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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, 29 July 10
GOVT TOO OPTIMISTIC ON IRON, COAL PRICE
Federal government forecasts of continued strength in iron ore and coal prices, which underpin revenue expectations for the proposed new mining tax, ...
Thursday, 29 July 10
BALTIC INDEXES ARE POSITIVE SINCE A FEW DAYS
Handy
Baltic indexes are positive since a few days which could mean that markets have bottomed out (as we correctly predicted in our report of las ...
Wednesday, 28 July 10
INDONESIA'S MERUKH SECURES US$200 MLN INVESTMENT FROM SAN MIGUEL
Trading Market Reported that, Indonesian mining company Merukh Enterprises said it has secured an investment commitment of US$200 million from the P ...
Wednesday, 28 July 10
RIZAL RISJAD MAY OWN 10% BERAU ENERGY
Rizal Risjad, son of Indonesian tycoon Ibrahim Risjad, might own 10% stakes in PT Berau Coal Energy Tbk (BRAU), parent company of Indonesia's fifth ...
Wednesday, 28 July 10
UNUSUAL RAINS TO HIT COAL EXPORTS
COALspot.com: Heavy rains in South and East Kalimantan have compelled coal exporters to delay or cancel coal exports. PT Bayan and PT. TIA hav ...
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- Eastern Coal Council - USA
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- Goldman Sachs - Singapore
- Sical Logistics Limited - India
- Altura Mining Limited, Indonesia
- Kepco SPC Power Corporation, Philippines
- Chamber of Mines of South Africa
- Binh Thuan Hamico - Vietnam
- Sojitz Corporation - Japan
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Mjunction Services Limited - India
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Larsen & Toubro Limited - India
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- Parry Sugars Refinery, India
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Electricity Authority, New Zealand
- IEA Clean Coal Centre - UK
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Mines - Canada
- SMG Consultants - Indonesia
- South Luzon Thermal Energy Corporation
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bulk Trading Sa - Switzerland
- London Commodity Brokers - England
- The University of Queensland
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- Makarim & Taira - Indonesia
- SN Aboitiz Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- PNOC Exploration Corporation - Philippines
- Power Finance Corporation Ltd., India
- GMR Energy Limited - India
- Port Waratah Coal Services - Australia
- Kalimantan Lumbung Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- Star Paper Mills Limited - India
- Indogreen Group - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Aditya Birla Group - India
- Thiess Contractors Indonesia
- Kaltim Prima Coal - Indonesia
- Tamil Nadu electricity Board
- Deloitte Consulting - India
- Thai Mozambique Logistica
- Australian Commodity Traders Exchange
- Bangladesh Power Developement Board
- Indika Energy - Indonesia
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- Mercator Lines Limited - India
- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- Indian Oil Corporation Limited
- Interocean Group of Companies - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Metalloyd Limited - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- ASAPP Information Group - India
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Vizag Seaport Private Limited - India
- Jaiprakash Power Ventures ltd
- Aboitiz Power Corporation - Philippines
- Bhatia International Limited - India
- Edison Trading Spa - Italy
- TNB Fuel Sdn Bhd - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Dalmia Cement Bharat India
- Price Waterhouse Coopers - Russia
- Therma Luzon, Inc, Philippines
- Malabar Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Economic Council, Georgia
- Ind-Barath Power Infra Limited - India
- Banpu Public Company Limited - Thailand
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Renaissance Capital - South Africa
- Rashtriya Ispat Nigam Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Sree Jayajothi Cements Limited - India
- Energy Development Corp, Philippines
- Central Java Power - Indonesia
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Coal Association
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement PLC, Thailand
- New Zealand Coal & Carbon
- Borneo Indobara - Indonesia
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- Electricity Generating Authority of Thailand
- India Bulls Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Salva Resources Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Straits Asia Resources Limited - Singapore
- OPG Power Generation Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Madhucon Powers Ltd - India
- Chettinad Cement Corporation Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- White Energy Company Limited
- Essar Steel Hazira Ltd - India
- Bharathi Cement Corporation - India
- Coastal Gujarat Power Limited - India
- Cement Manufacturers Association - India
- Bayan Resources Tbk. - Indonesia
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- Karbindo Abesyapradhi - Indoneisa
- Kobexindo Tractors - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Krishnapatnam Port Company Ltd. - India
- Miang Besar Coal Terminal - Indonesia
- Carbofer General Trading SA - India
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- Ministry of Finance - Indonesia
- Meralco Power Generation, Philippines
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- VISA Power Limited - India
- Vedanta Resources Plc - India
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- Alfred C Toepfer International GmbH - Germany
- ICICI Bank Limited - India
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- PowerSource Philippines DevCo
- Marubeni Corporation - India
- Indonesian Coal Mining Association
- Simpson Spence & Young - Indonesia
- Videocon Industries ltd - India
- Rio Tinto Coal - Australia
- Romanian Commodities Exchange
- Oldendorff Carriers - Singapore
- Maheswari Brothers Coal Limited - India
- Ambuja Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Planning Commission, India
- McConnell Dowell - Australia
- Standard Chartered Bank - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Orica Mining Services - Indonesia
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- Global Coal Blending Company Limited - Australia
- LBH Netherlands Bv - Netherlands
- Globalindo Alam Lestari - Indonesia
- Mintek Dendrill Indonesia
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- CNBM International Corporation - China
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Green Power PLC Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Manunggal Multi Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Posco Energy - South Korea
- Kumho Petrochemical, South Korea
- Commonwealth Bank - Australia
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