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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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Thursday, 19 May 11
INDONESIAN COAL EXPORTS DROP 7.98 PERCENT IN APRIL
COALspot.com - Indonesian coal exports dropped to 2.168 million tons in April, and up 7.13 percent on the year and 7.98 percent below March, a ...
Thursday, 19 May 11
OVERSUPPLY, VERY LARGE ORE CARRIERS EAT UP ON DRY BULK FREIGHT RATES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
After a brief upward momentum which ended early last week, the Baltic Dry Index, the dry bulk market’s benchmark has returned to its usual pat ...
Wednesday, 18 May 11
THE US COAL INDUSTRY LOGGED EXPORTS OF AROUND 25M TONNES IN 1Q OF 2011 - BRS
Another slow decline in the bulk markets this week, with the BCI losing the most at nearly 5%, the BPI 2.8% and the smaller sizes sub-1% amounts. Th ...
Wednesday, 18 May 11
AKR AIMS TO SELL COAL WORTH RP216 BILLION - PAPER
Bisnis Indonesia, an Indonesia's one of the leading business paper reported that, PT AKR Corporindo Tbk has targeted coal sales valued at Rp216 bil ...
Wednesday, 18 May 11
OVERHAUL OF MINING LAW MAY DETER INVESTMENT, S&P SAYS - THE JAKARTA GLOBE
The Jakarta Globe, an Indonesian English language news paper reported that, A report by Standard & Poor’s Ratings Services that a regulatory ...
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- Intertek Mineral Services - Indonesia
- Eastern Coal Council - USA
- Thiess Contractors Indonesia
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- Edison Trading Spa - Italy
- Semirara Mining and Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Altura Mining Limited, Indonesia
- Therma Luzon, Inc, Philippines
- Parry Sugars Refinery, India
- Anglo American - United Kingdom
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Heidelberg Cement - Germany
- Global Coal Blending Company Limited - Australia
- Barasentosa Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Renaissance Capital - South Africa
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- Ministry of Finance - Indonesia
- Indian Energy Exchange, India
- London Commodity Brokers - England
- Kalimantan Lumbung Energi - Indonesia
- Marubeni Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Vedanta Resources Plc - India
- Lanco Infratech Ltd - India
- South Luzon Thermal Energy Corporation
- Bahari Cakrawala Sebuku - Indonesia
- Tata Chemicals Ltd - India
- Oldendorff Carriers - Singapore
- Electricity Authority, New Zealand
- Borneo Indobara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kumho Petrochemical, South Korea
- Gujarat Sidhee Cement - India
- Miang Besar Coal Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Africa Commodities Group - South Africa
- International Coal Ventures Pvt Ltd - India
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- Baramulti Group, Indonesia
- SMG Consultants - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Mines - Canada
- Thai Mozambique Logistica
- Central Java Power - Indonesia
- Larsen & Toubro Limited - India
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- Mjunction Services Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aditya Birla Group - India
- Minerals Council of Australia
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- Agrawal Coal Company - India
- Indogreen Group - Indonesia
- Siam City Cement PLC, Thailand
- Bharathi Cement Corporation - India
- Essar Steel Hazira Ltd - India
- Petron Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
- Singapore Mercantile Exchange
- Globalindo Alam Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Billiton Holdings Pty Ltd - Australia
- Latin American Coal - Colombia
- SN Aboitiz Power Inc, Philippines
- Eastern Energy - Thailand
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- Global Business Power Corporation, Philippines
- Posco Energy - South Korea
- Meenaskhi Energy Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- Siam City Cement - Thailand
- Malabar Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chamber of Mines of South Africa
- Medco Energi Mining Internasional
- Jindal Steel & Power Ltd - India
- Cement Manufacturers Association - India
- Bhushan Steel Limited - India
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- Sojitz Corporation - Japan
- Sree Jayajothi Cements Limited - India
- PowerSource Philippines DevCo
- Directorate Of Revenue Intelligence - India
- CIMB Investment Bank - Malaysia
- Port Waratah Coal Services - Australia
- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- Goldman Sachs - Singapore
- Electricity Generating Authority of Thailand
- Economic Council, Georgia
- Rashtriya Ispat Nigam Limited - India
- San Jose City I Power Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Bayan Resources Tbk. - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- Tamil Nadu electricity Board
- Gujarat Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- GMR Energy Limited - India
- Meralco Power Generation, Philippines
- Timah Investasi Mineral - Indoneisa
- Planning Commission, India
- Xindia Steels Limited - India
- Indonesian Coal Mining Association
- Trasteel International SA, Italy
- The University of Queensland
- Bukit Baiduri Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Simpson Spence & Young - Indonesia
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Indian Oil Corporation Limited
- OPG Power Generation Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Attock Cement Pakistan Limited
- Karbindo Abesyapradhi - Indoneisa
- Sakthi Sugars Limited - India
- Sinarmas Energy and Mining - Indonesia
- White Energy Company Limited
- Kapuas Tunggal Persada - Indonesia
- Orica Mining Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Mercator Lines Limited - India
- Savvy Resources Ltd - HongKong
- Uttam Galva Steels Limited - India
- Indika Energy - Indonesia
- Carbofer General Trading SA - India
- Sindya Power Generating Company Private Ltd
- Antam Resourcindo - Indonesia
- Romanian Commodities Exchange
- Kobexindo Tractors - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Star Paper Mills Limited - India
- Indo Tambangraya Megah - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMC Global Power, Philippines
- Sarangani Energy Corporation, Philippines
- Independent Power Producers Association of India
- CNBM International Corporation - China
- Formosa Plastics Group - Taiwan
- Videocon Industries ltd - India
- Leighton Contractors Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- The State Trading Corporation of India Ltd
- Energy Link Ltd, New Zealand
- Coastal Gujarat Power Limited - India
- Straits Asia Resources Limited - Singapore
- Australian Coal Association
- Bangladesh Power Developement Board
- Kohat Cement Company Ltd. - Pakistan
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- Commonwealth Bank - Australia
- Energy Development Corp, Philippines
- Bhatia International Limited - India
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- Parliament of New Zealand
- Chettinad Cement Corporation Ltd - India
- Ceylon Electricity Board - Sri Lanka
- ASAPP Information Group - India
- Ambuja Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- New Zealand Coal & Carbon
- Riau Bara Harum - Indonesia
- Mintek Dendrill Indonesia
- Bulk Trading Sa - Switzerland
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- Metalloyd Limited - United Kingdom
- Toyota Tsusho Corporation, Japan
- Krishnapatnam Port Company Ltd. - India
- Wilmar Investment Holdings
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
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