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Saturday, 17 April 10
DRY BULK SHIPPING MARKET ANALYSIS - BIMCO
 Strong Chinese steel market is set to cushion the flood of new Capesize vessels entering the dry bulk fleet Demand: The first quarter of 2010 saw ups and down for the BDI with the index hovering around 3,000. It seems as if the market is balanced on a knife edge. High supply is likely to overmatch even very healthy demand growth rates – strongly dependant on China.
Chinese iron ore imports continue to remain firm. In the first quarter of this year, China has imported an average of 51.68 million tons (mt) of ore. In 2009, iron ore imports reached a monthly average of 52.37mt, leaving this year’s ore imports just 1% short of 2009 levels, but still very healthy at 14.7mt (40%) more than 2008 levels. With steel prices rising above those of 2009 – Chinese iron ore imports will continue as the prime driver in the dry bulk market.
However, the present spot rates are not expected to stay that low as time charter rates stay strong as illustrated by the reported BHP Billiton booking of a Capesize vessel for 3-5 months at USD/day 37,000 - more than 30% premium to spot. The current FFA (Forward Freight Agreement) rates also point in that direction with Capesize Q2 FFA going up to USD/day 35,750 and Panamax Q2 going down to USD/day 28,500.
Supply:
The active fleet has grown by 3.5% during first quarter of 2010, caused by deliveries of 16 million DWT of newbuildings offset by just 1 million DWT being demolished. Since BIMCO Bulletin 1/2010, the total dry bulk order book has increased by 5.5 million DWT. It seems as though the optimism from surprisingly healthy freight rate levels in 2009 has made contracting go on – despite the fact that the 285 million DWT that comprises the order book today is doomed to make challenging markets in short as well as long-term.
Year-to-date deliveries in capesize amount to 47 ships comprising 8.7 million new DWT, resulting in an increased fleet size of 5% so far in 2010 and active Capesize vessel number 1,000 has just been delivered. At the beginning of 2009, 822 Capesize vessels were active, but an inflow of 112 newbuildings and 29 converted vessels was added to the existing fleet, counterbalanced by just 9 demolitions, leaving a fleet tonnage growth of 18.5% in 2009.
An additional 305 Capesize vessels are scheduled for delivery in 2010, but “only” 183 will hit the water, when applying the BIMCO assumptions for supply forecast as described next to the graphics. In total, this will in turn mean that Capesize tonnage could grow by 21% when fine-tuning for an average scrapping age of 26 years for Capesize vessels
as compared to the average of 30 years for the overall fleet.
BIMCO forecasts inflow of new dry bulk tonnage in 2010 to reach 76 million DWT, offset by demolition of as much as 13 million DWT. This could make the fleet grow by 14% in 2010 as compared to 10% in 2009. Deliveries in 2011 are forecast to be even higher before supply growth comes down in 2012.
Clarkson’s have scheduled deliveries of 120-130 million DWT in 2010. BIMCO assumes that 10% of the entire order book will not be built and one third of the rest will be deferred by one year. Furthermore, the demolition potential is calculated to 49 million DWT, equal to all vessels aged 30 or above to be demolished by the end of 2013.
Outlook:
The fortunes of the dry bulk markets are basically down to the fortunes of China. March was the 13th straight month that the official Chinese PMI (Purchasing Managers Index) has stood above the threshold of 50 that demarcates expansion from contraction, indicating that the Chinese economy is on a stable and relatively fast growth track. PMI rose to 55.1% in March, up 3.1% on last month, according to data released by the China Federation of Logistics & Purchasing.
The housing market and huge infrastructure projects have been primary beneficiaries of the Chinese Government’s stimulus package. With the construction sector being the number one steel user, consuming around 50% of Chinese steel, it goes without saying that a continuance of the strength in this sector is vital for the health of the dry bulk freight rates.
Freight rates are forecast by MSI to drift sideways on current levels over the next 6 months. Capesize rates are forecast to stay around USD 30-35,000 per day while the smaller vessel types could see rates go down from current levels to around USD 16-24,000 per day.
Current news:
BHP Billiton has reached agreement to sell the majority of its iron ore to Asian steel mills on shorter term contracts, ending more than 40 years of annual pricing. Brazilian Vale have also inked new iron ore prices – resulting in price hikes of around 90%– indicating a continued strong demand for the vital raw material in steel production. Contract prices for coking coal are also expected higher.
Meanwhile, the China-Rio Tinto bribery case has just been settled. The court in Shanghai sentenced the four convicted Australian mining giant Rio Tinto employees to prison for a total 39 years. They were found guilty after having admitted to accepting about USD 13 million in bribes from private steel mills that wanted to avoid purchasing iron ore from more costly state-run mills. The arrangement undercut the state’s China Iron and Steel Association’s desire for a united front in negotiating with Australian suppliers. Shortly after the verdict the employees were sacked for clear violation of Chinese Law and Rio Tinto’s code of conduct. China claims its steel sector paid as much at USD 160 million too much last year for iron ore because of bribery and espionage. While the three Chinese defendants have decided to appeal terms, the Australian national Stern Hu appears to be the only one not appealing terms.
Source: Bimco / Hellenic Shipping
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Friday, 05 August 11
RIO TINTO SIGNS MOU WITH JINDAL STEEL AND POWER ON ADVANCING HISMELT TECHNOLOGY
Press Release - Rio Tinto has signed a Memorandum of Understanding (MoU) with Jindal Steel and Power Limited (JSPL) to take the next step in g ...
Friday, 05 August 11
THE WORLDS LARGEST COAL MINER TO INVEST IN INDO MINES
COALspot.com - Golden Energy Mines (GEMS) might go for initial public offering (IPO) by the end of September 2011. The company is planning to off lo ...
Friday, 05 August 11
DRY BULK MARKET FINALLY TAKES A BREATHER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market at last caught a break mid-week after a constant fall which saw the industry’s benchmark, the BDI (Baltic Dry Index) falli ...
Thursday, 04 August 11
THE HBA CONTINUES TO FALL IN AUGUST
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia has set the August 2011 coal reference price at US$ 117.21 per ton slightly low ...
Wednesday, 03 August 11
DEWA RETURNS TO US$2.65 MIO NET PROFIT - INSIDER STORIES
Coal mining contractor PT Darma Henwa Tbk (DEWA), that most of its revenue is contributed by Kaltim Prima Coal and Arutmin Indonesia, returned to ne ...
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- Sree Jayajothi Cements Limited - India
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Sojitz Corporation - Japan
- Planning Commission, India
- Makarim & Taira - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Borneo Indobara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- Aboitiz Power Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Miang Besar Coal Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Bhatia International Limited - India
- PTC India Limited - India
- The State Trading Corporation of India Ltd
- McConnell Dowell - Australia
- Leighton Contractors Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Bangladesh Power Developement Board
- Madhucon Powers Ltd - India
- Wilmar Investment Holdings
- LBH Netherlands Bv - Netherlands
- VISA Power Limited - India
- Electricity Generating Authority of Thailand
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Star Paper Mills Limited - India
- Kaltim Prima Coal - Indonesia
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Xindia Steels Limited - India
- Parry Sugars Refinery, India
- Thiess Contractors Indonesia
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Indogreen Group - Indonesia
- Australian Coal Association
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- Rio Tinto Coal - Australia
- Medco Energi Mining Internasional
- Chamber of Mines of South Africa
- Central Java Power - Indonesia
- Mjunction Services Limited - India
- Kartika Selabumi Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Tata Chemicals Ltd - India
- Australian Commodity Traders Exchange
- Sical Logistics Limited - India
- Sinarmas Energy and Mining - Indonesia
- London Commodity Brokers - England
- Straits Asia Resources Limited - Singapore
- Meenaskhi Energy Private Limited - India
- Ambuja Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Coalindo Energy - Indonesia
- Romanian Commodities Exchange
- Wood Mackenzie - Singapore
- Cigading International Bulk Terminal - Indonesia
- Indonesian Coal Mining Association
- Simpson Spence & Young - Indonesia
- Baramulti Group, Indonesia
- Deloitte Consulting - India
- GVK Power & Infra Limited - India
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- Cement Manufacturers Association - India
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- Siam City Cement PLC, Thailand
- Siam City Cement - Thailand
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- South Luzon Thermal Energy Corporation
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- Bukit Baiduri Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Heidelberg Cement - Germany
- Holcim Trading Pte Ltd - Singapore
- Iligan Light & Power Inc, Philippines
- Energy Development Corp, Philippines
- Vedanta Resources Plc - India
- Asmin Koalindo Tuhup - Indonesia
- Petron Corporation, Philippines
- Bharathi Cement Corporation - India
- White Energy Company Limited
- Electricity Authority, New Zealand
- Bhoruka Overseas - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Directorate Of Revenue Intelligence - India
- SMC Global Power, Philippines
- Interocean Group of Companies - India
- Alfred C Toepfer International GmbH - Germany
- Savvy Resources Ltd - HongKong
- PetroVietnam Power Coal Import and Supply Company
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- CIMB Investment Bank - Malaysia
- TNB Fuel Sdn Bhd - Malaysia
- Independent Power Producers Association of India
- Vijayanagar Sugar Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Uttam Galva Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- The University of Queensland
- Ceylon Electricity Board - Sri Lanka
- Dalmia Cement Bharat India
- Gujarat Mineral Development Corp Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- India Bulls Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Timah Investasi Mineral - Indoneisa
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
- Ministry of Mines - Canada
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- Minerals Council of Australia
- Mercator Lines Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Anglo American - United Kingdom
- Attock Cement Pakistan Limited
- Marubeni Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- Kapuas Tunggal Persada - Indonesia
- Economic Council, Georgia
- Ind-Barath Power Infra Limited - India
- Carbofer General Trading SA - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Merrill Lynch Commodities Europe
- SN Aboitiz Power Inc, Philippines
- Bhushan Steel Limited - India
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Central Electricity Authority - India
- MS Steel International - UAE
- Rashtriya Ispat Nigam Limited - India
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
- Kideco Jaya Agung - Indonesia
- Kepco SPC Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- SMG Consultants - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- San Jose City I Power Corp, Philippines
- Altura Mining Limited, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- Manunggal Multi Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Sakthi Sugars Limited - India
- Global Coal Blending Company Limited - Australia
- Indika Energy - Indonesia
- Standard Chartered Bank - UAE
- International Coal Ventures Pvt Ltd - India
- Grasim Industreis Ltd - India
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- The Treasury - Australian Government
- Meralco Power Generation, Philippines
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Ministry of Finance - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Singapore Mercantile Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Metalloyd Limited - United Kingdom
- Bulk Trading Sa - Switzerland
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