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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, 15 July 10
NO IMPROVEMENT IN THE DRY BULK MARKET - INTERMODAL
Broker’s insight
With the Baltic Dry Index today (13/7/2010) standing at 1,790 points - the lowest point since early May 2009 - ...
Thursday, 15 July 10
IRON ORE PRICING MECHANISMS PUT ON THE SPOT
THE new iron ore pricing mechanisms that killed off the annual benchmark system are coming under pressure. The spot price of the steel feed has fall ...
Thursday, 15 July 10
NTPC TO PURSUE COAL MINE ACQUISITION IN AUSTRALIA, INDONESIA - BUSINESS STANDARD
Business-Standard reported that, NTPC, the India’s largest power producer, has set the ball rolling to acquire coal mines or form joint ventur ...
Wednesday, 14 July 10
SUCCESSFUL COMMISSIONING OF GTLE LOW RANK COAL UPGRADING PLANT
COALspot.com: GTL Energy Ltd (GTL Energy) announced that construction and commissioning of its proprietary ‘first-of-a-kind’, low rank c ...
Tuesday, 13 July 10
BUMI TO PRODUCE MORE THAN 67 MILLION TONS OF COAL IN 2010
COALspot.com: Bumi resources, Indonesia’s largest coal producer has previewed its operating results in KPC/Arutmin for Jan – Jun 2010. A ...
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- Electricity Generating Authority of Thailand
- Central Electricity Authority - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Mineral Development Corp Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Cigading International Bulk Terminal - Indonesia
- Indika Energy - Indonesia
- Baramulti Group, Indonesia
- Indogreen Group - Indonesia
- ASAPP Information Group - India
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Finance - Indonesia
- Kumho Petrochemical, South Korea
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- TNB Fuel Sdn Bhd - Malaysia
- Sarangani Energy Corporation, Philippines
- Makarim & Taira - Indonesia
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- White Energy Company Limited
- Oldendorff Carriers - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Antam Resourcindo - Indonesia
- Aboitiz Power Corporation - Philippines
- Electricity Authority, New Zealand
- Kartika Selabumi Mining - Indonesia
- Bhushan Steel Limited - India
- Tata Chemicals Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Heidelberg Cement - Germany
- Jaiprakash Power Ventures ltd
- Mjunction Services Limited - India
- Malabar Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- Planning Commission, India
- London Commodity Brokers - England
- Mercuria Energy - Indonesia
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- Carbofer General Trading SA - India
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- VISA Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- Commonwealth Bank - Australia
- Indonesian Coal Mining Association
- Coal and Oil Company - UAE
- Altura Mining Limited, Indonesia
- Orica Mining Services - Indonesia
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- Latin American Coal - Colombia
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
- Barasentosa Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Sical Logistics Limited - India
- Bukit Baiduri Energy - Indonesia
- Deloitte Consulting - India
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- Parliament of New Zealand
- Siam City Cement - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Medco Energi Mining Internasional
- Straits Asia Resources Limited - Singapore
- Chettinad Cement Corporation Ltd - India
- Ambuja Cements Ltd - India
- Australian Coal Association
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
- Vedanta Resources Plc - India
- Xindia Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Siam City Cement PLC, Thailand
- Marubeni Corporation - India
- Orica Australia Pty. Ltd.
- Bhatia International Limited - India
- Salva Resources Pvt Ltd - India
- Attock Cement Pakistan Limited
- Alfred C Toepfer International GmbH - Germany
- Wilmar Investment Holdings
- Gujarat Sidhee Cement - India
- Petron Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- ICICI Bank Limited - India
- Kapuas Tunggal Persada - Indonesia
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- Bharathi Cement Corporation - India
- SMC Global Power, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Samtan Co., Ltd - South Korea
- Semirara Mining Corp, Philippines
- Rio Tinto Coal - Australia
- Mintek Dendrill Indonesia
- Therma Luzon, Inc, Philippines
- Savvy Resources Ltd - HongKong
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- Global Green Power PLC Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Indian Oil Corporation Limited
- Kaltim Prima Coal - Indonesia
- Aditya Birla Group - India
- SN Aboitiz Power Inc, Philippines
- Thai Mozambique Logistica
- Independent Power Producers Association of India
- TeaM Sual Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Georgia Ports Authority, United States
- Madhucon Powers Ltd - India
- Indian Energy Exchange, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PTC India Limited - India
- Agrawal Coal Company - India
- Indo Tambangraya Megah - Indonesia
- Thiess Contractors Indonesia
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- CNBM International Corporation - China
- Bhoruka Overseas - Indonesia
- Anglo American - United Kingdom
- Chamber of Mines of South Africa
- Billiton Holdings Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- The University of Queensland
- Sinarmas Energy and Mining - Indonesia
- SMG Consultants - Indonesia
- Karaikal Port Pvt Ltd - India
- Coalindo Energy - Indonesia
- Ministry of Mines - Canada
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- International Coal Ventures Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- India Bulls Power Limited - India
- Directorate Of Revenue Intelligence - India
- Lanco Infratech Ltd - India
- PowerSource Philippines DevCo
- Vizag Seaport Private Limited - India
- McConnell Dowell - Australia
- Edison Trading Spa - Italy
- Larsen & Toubro Limited - India
- GMR Energy Limited - India
- Ministry of Transport, Egypt
- Petrochimia International Co. Ltd.- Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- MS Steel International - UAE
- Holcim Trading Pte Ltd - Singapore
- Dalmia Cement Bharat India
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- Uttam Galva Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Posco Energy - South Korea
- IEA Clean Coal Centre - UK
- Australian Commodity Traders Exchange
- Global Coal Blending Company Limited - Australia
- Sojitz Corporation - Japan
- The State Trading Corporation of India Ltd
- Meralco Power Generation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Power Finance Corporation Ltd., India
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- OPG Power Generation Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- Manunggal Multi Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- CIMB Investment Bank - Malaysia
- Borneo Indobara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sakthi Sugars Limited - India
- Neyveli Lignite Corporation Ltd, - India
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