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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, 22 December 10
PEABODY ENERGY TO SOURCE INDONESIAN COAL FROM PT SUPRA BARA ENERGI (SBE) - COAL GEOLOGY
Coal Geology reported that, Peabody Energy has entered into an agreement to source coal from PT Supra Bara Energi (SBE), which will be sold on the e ...
Wednesday, 22 December 10
INDONESIAN COAL LOAD PORT WEATHER CONDITION AND DELAYS
COALspot.com - The several leading shipping agents in Indonesia, said due to rainy season in Indonesia, loading activities in coal loading ports hav ...
Wednesday, 22 December 10
COAL INDIA CLOSE TO BUYING 15% STAKE IN AUSTRALIAN MINE - ECONOMIC TIMES
Economic Times reported that, Coal India (CIL) is close to buying a stake between 10% to 15% in an Australian mine owned by Peabody, a US company.
...
Wednesday, 22 December 10
CAPESIZE FUTURES MARKET RATES ARE EXPECTED TO CONTINUE THEIR DRIFT DOWN IN 2011 - BRS
Nearly two months of weekly declines in the Baltic Capesize Index were finally halted last week with a small 1% increase Friday-to-Friday. The impro ...
Wednesday, 22 December 10
DRY BULK MARKET LOOKING FOR DIRECTION AMID HOLIDAYS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market isn’t exhibiting a “festive” behavior, thus cheering ship owners and investors alike. Instead, the industry&rs ...
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- Ind-Barath Power Infra Limited - India
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- Barasentosa Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Mines - Canada
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- European Bulk Services B.V. - Netherlands
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- Petron Corporation, Philippines
- Parliament of New Zealand
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- Orica Australia Pty. Ltd.
- Mjunction Services Limited - India
- Minerals Council of Australia
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- Electricity Generating Authority of Thailand
- Samtan Co., Ltd - South Korea
- Carbofer General Trading SA - India
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- Indonesian Coal Mining Association
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- Bulk Trading Sa - Switzerland
- Siam City Cement - Thailand
- PetroVietnam Power Coal Import and Supply Company
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- Georgia Ports Authority, United States
- White Energy Company Limited
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- Bangladesh Power Developement Board
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- Mercuria Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Leighton Contractors Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Riau Bara Harum - Indonesia
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- Meralco Power Generation, Philippines
- Therma Luzon, Inc, Philippines
- VISA Power Limited - India
- Port Waratah Coal Services - Australia
- Miang Besar Coal Terminal - Indonesia
- PTC India Limited - India
- Wilmar Investment Holdings
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Timah Investasi Mineral - Indoneisa
- Anglo American - United Kingdom
- Marubeni Corporation - India
- SMC Global Power, Philippines
- Sarangani Energy Corporation, Philippines
- McConnell Dowell - Australia
- Billiton Holdings Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Salva Resources Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- Manunggal Multi Energi - Indonesia
- Renaissance Capital - South Africa
- Medco Energi Mining Internasional
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
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- Central Electricity Authority - India
- Sojitz Corporation - Japan
- Bhoruka Overseas - Indonesia
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- Holcim Trading Pte Ltd - Singapore
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- The State Trading Corporation of India Ltd
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- Bank of Tokyo Mitsubishi UFJ Ltd
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- Antam Resourcindo - Indonesia
- Planning Commission, India
- Thiess Contractors Indonesia
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- IEA Clean Coal Centre - UK
- Formosa Plastics Group - Taiwan
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- Vijayanagar Sugar Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Malabar Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Independent Power Producers Association of India
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- Maheswari Brothers Coal Limited - India
- Bhatia International Limited - India
- Cement Manufacturers Association - India
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- Intertek Mineral Services - Indonesia
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- Africa Commodities Group - South Africa
- CNBM International Corporation - China
- Economic Council, Georgia
- Electricity Authority, New Zealand
- Indian Energy Exchange, India
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- Bukit Makmur.PT - Indonesia
- Ambuja Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- GN Power Mariveles Coal Plant, Philippines
- Trasteel International SA, Italy
- Coal and Oil Company - UAE
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- Binh Thuan Hamico - Vietnam
- Ministry of Transport, Egypt
- Mintek Dendrill Indonesia
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- Eastern Coal Council - USA
- Thai Mozambique Logistica
- Jaiprakash Power Ventures ltd
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- Bhushan Steel Limited - India
- South Luzon Thermal Energy Corporation
- Iligan Light & Power Inc, Philippines
- Australian Commodity Traders Exchange
- GMR Energy Limited - India
- Standard Chartered Bank - UAE
- Power Finance Corporation Ltd., India
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- India Bulls Power Limited - India
- Heidelberg Cement - Germany
- Lanco Infratech Ltd - India
- GAC Shipping (India) Pvt Ltd
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