Carmichael coal mine will be Australia’s largest thermal coal mine, capable of producing an estimated 60 million tonnes per annum. The project continues to be heavily scrutinised due to the environmental risks associated with Abbot Point’s close proximity to the Great Barrier Reef. Following is a project update together with implications for the dry bulk shipping sector amidst India’s reliance on coal.
Global trade wars
Steel in the cross hairs
The global steel industry is plagued by concerns over a global trade war and is already starting to feel the impact of President Trump’s wave of new tariffs. The impact of trade wars on shipping is likely to be mixed with the Cape sector remaining buoyant off strong demand for steelmaking raw materials, while smaller sectors face a squeeze on internationally traded steel cargoes.
Iron Ore Shipments
The big iron ore miners have now all released their second quarter production reports. We take a look at their performance, and more importantly look at what the expectations are for the rest of the year and beyond.
Deal with it
No one will tell you (not with any conviction at least) what will happen when IMO 2020 kicks in. Nonetheless, the industry now trades FFAs, ships, cargoes and bunkers well into IMO 2020 territory. That uncertainty presents huge risks and rewards. Here we discuss some considerations for owners and charterers moving cargo in a 0.5% sulphur world.July 20th
South African Coal Exports
More important than just tonnes
South Africa has long been one of the most important exporters of thermal coal, with shipments to Europe setting the C4 rate, for a time the benchmark freight rate for the Capesize market. But times have changed, and while South Africa’s remains the 5th largest seaborne coal exporter, changing patterns of coal consumption mean that the freight requirements to service the trade have radically altered, with further changes set to come.
Dry bulk markets have enjoyed a solid start to 2018 with the Baltic Dry Index (BDI) up 25% year-on-year. The increased values are of course welcome after such a prolonged bear market, but the recovery also highlights increased downside risk.
Supply Review – Shipbuilding & Shipyards
Following from last week’s review of the delivery schedule and expected fleet growth, we continue to look into the supply side. This week, the changing trends in shipbuilding.
Supply Review – 2018 so far
Supply side update
We’re nearly halfway through the year so it seems an opportune time to review the activity on the supply side of the market. How fast is the fleet growing? And is it matching expectations?
Soybean exports are dominated by three countries, Brazil, USA and Argentina. But with a large number of different load ports spread across long coastlines and several major rivers, it is a very fragmented trade, necessitating a much broader range of ship types than we see in the Capesize-dominated iron ore market. Tracking what is going on with the seaborne soybeans is made more complex by the highly seasonal nature of exports.
This week has seen the Posidonia conference taking place in Athens, with the biennial event now in its 50th year. For those who didn’t make it, or partied so hard they can’t remember it, here is a recap of some of the key topics that came up in discussion.
Event Impact Analysis
- Australian coal exports expected to generate more revenue than iron ore July 9th
- Australian Government forecaster predicts shape of Chinese near term iron ore imports July 9th
- US Soybean saga continues July 9th
- International operators likely to benefit from change to Indian “Right of First Refusal” rules July 9th
- Wheat imports into China set to rise due to poor weather July 2nd
- Poor Argentine crop allows Brazilian soybeans to benefit from US-China trade crisis July 2nd
- Australia becomes the largest iron ore exporter to India July 2nd
- Forecast for US winter wheat production shows small improvement June 18th
- Mixed reports give uncertain outlook for Indian coal imports June 18th
- Cliffs finds a buyer for its Australian mines – good news for Esperance and capes June 18th
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