Lower Level of Dry Bulk Spot Chartering Activity

Through the first three days of this week, the Baltic Dry Index has decreased by 67 points to 1,239 points. This represents a decrease of 5% from the end of last week. Capesize rates have fallen by a significant amount and remain very volatile as of late. However, the decline in capesize rates has come due to a lack of Atlantic basin cargoes. Capesize rates are likely to increase as soon as Atlantic basin cargoes return to the market in earnest. Overall, global dry bulk cargo volume has been lower this week than seen during the first three days of last week. A total of 51 dry bulk cargoes have been chartered in the spot market so far this week. In comparison, 63 cargoes were chartered during the first three days of last week.

Robust Indian Thermal Coal Imports Expected

Power plant coal stockpiles in India now stand at approximately 10 million tons. While stockpiles have continued to increase, they still remain at very low levels. As has continued to be the case in the dry bulk market, Indian thermal coal-derived electricity production is set to rise even further in the near term as peak winter demand season in India is fast approaching. Overall, there remains an urgent need to further restock India’s coal stockpiles, and near-term prospects for Indian thermal coal imports remain encouraging. This is most beneficial for the panamax and supramax segments of the dry bulk market, as these are the types of vessels most often used to export thermal coal to India. Going forward, Indian thermal coal-derived generation is set to reach an extremely high level this December as Indian thermal coal-derived generation traditionally sets a record in December of every year. Indian thermal coal imports will be robust.

No Major Surge in Chinese Thermal Coal Imports Expected

While the prospects for Indian thermal coal imports remain very positive, prospects for Chinese thermal coal imports remain negative. As of November 10th, coal stockpiles at major Chinese power plants stood at approximately 98.3 million tons. This marks an 18.8 million ton (24%) rise from the start of September and is the largest amount ever stockpiled. The robust amount of stockpiles continues to restrict Chinese thermal coal imports by a large extent. Going forward, peak winter demand electricity season is fast approaching in China, and China’s seasonal surge in rainfall and hydropower production season has come to an end. While this will help boost demand for thermal coal, power plant coal stockpiles are simply at a very high level and remain negative for import prospects.