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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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Wednesday, 26 January 11
DRY BULK MARKET TAKES YET ANOTHER NOSEDIVE, CAPESIZES LOOK RATHER UNATTRACTIVE AT THE MOMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The downturn of the dry bulk market sees no boundariers, disproving even those who thought that at least for the capesize market, the worst had pass ...
Tuesday, 25 January 11
DRY BULK RATES CONTINUED TO TUMBLE LAST WEEK - BRS
With weather-related problems affecting the short-term outlook, and new building deliveries the longer-term picture, dry bulk rates continued to tum ...
Tuesday, 25 January 11
R-POWER TO INVEST $5BN IN INDONESIA - THE TIMES OF INDIA
The Times of India reported that, In what is being seen as one of the largest foreign investments in Indonesia, Reliance Power will infuse $5 billio ...
Monday, 24 January 11
GOVT PROMISES COAL FOR PLN DESPITE PRICE SPIKES - THE JAKARTA POST
The Jakarta Post reported that, the government says state electricity company PT PLN will receive enough coal to fire its power plants, despite pric ...
Monday, 24 January 11
DRY BULK MARKETS DOWNTURN SEES NO RELIEF - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept falling for yet another week, with the industry’s benchmark, the Baltic Dry Index (BDI) losing an additional 4.79 ...
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- Essar Steel Hazira Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sojitz Corporation - Japan
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bukit Baiduri Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- Star Paper Mills Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Heidelberg Cement - Germany
- Makarim & Taira - Indonesia
- Meralco Power Generation, Philippines
- Formosa Plastics Group - Taiwan
- Parliament of New Zealand
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Australian Coal Association
- Neyveli Lignite Corporation Ltd, - India
- Bukit Asam (Persero) Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Sical Logistics Limited - India
- Aditya Birla Group - India
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- GMR Energy Limited - India
- ICICI Bank Limited - India
- Metalloyd Limited - United Kingdom
- GVK Power & Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining and Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Bhatia International Limited - India
- Tata Chemicals Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Siam City Cement - Thailand
- Port Waratah Coal Services - Australia
- Ambuja Cements Ltd - India
- Jaiprakash Power Ventures ltd
- Kapuas Tunggal Persada - Indonesia
- Cement Manufacturers Association - India
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- London Commodity Brokers - England
- Vijayanagar Sugar Pvt Ltd - India
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- Pipit Mutiara Jaya. PT, Indonesia
- Renaissance Capital - South Africa
- Goldman Sachs - Singapore
- IEA Clean Coal Centre - UK
- Planning Commission, India
- Videocon Industries ltd - India
- Sree Jayajothi Cements Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- PNOC Exploration Corporation - Philippines
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- Salva Resources Pvt Ltd - India
- Edison Trading Spa - Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Latin American Coal - Colombia
- International Coal Ventures Pvt Ltd - India
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- Meenaskhi Energy Private Limited - India
- Coastal Gujarat Power Limited - India
- Kobexindo Tractors - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Bangladesh Power Developement Board
- Deloitte Consulting - India
- Carbofer General Trading SA - India
- Mintek Dendrill Indonesia
- Mercuria Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- AsiaOL BioFuels Corp., Philippines
- Economic Council, Georgia
- Timah Investasi Mineral - Indoneisa
- Trasteel International SA, Italy
- Africa Commodities Group - South Africa
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- Eastern Coal Council - USA
- Kaltim Prima Coal - Indonesia
- Rio Tinto Coal - Australia
- Energy Development Corp, Philippines
- Straits Asia Resources Limited - Singapore
- South Luzon Thermal Energy Corporation
- Bahari Cakrawala Sebuku - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Sidhee Cement - India
- Samtan Co., Ltd - South Korea
- The University of Queensland
- GAC Shipping (India) Pvt Ltd
- Merrill Lynch Commodities Europe
- Iligan Light & Power Inc, Philippines
- Indonesian Coal Mining Association
- Interocean Group of Companies - India
- Thiess Contractors Indonesia
- CIMB Investment Bank - Malaysia
- Ind-Barath Power Infra Limited - India
- Agrawal Coal Company - India
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- White Energy Company Limited
- VISA Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Singapore Mercantile Exchange
- PTC India Limited - India
- Cigading International Bulk Terminal - Indonesia
- Eastern Energy - Thailand
- Global Business Power Corporation, Philippines
- PowerSource Philippines DevCo
- Indian Energy Exchange, India
- Ministry of Finance - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- Vizag Seaport Private Limited - India
- ASAPP Information Group - India
- Energy Link Ltd, New Zealand
- Romanian Commodities Exchange
- TeaM Sual Corporation - Philippines
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- Semirara Mining Corp, Philippines
- Parry Sugars Refinery, India
- Sakthi Sugars Limited - India
- Standard Chartered Bank - UAE
- Electricity Authority, New Zealand
- The State Trading Corporation of India Ltd
- Chamber of Mines of South Africa
- Grasim Industreis Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Indogreen Group - Indonesia
- New Zealand Coal & Carbon
- Orica Australia Pty. Ltd.
- Indo Tambangraya Megah - Indonesia
- Bhushan Steel Limited - India
- Wood Mackenzie - Singapore
- Aboitiz Power Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- Minerals Council of Australia
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- Leighton Contractors Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- Jorong Barutama Greston.PT - Indonesia
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Mjunction Services Limited - India
- Holcim Trading Pte Ltd - Singapore
- CNBM International Corporation - China
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- India Bulls Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Manunggal Multi Energi - Indonesia
- SMG Consultants - Indonesia
- Bhoruka Overseas - Indonesia
- Central Java Power - Indonesia
- Xindia Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- SN Aboitiz Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Borneo Indobara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Karaikal Port Pvt Ltd - India
- Ministry of Mines - Canada
- Vedanta Resources Plc - India
- Posco Energy - South Korea
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Electricity Generating Authority of Thailand
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