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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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Friday, 23 April 10
KPCL EYES MINE IN INDONESIA - BUSINESS STANDARD
Business-Standard reported that, Karnataka Power Corporation Ltd (KPCL), the state-owned power generator, is exploring the possibility of acquiring ...
Thursday, 22 April 10
INDONESIAN COAL PRICE REFERENCE FOR MARCH 2010 - US$ 86.64/T
COALspot.com: The directorate general of mineral, coal and geothermal of Indonesia has begun publishing a monthly coal price reference (HBA) to be use ...
Thursday, 22 April 10
NEED TO IMPORT 82 MT COAL IN FISCAL - INDIA COAL MIN
Indian Express reported that, anxious to bridge the ever-widening gap between the rising demand for coal and its inadequate supply, the Coal Ministr ...
Thursday, 22 April 10
DRY CARGO DEMAND EXPECTED TO INCREASE, FAVORING HIGHER FREIGHT RATES
Increased dry bulk cargo demand is expected to become the norm in the coming weeks and months, according to analysts, which in turn should sustain f ...
Thursday, 22 April 10
INDIA'S BORL SEEKS TO BUY INDONESIAS LOW - SULFUR COAL
COALspot.com: Bharat Oman Refineries Ltd, a joint venture company (promoted by Bharat Petroleum Corporation Ltd, India and Oman Oil Company Lt ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- The State Trading Corporation of India Ltd
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- Indonesian Coal Mining Association
- Price Waterhouse Coopers - Russia
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
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- Bhoruka Overseas - Indonesia
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- Parliament of New Zealand
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- GMR Energy Limited - India
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- Electricity Authority, New Zealand
- Australian Coal Association
- LBH Netherlands Bv - Netherlands
- Deloitte Consulting - India
- Essar Steel Hazira Ltd - India
- Siam City Cement PLC, Thailand
- GAC Shipping (India) Pvt Ltd
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- The Treasury - Australian Government
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- Merrill Lynch Commodities Europe
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- Kaltim Prima Coal - Indonesia
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- Semirara Mining Corp, Philippines
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- Energy Link Ltd, New Zealand
- Kartika Selabumi Mining - Indonesia
- Eastern Energy - Thailand
- Global Coal Blending Company Limited - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kumho Petrochemical, South Korea
- Mjunction Services Limited - India
- Uttam Galva Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Banpu Public Company Limited - Thailand
- Bangladesh Power Developement Board
- Billiton Holdings Pty Ltd - Australia
- Renaissance Capital - South Africa
- White Energy Company Limited
- Coalindo Energy - Indonesia
- Global Business Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Timah Investasi Mineral - Indoneisa
- Commonwealth Bank - Australia
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- Wilmar Investment Holdings
- India Bulls Power Limited - India
- Minerals Council of Australia
- Petrochimia International Co. Ltd.- Taiwan
- Bhatia International Limited - India
- Aditya Birla Group - India
- Altura Mining Limited, Indonesia
- Globalindo Alam Lestari - Indonesia
- Sojitz Corporation - Japan
- Edison Trading Spa - Italy
- Cement Manufacturers Association - India
- Offshore Bulk Terminal Pte Ltd, Singapore
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- Maheswari Brothers Coal Limited - India
- Standard Chartered Bank - UAE
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Ministry of Mines - Canada
- Ministry of Transport, Egypt
- SMC Global Power, Philippines
- Tamil Nadu electricity Board
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- CIMB Investment Bank - Malaysia
- Marubeni Corporation - India
- Energy Development Corp, Philippines
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- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- Economic Council, Georgia
- Australian Commodity Traders Exchange
- Central Java Power - Indonesia
- Rio Tinto Coal - Australia
- Manunggal Multi Energi - Indonesia
- Thai Mozambique Logistica
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- Siam City Cement - Thailand
- Indo Tambangraya Megah - Indonesia
- Goldman Sachs - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- Orica Mining Services - Indonesia
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- PowerSource Philippines DevCo
- Toyota Tsusho Corporation, Japan
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Formosa Plastics Group - Taiwan
- Binh Thuan Hamico - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Kohat Cement Company Ltd. - Pakistan
- Rashtriya Ispat Nigam Limited - India
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- Salva Resources Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Global Green Power PLC Corporation, Philippines
- Lanco Infratech Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
- Malabar Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- VISA Power Limited - India
- Agrawal Coal Company - India
- Miang Besar Coal Terminal - Indonesia
- Baramulti Group, Indonesia
- Antam Resourcindo - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Coal and Oil Company - UAE
- Straits Asia Resources Limited - Singapore
- Central Electricity Authority - India
- McConnell Dowell - Australia
- London Commodity Brokers - England
- Africa Commodities Group - South Africa
- Kapuas Tunggal Persada - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Intertek Mineral Services - Indonesia
- South Luzon Thermal Energy Corporation
- Chamber of Mines of South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Anglo American - United Kingdom
- Planning Commission, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- AsiaOL BioFuels Corp., Philippines
- Videocon Industries ltd - India
- Oldendorff Carriers - Singapore
- Larsen & Toubro Limited - India
- Singapore Mercantile Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Oil Corporation Limited
- Jindal Steel & Power Ltd - India
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Pendopo Energi Batubara - Indonesia
- Metalloyd Limited - United Kingdom
- Bukit Makmur.PT - Indonesia
- Indogreen Group - Indonesia
- International Coal Ventures Pvt Ltd - India
- MS Steel International - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Mineral Development Corp Ltd - India
- Aboitiz Power Corporation - Philippines
- Interocean Group of Companies - India
- Indika Energy - Indonesia
- Carbofer General Trading SA - India
- Iligan Light & Power Inc, Philippines
- Independent Power Producers Association of India
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- IEA Clean Coal Centre - UK
- Simpson Spence & Young - Indonesia
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Asmin Koalindo Tuhup - Indonesia
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