Freight market and coal
imports by India
4th International Conference on Coal market in India
Nazneen Fatima
Sr. Research Analyst
fatima@drewry.co.uk
22 August 2014
Drewry | 4th International Conference on coal market in India
22
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Drewry | 4th International Conference on coal market in India
3
Agenda
Dry bulk demand and supply
Dry bulk freight market
Indian coal demand
Conclusion
© Drewry 2014
4
Drewry | 4th International Conference on coal market in India
Global Dry bulk trade and demand for dry bulk fleet
Coal is the second-largest dry bulk commodity transported via sea
1200
1000
40%
80
1,500
30%
60
1,000
20%
500
million dwt
2,000
%
million tonnes
100
10%
800
40
600
20
400
0
-
0%
200
-20
-40
Iron ore
Coal
Grain
Minor bulk
%of coal in total trade-right axis
million dwt
Dry fleet development
Dry bulk trade
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Dry bulk fleet supply /demand
Deliveries
Demolitions
Fleet-right axis
1200
40%
35%
1000
25%
600
20%
%
million dwt
30%
800
15%
400
10%
200
5%
0
0%
2009
2010
2011
Supply
Source: Drewry Maritime Advisors
2012
2013
Demand
2014(est)
2015(f)
2016(f)
2017(f)
2018(f)
2019(f)
Supply/demand gap as %of fleet- right axis
© Drewry 2014
5
Drewry | 4th International Conference on coal market in India
Global dry bulk fleet development
Dry bulk fleet growth has declined as compared with 2011 and 2012 amid lower deliveries
Capesize fleet growth
• Total dry bulk fleet is expected to grow
around 5% annually in coming five years
Million dwt
• Capesize fleet growth, which was more than
25% in 2011, has finally come down and
expected to decline further by 2019
• Post Panamax fleet growth is likely to pick
from 2016 onwards
45
30%
35
25%
25
20%
15
15%
5
10%
-5
5%
-15
VLOC fleet growth
15
Post Panamax fleet growth
60%
15
13
11
45%
13
40%
11
9
7
20%
5
3
0%
1
-1
-20%
-3
-5
-40%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Deliveries
Demolitions
Source: Drewry Maritime Advisors
Fleet growth (secondary axis)
Million dwt
Million dwt
0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Deliveries
Demolitions
Fleet growth (secondary axis)
35%
9
7
25%
5
3
15%
1
-1
5%
-3
-5
-5%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Deliveries
Demolitions
Fleet growth (secondary axis)
© Drewry 2014
Drewry | 4th International Conference on coal market in India
6
Global dry bulk fleet development cont..
Fleet growth of smaller segments such as Supramax and Handysize vessels below 5%
Panamax fleet growth
• Fleet growth rate in smaller segment is on
lower side amid low ordering in last couple of
years
18%
16%
20
Million dwt
• Panamax vessels fleet growth was around
14% during 2012, which has come down and
expected to decline significantly by 2016
25
14%
12%
15
10%
10
8%
6%
5
4%
2%
0
0%
-5
-2%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Deliveries
30%
20
25%
20%
10
15%
5
-5
-10
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Deliveries
Demolitions
Source: Drewry Maritime Advisors
Fleet growth (secondary axis)
Million dwt
Million dwt
25
0
Fleet growth (secondary axis)
Handysize fleet growth
Supramax fleet growth
15
Demolitions
12
10%
9
8%
6
6%
3
4%
0
10%
-3
5%
-6
0%
-9
2%
0%
-2%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Deliveries
Demolitions
Fleet growth (secondary axis)
© Drewry 2014
Drewry | 4th International Conference on coal market in India
7
Dry bulk newbuilding ordering and scheduled deliveries
Dry bulk orderbook has declined amid lower orderings in last couple of years
Total dry bulk orderbook
180
• Total dry bulk orderbook is around 19% of
the existing fleet and 4.6% of orderbook is
scheduled for delivery in 2014
19.2%
160
140
Orderbook as % of existing fleet
120
• The Capesize orderbook is around 18% of
the existing fleet, and only 3% of which are
scheduled for delivery in 2014
Millions dwt
100
80
6.4%
60
4.6%
5.4%
40
20
0.6%
0
Total OB
VLOC orderbook
14
Total No. of
vessels:1955
15%
2016
2017+
Average age
fleet:9yrs
18%
Orderbook as % of existing fleet
10
50
Orderbook as % of existing fleet
8
40
6.4%
6
30
5.2%
4
Millions dwt
Millions dwt
2015
Capesize orderbook
60
12
Scheduled in
2014
3.5%
2
6.8%
7.7%
20
3.1%
10
0
0.7%
Total OB
Scheduled in
2014
Total No. of
vessels:48
Source: Drewry Maritime Advisors
2015
2016
2017+
Average age
fleet:9.5yrs
0
Total OB
Scheduled in
2014
Total No. of
vessels:281
2015
2016
2017+
Average age
fleet:7.3yrs
© Drewry 2014
Drewry | 4th International Conference on coal market in India
8
Dry bulk newbuilding ordering and scheduled deliveries cont..
Newbuilding ordering is quite low for Post Panamax vessels amid low earnings
4.5
Post Panamax orderbook
Panamax orderbook
4.5%
35
4
30
Orderbook as % of existing
fleet
3.5
3
Orderbook as % of existing fleet
25
20
2.5
2.0%
2
Millions dwt
Millions dwt
17%
1.5%
1.5
0.8%
1
0.5
0.1%
7.2%
15
5.8%
10
4.1%
5
0.2%
0
Total OB
0
Total OB
Total No. of
vessels:42
2015
2016
2017+
18
21%
2016
2017+
Average age
fleet:8.8yrs
Handysize orderbook
17%
16
Orderbook as % of existing fleet
40
14
35
Orderbook as % of existing fleet
12
30
10
Millions dwt
25
Millions dwt
2015
Total No. of
vessels:397
Average age
fleet:4.7yrs
Handymax orderbook
50
45
Scheduled in
2014
Scheduled in
2014
8.8%
20
15
5.4%
5.3%
10
1.4%
5
7.6%
8
6
4.8%
3.7%
4
2
0.7%
0
0
Total OB
Scheduled in
Total No. of 2014
vessels:724
2015
2016
2017+
Average age
fleet:8.3yrs
Total OB
Scheduled in
2014
Total No. of
vessels:463
2015
2016
2017+
Average age
fleet:11.3yrs © Drewry 2014
Drewry | 4th International Conference on coal market in India
9
Agenda
Dry bulk demand and supply
Dry bulk freight market
Indian coal demand
Conclusion
© Drewry 2014
Drewry | 4th International Conference on coal market in India
10
International dry bulk freight market
Dry bulk freight market reached at historical low levels during 2012
Baltic Dry Index (BDI)
• The dry bulk fleet grew around15% during
2011and more than 12% during 2012, which
increased the supply-demand gap and rates
declined significantly
14000
12000
10000
8000
6000
• Although rates have improved in 2014, the
International freight market is still under
pressure of over supplied dry bulk vessels
4000
2000
0
Jan-07
Jan-08
Jan-09
Jan-10
Time charter rate(1year)
Jan-11
BDI
Jan-12
Jan-13
Jan-14
Jan-13
Jan-14
Baltic Index: All segments
140,000
25,000
USD per day
120,000
100,000
20,000
80,000
15,000
60,000
40,000
10,000
20,000
5,000
0
Capesize
Post Panamax
Source: Drewry Maritime Advisors
VLOC
Supramax
Panamax
Handysize
0
Jan-07
Jan-08
BCI
Jan-09
Jan-10
BPI
Jan-11
BSI
Jan-12
BHSI
© Drewry 2014
Drewry | 4th International Conference on coal market in India
11
International dry bulk freight market cont..
Capesize trip rates went below the operating cost in 2012 for vessels trading in SingaporeJapan /Australia round voyage
Capesize Trip rates
Panamax Trip rates
200,000
70,000
60,000
USD per day
USD per day
150,000
100,000
50,000
50,000
40,000
30,000
20,000
10,000
2007
2008
2009
2010
2011
2012
0
2013
(50,000)
Transatlantic
Continent-FE
FE-Continent
Sing-Jap/Australia
rv
35,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
Cont/USG/ Sing-Jap
FE/E.Australia rv
FE/USNP rv
Handysize Trip rates
30,000
USD per day
USD per day
Supramax Trip rates
Cont/ECSA rv
25,000
20,000
15,000
10,000
5,000
0
FE/Australia rv
Source: Drewry Maritime Advisors
Cont/-/FE
US Gulf/Cont
Cont/Transatlantic rv
FE/Australia rv
NWE/-/W.Af
© Drewry 2014
Drewry | 4th International Conference on coal market in India
12
Agenda
Dry bulk demand and supply
Dry bulk freight market
Indian coal demand
Conclusion
© Drewry 2014
Drewry | 4th International Conference on coal market in India
13
13
Coal in energy mix : India
Coal meets more than 50% Indian energy requirement
 Coal, oil and natural gas are the prime
energy sources across the globe and in India
 Share of coal in energy mix of India is 55%,
which is higher than the global share
 Major industries for coal consumption are
thermal power production, steel
manufacturing and cement production
 Indian thermal power plants consume more
than 70% of the total Indian coal
consumption.
Electricity Generation ( Terawatt- hours)
6,000
25,000
5,000
20,000
Global: Share of coal in total energy mix 2013
Hydro electric
7%
Renewables
2%
Nuclear Energy
4%
Oil
33%
Coal
30%
Natural Gas
24%
India :Share of coal in total energy mix 2013
Hydro electric
5%
Nuclear Energy
1%
4,000
15,000
Renewables
2%
Oil
29%
3,000
10,000
2,000
5,000
1,000
-
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
India
China
Source: Drewry Maritime Advisors, BP Statistics
Global (right axis)
Coal
55%
Natural Gas
8%
© Drewry 2014
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Drewry | 4th International Conference on coal market in India
14
Coal consumption and production: India vs. top consumers
Indian coal consumption has surged in recent years, but its production has stagnated
Growth in coal consumption: India vs. top consumers
20%
15%
7%
5%
4%
% growth
10%
0%
-5%
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
-10%
-15%
-20%
India
Japan
China
Global
Growth in coal production: India vs. top consumers
50%
40%
% growth
30%
20%
10%
1%
0%
-10%
2004
2005
2006
2007
2008
2009
2010
2011
2012
0%
2013
-20%
-30%
-40%
India
Source: Drewry Maritime Advisors, BP Statistics
Japan
China
Global
© Drewry 2014
Drewry | 4th International Conference on coal market in India
15
Coal demand: India
Indonesia and Australia are the major suppliers of thermal and coking coal to India
Sector wise coal demand: India
• Thermal coal demand by power producing
units are increasing significantly because of
an increase in power production capacity
and a lack of domestic production to meet
the requirement
• Construction of power projects in coastal
areas has made importing coal more
economical
million tonnes
1,000
800
600
400
200
0
Steel/Coke oven & Cokeris
Captive Power
BRK & Others
Steam Coal imports by source: India
40
160
Power (Utilities)
Steel DR
Coking Coal imports by source: India
35
million tonnes
140
million tonnes
Steel (Import)
Cement
120
100
80
60
30
25
20
15
40
10
20
5
0
0
2004
Australia
2005
2006
2007
Indonesia
2008
2009
2010
South Africa
Source: Drewry Maritime Advisors, Ministry of Coal: India
2011
US
2012
Others
2013
2004
2005
2006
Australia
2007
2008
US
2009
2010
2011
2012
2013
Others
© Drewry 2014
Drewry | 4th International Conference on coal market in India
16
Coal imports projections and major demand drivers for coal: India
Coal production and consumption gap has nearly doubled in last ten years
Steel Production: India
Thermal power production capacity: India
140
100
80
MW
million tonnes
120
60
40
20
-
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
-
Thermal Power production capacity
Steel production
Coal imports: India
120
300
100
250
80
200
60
150
40
100
50
20
-
-
Production
Consumption
Source: Drewry Maritime Advisors
production/consumption gap- right axis
million tonnes
350
million tonnes oil equivalent
million tonnes oil equivalent
Coal production/consumption gap: India
200
180
160
140
120
100
80
60
40
20
-
Coking coal imports
Thermal coal imports
© Drewry 2014
Drewry | 4th International Conference on coal market in India
17
Freight rate for importing coal to India
Panamax vessels for coal imports in India are more in demand and getting better rates
Voyage rates for coal imports to India: Panamax
25
USD/tonne
20
15
10
5
0
R Bay - Gangavaram
R Bay - Mundra
Samarinda - Mundra
Kalimantan - Krishnapatnam
Voyage rates for coal imports to India: Capesize
25
USD/tonne
20
15
10
5
0
R Bay - Gangavaram
Source: Drewry Maritime Advisors
© Drewry 2014
Drewry | 4th International Conference on coal market in India
18
18
Indian port infrastructure and vessels at anchorage
Dhamra and Gangavaram have the infrastructure to handle vessels with more than
150,000 dwt
Largest dry bulk vessels handled at Indian ports
no of vessels
Vessels waiting at anchorage at Indian ports
80
70
60
50
40
30
20
10
0
-10
Handy-Supramax
Source: Drewry Maritime Advisors, Global ports
Panamax
Capesize
Total
© Drewry 2014
Drewry | 4th International Conference on coal market in India
19
Agenda
Dry bulk demand and supply
Dry bulk freight market
Indian coal demand
Conclusion
© Drewry 2014
Drewry | 4th International Conference on coal market in India
20
Conclusion
++++
 Growth in Indian power generation, steel
manufacturing and cement industry
 Indian investors on the fore in the overseas
market
 Escalating growth in the dry bulk fleet
slowed
--- Bottlenecks in the supply of domestic coal
in India
 Cement and steel industry established in
the inland region have to rely more on
the domestic coal in India
Newbuilding ordering has picked up recently
Freight market and
coal imports in India
++++
 Decline in international coal prices
 Lower ocean freight rates
 Increasing overseas production capacity
--- Huge imports of coal could affect
the Indian coal mining industry
 Supply-demand gap is still on the higher
side
 Pressure on the International ocean freight
still exists
© Drewry 2014
Drewry | 4th International Conference on coal market in India
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