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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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Saturday, 22 May 10
INDUSTRY QUESTIONS STEAM COAL PRICE ANOMALY
Five South Korean utilities have secured a deal for 3.13 million tonnes of Australian thermal coal with a calorific value of 6,080kcal/kg for delive ...
Wednesday, 19 May 10
DRY BULK FREIGHT RATES' RALLY MAY BE SET TO END
The Baltic Dry Index (BDI) has rallied these past couple of weeks, almost touching the 4,000 point mark. But this positive development for dry bulk ...
Wednesday, 19 May 10
NEWCASTLE WEEKLY EXPORTS RISE; SHIP QUEUE LENGTHENS
Coal shipments from Australia's Newcastle port, the world's biggest export harbor for the fuel used in power stations, rose 2.9 percent last week ...
Tuesday, 18 May 10
THE BDI HIT A FIVE-MONTH HIGH AT THE CLOSE OF LAST WEEK
According to BRS, One of the oldest ship broker, at 3,929 points, the BDI hit a five-month high at the close of last week. The Capesize four time ch ...
Tuesday, 18 May 10
COAL TRADER CHINA QINFA TO BUY TWO BULK CARRIERS FOR 69 MLN USD
China Qinfa Group, a leading non-State-owned coal trader on China's mainland, said Sunday it had signed shipbuilding contracts to pay 69 million U. ...
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- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- Parry Sugars Refinery, India
- Mercuria Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Bhushan Steel Limited - India
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Bhoruka Overseas - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- OPG Power Generation Pvt Ltd - India
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- Economic Council, Georgia
- Electricity Generating Authority of Thailand
- TeaM Sual Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Standard Chartered Bank - UAE
- Barasentosa Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Borneo Indobara - Indonesia
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- Dalmia Cement Bharat India
- GAC Shipping (India) Pvt Ltd
- Grasim Industreis Ltd - India
- VISA Power Limited - India
- European Bulk Services B.V. - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Mintek Dendrill Indonesia
- Trasteel International SA, Italy
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- Makarim & Taira - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Agrawal Coal Company - India
- Holcim Trading Pte Ltd - Singapore
- Price Waterhouse Coopers - Russia
- Edison Trading Spa - Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Xindia Steels Limited - India
- Meralco Power Generation, Philippines
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- Indian Oil Corporation Limited
- Manunggal Multi Energi - Indonesia
- Renaissance Capital - South Africa
- Metalloyd Limited - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Energy Development Corp, Philippines
- Merrill Lynch Commodities Europe
- Commonwealth Bank - Australia
- Binh Thuan Hamico - Vietnam
- Deloitte Consulting - India
- Gujarat Sidhee Cement - India
- Australian Commodity Traders Exchange
- Parliament of New Zealand
- Vizag Seaport Private Limited - India
- Riau Bara Harum - Indonesia
- Karaikal Port Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Global Business Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Petron Corporation, Philippines
- Attock Cement Pakistan Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Malabar Cements Ltd - India
- IEA Clean Coal Centre - UK
- The State Trading Corporation of India Ltd
- New Zealand Coal & Carbon
- Gujarat Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- Tamil Nadu electricity Board
- Anglo American - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- San Jose City I Power Corp, Philippines
- Planning Commission, India
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- Bahari Cakrawala Sebuku - Indonesia
- Videocon Industries ltd - India
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- London Commodity Brokers - England
- Lanco Infratech Ltd - India
- Tata Chemicals Ltd - India
- Power Finance Corporation Ltd., India
- Rashtriya Ispat Nigam Limited - India
- Ministry of Finance - Indonesia
- Australian Coal Association
- Kohat Cement Company Ltd. - Pakistan
- Thai Mozambique Logistica
- Semirara Mining Corp, Philippines
- Sical Logistics Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Aditya Birla Group - India
- AsiaOL BioFuels Corp., Philippines
- Indonesian Coal Mining Association
- Ceylon Electricity Board - Sri Lanka
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Directorate Of Revenue Intelligence - India
- Ministry of Mines - Canada
- PNOC Exploration Corporation - Philippines
- Indogreen Group - Indonesia
- Eastern Energy - Thailand
- Eastern Coal Council - USA
- Thiess Contractors Indonesia
- GVK Power & Infra Limited - India
- Mjunction Services Limited - India
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- Semirara Mining and Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Singapore Mercantile Exchange
- Sarangani Energy Corporation, Philippines
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- Ind-Barath Power Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- GMR Energy Limited - India
- Medco Energi Mining Internasional
- Salva Resources Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Central Java Power - Indonesia
- Electricity Authority, New Zealand
- Intertek Mineral Services - Indonesia
- Marubeni Corporation - India
- Siam City Cement - Thailand
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Gujarat Mineral Development Corp Ltd - India
- Bhatia International Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wilmar Investment Holdings
- Chamber of Mines of South Africa
- Bukit Makmur.PT - Indonesia
- Orica Australia Pty. Ltd.
- Kideco Jaya Agung - Indonesia
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- Latin American Coal - Colombia
- Vedanta Resources Plc - India
- Ambuja Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- White Energy Company Limited
- Indo Tambangraya Megah - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Africa Commodities Group - South Africa
- Uttam Galva Steels Limited - India
- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- Minerals Council of Australia
- Chettinad Cement Corporation Ltd - India
- SMC Global Power, Philippines
- Jindal Steel & Power Ltd - India
- Romanian Commodities Exchange
- McConnell Dowell - Australia
- Orica Mining Services - Indonesia
- MS Steel International - UAE
- Central Electricity Authority - India
- Global Coal Blending Company Limited - Australia
- Energy Link Ltd, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- The University of Queensland
- Oldendorff Carriers - Singapore
- CNBM International Corporation - China
- Maheswari Brothers Coal Limited - India
- Bharathi Cement Corporation - India
- Sindya Power Generating Company Private Ltd
- Kobexindo Tractors - Indoneisa
- Kumho Petrochemical, South Korea
- Heidelberg Cement - Germany
- Aboitiz Power Corporation - Philippines
- PTC India Limited - India
- Posco Energy - South Korea
- Madhucon Powers Ltd - India
- Savvy Resources Ltd - HongKong
- IHS Mccloskey Coal Group - USA
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- TNB Fuel Sdn Bhd - Malaysia
- Meenaskhi Energy Private Limited - India
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