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News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169

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

Hello and welcome to the selection of news extracts from June 2017. After the hottest June day in the UK for more than 40 years, I am pleased that Wimbledon starts next week so rain is on the way for sure.

In June we held an Executive Committee meeting in London and much of our time was spent discussing the next DBTG meeting of Members in Uruguay 9th & 10th November. This will run immediately after the AAPA Latin American Congress. We are waiting for some final information and hope to launch the meeting in July so please keep an eye on your in box.

Speaking to some of you, it seems Uruguay is on the wish list of many Members so I really do hope that we will see a high number of Members there – get the dates in your diaries. The AAPA are offering DBTG Members their Member delegate rate for those that wish to attend the AAPA and then DBTG. The latest AAPA press release follows.

As I advised last month, I visited NAEGA in May to discuss the Memorandum of Understanding between us. I am pleased to advise that a new MoU is now in place and I very much look forward to continuing work with NAEGA.

One story really caught my attention this month. Titled ‘Bauxite behaviour stuns researchers’ it sheds a new light on what has always been seen and known as Liquefaction. New research appears to suggest otherwise and DBTG has been at the heart of that work – you can find it on page 19.

My activities this month start next week in Geneva for the latest discussions on explosive dust. The following week I will be speaking to some cyber security experts in preparation for Uruguay. Geneva is a beautiful city that I am looking forward to visiting again - I hope the weather is as stunning as it was last year.

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 ASEAN Ports and Shipping, 6th -7th June,

Myanmar Marine Philippines, 12th July, Manila Cyber Security Seminar SMI, 19th July,

London

IN THIS ISSUE

Shipping Matters Economy/Finance/Trade Commodities Terminals/Ports Freight Markets

1www.drybulkterminals.org

mailto:[email protected]

News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169SHIPPING MATTERS

Shipping facing a more serious shortage of senior officers than it expects – SMN June 9th

Shipping faces a more serious shortage in senior officers

in the future than it is prepared for warns Mark

Charman, ceo of Faststream Recruitment Group.

In an interview with Seatrade Maritime News Charman

says that they were already seeing shortages of senior

officers in certain areas such as gas shipping. “I think we

are at the beginning of the cycle with organisations

struggling to find the officers they need for their ships,”

he says.

The latest Bimco/ICS Manpower Report published in

2016 identified an existing shortfall of about 16,500

officers (2.1%), and estimates a need for an additional

147,500 officers by 2025 to service the world fleet.

“I truly believe going forward shipping will face problem

beyond what it expects in the recruitment of officers,”

Charman states.

Specialising in shipping and offshore Faststream is

involved in the recruitment of officers to ships, but not

crewing or crew management.

“We’re starting to see more skill shortages for senior

officers with gas experience. All these gas ships that

have been built and have come into service the supply

of officers with good gas experience and meet the

requirements of the various matrix are few and far

between of all nationalities and that is going to get

harder,” he explains.

Charman believes that shipping has benefitted from the

sharp downturn in the offshore sector where large

numbers of vessels laid-up leaving senior officers to seek

work in other sectors such as tanker and cruise shipping.

However, he believes once the offshore sector rebounds

seafarers with qualifications as DP2 training will chose to

return to offshore.

“When the offshore sector picks-up they’ll be gone. And

they’ll be gone because the offshore sector pays way

more than conventional deepsea shipping and the

rotations in offshore are much shorter. It’s a way better

lifestyle for the officers,” he says.

Shorter rotations is something that Charman believes

deepsea shipping will need to offer if it is to appeal to

the Millennial generation. A survey by Faststream of

around 1,000 seafarers in the gas shipping sector found

that the most important factors in choosing an

employer, in order, were – money, rotations, onboard

communications such as wi-fi access, and new vessels.

The survey also found that 55% of junior officers

thought that promotions were too slow. Charman noted

the Millennial generation were not used to waiting, and

wanted things now and would not wait for promotions.

As to how the industry should tackle the issues it faces

in the future he said it needed to understand it was

cheaper to retain people than replace them. “The

industry needs to move from away this distressed

purchase, just in time, hiring, to a talent pipeline.”

Experts warn of more cyber-attacks – SMN June 30th

In the wake of a new wave of cyberattacks which has

affected companies across Europe from Maersk Line'ss

booking systems and APM Terminal operations to

express freight companies such as TNT, global advisory

firm AlixPartners has issued several statements and

warnings.

“While the Cyber community is still trying to figure out

the origin of the attack, the impact and damage are

already affecting many organisations and individuals

around the world," said AlixPartners director Stephen

Yu.

“This adds another element of urgency that calls for

especially large organization to beef up their cyber


News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169intrusion detection and mitigation strategy – one of the

major selling points of the new China Cyber Security

Law. We will continue to monitor the situation and

advise clients the ongoing course of actions in light of

the new cyber-attack,” he added.

“Most of these attacks originate from an initial email,

which means that risk awareness and security

programmes have to be in place before the event to

withstand such attacks," said director Gretchen Ruck.

"It’s also about timely investment. If you look at the type

of organisations that have been hit by the Petya

ransomware, they tend to be those in industries that

have typically been making fewer and slower

investments into cyber security. Businesses have to

develop mature process around vulnerability and patch

management and implement advanced monitoring tools

and preventative measures, whilst making sure they

have up-to-date software to mitigate the impact of

these growing number of attacks," she warned.

“Over the next six months, we have to expect these

attacks will continue to develop in number and

sophistication and companies need to prioritise

investments in secure systems and collaboration with

executives to stay one step ahead,” Ruck concluded.

Recent maritime conferences have focussed on

cybersecurity, with cyber risk at sea being one of the key

themes at the recent Sea Asia Conference in Singapore.

MOL pens coal supply deal in India – SMN June 1st

Japan’s Mitsui OSK Lines (MOL) has signed a coal

transport contract with Thermal Powertech Corporation

India Limited (TPCIL), jointly owned by Singapore’s

Sembcorp Industries and India’s Gayatri Projects

Limited.

TPCIL owns and operates a 1,320-megawatt thermal

power plant in SPSR Nellore district in India’s Andhra

Pradesh state.

TPCIL is supplying electricity to Andhra Pradesh and

Telangana states while MOL’s ocean shipping services

will support the project by providing a stable supply of

coal.

“MOL continually takes a proactive stance in providing,

safe, reliable, and efficient transport of resources and

energy to India and emerging countries in Asia, where

the company anticipates strong growth in demand,”

MOL stated.

German shipowner Rickmers Group files for insolvency – SMN June 2nd

Rickmers Group has filed for insolvency on Thursday,

making it the most high profile casualty in Germany’s

shipping sector, after its key lender HSH Nordbank

rejected a restructuring plan a day earlier on

Wednesday.

The German shipowner said it filed for insolvency in the

morning of 1 June with the court confirming that it has

received the application, according to a company

statement cited by Reuters.



The absence of support from HSH Nordbank was

deemed “highly surprisingly” by Rickmers, leaving

insolvency as the only next step for the shipowner.

The insolvency of Rickmers marks the end of business

for a five-generation German shipping family, with

Bertram Rickmers currently owning 100% of the firm.

The sole owner had sought to five up 75.1% of his

ownership and allow HSH Nordbank to become a major

shareholder under the proposed restructuring deal.

The banks with exposure to shipping, however, are

themselves challenged with having to write-off huge

amounts of loans to shipping companies, with HSH

Nordbank having a total exposure of EUR17bn ($19bn)

to shipping, of which EUR750m is in loans to Rickmers.

Shipping trust Rickmers Maritime, the Singapore-listed

offshoot of Rickmers, has filed for liquidation in April

after bondholders refused to approve its restructuring

plans in late-2016.

A previous major casualty of the shipping sector was the

bankruptcy of South Korea’s Hanjin Shipping in August

2016.

Tomini Shipping books three ultramax bulkers at China Shipping Jiangsu – SMN June 5th

Dubai-based Tomini Shipping has booked three 64,000-

dwt ultramax bulk carriers at China Shipping Industry

(Jiangsu) Co, reports said.

The financial details of the deal and delivery schedule

for the newbuildings were not disclosed, the local media

reported.

Tomini Shipping currently operates a fleet of 10 dry bulk

carriers. In January, the shipowner expanded its fleet to

10 when it took delivery of two ultramaxes from CIC

Changxing Shipyard in Shanghai, a sister yard of China

Shipping Industry (Jiangsu), of which both are

subsidiaries of Cosco Shipping Heavy Industry.

The 56,811-dwt bulk carrier Tomini Victory

Union of Greek Shipowners strike back at German Finance Minister over tax – SMN June 6th

In a rare intervention in political matters Union of Greek

Shipowners president, Theodore Veniamis has taken

German Finance Minister Wolfgang Schauble to task

over the tax regime covering the Greek shipping

industry.

In particular Veniamis took issue with Schauble’s

comment that Greek Prime minister Alexis Tsipras has

failed to keep a promise to impose heavier taxes on

shipowners. Schauble last week told a financial forum in

Berlin, that Greece was making insufficient economic

progress and was reported as saying "He [Tsipras] came

to power promising to tax the shipowners. Nothing has

happened."

In a statement Veniamis said: "The recent and

unwarranted attack on our country by the German

Finance minister, Schäuble, and in particular against

Greek shipowners has raised questions. It seems

Schäuble has chosen to ignore the particularly

favourable regime enjoyed by German shipping, while

attacking the regime of Greek shipping, which, also,

amounts to 50% of EU shipping, an achievement that

seems to cause annoyance.



"At a time when the European Union is called upon to

underpin and enhance the competitiveness of its

shipping industry against fierce international

competition, Schäuble’s criticisms are especially

inopportune and unfounded. The question that also

arises is whether, despite favourable arrangements at all

levels – shipownership, ship management, natural

persons – the inability of the German maritime policy to

successfully support its shipping is the motivation

behind the minister’s statement.

"If the aim of his statement is to undermine the close

ties of Greek shipping with its homeland, then it

demonstrates that he does not want to see Greece on a

path of growth at last. For Schäuble’s information, the

Greek shipping community in its entirety responded to

the need to enhance the national revenues with its

decision four years ago to voluntarily double its annual

tonnage tax liability per vessel, even though it

historically enjoys constitutional guarantees regarding

the level of taxation. This is an initiative that proves the

unity and solidarity of the Greek shipping community

with its homeland."

Greek owners have long argued they are more heavily

taxed than many of their European counterparts, a view

backed by a number of studies by international

accountancy groups and consultants. They have found

Greek levels of tonnage tax are higher than in many

other EU countries. Personal tax is another issue.

Clarksons Platou open fourth largest global office in Dubai – SMN June 6th

Shipbrokers Clarksons Platou have opened their fourth

largest office worldwide in Dubai.

The new regional headquarters office in Gold Tower,

Dubai will provide a platform for Clarksons Platou to

expand its operations in the Middle East, India, Egypt

and Morocco, particularly in brokerage services in the

dry cargo, specialised products and offshore markets.

It is Clarkson Platou's fourth largest office globally after

London, Oslo and Singapore.

Among those attending the opening ceremony were

Amer Ali, executive director of Dubai Maritime City

Authority; Nawfal Al Jourani, chief officer of Dubai

Maritime Cluster Office; and Essam Bella, managing

director of Clarksons Platou.

“This meeting represents a practical demonstration of

the Dubai Maritime Cluster Office efforts to connect

with the maritime sector leaders as we strive to build a

fruitful and solid partnership with Clarksons Platou,

which has a long history of leadership, success and

excellence in the world of maritime services for over 165

years of time,” said Ali.

Bella from Clakrsons said: “Given its strategic location as

a link between East and West, Dubai provides the ideal

gateway for us to serve our extensive customer base in

the Middle East.”

Dry Bulk Market: More slumbers ahead or a wake-up call – SMN June 1st

In a week dotted by various countries’ public holidays,

the freight market found it hard to bounce back and

witnessed further declines across the sectors.


News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169The latest trade data from China certainly did nothing to

lift the bearish sentiment with the official Purchasing

Managers’ Index (PMI) indicated a growth of 51.2 in

May, beating economists’ estimates. However, this level

is similar to the April’s which was a six-month low,

suggesting that the Chinese economy has slowed down

over the months.

Next, the Caixin and Markit PMI hit an 11-month low to

49.6 in May, down 0.7 from 50.3 in April, indicating that

China’s private manufacturing sector is still in

contraction mode.

“Capes came under significant pressure this week, as Far

Eastern holidays and the physical market gave no signs

of life,” said a FIS FFA broker based in Asia. “The miners

were absent from the market for the C5 route while

sellers took the opportunity to lean on the market with

no real resistance from the bid side,” the broker added.

Capesize spot rates began the week fairly weak at

$11,709 on Monday before tumbling down by $656 or

5.6% to $11,053 on Wednesday. The market inactivity

has also spread to Panamax spot rates which first

started the week at $6,795 then slumped to $6,658 by

mid-week, down by $137.

“We witnessed further declines across the curve today

on panamax paper with the lack of activity off the

underlying and the sell off on capes further fueling the

bearish tone.” the broker added.

Likewise, the supramax and handysize market were in a

downward trend just like their larger counterparts. Spot

rates for supramax opened the week at $8,342 before

closing at $8,105 on Wednesday, down $237, while

handysizes slipped by $213 to $6,620.

“Once again with the physical outlook still deteriorating

we saw sellers having to chase a thin buy side as

prompts remained under pressure,” said an FIS

supramax broker. “Further out we saw some marginal

losses but ultimately support remains just off last done”.

Demand for steel, iron ore and coal has been lacklustre

for a while, leading to even weaker freight market with

the Baltic Dry Index (BDI) barely recovered from the

slump off the 1,000 mark last week. By Wednesday, the

BDI had fallen to 878 in a long slide since the index

peaked at 1,294 in April 2017.

With most economic indicators pointing to hard landing

in the longer term, the situation could take a turn for a

better with ‘a new impetus’ of demand according to

Mark Mobius, executive chairman of Templeton

Emerging Markets Group who cited China’s One Belt,

One Road as one of these demand drivers.

“If you look at Chinese imports of iron ore, it’s almost a

straight line, continuing to go up,” he said, adding, “If

the One Belt, One Road program proceeds, there’ll be

continuing demand.”

China's OBOR good for shipping: Khalid Hashim – SMN June 1st

China's massive One Belt One Road (OBOR) project will

be good for shipping as a whole according to Precious

Shipping boss Khalid Hashim.

Speaking at Nor-Shipping on Wednesday Hashim cited a

Fitch Ratings report that as on 17 May this $900bn

worth of projects had either been committed to, started

or completed under OBOR.

“So you can see OBOR is taking shape, and taking shape

quite quickly,” he said.

Projects include freight trains linking 15 European cities

and China, and 10 ports along OBOR. For China it

provide a market for its idle steel and cement capacity,

labour intensive industries, and shifts production into

lower cost and poorer locations in land.



Looking specifically at shipping Hashim said the impact

as a whole was positive. “In terms of dry bulk this will

increase the demand for dry bulk capacity. In terms of

tankers, once the oil pipeline are there, there will be w

big slowdown for crude tankers. In terms of container

shipping having these land trade routes will compete

more against air traffic than by sea traffic.

“At the end of day OBOR with all its mega-projects will

create more jobs, more economic growth, more

economic prosperity, and more consumer buying power

and that will increase the shipping trade lanes in far

greater way than anything else.”

Hashim sees a huge geo-political significance for China in

OBOR. “Geopolitics has greater role in OBOR than most

people really imagine,” he stated. It builds a buffer

against American influence in the Pacific Rim and gains

diplomatic capital for China in 65 countries, three

continents and 4bn people.

Concluding Hashim said it offer the 21st century choice

of China and OBOR or “America with its model where

you try and bomb the country into democracy”.

Courage Marine proposes stock split to improve trading liquidity – SMN June 7th

Shipowner Courage Marine, which currently owns only

two bulk carriers, has proposed to split one existing

share into three in an attempt to boost trading liquidity.

Courage Marine has a primary listing on the Hong Kong

Stock Exchange (HKSE) and a secondary listing on the

Singapore Exchange (SGX).

“The board proposes to implement the proposed share

subsidivision by subdividing every one existing share

with par value of $0.18 each in the share capital of the

company into three subdivided shares with par value of

$0.06 each,” Courage Marine stated.

“There will be no change to the existing board lot size

for trading in the shares upon the proposed share

subdivision becoming effective,” the company said.

Courage Marine noted that on average the daily volume

of existing shares traded on the HKSE was less than

900,000 existing shares, or less than 0.6% of total issued

share capital.

“Upon the proposed share subdivision becoming

effective, the par value of each existing share will

decrease and the total number of shares in issue will

increase. The proposed share subdivision is therefore

expected to result in a downward adjustment to the

trading price of the shares,” it said.

The board, however, believes that this exercise will

improve the liquidity in trading of the shares, and

thereby attract more investors and widen the company’s

shareholder base.

The proposed effective date for the share subdivision on

both HKSE and SGX is on 6 July 2017.

The dry bulk shipowner has been challenged by a

difficult dry bulk shipping market, prompting the

company to gradually dispose of its ships until the fleet

has shrunk to just two 57,000-dwt ships – Zorina and

Heroic.

Courage Marine had wanted to let go of Zorina at a price

of $7.35m under a memorandum of agreement signed

with a buyer Universal Ship Investment Corp. The

agreement, however, has lapsed on Monday.


News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169Earlier this month, Courage Marine mentioned that the

sale of Zorina may jeopardise the company’s listing and

shares trading on the HKSE as the exchange had

informed that the company may not have assets of

sufficient value to warrant a continued listing.

Heineken beer and biofuels shipping pilot – SMN June 9th

Dutch brewer Heineken is aiming for sustainable

transport of its beer for export with a part biofuelled

barge for inland transport.

Heineken is partnering with marine biofuels company

GoodFuels and foodstuff distributor to operate a 104

teu barge operated with 30% biofuels in a pilot project.

The barge For Ever will transport Heineken export beer

brewery in Zoeterwoude to the deepsea terminals in

Rotterdam.

A statement said the use of biofuels would reduce CO2-

emissions by more than 25%, while also sharply reducing

harmful local emissions such as nitrogen oxide (NOx)

and particulate matter (PM).

“It’s our ambition to make our brewery in Zoeterwoude

climate neutral, and we are well on the way to achieving

this,” said Pieter van Kooten, manager projects &

sustainability, for Heineken Netherlands.

“The logistical process is an important part of our

sustainability ambition as well, and together with our

partners Nedcargo and GoodFuels we are now taking an

important step to realising a green corridor between our

brewery in Zoeterwoude and the port of Rotterdam,

from where we transport our beer around the world.”

Keeping seafarers sane – SMN June 15th

“Seafarers required - preference will be given to stolid,

pragmatic anti-social candidates who can demonstrate a

lack of imagination”. That’s not serious, of course, but it

might seem not too outrageous, as the life of the

modern seafarer develops increasingly joyless

characteristics.

Why, for instance, has suicide become the most

prevalent cause of onboard deaths? Why did the

incidence triple over the past two years? There is

something going wrong, somewhere, about the life

seafarers are expected to live.

While shipowners and operators studiously avoid the

subject as it will clearly affect recruitment efforts, as the

industry tries to stave off expected shortages, others are

clearly voicing their concerns in public about the mental

health of seafarers. The welfare organisations, as one

might expect, acknowledge that this is an issue that

really does need to be confronted. And the Shipowners’

P&I Club, in conjunction with ISWAN, have identified the

maintenance of mental wellbeing as a matter that is

important. There are insurance claims that have to be

paid when ships are delayed and repatriations required

after crew members have suffered mental breakdowns.

There are important academic studies under way into

seafarers’ mental health. The Seafarers International

Research Centre at Cardiff University has begun a major,

two-year study funded by the Institution of Occupational

Safety and Health into this very subject, designed to

examine the factors which contribute to the mental

health and wellbeing of this group of workers. The

Australian organisation Seafarers Mental Health has

published helpful booklets which it distributes to ships in

port, with sensible strategies.

You can publish advice in all the languages under the

sun, warning about how the signs of mental illness can

be recognised by shipmates, but to do something

practical about its prevention suggests that a closer look

at life at sea today is long overdue. The modern

shipboard society of ever-smaller numbers of crew

members, drawn from different cultures and speaking

different first languages, is said by people (call them


News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169cynics or realists) as “what is on offer – take it or leave

it!”

It has been said that the social isolation of the seafarer

needs to be addressed by better connectivity, with

affordable communication technology enabling people

at sea to more easily communicate with their loved ones

and live a more “normal” life. But other, perhaps more

realistic folk, have pointed out that the ability to

communicate easily may bring with it its own problems,

such as bringing the crises at home onto the plate of the

person at sea, who might be unable to do anything

practical to help and will feel ever more helpless and

stressed, as a result.

The lack of communication between people on board

ships, with insufficient people aboard to provide even a

small cohesive society has been identified by people

who have gone to sea primarily to observe what

happens afloat. Two authors – Rose George and Horatio

Clare, who wrote separate books about their voyages

aboard Maersk containerships, commented on this self-

contained, self-imposed isolation of the off-watch

seafarers; spending their time behind the closed doors

of their cabins, locked into their “devices”. Mealtimes,

they noted, were spent mostly in silence, the shortest

possible time being occupied in eating. Those who

experienced sea time in more generously manned days,

when there was a working shipboard society and

friendships established, look on modern seafaring as a

demonstrable deterioration of working life.

Loneliness is clearly a major factor in the deterioration

of mental health, but what can be done to prevent it,

rather than to try and pick up the pieces after a

breakdown is an important question. You can scarcely

force people to socialise, especially when the working

language of the ship is not their own. It could be argued

that the manning is so lean and everyone so busy that

there is no room, or space, for a more pleasant life.

But this is the counsel of defeat. There is “best practice”

out there. There are companies which try and promote a

better shipboard environment and which try and

maintain a “one nation” manning arrangement.

Arguably, it will be these which recruit and retain the

best seafarers, which will be their reward. You do not, as

the note under the glass of old chart tables used to note

“have to be mad to work here”.

Wartsila poised to ramp up ballast water system production capacity in China – SMN June 19th

Finland’s marine equipment manufacturer Wartsila is

poised to ramp up the capacity of its annual production

of ballast water management systems (BWMS) at its

China facility in Suzhou, in anticipation of increased

demand ahead of the IMO regulation.

Craig Patrick, sales director of BWMS at Wartsila, said

the Wartsila Suzhou factory has an annual BWMS

production capacity of around 400, and the aim is to

more than double that figure to 1,000 over the next

couple of years.

The Suzhou factory is capable of producing two different

types of ballast water treatment systems – the Ultra-

Violet (UV) light and Electro-Chlorination (EC). Both the

Wartsila Aquarius UV and Aquarius EC systems have

obtained IMO type approvals.

“We are now looking forward to obtain the US Coast

Guard (USCG) type approval for our EC system by 2017,

and for our UV system by early-2018,” Patrick told

reporters in Suzhou last week during a press trip

organised by Wartsila.



Craig Patrick, sales director of BWMS at Wartsila

With offers of both the UV and EC treatment systems,

Wartsila is able to meet demands from a wide range of

vessel types, according to Patrick.

He shared that the EC treatment system is better able to

cater to vessel types such as bulk carriers from

handysizes to capesizes and tankers from handysizes to

ULCCs. The UV treatment system, on the other hand, is

suited for vessels such as containerships from feeders to

post-panamaxes and other vessels such chemical

carriers, ro-ro vessels and general cargo ships.

The IMO BWM convention was ratified in September

2017 and will come into force this year September,

making it compulsory for shipowners to install or retrofit

ballast water treatment systems on their fleet.

“We expect our BWMS orderbook to come mostly from

newbuildings in China rather than retrofits,” Patrick said,

explaining that Wartsila will continue to benefit from its

long term partnership with shipbuilding group China

State Shipbuilding Corporation (CSSC) since July 2014.

The CSSC Wartsila joint venture widened its scope of

cooperation with the formation of CSSC Wartsila

Electrical & Automation Shanghai Co in January this

year, adding on to existing joint ventures with CSSC

including Wartsila CME Zhenjiang Propeller and Wartsila

Engine (Shanghai) Company.

ICS backs proposal to delay ballast water convention implementation for existing ships – SMN June 19th

The International Chamber of Shipping (ICS) is backing a

proposal to the IMO to delay the implementation of the

Ballast Water Management (BWM) Convention for

existing ships.

The proposal by Brazil, Cook Islands, India, Norway,

Liberia and the UK, would delay the requirement for

existing ships to retrofit a BWM system by their next

special survey after 8 September 2017 by two years to 8

September 2019. This would extend the date by which

all systems would have to a system installed from 2022

to 2024.

“If this pragmatic proposal is agreed, this would allow

shipping companies to identify and invest in far more

robust technology to the benefit of the marine

environment,” said ICS secretary general, Peter

Hinchliffe.

ICS noted that these more environmentally robust

standards will not become mandatory for new system

approvals until October 2018 and that only systems

being installed into ships from October 2020 will be

required to have been approved in accordance with the

new code.

It also expressed concern over a shortage of shipyard

capacity and manufacturing capacity for BWM systems

to retrofit 40,000 ships.

China Steel Express orders four bulkers at CSBC and Japan Marine United – SMN June 21st

Taiwan’s China Steel Express Corporation (CSE) has

placed orders for four large bulker carriers at a total

price of $187m with shipbuilders CSBC Corp and Japan

Marine United.



Taiwanese state-owned CSBC will build two of the

208,000-dwt ships for CSE at a price of $47.5m apiece,

while Japan Marine United will build two similar ships at

a price of $46m apiece.

CSBC and Japan Marine United are scheduled to deliver

the newbuildings by end-June 2018 and end-June 2019,

respectively, according to CSE’s announcement to the

Taipei Exchange.

‘Historic’ demonstration of remotely controlled vessel – SMN June 21st

Rolls-Royce and Svitzer announced that they have

carried out a demonstration of the world’s first remotely

operated commercial vessel in what they term a

“genuinely historic moment” for the maritime industry.

The 28m long tug Svitzer Mermod is reported to have

carried out a number of remotely controlled

manoeuvres in Copenhagen harbour earlier this year.

The vessel’s captain, stationed quayside in the vessel’s

Remote Operating Centre (ROC) within Svitzer HQ,

berthed the vessel alongside, undocked, turned 360

degrees and then piloted towards the Svitzer HQ before

docking again.

Built to Robert Allan design, the tug is equipped with a

Rolls-Royce Dynamic Positioning System which was

linked to the remote controlled system. Sensors

installed aboard the vessel combined different data

inputs and transmitted them to the ROC, providing the

captain with situational awareness.

Rolls-Royce president – marine, Mikael Makinen,

witnessed the event, describing it as “an honour to be

present at what I believe was a world first and a

genuinely historic moment for the maritime industry.”

The demonstration actually took place back in February

but the two companies decided to delay an

announcement until after they had agreed to continue

their cooperation, which they have just done. A further

18 months of testing remote and autonomous

operations will now follow, with class society Lloyd’s

Register also continuing to take part.

SWS wins order to build two 180,000 dwt bulkers for Foremost Group – SMN June 29th

China’s Shanghai Waigaoqiao Shipbuilding (SWS) has

won an order to build two 180,000 dwt bulk carriers for

Foremost Group, a New York-based shipping, trading

and finance enterprise, reports said.

SWS, subsidiary of China State Shipbuilding Corporation

(CSSC), will incorporated environmentally-friendly

features into the newbuildings, as well as ballast water

treatment systems to meet global regulations, the local

media reported.

Financial details of the shipbuilding order were not

disclosed.

Since 2002, Foremost Group has built more than 10

bulkers of 175,000-206,000-dwt in capacity at SWS.

The US firm currently operates a fleet of 18 dry bulk

carriers.



U-Ming’s new Asian Pride christened in Japan – SMN June 30th

Taiwan’s U-Ming Marine Transport Corporation

welcomed its fourth ultramax series from Japan’s

Oshima Shipbuilding following a christening and delivery

ceremony held on Friday.

The 62,466-dwt ultramax, Asian Pride, has a length of

199.98 metres, width of 32.26 metres and equipped

with four 30-tonne cranes.

U-Ming highlighted that the dry bulk carrier’s design

emphasises on energy-saving and carbon reduction with

a streamlined hull for low resistance and anti-fouling

paint, rudder bulb, pre-swirl stator and flipper fins.

Asian Pride’s carbon dioxide emission has exceeded the

IMO’s Energy Efficiency Design Index (EEDI) reference

value by 32%, and the vessel is also installed with ballast

water treatment system ahead of the ballast water

regulation coming into force in September this year.

Following the delivery of Asian Pride, U-Ming has two

new kamsarmax vessels under construction by Oshima

Shipbuilding with deliveries scheduled by 2019.

U-Ming currently owns and operates capesizes, post-

panamaxes, kamsarmaxes, panamaxes, ultramaxes,

supramaxes, cement carriers, LR1 tankers, and VLCCs

amounting to a total of 47 ships with a combined

tonnage of 5.99m dwt.

Oil tanker and cargo ship collide in English Channel – BBC July 1st

An oil tanker and a cargo ship have collided in the English Channel.

The collision happened 15 miles north east of Dover at

02:00 BST, the coastguard said.

The 183m (600ft) tanker Seafrontier, which is loaded

with gasoline, has a hole above the waterline and

damage to the superstructure, the RNLI said.

The 225m (740ft) Huayang Endeavour was also

damaged. None of the crew on board either ship was

injured.

"Although both vessels have been damaged, there is no

water ingress and no pollution," a coastguard

spokesman said.

Huayang Endeavour was en route to Lagos in Nigeria

and Seafrontier was travelling to Puerto Barrios in

Guatemala. The vessels have Chinese and Indian crews

on board, the UK coastguard said.

A tug from Boulogne was called and the Seafrontier was

taken under tow. The Huayang Endeavour is anchored

mid-Channel between the two shipping lanes.

Both ships are registered in Hong Kong.


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News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169Weather conditions at the time of the callout showed a

moderate wind and the state of the sea was calm, the

RNLI said.

Dry Bulk FFA market: Panamaxes hold the fort – SMN June 23rd

Panamax rates have been the darling of the market this

week with its string of strong upticks that have helped to

buoy the freight market as a whole. On the other hand,

capesize rates have weakened and caused a downward

drag overall on the freight markets.

As a result, the Baltic Dry Index remained fairly flat in

the week, hovering near the 850 points mark, before

settling 847 points on Wednesday. However, it seem

that an uptick could be around the corner with the

rebound on capesize market.

“There is life in the old dog yet,” said a China-based FIS

freight forward agreement (FFA) broker, referring to the

capesize freight market. “After a few weeks of

deteriorating rates, the capesize FFA market has turned

and firmed all down the curve,” she observed.

According to the broker, capesize Q3 has moved above

12k and recorded a high of $12,200 at one point, while

Q4 printed $15,500 on Thursday. By contrast, capesize

rates were embattled since Monday’s spot average rate

of $8,798, which dropped by 12.7% to $7,685 on

Wednesday.

The weakness of capesize rates lies in iron ore prices

that have since fallen from the zenith of USD95/mt in

February to the current level around USD56/mt. Against

this background, the marginal iron ore business ex-

Chile/Peru has become uneconomical and therefore the

longer tonne/mile business has been adversely affected.

Thus, for most of the time this week, panamaxes have

been holding the fort after pulling a string of gains since

Monday. As such, average Panamax rate began the

week at $7,886 then finished at $8,570 by Wednesday,

booking a gain over 8.6%.

“The tone for panamax market remains upbeat with

further gains looking likely at this stage,” added the FIS

FFA broker.

The strong panamax market can be traced to a buying

spree for seaborne coking coal initiated by Chinese

traders. On Wednesday, it was heard that at least five

spot trades changed hands for delivery to China.

The trades were deemed as “panic buying” by some

participants as the China-based majors are estimated to

cut their output by 13-14m tonnes through the adoption

of shorter working days for coal miners.

The higher rainfall in China was also one of the

influencing factors in the majors’ decision to reduce coal

output but one source claimed that the curbing of

coking coal output was used as a method to support

spot prices in the near term.

Besides coking coal, panamax rates have benefited from

the buying spree on grains markets, where weather

scares are driving up grain prices and futures. These

buyers’ behaviors may trace back to lower than

expected yields of winter wheat in the US plains and

poor growing conditions for spring wheat, while hot and

dry weather is being reported in Western Europe, China

and the Ukraine as well.

With panamax holding the fort, smaller vessels booked

gains too during the week, with supramax hiked to

$7,932 on Wednesday, up 1.66% from $7,805 on

Monday. Similarly, handysize posted a gain of 1.62% to

$6,490 on Wednesday from $7,805 recorded on

Monday.

At the moment, panamaxes have stolen the limelight,

with firm gains and good market outlook, but watch the

capesize market too, which might yet enjoy the dog days

of early summer.


News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169Why has shipping got it so wrong? SMN June 16th

The arrival of spring brought fresh bloom on the trees

and flowers on the plants but there is no spring in the

step of the shipping industry as it moves into another

slow summer.

The recent spring gatherings in New York and Stamford

CT produced the false view that the dry cargo markets

were booming when in fact they were barely breaking

even.

All of this while shipping continues to carry more than

90% of physical world trade and will do so for the

foreseeable future.

Shipping is the world’s largest service industry with

hundreds of shipowners competing on a global basis to

be paid to transport billions of dollars’ worth of cargoes

across the oceans and waterways around the world.

The huge rise in demand for shipping services in the last

decade, led by the Chinese industrial boom commencing

in 2004, caused a significant surge in freight rates for

dry-bulk and containerized cargoes. This attracted a

large number of new owners and investors from the

various private equity and hedge funds in the USA and

Europe.

It is clear that the objectives of many investors in the

publicly quoted companies were to chase short-term

gains in ship values while cutting costs in all directions.

However most of the Funds that have invested in the

last 10 years have shown little or no return except for

some day trading on shipping rumors.

The investment surge focused on building new ships to

meet the perceived increased demand, with a view that

the ship values would increase enabling them to be sold

for a profit as soon as they were delivered.

This philosophy ignored the fact that ship values are

driven by the revenues earned from carrying cargoes,

the quality of the ship management and the capacity of

the shipyards to build new ships, and deliver them in a

short timeframe.

The Chinese boom lasted less than five years but the

new ship orders continued to deliver into the second

decade and resulted in a 50% growth in the capacity of

the world fleets of dry-bulk and container ships. The

tanker fleets were also over-built as investors switched

their attention away from the loss-making dry markets

and also climbed into the OSV markets.

The result is a grossly overtonnaged industry with

depressed freight rates and reduced ship values. Many

quoted companies face insolvency as the unavoidable

costs of classification surveys loom and the balance

sheet values of the ships are overstated.

Many of the new investors rely on statistical projections

of ship values rather than a factual analysis of the freight

markets and ignore the fact that charterers will not fix

longterm charters with owners that are likely to sell the

ships at any time.

Funds have rarely done well when investing in service

industries that use expensive assets that are high

maintenance and inherently depreciating.

Most of these facts are known to traditional shipowners

who have faced similar excesses in the past 30 years, but

none of such a serious size.

These owners, who value close relationships with cargo

owners, form the hard core of shipping that focuses on

operating their ships efficiently on period charters that

generate modest profits after bank financing and

depreciation but provide a longterm revenue stream.

A well maintained ship properly managed can earn as

much as a new ship as there has been little change in the

ship’s fundamental technology. The ships must be

properly certified and the costs of these statutory

surveys must be budgeted for.

New regulations covering air pollution and ballast water

treatment will slowly be introduced but are costly.


News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169Given the substantially private nature of ship ownership

it is not surprising that the majority of charter fixtures

go unreported and the so-called indexes, such as the BDI

are a worthless gauge of market activity. Only the

publicly quoted companies publish some details of

charters and the prices of ships bought or sold.

The result of the short-term approach to ship values is

that a majority of ships now trade in the spot markets,

do not achieve even 300 days annually of paid activity

and have to pay for their own fuel.

Recently we have seen a surge in newbuilding orders in

both wet and dry bulk and more surprisingly in large

container ships. By funding the construction of large

numbers of ships of all types without securing their

employment is a huge mistake as we have already seen.

The enormous losses in the German equity and debt

markets will be repeated elsewhere and probably in the

Chinese and Korean Exim banks as they work to support

their shipbuilders.

The outlook for crude oil demand is stable with no

growth in production and low prices. But the

introduction of new fleets of Iranian and Saudi Vlccs and

the decline of US imports suggest a weak future for

ships not fixed on period charters.

The container markets are grossly overtonnaged and

mostly a one-way traffic with few backhaul cargoes and

new US policy on trade agreements will likely reduce US

imports.

Overall we can expect shipping to return to making

marginal profits from the services it provides and the

operational longevity it can obtain from using well

maintained and well managed ships.

Dry bulk FFA market – facing unpredictable weather – SMN June 16th

Dry bulk freight rates held stronger for most of this

week, thanks to stronger panamax rates that continued

to lift the market while capes were more mixed.

Throughout the week, capesize rates have offered little

support following pattern of mixed sell-offs.

The market’s overall indicator, the Baltic Dry Index (BDI)

stabilised in a 865-870 points range for most of the

week. At one point, BDI was flat at 870 points for June

12-13 before slipping to 865 points on Wednesday.

“The capesize paper market witnessed another sell-off

on Wednesday with particular focus on prompt

contracts,” said a FIS FFA broker. “The Q4 period

onwards was more resilient with the majority of selling

interest coming from spreads into the deferred periods.”

As a result, higher cape FFA volume changed hands in

mid-week showing combined volume of 3,279 lots on

12-13 June and 3,070 lots on 14 June.

Thursday saw capes come under further pressure as the

physical market showed no immediate sign of a recovery

and paper continued weaker, falling nearly 10% in the

morning session as the index came under pressure.

“There is little to indicate the physical is in for a recovery

in the short term although the deferred strength

indicates a hope of rates being revived beyond July,”

added the FFA broker.

By contrast, panamax rates enjoyed a better run as

buyers began to return to the market on improved

activity on both basins.

“The physical market remains firm in both basins, and

consequently the index moved above $7,000 on

Wednesday,” said an FIS Panamax FFA broker. However,

he noted that some late selling interest soon saw the

market moving down towards the close and ending the

day mostly flat with a total of 1,945 lots traded.

Unlike the capesize market, the panamax market

remained continued to push on both physical and paper

trades, with spot prices settling at $7,242 by


News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169Wednesday, up $563 or 8% from $6,679 reported on

Monday.

The good run suggested that panamax FFAs would be

expected to be further supported up in the near term.

The market drifted early on Thursday before attracting

more buying to bring the market up again on talk of

better index which rose by 277 points.

The rally in panamax rates then started to rub off on the

supramax and handysize paper markets which both saw

rising freight rates. In supramaxes, spot prices continued

to tick up throughout the week settling at $7,604 by

Wednesday, up $158 from $7,446 on Monday.

Meanwhile, handysize rates remained steady

throughout the week, recording $6,224 by Wednesday,

up $46 from $6,178 on Monday.

A mixed outlook overall then for the dry bulk freight

market and one which mirrors the action in the iron ore

and coal markets in particular – two commodities which

have strong links to the Chinese economy. Of course,

with little clear indication of where the Chinese

economy is going, the freight market is not unlike a

weather vane, liable to frequent changes of direction

from moment to moment.

Dry bulk FFA market: Back to the top? SMN June 30th

Like the legendary phoenix, the freight market has been

reborn this week, with the Baltic Dry Index (BDI) rising

from 884 points to 929 points, breaking the 900-barrier

in the matter of days.

The sudden surge can be traced to better capesize rates

that benefited from a buying spree in iron ore and coal

in the market.

Capesizes rates began the week somewhat sluggishly -

partly due to the public holiday in Singapore on Monday.

Rates then took off from $8,094 on Monday before

rising to $9,489 on Wednesday, up by 17% in mere two

days.

“Some traders felt that market sentiment had changed

and directionally we could see more gains in capesizes

this week,” said a FIS FFA broker.

The freight uptick found support from Chinese optimism

in iron ore market with the Chinese premier, Li Keqiang’s

recent speech which pledged that the world’s second

largest economy is on track to achieve its goal of 6.5%

growth for 2017.

Picking up on the Premier’s words, iron ore futures and

rebar contracts soared in paper markets, while mills

engaged in a series of buying spree for physical cargoes.

This coupled with the good steel margins of around RMB

800-1000, fueling the purchasing spree of the seaborne

iron ore and coking coal which boosted tonnes-miles in

return.

Meanwhile, some strength was seen in Panamax rates

this week, with levels rising from $9,174 on Monday to

$9,212 on Wednesday – though rates did seem to be

affected by news of a proposed coal import ban on

second level Chinese ports.

“The panamax market came under pressure on Tuesday

as the physical freight market activity slowed down

upon mixed reports on Chinese port restrictions that

fueled the bearish tone,” added the FIS broker.

Chinese authorities announced on Tuesday that they will

impose a possible ban on imported coals at certain ports

from 1 July onwards. Most of the ports affected are

among the smaller facilities found in southern China,

such as Fujian province and the announcement did not

specify whether the ban was meant for thermal or

coking coal.

China’s northern ports would be mostly unaffected by

the proposed ban but traders are concerned about the

higher costs from re-directing the shipments to level one

ports from level two ports.


News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169Supramax rates, however seemed unaffected by the

proposed ban and clocked $8,282 on Wednesday, from

$8,210 on Monday.

“Supramax paper felt selling pressure today as rates

slipped throughout Wednesday,” added the broker.

“July opened the day trading $8950 and eventually

reached a low of the day $8,550. Q3 followed suit as we

saw trading in range $8,800-$8,600.”

Small gains were also seen in the handysize market with

rates recorded at $6,707 on Wednesday, up 1.2% from

$6,627 on Monday.

The last time the freight market experienced a sudden

spike from a speech was probably Donald Trump’s

mention of US plan for infrastructure investment over

the next decade.

Now, the freight market has clearly found another

rallying point in form of China’s Li Keqiang. But the

question remained on how long the optimism will last,

before market fundamentals sink in.

Petcoke restrictions could see India importing more US coal – FP June 30th

As Indian environmentalists move against the burning of

petroleum coke, the country could import more high

calorific-value coal from the United States, with positive

effects for the dry bulk market.Petroleum coke, known

as petcoke, is a high-sulphur byproduct created from oil

refining processes. It is commonly used in power

generation.India's National Green Tribunal has ordered

all utility companies using petcoke without permission,

to close down with immediate effect, while permitted

users may continue operating until August, when the

tribunal expects to finalise a policy regulating petcoke

usage.

The National Green Tribunal has also asked the Ministry

of Environment, Forests and Climatic Change and the

Central Pollution Control Board to study the harmful

effects of burning petcoke.Sulphur emissions resulting

from petcoke burning is said to contribute to air

pollution.IHS Markit McCloskey's Indian markets editor

Rakesh Dubey told Fairplay that India currently imports

5–7 million tonnes of high CV US coal."High CV US coal is

primarily used by cement and brick kilns. It was started

by cement makers about six to seven years ago, but

later on, brick kilns in North India started using it

[cement makers gradually shifted to petcoke] after they

faced problems in procuring high-sulphur and high CV

domestic coal that was coming from a remote location

in North-eastern India,” Dubey said."But there're talks

going on to ban the use of petcoke for power generation

and a clearer picture may emerge in the next few

months. If that happens, some existing petcoke users

may shift to high-sulphur and high CV US coal."Given

that US coal is primarily shipped to India on Capesize

bulk carriers, any increase in volumes would augur well

for the dry bulk freight market.Dubey noted that India's

petcoke imports had increased substantially in the last

five years to meet growing demand for power

generation. In 2016, India imported 13 million tonnes of

petcoke, an all-time high, from just 4 million tonnes in

2014.

Survey shows strong optimism in dry bulk sector – FP June 23rd


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News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169A recent survey of sentiment in the global shipping

industry by Moore Stephens, the UK-based accountant

and consultancy firm, found that the majority of

respondents expect the Baltic Dry Index (BDI) to stage

solid gains in the next 12 months.Just over half of those

questioned felt the BDI would reach a level of between

1,000 and 1,499, while a quarter (25%) put the likely

figure at between 1,500 and 1,999. “Healthy volumes of

cargo are being moved,” said one respondent. “But

there are too many ships around.”The index currently

trades at 855 points, although it hit a high of 1,070

points in 4Q16. In early 2016, it had touched an all-time

low at just under 300 points.“The sentiment is indeed

quite positive, but I think it will take some time before

the market will fully recover,” Herman Billung, CEO of

the Oslo-based dry bulk shipping company Songa Bulk,

told Fairplay. He added that the market is likely to face a

bumpy ride over the summer months and although it is

heading in a positive direction, Billung said he would

estimate where the BDI will be in a year’s time.Should

the BDI really court the 2,000 point level in the next 12

months, then it would reach historically high levels.

A chart on the website of the Hofstra University in the

United States shows that since the beginning of 1985,

the BDI has only exceeded 2,000 points briefly in 1995,

then during the super cycle in commodities in 2003–09

and again in 2010–11 plus briefly in 2014.Per Lange, CEO

of Ultrabulk in Copenhagen, was both optimistic and

cautious in his assessment of the development of the

market. “When we look at the development of the

market, we should compare the present market with the

average levels of last year. We are now about 10%

higher,” he told Fairplay, adding that he mainly refers to

Supramax tonnage, which is the core business of the

company.

Moving on to the outlook in the near future, Lange said

that while the outlook in the supply of tonnage and the

demand for it justified optimism, it did not, however,

warrant expectations of a rally. Furthermore, should the

market really stage a rally in the near future, then the

prospects of a boom in newbuilding orders might soon

start to haunt it. This again would result in a sharp fall in

freight rates about two and a half years later, unless the

demand growth matched the increased supply of

tonnage. However, new rules that require banks to

strengthen their capital adequacy and limit leverage

would add about USD1.5 million to the cost of a

newbuilding, which could dampen the enthusiasm of

owners to grow their fleets.

The present positive mood has reversed the previously

grim fortunes of dry bulk shipping companies on the US

equity markets.However, commentators at a conference

in New York in March also mentioned the spectre of

renewed ordering in the wake of a recovering freight

market.Danish Ship Finance, the Copenhagen-based

shipping bank, said that demand growth in the dry bulk

sector is likely to reach 2.0% this year, more than double

the 0.9% figure recorded in 2016. At the same time, the

supply of tonnage is likely to expand by about 2.0% this

year assuming that 60% of the vessels due to enter

service are actually delivered and that scrapping will

halve from the high levels of 2016. The bank described

the outlook for the present year as decent in a market

report it released in May, but added, “There is no need

for ordering of new vessels to be resumed – almost no

matter how cheaply they are priced. The improved

market balance is fragile and could easily be shattered.”

Seoul deploys search vessel to Stellar Daisy disaster site – FP June 22nd


News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169The South Korean government has decided to send a

search vessel to the Atlantic Ocean in yet another

attempt to find the missing crew from the sunken ore

carrier Stellar Daisy.

This was announced on the evening of 21 June, when

officials from the Ministry of Oceans and Fisheries (MOF)

held a briefing for the bereaved families, informing them

of plans to resume the search-and-rescue.

Just two survivors, both Filipinos, were rescued after the

Stellar Daisy reportedly broke in half and sank in the

Atlantic Ocean during a routine Brazil-China trip on 31

March. The 22 missing crew members comprise eight

South Koreans and 14 Filipinos.

Families of four of the South Korean crew members and

five of the missing Filipino crew members have settled

compensation with Polaris Shipping.

However, families of the other missing seafarers have

been unappeased by Polaris Shipping's efforts and want

more to be done.

The vessel being despatched by the Moon Jae-in

administration will concentrate its search on a 30,000

km2 radius in the southern part of the Atlantic Ocean.

The 21 June briefing was attended by representatives

from the Blue House, MOF, the Ministry of Foreign

Affairs, and the Korea Coast Guard.

During the briefing, MOF officials explained that based

on a simulation carried out by Korea Institute of Ocean

Science & Technology (KIOST), the search would be the

most intensive in a 28,600 km2 area.

The search vessel is a Singapore-flagged 2,400-gt

offshore support vessel that was in waters off Cape

Town. The vessel set out for the Atlantic Ocean and is

set to arrive on 25 June.

Initially, ships operated or chartered by Polaris Shipping

were involved in the search, but the efforts were scaled

down in early May when no human remains were found.

At the persistent requests of the families of the missing

seafarers, Polaris Shipping deployed a rescue craft to the

site where the Stellar Daisy is believed to have gone

down. This craft has been carrying out a 22-day search

since 14 June and is set to end its mission on 5 July.

The families then appealed to President Moon, who was

elected on 9 May following the ouster of Park Geun-hye.

An initial proposal by the families to focus on a 66,000

km2 was rejected by the government on the basis that

at least three search vessels would be needed.

Accepting the families' request as the first such petition

from civilians, President Moon said on 13 June that

comprehensive search-and-rescue plans would be

developed.

Seoul has also asked Uruguay's Maritime Rescue Co-

ordination Center to provide co-ordinations relating to

the possible location of the missing persons.

The bereaved families have remained unappeased,

especially when their request to search a wider area was

turned down.

A statement from the MOF said, "We are searching for

the missing persons by dedicating all the available

resources to scouring the vicinity [of the accident] and

reading satellite images."

Polaris Shipping has come under fire for reporting the

accident to the government 12 hours after the company

was notified of the emergency. This suggests

that Polaris Shipping missed the "golden time" to

evacuate all the crew.

The incident is the worst maritime disaster involving a

South Korean-owned ship after the capsizing of the

Sewol ferry in April 2014, and has been dubbed "Sewol

No.2" in the local media.

The loss of Stellar Daisy has also sparked concerns over

the safety of such converted bulk carriers. Shortly after

the disaster, another Polaris ore carrier, Stellar Unicorn,

had to be diverted to Cape Hope for repairs to a cracked

hull, lending more fuel to the speculation.


News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169As of 20 April, Polaris Shipping had initiated inspections

on all its ore carriers, amid growing concern over the

safety of its fleet. On 8 May, cracks were found on

another of the company's vessels, the Stellar Queen.

On 25 May, the Busan Coast Guard raided Polaris

Shipping's offices in Seoul and Busan, taking away

records of voyages and ship repairs.

IHS Markit's vessel-tracking data indicate that Stellar

Unicorn and Stellar Galaxy have been laid up in Labuan.

Bauxite behaviour stuns researchers – FP June June 28th

A global team of researchers has observed an entirely

new phenomenon that affects the solid bulk cargo

bauxite, which could result in vessels capsizing.

The Global Bauxite Working Group (GBWG) set out to

investigate the risk of liquefaction in bauxite cargoes – a

mechanism affecting other solid bulk cargoes that has

caused numerous sinkings worldwide – but its tests

showed that liquefaction did not occur at all, even with

worst case ship motions.

Instead, it observed the moisture controlled mechanism

‘dynamic separation process’ whereby, when subject to

sufficient dynamic loading, very wet finer grained

bauxites go through a process of slumping and dynamic

separation, with the upward expulsion of water/ slurry.

The findings, set out in the peer-reviewed report,

Research into the Behaviour of Bauxite during Shipping,

state: ‘This [mechanism] could result in the significant

formation of a free surface, which could result in vessel

capsizing. ’The study was recently reviewed by the IMO

Correspondence Group on the Evaluation of Properties

of Bauxite, and forms the basis of its own report report

which will be discussed at the Carriage of Cargoes and

Containers 4 Sub-Committee session in September.

Ai-Cheng Foo-Nielsen, assistant manager at BIMCO, a

key participant in the Correspondence Group, told

Fairplay: “The GBWG has come up with very surprising

conclusion. I don't know if this is a more serious

phenomenon than liquefaction. At present, there is

nothing mentioned about it in the International

Maritime Solid Bulk Cargoes Code (IMSBC).

We were not aware of it, it is something very new. ”The

GBWG report recommends changes to the IMSBC Code,

including amendments to the classification of Type A

cargoes (those considered likely to liquefy) to include

other cargo instabilities due to moisture, such as

dynamic separation process. At present, Bauxite is

classified as a Type C cargo (cargoes that do not liquefy

or possess a chemical hazard).In addition, the Proctor-

Fagerberg Test methodology, developed as part of the

research, is outlined for consideration of inclusion in

Appendix 2 of the Code.

Bulk Jupiter sank in 2015The research examined materials

representing over 90% of the seaborne trade in

bauxites, including those from Australia, Brazil, India,

Indonesia, Guinea, Guyana, Jamaica and Malaysia. They

ranged from silt with a large proportion of gravel, to silty

gravel with sand and cobbles. Particle shapes ranged

from spherical and round, to angular.

None of the bauxite tested liquefied in so-called

Hexapod tests or in DC rolling tests, where the cargo

was undrained and extreme vessel motions were

simulated.Liquefaction is known to affect other solid

bulk cargoes, such as nickel ore and coal. It occurs when

a large volume of fine particles, with a sufficiently high

moisture content, start to behave like a liquid when a

vessel moves, rolls or pitches.

This can result in a sudden and dramatic loss of stability,

causing a capsize. Physical modelling tests on bauxite

indicated that some exhibited instabilities due to

moisture, whereby the cargo dynamically separated to

form a perched free slurry surface with an underlying

drier, unsaturated and competent solid cargo.


News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169The report states: “Evidence from real world shipments

of bauxites showing instabilities due to moisture cannot

be explained by liquefaction phenomena, but can be

explained by a dynamic separation mechanism of

instability. ”The findings contradict recommendations

issued by the IMO in a circular in September 2015,

intended to raise awareness of the possible dangers of

liquefaction associated with bauxite.

The circular was approved by IMO’s Sub-Committee on

CCC, in the wake of an investigation into the loss of the

10-year-old Bahamas flag bulk carrier Bulk Jupiter, which

was carrying 46,400 tonnes of bauxite when it sank

rapidly with 18 fatalities in January 2015.Foo-Nielsen

commented: “Further discussion is required as to decide

what should be done about this phenomenon and

whether to call for further research to examine the

process and determine if it applies to other cargos, not

just bauxite.

”In related news, amendments to the IMSBC Code were

adopted earlier this month to help prevent incidents of

liquefaction in solid bulk cargoes. The amendments will

enter into force on 1 January 2019 and explicitly assign

the shipper the responsibility to ensure that a test

determining the Transportable Moisture Limit (TML) of a

cargo liable to liquify is carried out within six months

prior to the date of loading.

The TML is defined as the maximum water content a

Group A solid bulk cargo may contain while being

transported on a bulk carrier without it being at risk of

liquefying. Previously, no single entity was assigned this

responsibility in the IMSBC Code. The Code also requires

the shipper to ensure that, when cargo is exposed to

rain or snow during loading, the moisture content is less

than the TML by providing evidence as required by the

Code. For example, this could be in the form of

additional cargo testing.

BIMCO originally suggested the amendments in a

submission to IMO, Foo-Nielsen told Fairplay: “Currently

the IMSBC only calls for one test for moisture content, at

the start of the loading operation, but when the loading

operation goes beyond the normal period and the cargo

is exposed to additional moisture intake, the probability

of liquefaction increases.”

More than malware – FP June 9th

An engineer boards a superyacht to carry out a standard

software upgrade on the vessel’s heating, ventilation,

and air conditioning (HVAC) system. He plugs in his

laptop and begins the installation. Little does he know

that during this routine task the HVAC system has been

accidentally rebooted. The dampers in the engine room

close, shutting off the air supply and eventually

depleting the entire area of oxygen.

This is not fiction but a real-life account that reveals how

vulnerable a ships’ operating technology is to both

accidental and malicious cyber attacks. All it can take is

one crew member or offshore worker to plug into the

ship and vital navigation or operating systems could be

shut down. Luckily, in this case the engine room was

unmanned and the ship was docked, but the situation

could have ended up with a much more tragic ending.

More vulnerable

The information and operating technology (IT and OT)

now on board ships makes them even more vulnerable

than traditional shore-based industries, according to

Gwynne Lewis, head of data, digital, and software at

Lloyd’s Register Marine & Offshore. He said there had

been a shift in the nature of attacks, moving beyond the

digital and into the physical realm.

So, while we should all still be wary of things such as

classic phishing emails attempting to gain personal

financial data, attacks today are becoming much more

complex. “They are designed to inflict damage on

property and operations by seeking to take control of

industrial control systems,” Lewis warned. For example,

hackers who have gained access to a ship's network

could easily inflict real damage and cause collisions or

fires by gaining control of operating technology or

navigational systems.

While shipping has embraced digital technology to drive

efficiency and reliability, Lewis said it has done so

"without considering the impact on connectivity and


News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169security". What systems are connected to what? Are

they sending data back to shore? Are they storing data

on the cloud? Who can access the data being stored? If

suppliers have access to your operating technology,

what cyber security protocols do they have in place?

When it comes to answering and resolving these

questions, Lewis said the marine industry is “way behind

the curve. It has been like building a house without

building the foundations. Now work must be done to

build the foundations up, or risk damage to assets,

potential loss of life, and loss of reputation.”

Complacency, Lewis stressed, is not an option, as the

recent WannaCry malware attacks have proven. “It is

not a matter of if a cyber-attack will occur, it’s a matter

of when, and how severe it is.”

Take action

The US Coast Guard (USCG) published policy guidance in

2015 that will begin dealing with oversights on cyber risk

and protection and push the industry from awareness

and recommendations to actual regulations.

But the industry shouldn’t rest on its laurels. Ship

managers should be aware of weak points on their ships

and familiarise themselves with the access points, from

USB ports to LAN routers, and find ways to limit or

control their use – particularly ones on key systems such

as ECDIS.

Training staff to stop and think about what they are

plugging their devices into or what they are clicking on

in emails is key. So is understanding which suppliers are

accessing data and communicating with components

they have supplied. Working with companies that have

robust cyber security is a must. If in doubt, question

what staff training and preventive procedures they have

in place.

Modelling firm Risk Management Solutions (RMS)

believes ships must have a maritime cyber-security plan

and train their crews to better understand and handle

vulnerable areas, such as integrated bridge systems, in

order to prevent cyber-physical attacks. Most at threat

from cyber-physical attacks in an integrated bridge

system are AIS, ECDIS, and GPS, according to RMS.

However, it is important to have a holistic view of your

ship’s cyber weak points. Lewis pointed to many

companies, such as Qinetiq, that carry out ‘friendly

attacks’ to test the robustness of ship systems. Once you

know where vulnerabilities lie, you can begin to protect

them.

A weak link

GPS is a particularly weak point when it comes to cyber-

physical threats. Prof David Last, past president of the

Royal Institute of Navigation, ran a series of trials to

examine the effect of GPS jamming on shipping. In one

trial, a jammer was operated from a lighthouse and

aimed at ships.

Last said ships sailing through beams lost all GPS

capability. Rather than shutting down, it would give false

positions. “We even had ships [apparently] travelling

over land,” he said.

A ship exposed to low-level jamming will “quite quietly

and with no warning” start to move in position and

travel away from its plotted path, Last explained. The

experiments revealed that jamming GPS signals would

make the ships behave erratically, with one speeding up

to mark 8. “If that isn’t a good cyber-attack then I don’t

know what is!”

The concern is also that GPS receivers are probably

connected to dozens of other management and control

systems that dependent on them. These range from the

obvious navigation systems, to speed, course, and chart

display data that might drive the autopilot and the ship’s

clocks. One vessel Last examined used GPS to stabilise


News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169its satellite communications and the stabilisation of the

helicopter landing deck.

This weakness has not just been manipulated for

academic purposes. In April 2016, South Korea said that

about 280 vessels had to return to port after

experiencing problems with their navigation systems,

and claimed North Korea was behind the disruption.

Last said it would not be hard to believe pirates or

insurgents could acquire off-the-shelf jamming devices

in order to disrupt a ship and make it vulnerable to

attack.

In a bid to prevent such attacks, Last is campaigning for

ships to revert to a modified version of an older

hyperbolic radio navigation system based on Loran-C.

This allowed a receiver to determine its position by

listening to low-frequency radio signals transmitted by

fixed land-based radio beacons. However, it has not

gained much traction with governments and will not be

a viable solution for most shipowners, at least in the

short term.

Insurance gap

Not only do crew and shipowners need to protect

against the growing cyber-physical threat, but it has

recently been revealed that most existing cyber or hull

insurance policies will not cover a navigation system

being jammed or physical damage to the ship caused by

a hacking attack.

RMS’s updated CAMS cyber model revealed that the

greatest concerns for insurers are cyber-physical attacks

that trigger fires or explosions, leading to large losses or

systemic claims across multiple insured parties.

Companies such as RMS lack the years of data needed to

create credible scenarios to provide proper exposure

estimates. However, the CSO Alliance, an online

community of company security officers, is to launch a

project later this year to help shipowners and insurers

tackle this problem.

Working with a major European aeronautics and cyber

industrial partner, it will launch an online portal for the

ship industry to confidentially report cyber incidents.

The confidentiality aspect is critical, said Chris Henny,

project manager for the cyber incident reporting system,

as shipping companies don’t want their reputations

ruined. Equally, crew will often not want to report an

incident out of embarrassment or fear of

reprimand.“We need to provide a portal that is unique,

global, and not tied to a particular government.” It also

removes some of the time consuming administrative

elements of reporting incidents, where ships may

currently have to report to multiple governments or

organisations.

While the data will be anonymised, it will be shared

among the users, with a messaging tool to update fellow

seafarers on potential threats, and even a live map to

warn where there have been cyber-crime hot-spots. The

data will also help to build up better models for

companies such as RMS and, it is hoped, improve

insurance to protect against cyber-physical attacks.

Mark Sutcliffe from CSO Alliance explained that without

such important data, the shipping industry was blind and

governments were no longer able to cope with the pace

and scale of the cyber threat. “As individuals we must

step up to plate and understand cyber weaknesses,” he

said. “It is a war. With increased awareness and

improved incident reporting, we may be able to fight

back.”

With the grain – PS June 3rd

Growth: Russia has significantly expanded grain handling

capacity since 2010. Credit: Valeri Pizhanski

Bulk terminal investments and equipment upgrades

are surging, finds Michael King

In the dry bulk shipping business, the grain trade is very

much the little brother of coal and iron, at least in

volume terms. But grain, being more valuable per tonne

and more fragile than industrial bulks, is both attractive

to terminal operators and requires more careful

handling. Moreover, demand for international

shipments from key origin regions continues to

accelerate, prompting growing investment in new port

facilities.


News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169Record harvests and swelling demand from Asia have

seen exports of grains from the Black Sea and South

America boom in recent years, a trend aided by low cost

inputs for producers and helpfully bearish ocean freight

rates which have boosted their competitiveness against

geographically better placed suppliers such as Australia.

However, port and hinterland capacity has struggled to

keep pace.

At the start of April, for example, bulk carrier operators

and exporters were weighing up the costs of the lengthy

delays suffered at terminals in Brazil. At the port of

Santos alone almost 80 vessels were queuing to load

grains, with the waiting time at one terminal stretching

to 19 days in the first week of the month, according to

Alphamar Agencia Maritima (AAM), a Brazilian bulk

cargo port and agency specialist.

In Brazil, the main reason for delays has been the stark

rise in exported maize and soybean volumes which have

risen from a combined total of almost 55m tonnes in the

2011/12 season to an estimated 81m tonnes in 2016-17.

Understandably, after such a steep rate of acceleration,

port investors have been left playing catch-up.

Brazil’s grain terminals are not alone in struggling to deal

with snowballing demand for elevator capacity during

peak export seasons. After five years of rapid expansion,

Black Sea exporters – Russia, Ukraine and Kazakhstan –

now account for some 20% of global grain exports.

Ukraine increased exports from 21.9m tonnes in 2012 to

40.3m tonnes last year, according to UkrAgroConsult.

Russia increased its exports from 16.3m tonnes to 37.2m

tonnes over the same period, while Kazakhstan’s

exports rose from 5.6m tonnes to 8.8m tonnes.

Although port capacity has been expanded, delays at

terminals are common during the peak season.

South American and Black Sea exporters are also looking

to further expand exports as demand from Asia and

Africa is forecast to continue to grow. AAM believes

Brazil’s exports of maize, soybeans and soybean meal

could be boosted by a further 34m tonnes in the next

ten years. However, for Brazil to realize its full export

potential, studies by the Chamber of Transport estimate

that upwards of $200bn of investment in transport

infrastructure and superstructure will be required.

Leandro Pierbattisti, Federation of Elevators Association

of Argentina, says his country’s grain producers face

similar port access issues. He says the government of

Argentina is planning to make substantial investments in

logistics including investing some $11bn on upgrading

the sea port access system.

Making progress

Some progress is already being made at Brazil’s ports.

Delays at the turn of the year at key export hubs such as

Santos and Paranagua were far lower than in previous

years, in part because of capacity upgrades and more in

the pipeline. At Santos, for example, heavy investment

by Tiplam saw two new berths open in January.

Together, the berths are projected to add some five

million tonnes of grains and four-and-a-half million

tonnes of sugar capacity to the port’s total handling

ability.

There are also designs under consideration for the

channelisation of the Juruena, Teles Pires and Tapajós

rivers. This would create a 1,000-mile industrial

waterway which would allow soybeans and other crops

from the Mato Grosso region to be containerised and

transported by barge downstream all the way to the

Atlantic, a development that would increase the need

for river port facilities along the way. Other port projects

under development include the expansion of the port

Miritituba to take capacity to 32m tonnes of grain per

year by 2026.

However, David Ross, general manager of AAM, tells

Port Strategy that Brazil’s efforts to boost exports would

only be realised if both port and hinterland capacity

were expanded. In particular, he said that at present


News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169poor inland logistics systems was rendering many

Brazilian exporters less competitive than rivals from the

US, able to use relatively cheap rail and barge systems,

or those in Argentina which benefit from being far closer

to ports then their Brazilian peers.

“If we were able to rely more on rail and waterway

transport, thus bringing the transhipment terminal

closer to the origination areas, we would be able to

reduce the overall FOB [Free On Board] price and in turn

become more competitive in the international market,”

says Mr Ross. “There are currently ongoing

improvements to the current road systems along with a

new rail concession called Ferrograo, which is expected

to be awarded later this year.”

He also says a number of private investors are now

looking at how to boost inland port capacity and the

national barge fleet. “Without a reliable means to

transport the cargo from transhipment terminals in

Miritituba, the many private companies who have

already invested in elevation assets or are currently

investing in elevation assets in the ports of Santarem,

Barcarena and Santana will not be able to realise their

full capacity,” he adds.

“If our inland logistics do not improve it makes our grain

exports more costly and less competitive in the global

market.”

Building capacity

In the Black Sea, improving yields and limited growth in

domestic consumption are also expected to lead to

higher exports in the coming years. Leonid Kozachenko,

Ukrainian People’s deputy, says Ukraine alone could

double or triple its exports in the years ahead but some

$65bn-70bn would need to be invested in production,

hinterland access and ports to handle the extra cargo.

Elizaveta Malyshko, a grain analyst at UkrAgroConsult,

adds that both Russia and Ukraine have expanded grain

handling capacity significantly over 2010-17. The top

Russian grain port is Novorossiysk, which currently loads

more than one-third of export grains each year. Another

third is accounted for by smaller ports in the Azov and

Black Sea basins, followed by the ports of Kavkaz and

Taman which each tranship 9%-10% of exports. “Also,

there are a number of potential projects for building

grain terminals in Russia’s Far East,” says Maksym

Kharchenko, a logistics market analyst at

UkrAgroConsult. “ These include a 10m tonne capacity

per annum terminal in Zarubino and a project of

Agrarian holding LLC Saho Company Group and Mitsui &

Co for the construction of a 1.5m tonne capacity

terminal in Vladivostok.”

In Ukraine, the main terminals used for grain exports are

located at the ports of Mykolaiv, Chornomorsk, Yuzhny

and Odesa. UkrAgroConsult estimates grain handling

capacity at Ukrainian ports at around 64m tonnes per

annum, a total that includes Crimean ports currently

under Russian control after the region was annexed in

2014.

“As many as three large grain terminals were launched

in 2016: COFCO in Mykolaiv with a capacity of 2.5m

tonnes, Bunge with 1m tonnes, and Risoil in

Chornomorsk with 2.2m tonnes capacity,” says Ms

Malyshko. “To date, a few companies, including

Allseeds, Cargill, Soufflé, NHC, Kernel, SFGCU, Mariupol

and Berdyansk commercial sea ports have declared

intent to build new grain-handling facilities in Ukraine’s

sea ports.

“This year, Novotech-Terminal Company kicks off the

implementation of its 3m tonnes capacity grain terminal

project in Odesa. MetalsUkraine Company is also

planning to construct a 4m tonnes capacity grain

terminal in the same port.

“If all are implemented, the declared projects may add

29.6m tonnes of capacity to the theoretical grain

handling capacity of Ukrainian ports by 2020. Some of

these projects have not yet left the ‘paper stage’, but it

can be stated already now that, if the projects under

construction are realised, there will be enough

capacities toward 2020 for servicing the highest forecast

grain export volumes.”

Indeed, adds Ms Malyshko, if all the current new port

development plans in Russia and Ukraine became

reality, demand for new capacity would recede unless


News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169production and export expansion beyond current

forecasts were recede. “Most likely, after the

commissioning of these facilities, interest in building

transhipment capacities will begin to fade,” she says. “In

the future, it will be more likely to expand existing

capacities than to build new facilities.”

*********Clarkson commentaries – DBTO (Volume 23, No 6 – June 2017)Dry Bulk Supply & Demand HighlightsEarnings across the bulkcarrier sectors eased back in

May 2017, partly reflecting a number of disruptions to

trade volumes and lower overall activity. Average

bulkcarrier earnings in May fell 17% m-o-m to

$9,288/day, although this was still around 50% higher

than the full year 2016 average. Meanwhile, bulkcarrier

secondhand prices remained fairly steady during May,

following sharp increases in March, with sales volumes

reported to have slowed in recent months.

Following firm growth in 2016, Chinese seaborne dry

bulk imports have remained robust in January-April

2017, with total shipments of iron ore and coal into the

country up 15% y-o-y to 419mt in the period. There

remains uncertainty regarding the sustainability of such

strong Chinese dry bulk import growth, partly given

concerns over the country’s real estate sector. However,

even when accounting for a slower pace of import

growth in 2H 2017, rising Chinese imports are projected

to be a major driver of the acceleration in growth in

global seaborne dry bulk trade to 3.5% in full year 2017.

On the supply side, bulkcarrier demolition activity has

slowed notably in recent months, with 7m dwt sold for

recycling in January-May 2017, down 67% y-o-y. Current

projections now indicate expansion of around 3.2% in

bulker fleet capacity in 2017, close to projected trade

growth. However, fleet growth remains slower than the

5% p.a. average seen in 2013-16, and with the

orderbook reaching a thirteen year low of 61m dwt in

June 2017 (equivalent to just 8% of the fleet),

bulkcarrier fleet growth could be limited to as low as 1%

in 2018. Overall, while the fundamental balance in the

bulker sector has seen a notable improvement recently,

the dry bulk market appears to have had a downwards

correction in recent months following the more robust

earnings environment seen in Q1 2017. There remain a

number of risks to the market outlook on both the

demand and supply sides, but current projections

suggest that the balance in the dry bulk sector may

continue to gradually improve over this year and next.

Seaborne Iron Ore Trade

CommentaryGlobal seaborne iron ore trade is projected to rise 6% to

1.5 billion tonnes in 2017. This is expected to

be driven by the increasing availability of low cost and

high quality iron ore exports from Australia and Brazil,

with combined shipments from the two countries

projected to rise 4% to 1.2 billion tonnes in 2017. Yet,

more aggressive growth has recently been recorded by

several smaller iron ore exporting nations, in response

to the high iron ore price environment in Q1 2017.

However, iron ore price levels have since dropped

somewhat and are widely expected to stabilise around

$50-60/t in the remaining months of the year, putting

some smaller, higher cost miners under pressure.

Nevertheless, following the strong start to the year,

combined iron ore shipments from Chile, Iran and India

are projected to rise 49% to 72mt in full year 2017. On

the demand side, Chinese seaborne iron ore imports are

projected to grow 7% to 1.1 billion tonnes, while iron

ore shipments into the EU are expected to buck the

trend of the past two years, by increasing 2% to around

106mt in 2017.

Iron Ore NewsChinese seaborne iron ore imports rose 9% y-o-y to

349mt in the first four months of 2017, driven by

two key factors. Firstly, China’s crude steel output grew

5% y-o-y to 273mt in January to April 2017, while

reports from CISA member mills also indicate continued


News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169firm expansion in May. This partly reflected the

country’s robust real estate development, with the

estimated total area of new construction starts up 10%

y-o-y in the first four months of the year. The second key

driver of firm Chinese iron ore imports has been the

country’s stockpiling activity, with inventories at Chinese

ports rising 19% since the start of the year to hit a

record 137mt by late May. However, looking forward

there is uncertainty regarding the sustainability of

China’s iron ore import growth. Provisional data

indicates a 5% y-o-y rise in the country’s total iron ore

imports in May 2017, which while still relatively robust,

represents slightly slower growth compared to the levels

recorded in January-April. Furthermore, Beijing is

expected to target a further 50mtpa of outdated steel

capacity by the end of August 2017 and has recently

introduced a restructuring fund to help push the

reforms forward.

The sustainability of China’s steel consumption growth is

also regarded by many analysts with uncertainty, given

the importance of public investment for construction

activity and the country’s rising national debt levels.

Furthermore, China’s steel products exports fell 26% y-

o-y to 27mt in January- April 2017. While this partly

reflected robust domestic demand, it is clear that trade

barriers in a number of export markets have also

impacted China’s steel products exports. Meanwhile,

Chinese domestic iron ore output rose 12% y-o-y to

around 400mt in the first four months of the year and

poses an ongoing threat to the country’s iron ore import

demand. Overall, current projections indicate a 7% rise

in Chinese seaborne iron ore imports to 1,081mt in

2017, accounting for slightly softer growth in 2H 2017.

Seaborne Coking Coal Trade

CommentaryHaving remained flat in 2016, global seaborne coking

coal trade is projected to increase 2% to around 255mt

in 2017. This largely reflects expectations of a continued

increase in coking coal shipments into Asia,

predominantly China, coupled with a slight recovery in

European seaborne coking coal import demand. Coking

coal shipments into China are projected to increase 12%

to around 40mt in 2017, which would represent a three

year high. This is expected to be driven by China’s firm

crude steel output and sluggish domestic coking coal

output. Indeed, the country’s domestic coking coal

production dropped 4% y-o-y to an estimated 102mt in

Q1 2017, despite government policies to support the

country’s coal mining industry and a relatively high coal

price environment in the period. Meanwhile, following

six years of consecutive decline, coking coal imports into

the EU are projected to increase 2% to around 35mt in

2017, reflecting improved profit margins for steel

producers in the region. Indeed, EU steel output

increased 4% y-o-y to total 56mt in January-April 2017.

Coking Coal NewsTotal coal exports from Australia’s major terminals in

Queensland, which predominantly handle coking

coal, more than doubled m-o-m to 16mt in May. This

reflected a recovery following Cyclone Debbie’s

disruptions to coal railings to terminals in April, when

combined coal shipments from Hay Point, Dalrymple

Bay, Abbot Point and Gladstone hit a six year low of 7mt.

However, coal throughput in May was still down 14% y-

o-y. Current projections indicate a 2% drop in total

Australian coking coal exports to 155mt in 2017,

accounting for a ramp-up in shipments in 2H 2017.

US seaborne coking coal exports increased 26% y-o-y to

15mt in the first four months of 2017. This largely

reflected the country’s coking coal miners responding to

the disruptions to Australian coking coal exports and the

high coal price environment in Q1 2017. Of particular

note were US coking coal exports to Japan, which rose

52% y-o-y to 2mt in January- April 2017. However

looking forward, easing coking coal price levels and a

recovery in shipments from Australia are expected to

undermine US coking coal export growth in 2H 2017.

Nevertheless, current projections indicate an 18%

increase in US seaborne coking coal shipments to

around 40mt in 2017.

Brazilian steel output rose 15% y-o-y to 11mt in January-

April 2017, driven by the country’s firming industrial


News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169production in Q1 2017. While the growth in Brazil’s steel

output was a key contributor to the country’s firm

coking coal import demand in the early months of the

year, total coking coal shipments into Brazil rose only 7%

y-o-y to an estimated 6mt in the first five months of

2017. This reflected the impact of recent domestic

political turbulence and disruptions to shipments from

Australia in April and May. Nevertheless, Brazilian coking

coal imports are projected to rise 8% to around 16mt in

full year 2017.

Seaborne Thermal Coal Trade

CommentaryGlobal seaborne steam coal trade is projected to grow

3% to 916mt in 2017, following a marginal decline

in 2016. This partly reflects an expected slowdown in the

pace of decline in shipments into the EU. Seaborne

steam coal imports into the region fell by an average 8%

per annum in 2012-16 due to the increasing impact of

environmental policies and a process of coal-to-gas

switching, especially in the UK. However, following

several years of major cuts, the UK’s steam coal imports

are expected to stabilise, while recent steam coal import

demand in France has firmed somewhat due to

disruptions to the country’s nuclear power generation.

Elsewhere, steam coal shipments into Asia are projected

to rise 3% to 723mt in 2017, largely driven by Chinese

seaborne import demand, as well as increasing

shipments into a number of the region’s other

developing nations, such as Vietnam, Thailand and the

Philippines. Conversely, increasing domestic steam coal

output is projected to contribute to a 10% drop in

seaborne steam coal imports into the US to a six year low of 6mt in 2017.

Steam Coal NewsTotal steam coal shipments into ASEAN nations are

projected to increase 11% to an estimated 87mt in 2017.

This is expected to be largely driven by a 32% rise in

steam coal imports into Vietnam to around 13mt,

reflecting the country’s firm economic growth levels and

increasing demand for cheap energy. Reports indicate a

projected 13% rise in the country’s power generation in

2017, a pace which is widely expected to be matched

over the following three years. The Vietnamese

government recently approved plans for three new coal

fired power plants with a combined 3,720 MW capacity,

with construction set to commence in 2018-19.

Chinese seaborne steam coal imports rose 33% y-o-y to

54mt in the first four months of the year. This

reflected an 8% y-o-y rise in the country’s thermal

power generation in the period. While the pace of

China’s domestic steam coal output has continued to

rise since mid-2016, supported by favourable

government policies and a high steam coal price

environment, the total 670mt mined over Q1 2017

represented only a 1.5% y-o-y rise. However looking

forward, increasing domestic output in the remaining

months of 2017 is expected to put growing pressure on

China’s steam coal import demand. Overall, current

projections indicate a 9% y-o-y increase in the country’s

seaborne steam coal imports in full year 2017,

accounting for a slower pace of growth in 2H 2017.

Steam coal exports from Colombia increased 9% y-o-y to

stand at 22mt in January-March 2017, supported by the

high coal price environment and a recovery in shipments

into the EU. Furthermore, Colombia’s domestic coal

output has been supported by the resolution of a

number of labour disputes and favourable weather

conditions for mining. The country’s Ministry of Mines

and Energy recently announced a projected 8% increase

in Colombia’s total steam coal output to 97mt in 2017.

However, current projections indicate only a 3% rise in

the country’s steam coal exports to 91mt in full year

2017, reflecting risks of further disruptions to output

and railings in the remaining months of the year.

Grain Imports

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

1% to 347mt in the 2017/18 crop year, partly reflecting

expectations of a 5% fall in imports into Asia to 111mt.

Chinese grain imports are projected to drop 13% to a


News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169five year low of 14mt in 2017/18, largely due to the

country’s corn destocking programme and expectations

of another firm domestic harvest. Elsewhere, grain

imports into South America are expected to drop 7% to

29mt in 2017/18, largely reflecting the firm recovery of

output in Brazil and Argentina. Brazil’s corn harvest is

expected to hit a record 93mt in the crop year ending in

June 2016, which is expected to gradually feed into the

domestic market and undermine the country’s import

demand in the coming crop year. Conversely, grain

imports into the Middle East are projected to rise 6% to

a record 59mt in 2017/18, driven by firm demand

growth in Iran, Turkey and Saudi Arabia.

Grain Imports

Grain Trade NewsVietnam’s total wheat and coarse grain imports, which

have ramped-up continuously in recent years, are

expected to rise 26% y-o-y to a record of 13mt in the

2016/17 crop year, ending in June 2017. The firm

volumes of grain imports largely reflect the country’s

emerging middle class with increasing disposable

income and a subsequent rising consumption of meat

and seafood boosting import demand for farm and

aquaculture feed import. Current projections indicate a

firm increase in Vietnam’s corn imports to a reported

4mt in 2016/17, while the country’s wheat imports are

expected to hit a record 5mt in the current crop year.

Looking further ahead, Vietnam’s grain imports are

projected to remain relatively unchanged at around

30mt in 2017/18, reflecting continued corn demand

growth offsetting a projected slight reduction in milling

wheat imports into the country.

Grain Exports

Grain Export NewsArgentina’s total wheat and coarse grain harvest is set to

rise 13% to a record 67mt in 2016/17. This is expected

to be driven by a 56% increase in the country’s wheat

output to an unprecedented 18mt.

Meanwhile, Argentina’s corn harvest is expected to rise

7% to 43mt in the period, driven by beneficial

weather conditions and farmers’ investments into

improved seed varieties and fertilisers. Argentina’s

firm domestic output is expected to drive a 29% rise in

the country’s total grain exports to 40mt in the

2016/17 crop year. However looking further ahead,

current projections indicate a 6% drop in the country’s

grain harvest to 63mt in 2017/18, reflecting a slowdown

in the pace of sowings in recent months. Overall,

Argentina’s grain exports are also projected to drop 6%

to 37mt in 2017/18, which would still represent the

second highest volume on record.

Minor Bulk Trades

CommentaryChinese seaborne imports of manganese ore, typically

used as a steel alloy, totalled 17mt in 2016 which

represented an 8% y-o-y rise and 70% of global seaborne

imports of the ore. China’s manganese ore imports then

went on to increase 68% y-o-y to 7mt in January-April

2017, which reflected the recovery in the country’s steel

output, increasing stockpiling at Chinese ports, as well as

firm manganese ore supply from a range of exporting

nations. However recent reports indicate softening

Chinese demand for manganese ore, given the high

volumes of available stockpiles and easing consumption

of manganese alloys at Chinese steel mills. There also

remains a degree of uncertainty regarding the country’s

property market and levels of steel demand in 2H 2017.

Nevertheless, following the strong start to the year,

Chinese seaborne manganese ore imports are projected

to rise 30% to 22mt in 2017.

Bulkcarrier Fleet

Commentary– Capesize Fleet TrendsAt the start of June 2017, the Capesize fleet consisted of

1,680 units of a combined 320.9m dwt, representing a

1.8% increase since the start of the year in terms of

tonnage. The expansion in the Capesize fleet in the year

to date has partly been driven by the subdued level of


News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169demolition. In total, 18 Capesize units of a combined

3.5m dwt were scrapped in the first five months of 2017,

representing a 68% y-o-y decline in terms of tonnage.

However, Capesize deliveries have also slowed slightly in

the year to date, with 47 units of a combined 9.5m dwt

entering the fleet in the first five months of the year,

compared to 10.5m dwt in January- May 2016.

Fleet Watch – To 1st June 2017Capesize vessels:

47 delivered 18 scrapped 3 ordered

Commentary – Panamax Fleet TrendsA total of 20 units, or 1.7m dwt, were ordered in the

wider Panamax sector in January-May, up ten-fold on

orders in full year 2016. However, the dearth in activity

in 2016 represented a historical anomaly and Panamax

ordering in January-May was in line with activity in the

same period in 2011-15. In total, 17 Kamsarmax units of

a combined 1.4m dwt were ordered in January-May

2017: 82% of total capacity ordered in the wider

Panamax sector. Meanwhile, at the start of June there

were 123 Kamsarmaxes of a combined 10.1m dwt on

order, accounting for 90% of the wider Panamax

orderbook in dwt. This compared to a 41% share of total

Panamax fleet capacity accounted for by Kamsarmaxes.

Fleet Watch – To 1st June 2017Panamax vessels:


Commentary – Handysize/Handymax Fleet TrendsAt the start of June 2017, the Handymax fleet consisted

of 3,510 units of a combined 193.0m dwt. This was up

2% since the start of the year, in terms of dwt. At the

start of June, there were 2,070 Supramax vessels in the

fleet within the range of 50-59,999 dwt, with a

combined total of 115.0m dwt. This represented a 60%

share of total capacity in the Handymax fleet at the start

of June. Meanwhile, there were 711 vessels of a

combined 44.4m dwt within the Ultramax 60-69,999

dwt range in the Handymax fleet, representing a 23%

share of total capacity in the sector. Ultramax designs

have proved popular in recent years and at 28.4m dwt,

Ultramaxes accounted for 81% of total Handymax

tonnage delivered since the start of 2015.

Fleet Watch – To 1st June 2017Handymaxes:


Handysizes:


*********

Commodity Countdown

Indian Iron Ore Exports: One To Look Out For Again?

While Australian and Brazilian exports are expected to

be the key drivers of seaborne iron ore trade growth in

2017, shipments from elsewhere are projected to rise

11% to 250mt this year. This partly reflects a surge in

Indian iron ore exports, which were almost fully

eradicated by government policies by 2015. This

month’s Commodity Countdown explores the highs and

lows of Indian iron ore exports.

Heady Heights, A Sharp DropIndian iron ore exports increased more than threefold

between 2000 and 2009 to 116mt, driven by rising

output and firm Chinese demand. This period

established India’s position as a significant iron ore

exporter, with the country’s shipments accounting for

13% of global seaborne iron ore exports in 2009.

However from July 2010, India’s government imposed a

series of mining restrictions and a 30% tariff on iron ore


News AbstractsDry Bulk Terminals Group – June 2017 – Issue 169exports. Indian iron ore shipments subsequently fell

sharply from the 116mt in 2009 to just 4mt by 2015.

Back From The AbyssThen, in February 2016, the Modi government cut the

country’s iron ore export tariffs and several mining

restrictions. India’s iron ore miners responded by

ramping up output 21% to 156mt in 2016, while the

country’s iron ore exports hit 19mt. This was also

supported by the high iron ore price environment in Q4

2016, which improved miners’ profit margins. High

prices continued into Q1 2017, supporting a threefold y-

o-y rise in Indian iron ore exports to 15mt in January-

April.

The Bullish OutlookLooking ahead, Indian iron ore exports are projected to

almost double to 37mt in 2017 which, assuming the

additional volumes are absorbed by Chinese demand

and do not replace other exports, could add another 1%

of growth to global seaborne iron ore trade this year.

The outlook for Indian iron ore export growth also

appears promising, given reports that output caps for

iron ore miners in Goa and Karnataka are to be raised

from a total 50mtpa, while additional road links

between Goa’s iron ore mines and westcoast terminals

are under construction.

Some Causes For CautionHowever, there are a number of downside risks to

future Indian iron ore export growth. Firstly, global iron

ore price levels have eased somewhat in recent weeks,

cutting Indian miners’ profit margins. Furthermore,

Indian steel output has grown substantially in recent

years, rising 6% to 95mt in 2016. Sustained growth in

Indian steel output has the potential to increase the

country’s iron ore consumption, potentially absorbing

volumes otherwise destined for export over the coming

years. On a final note, given the country’s proximity to

the Chinese market, increasing Indian iron ore exports

could actually pose a risk to global iron ore tonne-mile

trade, should they replace shipments from other, more

distant exporters. So, a change in government policies

and firm Chinese import demand have seen a substantial

increase in Indian iron ore exports recently. Overall,

while India is still far from reclaiming its position as a key

iron ore exporter in global terms and while there are

some downside risks, the country’s rising ore exports

may be one to keep an eye on in the years ahead.

And Finally.......

Last month I asked you;

1. What occurs once in a minute, twice

in a moment and never in one thousand years?

The answer - ‘m’

*****

2. What has 4 eyes but can’t see?

The answer - Mississippi



*****

3. What starts with the letter “t”, is filled with “t” and ends in “t”?

The answer - Teapot

*****

4. How do you make the number one disappear?

The answer – add a ‘G’ and its Gone

*****

Please feel free to send me any weird or strange pictures and I will try and fit them in.

*****

An Executive Committee Member sent me the following a few weeks ago. I thought that it would be worth sharing with you all, especially if you are planning a trip to the Caribbean or Southern parts of the USA....

....Watch out for September 10th, chances are it’s going to be windy!

That is it for June.

Pictures and answers to [email protected] please!

Nic

Further Information:

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

==================FUTURE ABSTRACTS

DBTG members are active world-wide so please contribute any interesting items from your own daily reading for inclusion in future issues of News Abstracts.Please send by e-mail to the Secretariat address below=================DBTG SecretariatTel: +44 1273 933817 Fax: + 44 1273 933715E-mail: info@dry bulkterminals. org


http://www.fearnresearch.com/

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

http://www.crsl.com/

€¦ · web viewone story really caught my attention this month. titled ‘bauxite behaviour...

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