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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, 13 January 11
DRY BULK RATES HIT NEW MULTI-MONTH LOWS ON AUSTRALIAS FLOODS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Floods in Australia’s Queensland has seriously disrupted coal shipments and together with a flood of vessels has pushed freight rates for dry ...
Wednesday, 12 January 11
BULKER DELIVERIES WEIGHING IN ON FREIGHT RATES KEEPING SENTIMENT ON A NEGATIVE MODE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A flurry of new buildings still hitting the water has caught up for good with the freight market, with capesizes unable to weather the storm. With r ...
Tuesday, 11 January 11
SUPRAMAX TRIP VIA INDONESIA TO INDIA US$ 8,000 PER DAY
Despite continued growth in the bulk trades, the delivery of new vessels is beginning to take its toll. The BDI continued its decline, finishing las ...
Tuesday, 11 January 11
DRY BULK MARKET REACHES NEW LOWS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market’s benchmark index, the Baltic Dry Index (BDI) lost further ground in the beginning of the week, following the trend of the ...
Monday, 10 January 11
MINING INVESTMENT TARGET TOO LOW - TEMPO INTERACTIVE
TEMPO Interactive reported that, the Indonesian Mining Association’s executive director, Priyo Pribadi, believes the government’s invest ...
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- Deloitte Consulting - India
- GAC Shipping (India) Pvt Ltd
- Independent Power Producers Association of India
- Kartika Selabumi Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Holcim Trading Pte Ltd - Singapore
- Indonesian Coal Mining Association
- PetroVietnam Power Coal Import and Supply Company
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- Interocean Group of Companies - India
- Bangladesh Power Developement Board
- Global Green Power PLC Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Sree Jayajothi Cements Limited - India
- Simpson Spence & Young - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Carbofer General Trading SA - India
- Pipit Mutiara Jaya. PT, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Development Corp, Philippines
- Aditya Birla Group - India
- Kalimantan Lumbung Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Sojitz Corporation - Japan
- Baramulti Group, Indonesia
- Orica Mining Services - Indonesia
- Port Waratah Coal Services - Australia
- Jorong Barutama Greston.PT - Indonesia
- Uttam Galva Steels Limited - India
- Medco Energi Mining Internasional
- Jaiprakash Power Ventures ltd
- Thai Mozambique Logistica
- Economic Council, Georgia
- Tamil Nadu electricity Board
- Anglo American - United Kingdom
- Malabar Cements Ltd - India
- Thiess Contractors Indonesia
- The University of Queensland
- Goldman Sachs - Singapore
- Larsen & Toubro Limited - India
- Lanco Infratech Ltd - India
- VISA Power Limited - India
- London Commodity Brokers - England
- Miang Besar Coal Terminal - Indonesia
- McConnell Dowell - Australia
- PowerSource Philippines DevCo
- Timah Investasi Mineral - Indoneisa
- Indian Oil Corporation Limited
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- SMG Consultants - Indonesia
- Pendopo Energi Batubara - Indonesia
- Ministry of Finance - Indonesia
- Mjunction Services Limited - India
- CIMB Investment Bank - Malaysia
- Mintek Dendrill Indonesia
- Planning Commission, India
- Minerals Council of Australia
- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Cement Manufacturers Association - India
- GVK Power & Infra Limited - India
- ASAPP Information Group - India
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Power Finance Corporation Ltd., India
- Orica Australia Pty. Ltd.
- Eastern Coal Council - USA
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Coalindo Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Edison Trading Spa - Italy
- Altura Mining Limited, Indonesia
- Krishnapatnam Port Company Ltd. - India
- CNBM International Corporation - China
- Latin American Coal - Colombia
- LBH Netherlands Bv - Netherlands
- Ministry of Transport, Egypt
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- GMR Energy Limited - India
- Bhoruka Overseas - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Rio Tinto Coal - Australia
- The Treasury - Australian Government
- Petron Corporation, Philippines
- Wood Mackenzie - Singapore
- Siam City Cement - Thailand
- IHS Mccloskey Coal Group - USA
- Leighton Contractors Pty Ltd - Australia
- MS Steel International - UAE
- Dalmia Cement Bharat India
- Eastern Energy - Thailand
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- Siam City Cement PLC, Thailand
- Central Electricity Authority - India
- Kapuas Tunggal Persada - Indonesia
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- Coal and Oil Company - UAE
- Marubeni Corporation - India
- Trasteel International SA, Italy
- Oldendorff Carriers - Singapore
- Binh Thuan Hamico - Vietnam
- Romanian Commodities Exchange
- Bharathi Cement Corporation - India
- Price Waterhouse Coopers - Russia
- Heidelberg Cement - Germany
- Meralco Power Generation, Philippines
- Indian Energy Exchange, India
- Bahari Cakrawala Sebuku - Indonesia
- Australian Commodity Traders Exchange
- Coastal Gujarat Power Limited - India
- Renaissance Capital - South Africa
- Ambuja Cements Ltd - India
- Energy Link Ltd, New Zealand
- PTC India Limited - India
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Coal Association
- India Bulls Power Limited - India
- Sical Logistics Limited - India
- Electricity Authority, New Zealand
- Bhushan Steel Limited - India
- South Luzon Thermal Energy Corporation
- Bukit Makmur.PT - Indonesia
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
- TNB Fuel Sdn Bhd - Malaysia
- Manunggal Multi Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Xindia Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Parry Sugars Refinery, India
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- Gujarat Sidhee Cement - India
- Iligan Light & Power Inc, Philippines
- Parliament of New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- TeaM Sual Corporation - Philippines
- Kumho Petrochemical, South Korea
- Formosa Plastics Group - Taiwan
- ICICI Bank Limited - India
- Global Coal Blending Company Limited - Australia
- Maharashtra Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bulk Trading Sa - Switzerland
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Indika Energy - Indonesia
- Mercuria Energy - Indonesia
- Semirara Mining Corp, Philippines
- Salva Resources Pvt Ltd - India
- Sakthi Sugars Limited - India
- SMC Global Power, Philippines
- Intertek Mineral Services - Indonesia
- Standard Chartered Bank - UAE
- Cigading International Bulk Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Star Paper Mills Limited - India
- Mercator Lines Limited - India
- Bhatia International Limited - India
- Commonwealth Bank - Australia
- Wilmar Investment Holdings
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Jindal Steel & Power Ltd - India
- The State Trading Corporation of India Ltd
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Kobexindo Tractors - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Borneo Indobara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Electricity Generating Authority of Thailand
- Tata Chemicals Ltd - India
- International Coal Ventures Pvt Ltd - India
- Africa Commodities Group - South Africa
- European Bulk Services B.V. - Netherlands
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Posco Energy - South Korea
- Madhucon Powers Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- Sarangani Energy Corporation, Philippines
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