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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, 20 January 11
DRY BULK MARKETS FALL SEES NO END - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Pundits indicating that the dry bulk market’s sentiment remains weak were justified, as the industry’s benchmark, the Baltic Dry Index ( ...
Wednesday, 19 January 11
DRY BULK MARKET HAS BOTTOMED OUT, AS WEATHER IN AUSTRALIA DIALS DOWN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has finally halted its plunge, after a devastating week of yet more losses. The industry’s benchmark, the Baltic Dry Index ...
Tuesday, 18 January 11
MINISTRY SEEKS COAL FROM INDONESIA - SUNDAY OBSERVER
Sunday Observer reported that, Ministry of Power and Energy is to explore the possibilities of importing quality coal from Indonesia.
Minister Pa ...
Tuesday, 18 January 11
DRY BULK MARKET HAS BOTTOMED OUT, AS WEATHER IN AUSTRALIA DIALS DOWN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has finally halted its plunge, after a devastating week of yet more losses. The industry’s benchmark, the Baltic Dry Index ...
Sunday, 16 January 11
STANCHART GLOBAL RESEARCH SEES COAL PRICE RISING ON SUPPLY DISRUPTION - BURSA MALAYSIA MARKET NEWS
Bursa Malaysia Market News reported that, Standard Chartered Global Research has upgraded its 2011 forecasts for global thermal coal prices based on ...
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- Banpu Public Company Limited - Thailand
- Dalmia Cement Bharat India
- India Bulls Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Indogreen Group - Indonesia
- Commonwealth Bank - Australia
- Malabar Cements Ltd - India
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Oldendorff Carriers - Singapore
- Straits Asia Resources Limited - Singapore
- Maheswari Brothers Coal Limited - India
- Kideco Jaya Agung - Indonesia
- Lanco Infratech Ltd - India
- Timah Investasi Mineral - Indoneisa
- Ambuja Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- MS Steel International - UAE
- Cigading International Bulk Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- Videocon Industries ltd - India
- Mintek Dendrill Indonesia
- TeaM Sual Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhatia International Limited - India
- Thiess Contractors Indonesia
- Global Coal Blending Company Limited - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- PowerSource Philippines DevCo
- Therma Luzon, Inc, Philippines
- McConnell Dowell - Australia
- ASAPP Information Group - India
- Tata Chemicals Ltd - India
- Coastal Gujarat Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Mjunction Services Limited - India
- San Jose City I Power Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Transport, Egypt
- The University of Queensland
- Bulk Trading Sa - Switzerland
- Directorate General of MIneral and Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- Larsen & Toubro Limited - India
- Mercuria Energy - Indonesia
- Ministry of Finance - Indonesia
- Bukit Makmur.PT - Indonesia
- Baramulti Group, Indonesia
- Eastern Coal Council - USA
- Bhushan Steel Limited - India
- Siam City Cement - Thailand
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- Rashtriya Ispat Nigam Limited - India
- European Bulk Services B.V. - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Salva Resources Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- Bangladesh Power Developement Board
- Aditya Birla Group - India
- Sree Jayajothi Cements Limited - India
- IHS Mccloskey Coal Group - USA
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Economic Council, Georgia
- Planning Commission, India
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Australian Commodity Traders Exchange
- Kumho Petrochemical, South Korea
- Renaissance Capital - South Africa
- Ind-Barath Power Infra Limited - India
- Riau Bara Harum - Indonesia
- Metalloyd Limited - United Kingdom
- Petron Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Simpson Spence & Young - Indonesia
- GMR Energy Limited - India
- Sical Logistics Limited - India
- Price Waterhouse Coopers - Russia
- Electricity Generating Authority of Thailand
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- Power Finance Corporation Ltd., India
- Mercator Lines Limited - India
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- Electricity Authority, New Zealand
- ICICI Bank Limited - India
- The State Trading Corporation of India Ltd
- Uttam Galva Steels Limited - India
- Wilmar Investment Holdings
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- Singapore Mercantile Exchange
- Holcim Trading Pte Ltd - Singapore
- Meenaskhi Energy Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Essar Steel Hazira Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Madhucon Powers Ltd - India
- Bayan Resources Tbk. - Indonesia
- Central Java Power - Indonesia
- Star Paper Mills Limited - India
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- Altura Mining Limited, Indonesia
- Siam City Cement PLC, Thailand
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- CNBM International Corporation - China
- Standard Chartered Bank - UAE
- Posco Energy - South Korea
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
- Jaiprakash Power Ventures ltd
- Miang Besar Coal Terminal - Indonesia
- PTC India Limited - India
- Tamil Nadu electricity Board
- Gujarat Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Merrill Lynch Commodities Europe
- Pipit Mutiara Jaya. PT, Indonesia
- Anglo American - United Kingdom
- Energy Development Corp, Philippines
- Wood Mackenzie - Singapore
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- Eastern Energy - Thailand
- Trasteel International SA, Italy
- Bukit Baiduri Energy - Indonesia
- Medco Energi Mining Internasional
- Alfred C Toepfer International GmbH - Germany
- International Coal Ventures Pvt Ltd - India
- Thai Mozambique Logistica
- Aboitiz Power Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- VISA Power Limited - India
- Coalindo Energy - Indonesia
- Gujarat Sidhee Cement - India
- Borneo Indobara - Indonesia
- Carbofer General Trading SA - India
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- Indika Energy - Indonesia
- The Treasury - Australian Government
- OPG Power Generation Pvt Ltd - India
- Heidelberg Cement - Germany
- Orica Australia Pty. Ltd.
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- Goldman Sachs - Singapore
- Makarim & Taira - Indonesia
- LBH Netherlands Bv - Netherlands
- Samtan Co., Ltd - South Korea
- IEA Clean Coal Centre - UK
- CIMB Investment Bank - Malaysia
- Port Waratah Coal Services - Australia
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Grasim Industreis Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Australian Coal Association
- Orica Mining Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Intertek Mineral Services - Indonesia
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- Xindia Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Vedanta Resources Plc - India
- Barasentosa Lestari - Indonesia
- Cement Manufacturers Association - India
- Bhoruka Overseas - Indonesia
- Globalindo Alam Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- Kepco SPC Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Latin American Coal - Colombia
- Deloitte Consulting - India
- White Energy Company Limited
- Minerals Council of Australia
- Attock Cement Pakistan Limited
- Vijayanagar Sugar Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
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