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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, 05 May 11
PANAMAXES LEAD DRY BULK MARKET TO HIGHER GROUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market’s benchmark, the Baltic Dry Index (BDI) managed to edge higher yesterday, rising by 1.81% to 1,292 points, in the first po ...
Thursday, 05 May 11
AKR NAMES KARUNIA AS COAL CONTRACTOR
Insider Stories reported that, PT AKR Corporindo Tbk has appointed PT Karunia Bumi Khatulistiwa as the contractor of coal mining concession in North ...
Tuesday, 03 May 11
DRY BULK MARKET OUTLOOK SEEN WEAK, AS SHIP OWNERS PILE UP MORE SHIPS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the Baltic Dry Index not trading yesterday, it’s worth taking a step back to see the current freight levels. First of all, capesizes and ...
Tuesday, 03 May 11
THE HANDY MARKET CONTINUED TO SLIDE DOWN - BRS
There were marginal increases in rates for the larger sizes this week, with the Cape index remaining stable and the Panamax index logging a 5% incre ...
Monday, 02 May 11
ADARO POSTS 11.7 PERCENT INCREASE IN REVENUES ON HIGHER PRICES - THE JAKARTA POST
The Jakarta Post reported that, Indonesia’s second-largest coal producer, PT Adaro Energy Tbk, announced an 11.7 percent increase in net reven ...
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- Vijayanagar Sugar Pvt Ltd - India
- Energy Development Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Trasteel International SA, Italy
- SN Aboitiz Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thiess Contractors Indonesia
- VISA Power Limited - India
- ICICI Bank Limited - India
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Global Coal Blending Company Limited - Australia
- Chamber of Mines of South Africa
- Siam City Cement PLC, Thailand
- Vizag Seaport Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Makarim & Taira - Indonesia
- PowerSource Philippines DevCo
- San Jose City I Power Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- Power Finance Corporation Ltd., India
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- Meenaskhi Energy Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- Global Green Power PLC Corporation, Philippines
- Kumho Petrochemical, South Korea
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- CNBM International Corporation - China
- Heidelberg Cement - Germany
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- Australian Coal Association
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- Savvy Resources Ltd - HongKong
- PetroVietnam Power Coal Import and Supply Company
- Africa Commodities Group - South Africa
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Tata Chemicals Ltd - India
- Edison Trading Spa - Italy
- Xindia Steels Limited - India
- Indogreen Group - Indonesia
- Vedanta Resources Plc - India
- PNOC Exploration Corporation - Philippines
- Attock Cement Pakistan Limited
- Globalindo Alam Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Agrawal Coal Company - India
- Wood Mackenzie - Singapore
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Central Electricity Authority - India
- Bukit Baiduri Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Latin American Coal - Colombia
- Merrill Lynch Commodities Europe
- Independent Power Producers Association of India
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Mintek Dendrill Indonesia
- Minerals Council of Australia
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- Renaissance Capital - South Africa
- PTC India Limited - India
- Simpson Spence & Young - Indonesia
- Antam Resourcindo - Indonesia
- Bhoruka Overseas - Indonesia
- Marubeni Corporation - India
- Samtan Co., Ltd - South Korea
- Salva Resources Pvt Ltd - India
- Parliament of New Zealand
- Ministry of Transport, Egypt
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- Ministry of Mines - Canada
- Dalmia Cement Bharat India
- Larsen & Toubro Limited - India
- Cement Manufacturers Association - India
- Kaltim Prima Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Ministry of Finance - Indonesia
- Wilmar Investment Holdings
- London Commodity Brokers - England
- Intertek Mineral Services - Indonesia
- Port Waratah Coal Services - Australia
- Essar Steel Hazira Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Lanco Infratech Ltd - India
- Coastal Gujarat Power Limited - India
- Oldendorff Carriers - Singapore
- Iligan Light & Power Inc, Philippines
- Standard Chartered Bank - UAE
- Semirara Mining and Power Corporation, Philippines
- Eastern Energy - Thailand
- South Luzon Thermal Energy Corporation
- Straits Asia Resources Limited - Singapore
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Australian Commodity Traders Exchange
- MS Steel International - UAE
- Singapore Mercantile Exchange
- Indo Tambangraya Megah - Indonesia
- Miang Besar Coal Terminal - Indonesia
- McConnell Dowell - Australia
- Interocean Group of Companies - India
- Price Waterhouse Coopers - Russia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- Banpu Public Company Limited - Thailand
- GMR Energy Limited - India
- Petron Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Madhucon Powers Ltd - India
- IEA Clean Coal Centre - UK
- Rashtriya Ispat Nigam Limited - India
- Gujarat Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Ind-Barath Power Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Bhatia International Limited - India
- CIMB Investment Bank - Malaysia
- Bulk Trading Sa - Switzerland
- OPG Power Generation Pvt Ltd - India
- Aditya Birla Group - India
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
- Kartika Selabumi Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Malabar Cements Ltd - India
- SMC Global Power, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Formosa Plastics Group - Taiwan
- Alfred C Toepfer International GmbH - Germany
- Mercuria Energy - Indonesia
- Economic Council, Georgia
- Kapuas Tunggal Persada - Indonesia
- Coalindo Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Orica Australia Pty. Ltd.
- Mercator Lines Limited - India
- Krishnapatnam Port Company Ltd. - India
- Jindal Steel & Power Ltd - India
- International Coal Ventures Pvt Ltd - India
- Sical Logistics Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Coal Council - USA
- Ambuja Cements Ltd - India
- White Energy Company Limited
- GVK Power & Infra Limited - India
- Grasim Industreis Ltd - India
- Sojitz Corporation - Japan
- Indian Oil Corporation Limited
- Bukit Makmur.PT - Indonesia
- Posco Energy - South Korea
- Siam City Cement - Thailand
- Leighton Contractors Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- SMG Consultants - Indonesia
- Kobexindo Tractors - Indoneisa
- Romanian Commodities Exchange
- Sindya Power Generating Company Private Ltd
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Global Business Power Corporation, Philippines
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tamil Nadu electricity Board
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- Sree Jayajothi Cements Limited - India
- Cigading International Bulk Terminal - Indonesia
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- Meralco Power Generation, Philippines
- New Zealand Coal & Carbon
- Ceylon Electricity Board - Sri Lanka
- Bharathi Cement Corporation - India
- Georgia Ports Authority, United States
- Metalloyd Limited - United Kingdom
- Anglo American - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Commonwealth Bank - Australia
- TeaM Sual Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Mjunction Services Limited - India
- Riau Bara Harum - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
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