[xclusiv] S&P Report 09th December 2024

Market Commentary:

The Asian thermal coal market outlook signals challenging conditions for 2025, with bearish pressure on prices driven by weak demand fundamentals in key consuming markets. China’s coal imports are projected to be 380 million mt, down from 2024 levels, while India targets 206 million mt despite infrastructure spending increases. China’s subdued outlook stems from underwhelming stimulus measures in the property sector and potential U.S. tariff increases under the incoming Trump administration, expected to rise to 25% from 14% by mid-2025. Chinese GDP growth forecast stands at 4.1%, marking a 0.2 percentage point decline from September’s baseline. Indonesia maintains its position as the largest coal exporter, with approved production quotas of 917.16 million mt for 2025. However, smaller miners face challenges from suppressed prices and China’s aggressive price negotiations. The market also sees reduced long-term contracting, potentially increasing price volatility. India’s emphasis on domestic supply limits industrial coal imports, though the sponge-iron sector maintains steady South African coal purchases. Coastal power plants may increase imports due to rising power demand. Notable supply-side developments include depleting Indonesian mid- to high-CV coal reserves, Australia’s strong position in mid-CV exports to China, and Russia’s logistical constraints in Kuzbass region despite Elga’s infrastructure improvements. Reduced Chinese coal imports may weaken Panamax/Capesize demand on Indonesia-China routes, while India’s steady South African coal imports most probably will support Panamax demand on that route. Australian mid-CV coal exports to China provide stable Capesize employment. Russian logistical constraints may shift more Asian buyers to Australian/Indonesian supply, and reduced long-term contracting could increase spot market volatility. Indonesia’s high production quota suggests sustained vessel supply pressure. This combination of factors may lead to rate pressure on Pacific routes due to weaker Chinese demand, while opportunities exist in India-South Africa trade despite overall Indian import constraints. A potential ton-mile increase from shifting buyer preferences from Russian to Australian coal and coastal power plant demand in India provide some positive offsets. However, the overall outlook suggests challenging conditions for dry bulk owners, particularly in Pacific routes, with selective opportunities in specific trades.

The OPEC+ alliance has decided to postpone the easing of its production cuts for another quarter, citing uncertain demand growth and abundant supply. The gradual rollback of 2.2 million b/d of voluntary curbs, initially scheduled for January, will now be implemented from April. With only three weeks left of the year, global oil demand is on track to expand by 920 kb/d to an average 102.8 mb/d in 2024, compared with growth close to 2 mb/d last year and 1.2 mb/d per year on average over 2000-2019. China’s marked slowdown has been the main drag on demand, with its growth this year expected to average just a tenth of the 1.4 mb/d increase in 2023. Meanwhile, world oil supply is rising at a progressive rate. Following the November US elections, we continue to expect the United States to lead non-OPEC+ supply growth of 1.5 mb/d in both 2024 and 2025, along with higher output from Canada, Guyana and Argentina. Plagued by a number of unscheduled outages and operational underperformance this year, Brazil is expected to be a major source of growth next year. Total growth from the five American producers will more than cover expected demand growth in 2024 and 2025.

Sale and Purchase

Dry:

Another active week on the dry S&P market passed. The Capesize “OTSL Athena” – 174K/2007 SWS was sold for USD 24.5 mills, while the Post Panamax “Century Wave” – 92K/2013 Oshima, found new owners in China for USD 22 mills. Moving to Panamaxes,   “Navios Sagittarius” – 76K/2006 Sanoyas and “Stratton” – 74K/2004 Hudong Zhonghua were sold for USD 10.5 mills and low USD 7 mills respectively. Finally the supramax “Porthos” – 56K/2010 Jiangsu Hantong, was sold to the Indonesians Pt Pelayaran Bahtera Adhiguna for xs USD 13 mills.

Wet:

Tanker S&P activity was subdued this week. The “Songa Breeze”- 20K/2009 Fukuoka was sold for USD 24.8 mills   basis TC attached to Bahri at USD 20,250/day till April/May 2026, while the “Winter”- 13K/2009 21st Century changed hands for high USD 13 mills.