viewthey cover a wide range of issues of direct and indirect relevance to dry bulk terminal...

News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165

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.

Welcome to the selection of news extracts for February 2017. Time really does fly, where did January go?

The Spring meeting is just under 4 weeks away and planning for it continues. I sent a more detailed speaker list to you all 10 days ago and there have been a couple of additions to that since it was sent to you.

Registration for the Spring meeting in Gijon (28th and 30th March) as well as the extra terminals tours in Santander on the 27th, are looking strong. However, I am aware that some of you intend to come but have yet to submit a registration form. Can I urge those who fit in to this category to complete the form and get it to Julia as soon as possible please.

The deadline date that the hotel held rooms for us has now passed too so if you are coming but have not yet booked the hotel, please secure your rooms so as to avoid disappointment. Failure to book the Abba Playa hotel means you won’t be staying where the cool people are!

All the details for the meeting remain on the DBTG website at http://www.drybulkterminals.org/event/2017-dbtg-operational-and-technical-seminar-including-agm/

Last week it was my pleasure to spend a few days visiting DBTG Members in The Netherlands. I spent time in both Amsterdam and Rotterdam and courtesy of Executive Committee Member Jan de Wit, was given a fascinating tour of several terminals, witnessing firsthand, the bulk operations of our Members.

The downside was the terrible weather that came with storm Doris which not only made standing up tricky but also cancelled all flights including mine back to the UK. There are worse places to be stranded over night....

Considering it was the shortest month, there was a lot of news in February. That means that this edition of the Newsletter is a little longer than usual. One story tells of senior shipping executives being held to account over wrong doing. Generally that means losing one’s job however in this instance a death sentence was handed out!

Finally, as always, if there is anything contained in this Newsletter that you would like to discuss further, please don’t hesitate to contact me.

Nic Ingle - Executive [email protected]

DIARY DATES Arctic Shipping Summit, 8th/9th March,

Montreal African Ports Expansion, 20th March,

Mombasa Intermodal Asia, 21st March, Shanghai Shipping 2030 Europe, 22nd March,

Copenhagen

1www.drybulkterminals.org

mailto:[email protected]

http://www.drybulkterminals.org/event/2017-dbtg-operational-and-technical-seminar-including-agm/



News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165IN THIS ISSUE

Shipping Matters Economy/Finance/Trade Commodities Terminals/Ports Ballast Water Management Freight Market

SHIPPING MATTERS

China coal demand key uncertainty for dry bulk shipping in 2017: SGX – SMN Feb 1st

Demand for coal from China is likely to remain the key

uncertainty for dry bulk shipping in 2017 according to

the Singapore Exchange (SGX).

SGX noted in its monthly dry freight report that Chinese

coal demand had been one of the main surprises for the

market in 2016.

“Looking forward, that same dark cloud of uncertainty is

likely to linger over 2017,” the report said.

“Our latest industry survey revealed widespread

expectations that China’s 276-day production

restrictions will likely be resumed from the spring, with

uncertainty over the impact on import demand as

central policymakers adjust production and prices to

their desired levels.”

Last April China limited its coal mines 276 days of annual

production, however, this was lifted with the onset of

winter and higher domestic demand.

SGX also noted that Indian coal import demand this year

would also hinge on domestic production.

While Chinese iron stocks at ports have hit a record high

this year thermal coal inventory has declined.

Dry bulk FFA market: The great Lunar New Year slumber – SMN Feb 3rd

It was never going to be a vintage week and as expected,

the dry freight market remained quiet throughout as

Chinese participants – and plenty of European ones too -

took off to celebrate the Lunar New Year holidays.

As a result of the inactivity, freight rates lost big chunks

of the gains made in pre-Lunar New Year trading and fell

into an uneventful seasonal January lull.

This market lullaby caused the Baltic Dry Index (BDI) to

venture into sub-800 point territory to 786 points on

Wednesday, after shedding 14 points on a day-on-day

basis. That is almost the similar level last seen in

September 2016, where the BDI languished between

700-800 points for most of the time.

An Asia-based FIS broker waxed lyrical, if predictable.

“Shipping is a funny old game. The physical market

continues to slip in both oceans although the rate of

decline has slowed,” he commented gnomically.

During this period of thin trading, brokers felt that

demand for Atlantic tonnage would lend some stability

to the market in the absence of Chinese traders. After

all, the freight market is reliably seasonal in nature, like

a ship’s engine that needs to warm-up in the first

quarter of the year before going full speed ahead

toward the fourth quarter.

Throughout this week, spot capesize time charter rates

have lost over $394 in value to $8,318 in the span of

three days to Wednesday. Despite this, mid-week saw

capes continue firmer post-index and well bid into the

close, trading at the highs of the day.



Spot panamax rates resumed their gradual slide to

$7,456 on Wednesday after starting the week at a level

of $7,699, with losses of $243 offset slightly by the

support of stronger grains trade and remained fairly well

supported.

Amid the market’s lethargy, spot rates for supramax and

handysize vessels also struggled to find support and

stumbled to a gradual slide. By Wednesday, supramax

rates had dropped over $146 to $7,047, while handysize

rates had dipped by $298 to $5,685.

Whether the freight market will rebound once the

Chinese participants are back this Friday after the long

holidays is anyone’s guess. By Thursday capes were

trading lower nearby and taking the rest of curve with it

while panamaxes were firmer despite the cape

weakness with good buying across curve.

Last year’s omens are not good – the market took a

nosedive post New Year. But a repeat seems less likely –

most industry experts agree that the dry market is

heading toward better times this year, even though the

recovery is likely to be fragile.

Either way, FIS would like to wish its clients and friends

Gong Xi Fa Choi and let’s hope the market will hear

more ‘Gan bei’ (Cheers!) once the Chinese are back to

business.

Dry bulk FFA market: We’re still worth one more try – SMN Feb 10th

In a global economy that is daily threatened by

protectionism and digitalized disruption, is the freight

market that old-fashioned bastion of steel, coal, iron ore

and grains still worth another shot as we move into

month two of the first quarter?

Perhaps still feeling the hangover effects from the just-

ended spring festival, the Baltic Dry Index (BDI) refused

to bounce and fell to 702 points on 8 February, a

straight if small decline from the starting point of 702

points on Monday.

The decline runs counter to the usual post-Lunar New

Year boost supported by the return of Chinese traders

and the subsequent restocking of commodities from

their week-long holidays. Most likely the market has

been reined in by India’s decision not to remove its

import duties for coking coal and scrap during its

national budget convention for 2016-2017.

In the meantime, the country has also extended anti-

dumping duty for another two months on cold-rolled

flat steel imports from four countries including China

and South Korea.

With these duties in place, it is easy for the market to

stop believing in an uptick that would carry on the

positive tone from the end of 2016.

Capesize spot rates have slid by 19% from starting

position of $6,849 to $5,538 by 9 February, hardly

benefiting from any bounce back. However there are

positive if contradictory signs from paper and physical

markets.

“A clear out of tonnage in both basins today, although

the rates fixed were at lower levels and this led to a sell

off on the paper,” explained an FIS FFA broker.

With stronger fixing rumoured on physical it was a

volatile week’s paper trading with the cape March

contract printing as low as $6200 and high of $7500

before closing at $6800 on Wednesday. As the week

ended, capes were bid up in Asian hours which then


News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165continued firmer European open. Despite the re-

ordering of tonnage the tone remains weak.

However, better prospects were seen in other freight

markets with supramax and handysize remaining

impervious to the slide in rates. supramax rates

remained virtually unchanged at $6,951 during the

week, while handysize rates then saw good support

throughout the week to finish at $5,484 on Wednesday.

Panamax rates, probably best mirrored the post-Lunar

New Year boost with healthy gains on daily basis to

$7,480 on Wednesday. The increase has closely followed

the harvest seasons of soybeans that drive up the rates

in the South America region. Both panamax and

supramax were trading firmer again on Thursday

morning, though neither had broken resistance.

So with this broadly positive tone, the freight market

may be whispering, “Don’t give up on us” just yet. Of

course, traders have the right to do exactly that, with

the memories of last year’s Q1 and Q2 still painfully

fresh in the mind. This quarter is far from over but on

the basis of this week’s performance the market could

be saying: “don't make the wrong seem right, the future

isn't just one night…”

Cargo volumes down 1.1% in 2016 at Port of Rotterdam – SMN Feb 12th

The Port of Rotterdam has announced it saw freight

volumes fall by 1.1% to 461.2mn tonnes in 2016, with

much of the fall largely attributed to dry bulk such as

ores and coal.

Over the year, liquid bulk managed to maintain to the

high level reached in 2015. Following 10% growth in

2015, 1.2% more containers were handled in 2016.

Allard Castelein, ceo Port of Rotterdam Authority, said

that while levels have fallen overall, growth in 2015 was

“exceptional” at 4.9%.

“The Rotterdam port and industrial complex is facing

huge challenges, in particular digitisation and energy

transition as well as stiff competition from surrounding

ports,” he said.

“Divergent trends provide reassurance that the complex

can handle these challenges, such as the major

investments in various refineries, a number of projects

that should shape energy transition and the new

container line sailing schedules that are favourable to

Rotterdam.”

Despite the fall in volumes, profits were slightly up

during the year.

Turnover remained stable at EUR675.4mn as a result of

costs being under control, as profits increased by 5.0%

to EUR222.2m.

Paul Smits, cfo, commented: “Investments rose by 16%

and they are at least expected to be comparable to 2016

levels over the next few years.

“At the same time the Port Authority is obliged to pay

corporate tax from 2017 onwards. We shall not allow

our clients to suffer as a consequence, so we shall be

focusing strongly on our costs.”

Throughput of crude oil fell by 1.2% to 101.9m tonnes;

although refinery margins fell slightly, they remained

buoyant whereby the level of crude oil input stayed at

the upper end of the historical spectrum.

Following a rise of 18% in 2015, the input and output of

oil products increased by a further 0.3% to 88.8m tonnes

Throughput of ores and scrap dropped by 7.8% to 31.2m

tonnes. The main reason for this was the dumping of

Chinese steel, although there was an increase in the

export of scrap to Turkey, which has announced anti-

dumping measures.

The amount of coal handled dropped by 7.3% to 28.4m

tonnes.


News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165Container volumes rose by 1.2% to 12.4m teu and a

0.6% increase in weight to 127.1m tonnes. In the second

half of the year, 4.9% more was throughput than in the

same period of the previous year.

More cargo was shipped to and from the Far East and

North America, but less went to South America. Within

Europe, both feeder traffic and short sea traffic between

Rotterdam and Great Britain, Ireland, Spain and Portugal

increased.

At the same time, container traffic to the ScanBaltic

shipping area decreased, mainly due to the weak

Russian economy.

Despite the announcement of Brexit, roll on roll off

traffic increased. This not only involves shipping to and

from Great Britain, but also Scandinavia, Spain and

Portugal. RoRo traffic grew by 1.7% to 22.4m tonnes.

Throughput of other general cargo increased by 3.0% to

5.9m tonnes, mainly due to the fact that more steel and

non-ferrous metals were handled. Ro-ro and other

general cargo combine to form the breakbulk category.

This increased by 2.0% to 28.3m tonnes.

In a statement, the port addressed the struggling

hydrocarbons industry: “There has been relatively little

investment in oil and gas production due to the

persistently low oil price and, consequently, the offshore

industry has been hard hit.

“A lot of companies in what is a key industry for

Rotterdam had to make employees redundant last year.

At the same time, Sif launched the manufacture of

monopiles for offshore wind turbines at Maasvlakte 2.”

And looking forwards, it added: “The Port Authority

expects throughput volume in 2017 to remain at a

comparable level to that of 2016. Container handling is

expected to continue on an upward trend. It is uncertain

whether the other sectors will equal the 2016 results.”

A late Valentine’s sweetheart for dry bulk freight – SMN Feb 17th

There were few Valentine’s Day surprises for the freight

market this week, as the market has reverted to its

seasonal mode of slowing seaborne trade.

So it was mostly a case of “same old, same old” as the

post-Lunar New Year bounce back failed to make a

significant impact on the freight rates. Instead, the

market appeared to be brought to an abrupt halt

compared to the momentum that appeared to be

picking up at the start of the year.

Iron ore prices have benefited from the slowdown in

freight rates especially from the lower capesize levels

and rebounded to over $90 per mt on Monday, marking

a three year high in the commodity pricing.

The dip in capesize rates was attributed to the lack of

ships for fixing off Western Australia due to the port

closures last week because of bad weather. Across the

Atlantic basin, capesize activity was lukewarm too and

the market lacked clarity of direction. Fundamentally,

the market was suffering from the phenomenon known

as age-old case of “too many ships and not enough

cargo” at the moment.

As a result of the tepid demand, capesize time charter

average rates hovered around $4,630-$4,808 for most of

the week, while panamax rates traded in the range of

$7,478-$7,563. Meanwhile the Baltic Dry Index also

exhibited lack of clear direction and yo-yo’d back to 688

points by Wednesday.

With few better prospects in sight, traders eyes are

turned toward the Q2 market and further ahead where

better demand for raw materials and higher

construction activities are slated to grow.

“There are divided opinions on whether Q2 will give this

market a much-needed recovery,” said a FIS freight

forward agreement broker. He added that Q3 offered


News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165more stability and was well bid with limited selling

interest at the moment.

So it looked like this would not be a love-struck week for

freight but by Thursday the cape market was pushing

higher from the London open as the traders felt that the

physical market had bottomed in both basins.

It appeared the Atlantic was the stronger and the round

voyage led the way with notable gains from charterers’

levels. March capes traded up to $7,500 and Q2 a tick

above $9k before losing some liquidity in the afternoon

but there was a feeling like there could be further gains

to come.

Thursday was a static rangebound day again on

panamax paper with little change in rates as the firmer

cape market seemed offset another dent in the index.

Despite the static nature of the market, some healthy

volume changed hands with March continuing to trade

$7,900-7,950 range while Q2 saw support tested at

$8,500.

Dry bulk freight: A red-hot summer ahead? – SMN Feb 25th

The stars it seems are aligned - and depending on your

point of view - 2017 is going to be the year of the dry

bulk recovery or instead a launchpad for greater market

fluctuations to come.

On the plus side is the continuing commodities boom,

with iron ore grabbing much of the news headlines as it

looks to push past the $100 per mt barrier. Coal prices

too are on an uptrend as Chinese authorities consider

reverting to a 276-working day year for coal miners from

the previous 330 days, as the winter heating season

draws to an end in mid-March 2017.

Given the price evolution seen last year, together with

the scrapping undertaken by owners of dry bulk tonnage

in order to reduce capacity, the mood in the FFA market

has been about gearing up for a better market and

finally an end to the downturn.

“We could be in for an interesting summer,”

commented one FIS FFA broker on the capesize freight

rates. “There is now a steep carry from spot to Q2 and

from Q2 to Q3 and shipowners can see from the forward

curve some light at the end of the tunnel.” he added.

And he might be right after some sweet foretastes of

recovery seen during last week. Capesize rates saw

steady gains throughout the week to $7,708 on

Wednesday, from the starting point of $6,496.

In the meantime, the Baltic Dry Index also followed the

uptick and climbed to 806 points on 22 February 2017,

up 49 points since the beginning of the week.

Of course, the second quarter of 2017 will prove to the

defining moment for this recovery as China’s

construction activities will typically peak around this

period, pushing up the demand for steel-making

materials like iron ore and coking coal shipments that

boost tonne-miles.

Moreover, the China-based mills may prefer to import

more high grade seaborne iron ore cargoes during the

seasonal high Q2 period, due to the stricter

environmental protection imposed on domestic

steelmakers. By using high-grade iron ore as feedstock

for blast furnaces, the steel mills will emit less pollutants

to the environment.

Despite the good run of freight rates, the FFA broker

owned to some reservations on the market’s bullish run.

“With the index now lagging behind paper, we'll need to

see another physical drive to keep paper rates firm,” he

said.

Certainly the end of the week was as windy as the

English weather, with capes seeing a volatile day of

trading starting with the Asian session and ending at a

high of $9,094, up $1,386 on Thursday. However, the


News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165market fluctuations started to fizzle out but stayed near

the highs of the day on most of the curve.

The bullish tone persisted on panamax paper too with

sharp gains witnessed once again on the prompt

contracts as rates surged post-index. Brokers saw good

volume changing hands with highs on March and Q2 of

$9,000 and $9,975 before drifting lower on the back of

some profit-taking but there was some improved buying

on the deferred contracts too.

Rating your experience at ports and terminals – SMN Feb 15th

A constant need for reassurance is one of the

phenomena of our age. Stay in a hotel, communicate

with your bank, have your car serviced and no sooner

have you finished this commercial transaction and you

will be invited to “rate your experience”. You may find

this annoying, even insincere, but we are assured that it

is because they are trying so hard to improve.

It was some time ago that Bimco, perhaps because they

were in receipt of so many complaints from their

members about the treatment of their ships in terminals

around the world, launched their own inquiry into what

people thought about those who were servicing their

ships in port terminals. Sensibly, because they know

plenty about the paperwork burden inflicted upon those

who go down to the sea in ships, they provided a brief

simple questionnaire for people to complete, after they

had shaken the dust of a port off their ships and were

safely at sea.

The questions were not difficult to answer and basically

amounted to a gauge of the ship-shore experience,

focussing on the communications, the level of co-

operation, the willingness of the terminal and its staff to

provide for the ship’s needs and the satisfaction level of

those aboard, and in the ship’s operational

headquarters. If you were looking for a single word to

sum up the exercise, it might be the “attitude” of the

terminal to their visitor.

It seemed a very worthwhile thing to do, because there

is no doubt that experiences vary tremendously. It is

tempting to suggest that a ship is a “customer” and jolly

well ought to be treated as such, but that is simplistic,

because when a ship has been chartered by an interest

which operates the terminal, it is the ship which is

providing the service and the terminal which has the

right to complain, if the vessel is deficient and fails to

live up to its promises.

Nevertheless, in an ideal world there would be harmony

and co-operation between ship and terminal, so it is

clear that in many places there is room for

improvement. You still hear scandalous tales about

masters being pressurised to load wet cargoes prone to

liquefaction, to alter cargo plans that will strain the

structure, or the terminal loading at such a speed that

the ship cannot de-ballast sufficiently fast. There are

terminals which will not have reception facilities

available, or which charge ridiculous prices for their use.

Others are reputed to have a cavalier attitude to

damage, bashing the ship around with grabs and other

heavy equipment.

The Bimco questionnaire was designed to sort the good

from the bad and ugly and perhaps to afford kudos to

the former while encouraging the latter to improve. That

will be in the future, but the first results have been

published and it must be said that they provide a certain

amount of encouragement that the situation is rather

better than might have been expected. There appear to

be fewer horror stories around than there were a few

years ago.

This might be because ports and terminals are doing

more to train their personnel, while it is arguable that at


News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165a time of gross ship overcapacity, it is the best ships and

operators which pick up the repeat business. But

hopefully a contributor might be that people can see the

benefits of co-operation, rather than confrontation and

that progress and high productivity invariably result

from personnel on both ship and shore seeing the

other’s point of view. The survey reveals that there are

still places with scope for improvement, and now they

have been told “how they are doing”, the poorer

performers might just shape up. We can only hope.

Ballast Water Management Convention success dependent on cooperation – SMN Feb 28th

The Ballast Water Management Convention aimed at

establishing standards and procedures to prevent the

spread of aquatic organisms, enters into force and takes

effect on 8 September this year. While it represents a

significant environmental milestone for our planet, the

Convention also means that the maritime industry has

to gear up for a huge operational change.

Peter Hinchcliffe

Under the Convention, ships trading in international

waters will need to ensure they are fitted with a ship-

specific Ballast Water Management System (BWMS),

according to the agreed implementation schedule. The

BWMS installed must be approved by the Flag State in

accordance with approval process defined by the IMO.

Even vessels from countries which have not acceded to

the convention are required to comply with the

standards when entering the ports of IMO Member

States that have ratified the convention.

In addition to meeting the requirements of the

convention, ships entering US waters will also need to

meet the stringent standards laid down in the US Ballast

Water Regulations and enforced by the US Coast Guard

(USCG). The US has not acceded to the Convention but

adopted its own ballast-water regulations in 2012.

This disconnect in requirements has left many

shipowners wondering if their vessels will be able to

operate in US waters when the Convention comes into

force. The uncertainty in this area has been

compounded by the fact that only three equipment

makers – Optimarin, Alfa Laval and Ocean Saver – have

systems that are approved and considered fully

compliant with both the convention and US Ballast

Water regulations. A fourth system is currently being

considered by the USCG for full approval.

With the Convention entering into force in less than

seven months, the pressure is certainly on for

shipowners who must find a suitably robust BWMS for

their operations and in the case of existing ships have

the system installed by the date of their first

International Oil Pollution Prevention (IOPP) Renewal

Survey after 8 September this year.

Absorbing costs

Industry watchers expect that the global maritime

industry will spend upwards of $75bn on equipping their

vessels with ballast water treatment systems.

Depending on the size of the vessel, its ballast water

capacity and type of treatment, estimates show that the

cost of implementation of the treatment systems can

range from $500,000 to $5m per vessel with some

40,000 ships to be equipped. This is in addition to other

maintenance and operational costs.

Given these costs, there is the consideration that it may

be more economically feasible to scrap a substantial

number of older ships rather than modify them to meet

the convention’s standards.

Moreover, individual shipowners will also need to invest

in training crew members to handle new equipment,

ensuring that appropriate safety protocols are well


News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165established, and costs associated with disruptions due to

dry-docking and equipment installation are contained.

In the current depressed market, these compliance

costs, and other ancillary costs have been of significant

concern to shipowners. For many countries, they have

even been a barrier to ratification.

Making progress

In spite of the nervousness about the ratification,

shipowners are generally confident of meeting the

standards in time. Having a firm date for the

convention’s implementation provides certainty for

timelines and budget.

Furthermore, faced with the pressure of the convention,

equipment manufacturers and engineering companies

are innovating to ensure that effective equipment and

systems are made commercially available to help

shipowners move forward. Currently, there are over 60-

type approved systems, some of which make use of UV.

To spur greater trust in ballast water systems, the ICS

has also been collaborating with the IMO to ensure a

more rigorous type approval process exists and as a

result, the IMO adopted the more robust 2016

Guidelines for the Approval of Ballast Water

Management Systems (G8) in October 2016.

The IMO also agreed in 2016 that the approval

guidelines should be made into a mandatory code and

the Convention amended accordingly following its entry

into force. As a result, the availability of commercial

equipment that can be considered to effectively treat

ballast water in conditions normally encountered in the

daily operation of ships should grow as systems gain

approval in accordance with the latest revision of the

approval guidelines (G8). The availability of systems

approved in accordance with the 2016 Guidelines (G8)

and with USCG approval will fuel confidence in the

Convention.

Navigating the way forward

It has taken 13 years to take the convention from

adoption to ratification and while there have been

significant concerns and challenges in its ratification, the

long-term benefits should outweigh the costs. The risks

to aquatic biodiversity and human health arising from

the transfer of harmful aquatic organisms in ballast

water will be eradicated with the implementation of

treatment systems.

As an aside, some in the industry are saying the

convention may address existing vessel over-supply in

the market, by encouraging shipowners to consider

scrapping vessels that are over 15 years old.

More importantly, compliance with the convention

offers shipowners the opportunity to feedback on the

efficacy of treatment systems, to help shape the

convention, and the industry as a whole. Here, the ICS

provides a key avenue for shipowners to collaborate

with other industry players and the IMO to refine the

convention and help facilitate implementation.

The success of the convention is ultimately dependent

on multi-level collaboration within the global maritime

industry. On a macro level, inter-agency coordination

amongst the flag States is necessary for effective

enforcement of ballast water management strategies.

On a micro level, careful planning and coordination is

vital if shipowners are to meet the requirements of the

convention while minimising preparatory and

compliance-related costs.

This multi-level collaborative approach will also be in

action during the Sea Asia 2017 conferences. Held in

April in Singapore, Sea Asia 2017 will bring together

leaders from across the industry and around the globe

to analyse, debate and find solutions to issues

confronting the maritime industry.

One of the areas we will discuss is the convention and its

expected impact on the sector. I look forward to

continuing the discussion on how we can work together

as an industry to navigate these challenges moving

forward.

P&I club warns clients that US ballast water rules are being ‘actively enforced' – FP Feb 22nd

Ships trading in the United States risk penalties similar

to those facing a German shipowner if they violate


News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165American ballast water regulations, P&I insurer the

Standard Club has warned.

Hamburg-based Vega Reederei could be required to pay

a maximum USD38,175 fine as part of a civil procedure

against the company after the US Coast Guard (USCG)

determined its bulker Vega Mars had dumped untreated

ballast water in late January while moored at the Port of

Tacoma in Washington State.

In a 21 February alert, the Standard Club reminded its

members that discharging ballast water must be done in

compliance with US regulations – in force since June

2012 – or ensure that ships have proper compliance

waivers or extensions from the USCG.

“Members are also reminded that P&I cover for fines

involving non-compliance to ballast water requirements,

except for accidental discharges, will be discretionary”,

similar to MARPOL violations, the club said. “In such

cases, members will be required to satisfy the board

that all reasonable steps had been taken to avoid the

event giving rise to the fine.”

Since type-approving three ballast water treatment

systems in December, vessel operators can no longer

cite an absence of available systems as a reason for

requesting a compliance exemption from the USCG.

Each request now requires “an explicit statement

supported by documentary evidence that one of the

accepted methods in the regulations, including

installation of a Coast Guard type-approved system, is

not possible for purposes of compliance”, said Paul

Thomas, the USCG’s Assistant Commandant for

Prevention Policy, in an industry update bulletin on 17

January.

Using a US public water supply to fill ballast tanks,

discharging ballast water to a shore-side facility, or not

discharging ballast water at all are the other options

available to operators – but are so far either impractical

or impossible for most shipowners.

Thomas also warned in the bulletin that with type-

approved systems in place, ballast water management

(BWM) compliance was being “actively enforced” in the

United States.

“Every domestic vessel inspection or Port State Control

examination includes an assessment of compliance with

the BWM requirements,” he said. “US Coast Guard

inspectors will follow the existing compliance approach

where they certify documents and records, crew

knowledge, equipment condition and operation, and

sample BW discharge for analysis if warranted. Failure to

comply with the applicable requirements may result in

penalties.”

Of the 14 defects found by the USCG inspectors who

boarded the 2011-built, Liberian flagged Vega

Mars, three were related to ballast water management,

according to IHS Maritime & Trade data.

Vega Reederei’s case will be adjudicated by the

coastguard at its headquarters in Washington, DC. A

USCG official told Fairplay that after conducting a

preliminary examination, “the hearing officer will

determine if a violation appears to have been

committed, and if so, will notify the charged party and

offer to hold a hearing on the alleged violation if the

party so desires”.

Vega Faces Penalty for U.S. Ballast Water Release – SME Feb 14

The U.S. Coast Guard has initiated civil penalty

proceedings against the operator, Vega Reederei GmbH

& Co. KG, after an investigation into ballast water

discharge violations by the bulk carrier Vega Mars.

Investigators found that around January 29, 2017, while

moored in Tacoma, ballast water was discharged from

the 580-foot Liberian-flagged vessel without the use of a

Coast Guard approved ballast water management

system or other approved means, a violation of the

National Invasive Species Act with a maximum penalty

for $38,175.

It is the responsibility of vessel masters, owners and

operators to ensure the proper discharge of ballast

water into any water within U.S. jurisdiction, or to

ensure proper waivers or extensions are processed

through the Coast Guard's Office of Operating and

Environmental Standards.


News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165The Coast Guard has established a ballast water

discharge standard which is the same as that adopted by

the IMO in 2004. In addition, the U.S. EPA 2013 Vessel

General Permit has adopted numeric limitations of

ballast water organisms that affect all vessels that

operate in U.S. waters. The regulations mean that

vessels are required to install and operate a treatment

system before discharging into U.S. waters.

The U.S. Coast Guard Type Approval process for ballast

water treatment systems is more stringent and rigorous

than the IMO process. As a result, many existing IMO

Type Approved systems may not meet U.S.

requirements and will require retesting or redesign. The

Coast Guard has created an Alternative Management

System process so that these systems may be used on a

vessel for up to five years.

“The Coast Guard is committed to the protection of the

marine environment through strong and robust

administration and oversight of ballast water

management practices,” said Capt. Joe Raymond,

commanding officer, Coast Guard Sector Puget Sound.

“These efforts are in line with the recent [type] approval

of four different ballast water management systems.”

In December, the Coast Guard Marine Safety Center

issued the first U.S. Coast Guard Ballast Water

Management System Type Approval Certificate to

Norwegian manufacturer Optimarin. The Optimarin

Ballast System is a filtration/ultraviolet ballast water

management system with treatment capacities ranging

from 167m3/h to 3000m3/h. Most recently, Alfa Laval

gained U.S. Coast Guard type approval for its new ballast

water management system.

In conjunction with the first type approval certification,

the Coast Guard released Marine Safety Information

Bulletin 14-16 which provides answers to frequently

asked questions concerning the extension program,

vessel compliance dates and the use of Alternate

Management Systems.

As there are now U.S. type approved systems, operators

can no longer request an extension to their waiver of

regulatory requirements simply citing there is no Coast

Guard type approved system available. Each extension

request requires an explicit statement supported by

documentary evidence that one of the accepted

methods in the regulations, including installation of a

Coast Guard type approved system, is not possible for

purposes of compliance with the regulatory

implementation schedule.

The U.S. Coast Guard has initiated civil penalty

proceedings against the operator, Vega Reederei GmbH

& Co. KG, after an investigation into ballast water

discharge violations by the bulk carrier Vega Mars.

Investigators found that around January 29, 2017, while

moored in Tacoma, ballast water was discharged from

the 580-foot Liberian-flagged vessel without the use of a

Coast Guard approved ballast water management

system or other approved means, a violation of the

National Invasive Species Act with a maximum penalty

for $38,175.

It is the responsibility of vessel masters, owners and

operators to ensure the proper discharge of ballast

water into any water within U.S. jurisdiction, or to

ensure proper waivers or extensions are processed

through the Coast Guard's Office of Operating and

Environmental Standards.

The Coast Guard has established a ballast water

discharge standard which is the same as that adopted by

the IMO in 2004. In addition, the U.S. EPA 2013 Vessel

General Permit has adopted numeric limitations of

ballast water organisms that affect all vessels that


News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165operate in U.S. waters. The regulations mean that

vessels are required to install and operate a treatment

system before discharging into U.S. waters.

The U.S. Coast Guard Type Approval process for ballast

water treatment systems is more stringent and rigorous

than the IMO process. As a result, many existing IMO

Type Approved systems may not meet U.S.

requirements and will require retesting or redesign. The

Coast Guard has created an Alternative Management

System process so that these systems may be used on a

vessel for up to five years.

“The Coast Guard is committed to the protection of the

marine environment through strong and robust

administration and oversight of ballast water

management practices,” said Capt. Joe Raymond,

commanding officer, Coast Guard Sector Puget Sound.

“These efforts are in line with the recent [type] approval

of four different ballast water management systems.”

In December, the Coast Guard Marine Safety Center

issued the first U.S. Coast Guard Ballast Water

Management System Type Approval Certificate to

Norwegian manufacturer Optimarin. The Optimarin

Ballast System is a filtration/ultraviolet ballast water

management system with treatment capacities ranging

from 167m3/h to 3000m3/h. Most recently, Alfa Laval

gained U.S. Coast Guard type approval for its new ballast

water management system.

In conjunction with the first type approval certification,

the Coast Guard released Marine Safety Information

Bulletin 14-16 which provides answers to frequently

asked questions concerning the extension program,

vessel compliance dates and the use of Alternate

Management Systems.

As there are now U.S. type approved systems, operators

can no longer request an extension to their waiver of

regulatory requirements simply citing there is no Coast

Guard type approved system available. Each extension

request requires an explicit statement supported by

documentary evidence that one of the accepted

methods in the regulations, including installation of a

Coast Guard type approved system, is not possible for

purposes of compliance with the regulatory

implementation schedule.

Owners conducting special surveys early delaying BWM system installation: ClassNK – SMN Feb 10th

ClassNK has seen a significant number of owners

conducting special surveys earlier than scheduled

pushing back the requirement to install ballast water

management (BWM) systems until the end of the

decade.

With the IMO’s BWM Convention due to come into

force on 8 September 2017, owners will be required to

retrofit a BWM system to existing vessels when they

come up for their five-year special survey. A way to

delay the fitting of systems, that can run into several

million dollars for larger vessel, is to conduct special

surveys earlier than required.

In a presentation to a technical seminar in Singapore on

Thursday, ClassNK revealed that for vessels under its

class many ships had their special surveys conducted in

2014 and 2015 pushing the date for the next survey, and

the requirement to fit a BWM system to 2019 and 2020.

A slide (pictured below) showed roughly 700 vessels

under ClassNK with the due date for their next special

survey shifting to 2019 and 2020 rather than an

originally a much more even distribution across the

period 2016 – 2020.



While some owners are seeking to delay installation of

BWM systems ClassNK is also seeing an increased

uptake in owners installing systems accounting for

around 15% of ships registered with classification

society or 1,000 – 1,500 vessels.

Three firms to jointly develop drone capable of ballast water tank inspections – SMN Feb 1st

A trio of companies, AkzoNobel, DroneOps and Barrier

Group, have teamed up to develop a drone capable of

remotely inspecting ballast water tanks and offshore

wind farms.

The project – codenamed Recomms (Remote Evaluation

of Coatings and Corrosion on Offshore Marine Structures

and Ships) – will use virtual reality technology and the

semi-autonomous operation of a drone.

If successful, the new drones could deliver safer, more

accurate evaluations of ballast water tanks and other

enclosed or difficult to access spaces on vessels and

offshore structures, including inspections of coatings

and corrosion.

Traditionally, these inspections are carried out by crew,

surveyors or independent inspectors; such inspections

are a risky activity that represent one of the most

common causes of work-related fatalities in the

industry.

The new method will allow maintenance to be remotely

monitored, with pictures and data available to staff in

real-time.

The drone is scheduled to undergo flight trials at

AkzoNobel’s UK-based coating test block, and Barrier

Group’s indoor training facility, with the drone’s launch

planned for October 2017.

“Using the expertise and experience of our partners and

supporters, Recomms aims to utilise the rapid

development of drone and autonomous technologies to

make remote inspections of ballast water tanks and

other enclosed spaces possible,” said Michael

Hindmarsh, spokesperson for Recomms and business

development manager at AkzoNobel’s Marine Coatings

Business.

“This in turn will reduce costs, increase efficiency and

most importantly, significantly reduce risk to human life

during essential maintenance.”

Drones and autonomous technology are predicted to

become increasingly important for offshore and marine

operations, particularly because of their ability to

remove staff from hazardous or dangerous sites and

jobs.

A raft of drone announcements were made in 2016, with

companies keen to stake a claim in what could

potentially be a lucrative market.

Just over two months ago, Robotica in Maintenance

Strategies launched a drone inspection for the maritime

and offshore industries designed to reduce dangers in

enclosed spaces.

In September last year, Lloyds Register signed a MoU

with drone company Airobotics to help further develop

its use of remote access technologies as part of its

Remote Presence Technology Programme.

And in March 2016, Rolls Royce outlined its vision of a

land-based control centre for unmanned ships, including

the use of shipboard drones.



Bahri and Bunge join forces to form Middle East dry bulk business – SMN Feb 22nd

Bahri Dry Bulk Company (BDB), a subsidiary of the Bahri

Group, and Koninklijke Bunge have formed a joint

venture to establish an ocean freight supplier for dry

bulk import and export flows in the Middle East.

The partnership, which will operate under the name

Bunge Bahri Dry Bulk Ltd., will provide exclusive freight

transportation services to regional and other

international customers.

The company plans to ship over 5m metric tons in year

one, ramping up volume over time to double-digit

figures. BDB and Bunge will own 60/40% of the jv

respectively, and it will be registered and based in

Dubai.

“This jv is one of BDB's strategic initiatives to reduce

complexity for our customers along the value chain,”

said Ibrahim Al-Omar, ceo, Bahri

“Working with a leading global player in commodity

trading brings the necessary commercial and market

intelligence to dry bulk supply and demand

fundamentals, and Bunge brings crucial expertise and

scale to the table.

“Their global presence in commodity flows and

knowledge of the freight market, coupled with our

maritime expertise and strategic position in the region,

creates a powerful alliance to meet growing demand for

freight services within the Middle East.”

Brian Thomsen, managing director, Bunge Global

Agribusiness and ceo, Bunge Product Lines, said: “We

expect the jv to become a carrier of choice for

customers importing grains and other agricultural

commodities in the Middle East, as well as for dry bulk

exports outside of the region.”

The jv will charter and commercially operate supramax

and/or panamax, and possibly other suitably sized dry

bulk vessels, initially from the fleet currently owned or

managed by BDB and subsequently from third parties.

BDB is itself a joint venture between Bahri and Arabian

Agricultural Services Companyf founded in 2010, and

has a fleet of five 81,555 dwt bulkers according to

Bahri's website.

Financial terms of the agreements were not disclosed.

Dryships returns to tankers with $102.5m acquisition – SMN Feb 22nd

George Economou’s Dryships has re-entered the tanker

market buying an aframax and a VLCC.

Dryships is splashing out $102.5m for a newbuild

113,205 dwt aframax being built in Korea and due for

delivery in Q2 this year, and a 2011-built, 320,105 dwt

VLCC, which it will also take delivery of in the second

quarter.

Both vessels are expected to be employed on the spot

market.

Economou, chairman and ceo of Dryships commented;

“We are very excited to have re-entered the tanker

market by acquiring a modern aframax tanker of eco-

design and one very large vrude varrier at historical low

prices.

“We continue to look at opportunities to diversify and

grow our fleet with high quality tonnage and significant

operating leverage.”

Dryships quit the tanker sector in mid-2015 selling its six

aframaxes to companies belonging to Economou.

Pan Ocean orders five woodpulp carriers for long term charters – SMN Feb 28th

Pan Ocean has made an order to construct five

woodpulp carriers at a total price of KRW165.5bn


News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165($146.1m) after having secured a long term

transportation contract with Brazil’s Fibria.

The open hatch type bulk carriers will be delivered from

31 December 2018 to 11 September 2020. The

shipbuilder for the woodpulp carriers was not disclosed.

Pan Ocean said the vessels investments are needed after

it entered into consecutive voyage contracts with Fibria,

a forestry company and producer of eucalyptus pulp.

The transportation of eucalyptus pulp will take place

from 2019 to 2035, with an option for Fibria to extend

by up to another 25 years.

Pan Ocean to order Handymax bulk carriers – FP Feb 24th

South Korea’s largest bulk carrier operator, Pan Ocean,

is close to placing orders for Handymax bulk carriers,

Fairplay has been told.

A company source said, “We are looking at fleet growth

and, given current newbuilding prices, we think that it’s

opportune to build new ships.”

IHS Markit’s Sea-web data shows that Pan Ocean owns

15 Handymax bulk carriers.

The dry bulk freight market has improved from all-time

lows seen in 2015 and early 2016, due to strong coal and

iron ore imports into China during the later part of 2016.

The source said, “The market for Handymax bulk carriers

is more flexible as these vessels carry a wide range of

cargoes. We think that the market is starting to feel

positive again, especially when Indonesia has lifted a ban

on the exports of raw ores.”

Shipbroking sources said that Jiangsu New Yangzi

Shipbuilding, part of Singapore-listed Yangzijiang

Shipbuilding, is favoured to win the orders.

South Korean shipowners have been ordering bulk

carriers in China due to the significantly lower

newbuilding prices for such vessels there. Pan Ocean

recently released unaudited results that showed a 142%

year-on-year surge in net profit to USD82.49 million.

Dry bulk shipping to gain from China's ban on North Korean coal – FP Feb 20th

China’s suspension of seaborne coking coal imports from

North Korea would be positive for the dry bulk shipping

market as more coking coal would have to be sourced

from further afield.

On 18 February, China’s Ministry of Commerce

announced that the country will suspend North Korean

coal imports through year-end, to penalise Pyongyang

for the latter’s 12 February missile test.

Speaking to Fairplay, Jeffrey Landsberg, president of dry

bulk consultancy Commodore Research, noted that

China imported approximately 23 million tonnes of

coking coal from North Korea in 2016.

This amount would work out to roughly 766 shipments

on Handysize bulk carriers.

Landsberg said: “The ban on coking coal imports from

North Korea is positive for the dry bulk shipping market.


News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165Commodore now expects China to import more coking

coal from several countries, including Australia, Russia

and Canada.

Coking coal, along with iron ore, are the key ingredients

of the production of crude steel.

Besides seaborne imports, China also imports coking

coal from Mongolia via rail and truck across the Gobi

Desert.

Coking coal is North Korea’s single biggest export item

and source of income, while China is the isolated

nation’s largest ally.

While the official announcement stated that China

wanted to comply with the UN Security Council’s latest

resolution to penalise Pyongyang for its missile test,

observers believe that the East Asian power is also

retaliating against North Korea for reportedly ordering

the assassination of Kim Jong-nam.

Kim Jong-nam, the estranged older half-brother of North

Korean leader Kim Jong-un, died after being reportedly

accosted and sprayed or injected with a toxic chemical

by two women in Kuala Lumpur International Airport on

13 February.

The older Kim had close ties to China and was reportedly

under Beijing’s protection.

Crew of Indian vessel stranded in Great Yarmouth paid after nine months – SMN Feb 24th

The crew of the Indian-owned vessel Malaviya 20

abandoned in Great Yarmouth, UK, in June last year

have been paid and have finally headed home according

to the International Transport Worker’s Federation (ITF).

The vessel first arrived in Great Yarmouth in June 2016

and was detained by the Maritime & Coastguard Agency

(MCA) mainly over unpaid wages. Some of the wages

were paid and some of the crew repatriated, however

12 remained, and after nothing happened.

“So in December we arrested the vessel on the crew’s

behalf. The bank, which owned the ship, contacted us

and sent a representative over to meet with the ITF in

January. They agreed to pay all owed wages to the crew

currently on the vessel and those who had left earlier,”

said ITF inspector Paul Keenan.

A total of $689,679 in back wages were paid on 17

February, the payments for 33 crew dated back to

October 2015.

“Thanks to their determination, the support of the local

community and port chaplain, organisations such as the

MCA, and the ITF itself, the men have finally achieved

justice. In the time when they were abandoned some

had taken loans out so that their families could survive,”

Keenan said.

The 12 remaining crew (pictured) began their journey

home on Tuesday.

A sistership Malaviya Seven remains detained in

Aberdeen and the ITF said it was moving to arrest the

vessel on the crew’s behalf in order to secure for them

the wages and tickets home to which they too are

entitled.

Two former Vinashin execs sentenced to death for corruption – SMN Feb 23rd

Two former executives from Vinashin Ocean Shipping

(Vinashinlines) have been sentenced to death for

corruption, while a third has been imprisoned for life.

Following a four-day trial the three senior executives

from the former subsidiary of state-owned Vietnam

Shipbuilding Industry Group (Vinashin) were found guilty

of having embezzled more than VND260bn ($11.5m)

according to local reports.

Former Vinashinlies sales manager Giang Kim Dat, 40,

and former director general Tran Van Liem, 62 were

both sentenced to death for embezzling at least


News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165VND255bn. Meanwhile former chief accountant Tran

Van Khuong, 67, was jailed for life for embezzling

$110,000.

According to the indictment between July 2006 to

March 2007 Liem signed contracts to buy three foreign

ships, Vinashin Summer from Panama, Vinashin Island

from Croatia and Vinashin Phoenix from Greece. He

authorised Dat to negotiate with the foreign partners.

Dat gained nearly VND11.5bn of commission during

negotiations to buy the vessels. The three were said also

to have earned VND250bn illegally from charter

revenues from nine shipowners between May 2006 and

June 2008.

The sentences for corruption are latest involving former

Vinashin executives. In 2012 former Vinashin chairman

Pham Thanh Binh was jailed for 20 years, and eight

other former senior executives were also given prison

sentences.

EC subsidies issue stymies Chinese interest in Greek shipyards – SMN Feb 2nd

Greek Prime Minister Alexis Tsipras, is heading the drive

to muster up Chinese interest in the sale of Greece's two

largest shipyards.

Tsipras'deputy Yiannis Dragasakis and Economy and

Development Deputy Minister Stergios Pitsiorlas have

also approached the Chinese regarding the Greek

government’s keenness to sell the facilities, in a bid to

kick-start the country's shipbuilding and ship repair

industry.

However, the high level approaches to China's Cosco

Shipping seem to have fallen on deaf ears with

the Chinese company reluctant to get involved as the

Athens' left wing government battles with the European

Commission regarding the return by the shipyards of

state subsidies.

Three years ago the Antonis Samaras-led conservative

government also failed to entice Cosco for the same

reason.

While Cosco has said it is interested in being involved in

ship construction and repair in Greece, its management

is not willing to get engaged in an on-going state

subsidies issue.

Greece was taken to the European Court of Justice by

the EC for failing to recover EUR250m ($275m) in what

Brussels considers to be illegal state aid to Hellenic

Shipyards.

Analysts say the amount said to be outstanding could

run to EUR540m including interest and would burden

the buyer of the shipyards.

Further, Cosco is already facing problems as it tries to

finalise the transportation of the first of two floating

docks it has ordered for the Piraeus Port Authority (PPA)

ship repair zone.

The dock is expected to arrive in Piraeus late spring or

early summer depending on when the Chinese group

finds a ship able to transport the 80,000-tonne post-

panamax dock, with a second, larger dock, slated to

follow provided the licensing process can be completed

for the first dock without any hitches.

The second dock is a 300,000-tonne capesize floating

dock, with Cosco hoping installations can be quickly


News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165completed and the new facilities are up and running

without delay.

Though the Shipping and Economy ministries are

seeking the fastest possible installation of this

equipment as Cosco has committed itself to operating

ship repairs in the Greek port, location of the

installations is still to be decided with local authorities

and other community groups in areas in or adjacent to

the ship repair zone have raised objections and are

preparing to fight the arrival of the docks, citing

environmental or archaeological reasons.

Tom Boardley appointed as new chairman of The Mission to Seafarers – SMN Feb 3rd

Tom Boardley of Lloyd’s Register (LR) has been

appointed as the new chairman of charity The Mission

to Seafarers (MtS).

Boardley, executive vice president of LR, will take over

as chairman of MtS from former P&O chief executive

Roberts Woods on 1 April this year.

“The Mission to Seafarers plays a crucial role within the

maritime industry, it is an honour to be invited to be

chairman of a charity with such a proud history and

bright future,” Boardley said.

Woods, who has been chairman of MtS since the start of

2007, said: “I am pleased to be handing over the

chairmanship of The Mission to Seafarers to Tom

Boardley.

“Tom has a great reputation within the industry, and I

have no doubt is the right person to steer the Mission

through the next stage of the charity’s evolution. I wish

him all the very best in his new role.”

Boardley has been with LR since 2009, has 30 years

experience in the maritime sector.

Shipping will need to adopt alternative fuels to meet C02 emission reductions: LR – SMN Feb 8th

The shipping industry will need to adopt alternative

fuels to heavy fuel oil to meet the demands of CO2

reductions, believes Douglas Raitt from Lloyd's Register

(LR).

Looking at what Raitt, regional consultancy manager for

LR, described as “tsunami of regulations” related to the

environment, he highlighted CO2 reductions as the

biggest challenge facing the industry. “The biggest

development that will impact shipping will be CO2

emissions,” Raitt told the Mare Forum Singapore

conference on Wednesday.

Noting the industry's reaction to low sulphur regulations

with a 0.5% cap due to come in globally from 2020 he

likened owners' reaction in terms of compliance to

“Bambi in the headlights of an oncoming car”.

The industry had sat on the fence with just 400

scrubbers installed and only 80 gas powered ships in

operation and 80 more on order, despite bullish

predictions from many including LR on the expected

take up rate of LNG as a fuel just a few years ago.

On top of low sulphur will come CO2 emissions, of which

shipping accounts for 2.5% of the global total.

Up till now shipping's main reaction to the

environmental agenda has been the eco-ship, but Raitt

questioned if this would be enough to meet the

demands for CO2 emissions. “I do not believe CO2

reductions can be achieved by optimised shipping.”

Instead shipping will need to “bite the bullet” and switch

to alternative fuels such as gas.

While the US headed by President Donald Trump may be

pulling back from addressing climate change, this will

not be the case in other parts of the world. “With the EU

and China very much clued up on C02 shipping will have

to pull its weight. The question is how,” Raitt stated.


News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165“It will lead to some sort of market based measure – its

not a case of if but when.”

Jinhai Heavy Industry lands order to build four bulk carriers – SMN Feb 8th

China’s Jinhai Heavy Industry has clinched an order to

construct four 208,000-dwt newcastlemax bulker

carriers from Greece’s Chartworld Shipping.

Financial details and the newbuildings delivery schedule

were not disclosed.

The latest deal is the second for Jinhai, after the

shipbuilder booked an order in January to build six

19,700-dwt oil and chemical tankers for Wilmar’s

shipping arm Raffles Shipping Corporation.

The buyer of the newcastlemaxes Chartworld Shipping

operates a fleet of 66 ships, including 10 dry bulk

carriers, 27 reefer vessels, seven oil tankers and 22

containerships.

Precious Shipping slumps to $75m loss in 'unthinkable' year for dry bulk – SMN Feb 9th

After a year in which the “unthinkable” happened in dry

bulk shipping Precious Shipping is forecasting “extreme

volatility” in demand.

The Bangkok-headquartered handy specialist reported a

full year loss for 2016 of $75.61m compared to a loss of

$69.41m in 2015, however, in a positive sign Precious'

Q4 2016 loss reduced to $3.34m compared to $42.16m

in the corresponding period a year earlier.

The results came against a year Precious md Khalid

Hashim described as the “worst ever” for dry bulk

shipping with the “truly unthinkable” happening in the

sector with BDI plunging to 290 points in February 2016.

Other unthinkable events highlighted by Hashim

included Brexit, the bankruptcy of Hanjin Shipping, the

Ballast Water Management (BWM) Convention being

ratified and the election of Donald Trump as US

President.

“To put our annual loss for 2016 of $75.61m into

perspective, please keep in mind that the average BDI

for this year at 673 was the lowest in history,” he said.

Looking ahead Precious sees the demand side of the

equation in 2017 as being characterized by “extreme

volatility”. Downside risks included China's slowing

economy, slowing imports of iron ore and coal into

China, rising protectionism and shipyard overcapacity.

“But it is not all gloom and doom. The upside potential

for 2017 consists of, amongst others, the ‘One-Belt-One-

Road’ that China proposes to build linking some 65

countries from Asia/China to Europe at an expected cost

between $1.4 to $21trn,” Hashim said.

On the supply side the level of scrapping is a key variable

with 20.3% (160.16m dwt) of the existing world fleet

that would be over 15 years of age during 2017 through

to end of 2020. Current low freight markets and costly

new regulations such as BWM convention should push

these older ships to the scrapyard.

“If markets are bad, scrapping will be reasonably good in

2017. If that happens and ‘forced’ scrapping takes off

due to the regulatory impact in 2018, we could have a

few very interesting years ahead!” Hashim commented.


News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165Courage Marine expects reduced loss for 2016, sells loss-making bulker – SMN Feb 9th

Dry bulk shipowner Courage Marine has alerted

investors of an expected narrowing of its loss in 2016 by

approximately 50% compared to 2015, and sold a loss-

making six-year-old bulker.

Courage Marine said the anticipated reduced loss for

2016 over 2015 was attributed to a decrease in

impairment losses recognised on vessels and deposits

paid for a coal purchase contract, absence of around

$5.34m loss resulting from the disposal of two bulkers in

2015, and reduced operating loss incurred by the vessel

chartering business due to less vessels being operated.

“The board wishes to inform the shareholders and

potential investors that the group is expected to record

a decrease in loss attributable to owners of the company

for FY2016 by approximately 50% as compared to the

loss recorded for FY2015,” Courage Marine stated.

In 2015, the shipowner posted a net loss of $36.84m.

Meanwhile, Courage Marine sold its vessel, the 2011-

built, 57,000-dwt Zorina, to Universal Ship Investment

Corp at a price of $7.35m. Courage Marine is expected

to record a loss on disposal of approximately $114,000,

while the net proceeds will be used to repay bank loan

secured by the vessel.

“The vessel had been incurring operating losses for the

last three financial years ended 31 December 2016, and

the board believes that the proposed disposal offers a

good opportunity to release the group from incurring

further cash outflow to maintain the operation of the

vessel,” Courage Marine stated.

Rickmers Maritime faces $360m in impairments if liquidated as it fights for survival – SMN Feb 16th

Rickmers Maritime auditors warn of another $360m of

impairments against the value of its fleet if it liquidates

as the Singapore shipping trust fights for survival.

The embattled trust reported a net loss of $180.09m in

2016 on revenues of $69.21m. A results presentation by

senior management drew particular attention to a

“disclaimer of opinion” by its auditors that the carrying

value of its fleet was based on “value-in-use” and if the

trust was to liquidate additional impairments based on

recent vessel transaction prices and the value of existing

time charters could total $360m.

Rickmers Maritime’s management stressed that they

continued in discussions to reach a restructuring

solution after its noteholders rejected its own plans in

December last year.

The management said it had seen one proposal from law

firm Rajah & Tann on behalf of a group of noteholders

“which it would very much like to discuss” and it was

also discussing a new framework with Ferrier Hodgson

but there was not a new proposal yet.

What form a new proposal would take was unclear but it

appeared it would likely be a more short term solution

than the one noteholders rejected last year.

“Unfortunately its not now all up to us, we can only

support what is proposed,” said Soeren Andersen, ceo of

Rickmers Trust Management.

“There can be other ways of doing it which would be

more short term and then we could manage for now.”

The trust has $235m of bank debt maturing this year as

well as $75m in notes.



Should the trust manage to strike a restructuring deal

Andersen said he could easily see a better market at the

end of this year, which he sees as providing hope for its

fleet of traditional panamax boxships. Panamax boxship

spot charter rates have taken a hammering following

the opening of the expanded Panama Canal in June last

year, and the trust has laid-up five of its vessels to

preserve cash.

“I think there is a good likelihood they will be re-

activated if we have the runway,” he said.

Andersen added they had lines in Asia upsizing

chartered in vessels from 2,800 – 3,500 teu to 4,250 teu

– which is the size of the vessels in its fleet.

Panama Canal sets new monthly tonnage record – SMN Feb 14th

The Panama Canal has set another record with

transporting 36.1m of tonnes (Panama Canal tonnes

PC/UMS) during the month of January 2017. During the

month the canal registered the transit of 1,260 ships

through both the expanded and original locks.

The previous record was set in December 2016, when

1,166 ships transited the waterway for a total of 35.4m

PC/UMS tonnes. Prior to the inauguration of the

expanded canal on 26 June 2016, the monthly tonnage

record was 30.4m PC/UMS, which was set in October

2014.

Seven months after the beginning of operations, the

expanded Canal has already transited more than 750

neo-panamax vessels – more than 50% of which were

container ships. In addition, the new locks have LPG and

LNG vessels, as well as bulk carriers, tankers and vehicle

carriers.

LNG vessels, which could not transit in the original locks,

are now regular sight at the Panama Canal and a new

item in the customers’ list.

In April 2017, the expanded Canal will receive its first

neo-panamax cruise vessel. Neo-panamax passenger

vessels are capable of transporting up to 4,000

passengers, nearly twice as much as the panamax

vessels able to transit the original locks.

"This increase reiterates the importance of the

expanded Canal,” said the Panama Canal administrator

Jorge L. Quijano.

This week, Friday 17 February, the Panama Canal

Authority will receive the proposals for the construction

of a new container terminal at Corozal. Four

international port operators have pre-qualified: APM

Terminals; Terminal Link; PSA International, and

Terminal Investment Limited.

Around 130 vessels stuck as Indonesian coal ports hit with congestion – SMN Feb 13th

A combination of bad weather and road blockages along

with a recent rises in coal demand from China has led to

bad congestion at Kalimantan ports and disruption of

coal supplies, Reuters reported.

The news wire cited coal traders and ship operator as

saying the disruptions were affecting coal ports near

Samarinda in the province of East Kalimantan and

Taboneo, near the capital of South Kalimantan,

Banjarmasin, with some 130 vessels currently offshore

Kalimantan according to Reuters.



"The area most affected is getting coal down the Barito

River to coastal ports like Taboneo," one coal barge

shipper from Kalimantan, was quoted as saying.

Shipping data shows around 30 large vessels are

currently waiting to load coal at Taboneo, with several

having already waited for about six weeks.

The number of vessels waiting to load coal at one of the

world's top thermal coal mining areas has risen from

108 a week ago and some of the ships have been waiting

since late December.

"Local authorities are delaying shipping and export

licenses, and that is what is causing delays," a local

source was quoted as saying. Meanwhile local media

reported that coal hauling roads in three locations had

been closed by the South Kalimantan government.

Sources said the persistent delays could start resulting in

vessel cancellations or repositioning to other areas in

Indonesia to clear some of the backlog.

Supply shifts to Australian coal could also lead to rises in

the price of seaborne coal and higher ton-miles for

shipowners.

One dead, seven kidnapped in attack on cargo vessel in Southern Philippines – SMN Feb 20th

Philippines gunmen attacked a Vietnamese cargo vessel

in the south of the country killed one crew member and

kidnapping seven on Sunday evening.

The Philippines Coastguard said pirates had attacked the

Vietnamese ship Giang Hai Baguan Island in Tawi-Tawi,

Reuters reported. The Coastguard said it had rescued 17

of the 25 crew members, while one was killed and seven

kidnapped according to multiple media reports.

Coastguard spokesman Commander Armand Balilo said

it had launched a pursuit in coordination with the

military and the police.

In some confusion over the number of seafarers

abducted the ReCAAP Information Sharing Centre in

Singapore said six had been kidnapped including the

master and chief officer, quoting information from the

Vietnamese Coastguard. "The pirates destroyed

navigation and communication equipment before

escaping. The ship is now at Taganak anchorage area,

Tawi Tawi, Philippines undergoing investigation

conducted by the Philippine authorities," ReCAAP said.

The attack took place close to the strong hold of Islamic

terror group Abu Sayaaf that has been linked to a string

on kidnap for ransom cases against commercial shipping

in the southern Philippines since the March 2016.

Abu Sayaaf started attacking commercial vessels in the

Sulu-Celebes sea area in March last year and successfully

kidnapping crew from 10 vessels, with a further six

unsuccessful attacks last year alone. Initially attacking

smaller vessels such as tugs and barges, the militants

graduated to hitting larger ships, including an

unsuccessful attack on a capesize bulker.

The Islamic militants are currently estimated to holding

27 hostages from attacks both on shipping and

abductions on land.

Liquidated Wenzhou Shipping sells five vessels on Taobao – SMN Feb 22nd


News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165China’s bankrupt Wenzhou Shipping has sold five vessels

over the country’s largest online shopping website

Taobao.

Wenzhou Shipping, subsidiary of Zhejiang Shipping

Group, liquidated its assets and sold the five vessels at a

total price of RMB156.93m ($22.81m) via Taobao.

The amount of RMB156.93m closed for the sale of the

ships was 27.2% higher than the auction price of

RMB123.4m.

The auctioned ships included 2011-built 57,000-dwt

supramax bulker Zhe Hai 167 sold for RMB67m, 2009-

built 33,400-dwt handysize bulker Zhe Hai 162 sold for

RMB50.2m, 2009-built 23,500-dwt handysize bulker Zhe

Hai 156 sold for RMB33.88m, a tugboat sold for

RMB3.8m and an oil barge sold for RMB2.05m.

The Chinese shipowner was declared bankrupt by a local

court in October 2016 due to mounting debts. The

parent firm Zhejiang Shipping had itself completed a

restructuring last year, leaving its subsidiaries Wenzhou

Shipping, Taizhou Shipping and Wuzhou Shipbuilding all

bankrupt.

What’s on the horizon for South America? – DBN Feb 21st

South America is in many ways the backbone for the dry

bulk shipping market. While China of course drives dry

bulk commodity demand, it is South America where a

particularly large amount of commodity supply comes

from. South America is blessed with an abundance of

iron ore, coal and grain – and also minor bulk cargoes,

including sugar. All of these cargoes are shipped to

buyers around the world on a daily basis. Also incredibly

important for the dry bulk shipping market is that the

vast majority of these cargoes are exported from the

Atlantic Basin. This is significant as it is here where spot

vessel supply most often becomes tight (as dry bulk

vessels are most often delivering their cargoes to buyers

in Asia, where they then become available in the spot

chartering market for another voyage).

The long-haul nature of many South American

commodity exports, combined with the wide-variety of

dry bulk commodities produced in South America,

makes South America a crucial region for the dry bulk

shipping market. All of the dry bulk vessel classes are

affected by production of South American commodities,

along with any supply disruptions and logistical

problems that, from time-to-time, arise in South

America. South America’s primary dry bulk exporting

nations, Brazil, Colombia and Argentina, are still

developing countries and are prone to more disruptions

than seen with major developed exporters, such as

Australia. Indigenous tribes in recent years have gone as

far as blocking major Brazilian iron ore railroads, which

in turn has led to vessel congestion surges at major

Brazilian iron ore ports. South American truckers and

other workers are also well known for their strikes,

while sudden increases in South American grain port

congestion has become fairly common. Vessels

grounding on the Parana River, where grain vessels

traverse en masse, is another logistical problem often

seen in South America.

Iron ore

Iron ore exports are a major component in the capesize

market and Brazilian iron ore shipments are perhaps the

most significant cargo capable of leading to sharp

changes in capesize shipping rates. While Australia is the

world’s largest exporter of iron ore cargoes, Brazil is the

world’s second largest iron ore exporter. In addition, it is

very significant that Brazil’s iron ore exports are shipped

out of the Atlantic Basin – as in times of tight spot vessel

supply, surges in Brazilian iron ore shipment activity

traditionally leads to strength in capesize rates (the vast

majority of Brazil’s iron ore is shipped in capesize

vessels). Overall, Brazilian iron ore shipments are a


News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165major driver of the great volatility that is historically

seen in the capesize market.

Last year, Brazilian iron ore exports (which are shipped

primarily to buyers in Asia) climbed to a record of

366 million short t. This large increase primarily came as

a result of Vale and Anglo American ramping up

production. Last year’s record Brazilian iron ore

production marked a year-on-year increase of 21 million

short t (6%); this year another record is likely to be set.

At the time of writing, 2016 Brazilian iron ore exports

are on pace to climb to approximately 384 million short

t. This would mark a year-on-year increase of 18 million

short t (5%). Steady growth in Brazilian iron ore

production and exports are expected during the

upcoming years, primarily due to Vale’s plans to roll out

additional iron ore production from its long-waited S11D

mine.

Overall, the demand for Brazilian iron ore (and all iron

ore) has remained strong, even during times when

Chinese steel production has fallen. Demand has also

remained strong even at times when China’s iron ore

port stockpiles have been at very high levels. A key

Commodore Research view has been that Chinese iron

ore imports (including demand for Brazilian iron ore) has

been set to remain strong, and China has continued to

show the world that it has remained happy to purchase

as much iron ore as global miners want to sell. So far,

there still has been absolutely no decline in Chinese iron

ore import demand, and the outlook for both Brazilian

iron ore exports and overall iron ore demand remains

promising. Looking longer-term, one of the most

significant possible headwinds on the horizon for the dry

bulk market regarding Brazilian iron ore exports is the

possibility of Vale (and others) potentially ordering new

valemaxes. In addition, there still remains talk that China

and Brazil want to jointly construct a trans-Amazonian

railroad in Brazil. The proposed new railroad would be

used to rail iron ore mined in Brazil to the western part

of the country, and then iron ore would be shipped out

of the Pacific Basin. This would cut down the distance

that vessels carrying Brazilian iron ore would have to

travel when exporting iron ore to China and other

buyers in Asia. In addition, Brazilian iron ore shipments

would no longer be an Atlantic Basin cargo. Such a

change in the nature of Brazilian iron ore exports would

be damaging to the capesize market, but there still has

been no progress made regarding building this potential

new railroad. In addition, it would take many years for

construction to be completed, and the overall outlook

for the proposed trans-Amazonian railroad remains

unlikely.

Siwertell secures order for a next generation, road-mobile ship unloader – DBN Feb 15th

Siwertell, part of Cargotec, has secured an order for a

next generation, road-mobile ship unloader for an

undisclosed client. The 10 000 S trailer-based, diesel-

powered unit will be used to unload cement at a rated

capacity of 300 tph. It will join the customer's existing

Siwertell 10 000 S road-mobile unloader, which it has

been operating successfully since 2015.

"This contract adds to our growing list of repeat orders

for road-mobile units," said Jörgen Ojeda, Siwertell

Director of Mobile Unloaders. "The customer is very

satisfied with the performance and reliability of its

existing unit and turning to Siwertell technology once

again was not a difficult decision.



"Customers like the operational flexibility road-mobile

unloaders offer, particularly for discharging ships at

multiple locations. The road-mobile unit is an excellent

choice in this case because the customer does not have

its own terminal. It rents space at an available jetty

when a cement vessel is due," Ojeda added.

The road-mobile unloader is completely autonomous

and does not require any installations on the jetty. It is

quick and easy to deploy and when the unloading

operation is finished the unit is folded up and driven

back to the customer's premises ready for its next

operation. The dust-free, environmentally-friendly

operation means that there are no jetty clean-up costs.

The new unit will be equipped with a dust filter and a

double-bellows system, allowing uninterrupted

discharge when changing between trucks or rail wagons.

It will be constructed at Siwertell's premises in Bjuv,

Sweden, with delivery scheduled for March 2017.

The customer has signed a Siwertell Service Contract

that covers both units. It includes two inspection and

service visits each year, along with remote support and

trouble-shooting via modem connection. It also provides

valuable discounts for spare parts.

"All our products are inherently robust and reliable, but

proper care and maintenance are important for a long

working life with minimal downtime," said Ojeda. "Our

service contracts provide a cost-effective way for

owners to protect their investments and get the best

results from them."

Drewry: improving demand could ease oversupply in dry bulk shipping – DBN Feb 13th

With contraction in vessel supply and healthy demand

growth, the dry bulk shipping market is expected to

recover from 2017 onwards, according to the latest

edition of the Dry Bulk Forecaster, published by global

shipping consultancy Drewry.

An impressive outlook for dry bulk demand coupled with

a small orderbook of newbuilds as a percentage of the

total fleet capacity will ensure a sustained recovery in

the dry bulk market. Earnings in the dry bulk market are

expected to improve from 2017 with a narrowing

supply-demand gap. Demand is projected to grow at a

healthy pace of 3% while supply is expected to grow by

about 1% from 2017, making the dry bulk segment an

interesting market to invest in.

The growth in demand originates from a rise in iron ore

and thermal coal trade. Coal demand is expected to rise

mainly from developing Asian countries, including

Vietnam, South Korea, Taiwan and China. The rise in

Chinese domestic steel consumption will provide

employment to VLOCs and capesize vessels carrying iron

ore in the market. On the other hand, Vale’s new project

S11D has become the most cost effective iron ore

mining project and will increase iron ore supply from

Brazil increasing total tonne-miles; this will help demand

for bigger vessels in the long term.

The supply side is projected to grow by just 1% from

2017 because of high scrapping and a thin orderbook.

The environmental regulations on Ballast Water

Treatment System (BWTS) will become effective in

September 2017 and IMO’s regulation on use of low

sulfur fuel oil in 2020, which will result in high scrapping

of old tonnages. Ship owners will prefer to scrap their

old tonnage, with low earnings potential, than incur

additional cost on scrubber and Ballast Water Treatment

Systems. On the other hand, a contracting orderbook

and low future new orderings due to limited financing

availability are keeping a check on future deliveries. At

this point in time, the orderbook as a percentage of the

total fleet, which is a strong indicator of future deliveries

currently stands at a decade low.

“The outlook for the dry bulk shipping market continues

to be positive as the supply and demand gap continues

to narrow. Charter rates are expected to improve for

most of the dry bulk segments in 2017 with the steepest

recovery expected in capesize segment. Average charter


News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165rates are expected to rise from $8000 per day in 2016 to

$12 800 per day level in 2017 and will further improve

from 2018,” commented Rahul Sharan, Drewry’s lead

analyst for dry bulk shipping.

Clarkson commentaries – DBTO (Volume 23, No 2 – February 2017)Dry Bulk Supply & Demand Highlights

Difficult dry bulk market conditions persisted in January

2017, with average bulker earnings dropping 13% m-o-m

to a three month low and a historically subdued level of

$7,785/day. While Capesize earnings increased 9% m-o-

m in January supported by firm iron ore shipments into

China, earnings across the other bulkcarrier sectors

declined fairly sharply m-o-m.

Continued subdued bulker earnings have reflected the

oversupply situation in the sector, despite supplyside

measures such as firm scrapping activity in 1H 2016. The

pace of bulker demolition also eased in recent months

and a sharp m-o-m rise in deliveries saw a net addition

of 86 vessels, or 8.8m dwt, into the bulkcarrier fleet in

January 2017. Looking forward, bulkcarrier fleet

expansion is still expected to remain limited at around

1.9% in full year 2017, compared to a 5% pa. average in

the preceding five years.

On the demand side, China has maintained its firm pace

of dry bulk imports recorded throughout 2016, with

total iron ore and coal imports into the country up 12%

y-o-y and 64% y-o-y respectively in January 2017. While

China has the potential to continue to stimulate dry bulk

trade growth in the coming months, there is uncertainty

given the potential impact of Beijing’s policy changes

regarding domestic steel capacity and coal output.

Given the uncertainty in China, combined with

expectations of static dry bulk imports across most other

key regions, current projections indicate global seaborne

dry bulk trade growth of around 2.0% in 2017, a slight

improvement on the pace in the past two years, but

nevertheless historically subdued.

Overall, conditions in the bulkcarrier market remained

difficult in January, given the ongoing oversupply

situation. Looking forward, while continued supply side

measures are expected to help ease the pace of

bulkcarrier fleet expansion, the oversupply will still take

some time to be absorbed, especially given expectations

of relatively sluggish levels of dry bulk trade growth for

at least the near future.

Seaborne Iron Ore Trade

CommentaryGlobal seaborne iron ore trade is estimated to have

increased 4% to 1.4bn tonnes in 2016. This largely

reflected the unexpectedly firm increase in Chinese iron

ore import demand to reach a record 1bn tonnes, which

offset the decline in iron ore shipments into most other

key importing regions in Europe and across Asia. Looking

forward, current projections indicate a further 4% rise in

global seaborne iron ore trade to around 1.5bn tonnes

in 2017. This is expected to be largely driven by a firm

increase in output and shipments of competitively

priced iron ore cargoes from the major miners in Brazil

and Australia. In Brazil, the addition of output from

Vale’s S11D, which shipped its maiden iron ore cargo in

January 2017, is expected to contribute to an 8%

increase in the country’s total seaborne iron ore exports

to around 400mt. Meanwhile, current projections

indicate a 3% rise in Australian iron ore shipments to

834mt in 2017, supported by the ramp up in output

from Roy Hill towards an expected rate of 50mtpa by

the end of the year.

Iron Ore NewsHaving hit a record high of over 1.0bn tonnes in 2016,

Chinese iron ore imports continued at a firm pace into

early 2017. Provisional customs data indicates that total

Chinese iron ore imports increased 12% y-o-y to hit

92mt in January 2017. This represented a record high for

January and was above the monthly average of imports

in 2016. The firm pace of iron ore shipments into China


News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165in January reflected the country’s continued cuts to

domestic iron ore output and an ongoing rise in

stockpiling activity at Chinese ports. Iron ore inventories

at key Chinese ports were up 24% y-o-y at 116mt at the

start of January 2017 and reports indicate a continued

build-up in recent weeks. However, there are early

indications that growth in the country’s steel output has

eased slightly, with the pace of steel production at CISA

member mills dropping to a six month low of 593mtpa

in mid-January 2017. Nevertheless, current projections

indicate a 5% increase in Chinese seaborne iron ore

imports to around 1,063mt in 2017.

Japanese customs data indicates that the country’s iron

ore imports dropped 1% to a five year low of 130mt in

2016. This partly reflected pressure on the country’s

steel manufacturers given the low steel price

environment and an influx of competitively priced

Chinese steel products exports in 1H 2016. This led to a

1% drop in the country’s crude steel output in the

period. While Chinese steel products exports dropped

somewhat in 2H 2016, supporting a boost in Japan’s

steel production, the recovery was insufficient to drive

overall growth in the country’s iron ore import demand

in full year 2016. This was also partly due to the

significant rise in global iron ore prices in Q4 2016,

which encouraged an increase in destocking activity in

Japan. Looking forward, Japanese iron ore imports are

projected to remain relatively static in 2017.

Seaborne Coking Coal Trade

Commentary

Global seaborne coking coal trade is estimated to have

dropped 2% to total 245mt in 2016. This was largely

driven by an estimated 11% decline in coking coal

shipments into the EU to a seven year low of around

33mt. Steel producers in the region came under severe

financial pressure, given the flood of competitively

priced steel products exports from China into the global

market, combined with a depressed steel price

environment in the period. While Chinese steel products

exports dropped in 2H 2016, EU steel output remained

sluggish until Q4 2016 and declined 2% in full year 2016.

Looking forward, EU crude steel output is expected to

stabilise in 2017, contributing to relatively steady

seaborne coking coal import demand into the region. EU

steel producers are expected to be supported by a

number of tariffs on steel products imports, including

duties on Chinese and Taiwanese steel tubing and

welding fittings, introduced in January 2017. This

stabilisation in EU coking coal import demand is

projected to contribute to a 1% rise in global seaborne

coking coal trade to around 247mt in 2017.

Coking Coal NewsGlobal coking coal price levels rose significantly to hit

multi-year highs in 2H 2016 driven by restrictions on

Chinese domestic output, the country’s firm import

demand and speculative trading on coal futures

markets. Indeed, the benchmark daily Australian FOB

coking coal price more than trebled from $100/t in late

July 2016, to exceed $310/t by the end of November.

However in recent weeks, global coking coal price levels

have fallen relatively sharply, with the Australian FOB

spot price down to $150/tonne by mid-February 2016.

This partly reflected the increase in Chinese domestic

coal output in the final months of 2016, as Beijing scaled

back its restrictions on mining output capacity, first

introduced in March 2016. Data released by the Chinese

National Bureau of Statistics indicates that the country’s

coking coal output totalled 31mt in December 2016,

which was 13% above China’s average monthly output

throughout the rest of the year. Furthermore, as coking

coal prices rose firmly in 2H 2016, especially for high

quality Australian product, Chinese buyers turned to

alternative import sources. Coking coal railings from

Mongolia rose 83% y-o-y to a record 3mt in December

2016, which was also 50% above Chinese coking coal

imports from Australia in the period. While falling price

levels are expected to support Chinese demand for

Australian and other seaborne imported coking coal in

the coming months, there remains a degree of

uncertainty given the potential impact of policy

decisions on China’s domestic coking coal output. Yet,


News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165provisional reports released in mid-February indicate

that the China Coal Association is likely to reintroduce a

276-day annual output cap on domestic coal mines in

March 2017, which if ratified would likely provide

support to the country’s coking coal import demand in

2017. Current projections indicate a 3% rise in Chinese

seaborne coking coal imports to 37mt in full year 2017.

Seaborne Thermal Coal Trade

CommentaryGlobal seaborne steam coal trade is estimated to have

remained fairly static at 890mt in 2016, reflecting firm

growth in Chinese imports balancing out a drop in

shipments into other regions. Beijing’s measures to

reduce China’s coal mining output, including a 276

working day cap, boosted the country’s steam coal

import demand. While the government reversed its

mining restrictions in October 2016, domestic coal

output grew at a sluggish rate in Q4 2016. Chinese

seaborne steam coal imports rose 28% to 165mt in full

year 2016, while customs data has indicated further

robust growth in January 2017. Looking forward, while

there is uncertainty regarding Chinese steam coal import

demand, reports indicate the likely reintroduction of the

276-day policy in the coming months, which could boost

the country’s steam coal imports. Current projections

indicate a 2% increase in Chinese steam coal imports to

around 168mt in 2017, although there are still a range of

possible scenarios. Overall, global seaborne steam coal

trade is projected to remain fairly steady at around

893mt in 2017.

Steam Coal NewsSeveral major Indonesian coal mining companies have

announced plans to raise their output in 2017, in a bid

to take advantage of still firm global steam coal prices.

The Indonesian government also recently raised

its national coal production target for 2017 to 470mt,

which would be up around 14% from the country’s

estimated output in 2016. While this may appear

promising for the country’s export growth, an increasing

proportion of output is to be set aside for domestic

consumption, while Indonesian coal exports have

recently also faced a series of disruptions. Road closures

have affected coal deliveries in South Kalimantan and

difficult weather conditions disrupted transfers from

barges to larger vessels off the coast of Borneo Island.

Furthermore, while still firm, steam coal prices have

been sliding in recent months, with the Indonesian

4,700Kcal FOB steam coal spot price at $57/t at the start

of February 2017, down 19% since early December

2016. Finally, there is uncertainty regarding demand for

Indonesian coal among key importing nations, such as

India. Overall, current projections indicate a 1% drop in

Indonesian steam coal exports to around 350mt in 2017.

Indian domestic steam coal production increased 6% y-

o-y to hit a ten month high of 56mt in January 2017.

While firm, the output level remained somewhat short

of the country’s notoriously ambitious production

targets, which was partly owing to India’s slower than

expected coal fired power generation growth and

ongoing destocking activity in recent months. Indeed by

the start of January 2017, steam coal stockpiles at key

Indian power plants stood at 21mt, which was down

around 40% y-o-y. Nevertheless, India’s continued

domestic output growth is expected to undermine the

country’s steam coal import demand in the coming

months. Furthermore, reports indicate that Indian

buyers have reportedly been put off the steam coal

import market given the current high price environment.

Overall, Indian steam coal imports are projected to drop

4% to a four year low of around 149mt in 2017.

Grain Imports

Grain Trade NewsGlobal wheat and coarse grain trade is expected to drop

1% to 340mt in the 2016/17 crop year. This largely

reflects expectations for reduced import demand in a

number of major grain importing countries. In China,

suitable weather conditions have supported harvests,

while destocking activity has been firm. The country’s

grain imports are projected to drop 34% to around 15mt

in 2016/17. This is projected to contribute to a 6% drop


News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165in grain imports into Asia to 110mt in the crop year.

Meanwhile, total grain shipments into the Middle East

are projected to drop 2% to 53mt in 2016/17, reflecting

easing import demand in Iran and Saudi Arabia.

Elsewhere, total grain imports into Africa are projected

to drop 1% to 75mt in 2016/17, although this is

expected to be driven by a decline in imports into a

range of smaller importing countries in the region, while

Egyptian grain imports are projected to rise 1% to 21mt.

Grain Imports

Grain Trade NewsTotal Indonesian grain imports are projected to drop

21% to 10mt in 2016/17. This partly reflects the

impact of the government’s measures to increase

domestic production and reduce the country’s reliance

on imported animal feed and wheat. Indonesian wheat

harvests are projected to reach around 10mt in

2016/17, in line with the country’s historical record. The

government has also enforced restrictions on the

country’s corn imports, centralising purchases and

introducing a 1mt per annum cap on imported volumes.

Jakarta has announced its intentions to eradicate the

country’s coarse grain imports which stood at 3mt in

2015/16, by the end of the 2017/18 crop year. While

this is widely regarded as an ambitious target, the

overall drive towards self-sufficiency is expected to

undermine Indonesian grain import demand in the

coming years.

Grain Exports

Grain Export NewsAustralian wheat harvests have excelled in recent

months, particularly in areas of Western Australia

where plentiful rain and favourably cool temperatures

contributed to record yields. Total Australian wheat

harvests are expected to reach around 34mt in the

2016-17 crop year, overshadowing the country’s

previous record of 30mt set in 2011/12. With the

country’s wheat inventories also nearing record levels,

Australia’s growing surplus is expected to further

stimulate the country’s wheat exports throughout 1H

2017, largely to markets across South East Asia. Current

projections indicate a 46% rise in total Australian wheat

exports to 23mt in 2016/17. This is expected to dampen

wheat prices and potentially undermine shipments from

the Black Sea into South East Asia. Overall, global wheat

trade is projected to rise 1% to around 166mt in

2016/17.

Minor Bulk Trades

CommentaryGlobal seaborne fertiliser trade dropped 2% to around

151mt in 2016. The steepest decline among the featured

fertilisers was in seaborne urea trade, which fell 7% to a

three year low of 36mt in 2016. This reflected the global

oversupply of nitrogen fertilizers and the impact of the

subsequent low price environment on urea producers.

Indeed, significant levels of urea output capacity in

China, the world’s leading urea exporter, was shuttered

in 2016, which was also due to firming anthracite prices

inflating output costs. By the end of 2016, only 52% of

Chinese urea capacity was reportedly active, which was

down from 62% at the end of 2015. Looking forward,

continued price pressures are expected to result in

further urea capacity cuts in China. Current projections

indicate a 30% drop in the country’s urea shipments to

around 6mt in 2017, accounting for around 18% of

global seaborne urea exports.

Bulkcarrier Fleet

CommentaryIn January 2017, 16 Capesizes of a combined 3.2m dwt

were delivered into the fleet, while 8 units of a

combined 1.8m dwt were scrapped. The net addition of

8 vessels and 1.4m dwt in January 2017 saw the

Capesize fleet reach 1,660 units of a combined 316.6m

dwt by the start of February. This represented a 2.1% y-

o-y expansion in the Capesize fleet in terms of dwt: the

largest y-o-y rise in the sector’s fleet since May 2015.

Meanwhile, the Capesize orderbook stood at 149 units

of a combined 37.3m dwt at the start of February, which


News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165was the smallest size since March 2006 in terms of dwt.

This represented 11.8% of the fleet, compared to 14.9%

at the start of February 2016.

Fleet Watch – Full Year 2016

Capesize vessels:

16 delivered 8 scrapped 0 ordered

CommentaryJanuary 2017 was the 11th consecutive month with no

Panamax vessels reported ordered, despite the

guideline newbuild price for a 75-77,000 dwt unit having

stood at $24m since June 2016. This compared to the

peak of $55m in mid-2007. The dearth in newbuilding

activity since February 2016 represents the longest

inactive period in the sector in at least 20 years, which

has significantly contributed to a contraction in the size

of the Panamax orderbook. Indeed, at the start of

February 2017, there were 161 Panamax units of a

combined 13.3m dwt on order. This was the smallest

size of the Panamax orderbook since June 2003, both in

terms of dwt and unit numbers.

Fleet Watch – Full Year 2016

Panamax vessels:


CommentaryIn January 2017, 42 of the 104 units delivered into the

bulkcarrier fleet were Handymax vessels. These

combined to a total of 2.6m dwt, which was the largest

monthly total of Handymax deliveries in five years. Of

those vessels entering the Handymax fleet in January,

33 units of a combined 2.1m dwt were Ultramaxes (60-

70,000 dwt) highlighting the popularity of contracting

activity in this size range in recent years. This

represented over 80% of Handymaxes delivered in

January 2017 in terms of tonnage, which was closely in

line with the share of Ultramaxes remaining in the total

Handymax orderbook at the start of February 2017. In

contrast, Ultramaxes accounted for only 22% of total

Handymax fleet capacity at the start of February.

Fleet Watch – Full Year 2016Handymaxes:


Handysizes:


Commodity Countdown

Minor Bulk Trade: Indonesia Back In The Game?

Seaborne minor bulk trade is estimated to have

remained steady at best in 2016, making it the third

consecutive uninspiring year of minor bulk trade growth

following the introduction of Indonesia’s refined mineral

export ban in January 2014. Indonesia is now set to

restart bauxite and nickel ore exports in 2017 which,

given the country’s previous key role, may help to

change minor bulk trade dynamics.

Two Distinct Periods

Seaborne minor bulk trade is estimated to have dropped

0.3% to 1,851mt in 2016, partly due to a sharp drop in

bauxite and nickel ore shipments. This contributed to

average seaborne minor bulk trade growth of only 0.5%

pa. in 2014-16, compared to 4.9% pa. in 2011-13. This

notable drop in the pace of total minor bulk trade

growth between the two periods coincided with the

introduction of Indonesia’s mineral export ban in 2014.

A Big Presence On The Pitch

In the three years prior to the ban, Indonesian minor

bulk exports grew by an average of 35% pa, accounting

for almost a third of total minor bulk trade growth. This


News AbstractsDry Bulk Terminals Group – February 2017 – Issue 165expansion was driven by a firm rise in the country’s

bauxite and nickel ore shipments, which hit a combined

120mt in 2013, accounting for 64% of global seaborne

exports of these commodities. The majority of this

volume was shipped to China, with buyers building up

stockpiles ahead of the mineral export ban.

A Decision To Bow Out

In January 2014, Indonesia introduced its ban on

unprocessed mineral exports, including bauxite and

nickel ore, in a bid to promote the country’s processing

industry. The emergence of alternative exporters such as

the Philippines and Malaysia failed to fill the gap left by

Indonesia, leading to an average 12% pa. Drop in

combined seaborne bauxite and nickel ore trade in

2014-16, compared to a 29% pa. rise in 2011-13. Overall,

while declining trade in agribulks, scrap metal and some

other commodities have also undermined recent minor

bulk trade growth, the disruption to bauxite and nickel

ore trade which followed the Indonesian mineral export

ban accounted for over 75% of the change in overall

minor bulk trade growth between the two periods.

Back In The Game

Then in January 2017, Jakarta unexpectedly relaxed its

mineral export ban. Given ongoing disruptions to

Malaysian and Philippine mineral exports, Indonesia’s

return may provide a well timed source of minor bulk

trade growth. In the short-term the impact is likely to be

limited, with Indonesian exports of nickel ore and

bauxite expected to displace shipments from other

exporters and total around 10-15mt combined in 2017.

However, given the country’s previous role as the key

bauxite and nickel ore exporter, the longer-term

implications may be more significant. So, while a wide

range of commodities contribute to global seaborne

minor bulk trade, volatility in seaborne bauxite and

nickel ore trade as a result of Indonesian export policy

has been a key factor in shaping overall minor bulk trade

growth trends in recent years. Looking forward, while

the impact of Indonesia’s return may at first be fairly

gradual, it has the potential to change the minor bulk

game,

And Finally.......

I am not convinced that many of you make it this far through the Newsletter however I get the odd frustrated e-mail so purely for my amusement here are a couple of teasers for this month.

January Answers

*****

I asked:

The maths:

If you take 3 apples from a bag containing 5, how many do you have?

Answer: You took 3 apples out so you have 3

*****

And a logic puzzle:

What can run but never walks, has a mouth but never talks, has a head but never weeps, has a bed but never sleeps

Answer: A river!



*****

The maths question this month:

To the nearest cubic centimetre, how much soil is there in a 3m x 2m x 2m hole?

*****

And a logic puzzle this month:

Which seven letter word contains thousands of letters?

*****

That is it for February. I hope to see you all in Gijon...........

Answers to [email protected] please and I will reveal the answers in the March issue.

Further Information:

Clarkson Research: www.crsl.comFairplay: www.fairplay.co.ukFearnleys: www.fearnresearch.com

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http://www.fairplay.co.uk/

http://www.crsl.com/

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