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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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Tuesday, 13 April 10
CHINA COAL SEEING 'STRONG DEMAND,' PUDA COAL CFO SAYS - BUSINESS WEEK
Business Week reported that, China coal prices will increase this year as the nation’s industry expands and a drought in the southwest region ...
Tuesday, 13 April 10
PEABODY, COAL INDIA CONFIRM 'EARLY STAGE' TALKS - MINING WEEKLY
Mining Weekly reported that, US coal-miner Peabody Energy is holding discussions with Coal India, the company said on Monday, after an Australian ne ...
Tuesday, 13 April 10
ANGLO PREDICTS HIGH COAL PRICES, STEADY SUPPLY
Busrep / Reuters reported that, Coal prices were expected to remain strong this year, while exports would match last year's despite rail cons ...
Tuesday, 13 April 10
THE PANAMAX MARKET CONTINUED TO STRENGTHEN - BRS DRY BULK
Panamax rates continue to beat the market, and the Panamax 4TC is now trading at a 25% premium to the Cape 4TC — the biggest margin since the ...
Monday, 12 April 10
INDIA'S NALCO TO INVEST BIG IN INDONESIA'S ALUMINIUM PROJECT - BERNAMA
Bernama reported that, India's state- owned National Aluminium Company Ltd (Nalco) is to pump in massive investment to set up a aluminium smelter a ...
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- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Coal and Oil Company - UAE
- Riau Bara Harum - Indonesia
- MS Steel International - UAE
- Marubeni Corporation - India
- Aboitiz Power Corporation - Philippines
- Bhatia International Limited - India
- Heidelberg Cement - Germany
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- Ministry of Transport, Egypt
- Directorate General of MIneral and Coal - Indonesia
- Parry Sugars Refinery, India
- Coastal Gujarat Power Limited - India
- Merrill Lynch Commodities Europe
- VISA Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Cement Manufacturers Association - India
- Uttam Galva Steels Limited - India
- Star Paper Mills Limited - India
- Australian Coal Association
- The University of Queensland
- Iligan Light & Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Agrawal Coal Company - India
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- Baramulti Group, Indonesia
- Bharathi Cement Corporation - India
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- Thai Mozambique Logistica
- Billiton Holdings Pty Ltd - Australia
- Energy Development Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Ministry of Finance - Indonesia
- Thiess Contractors Indonesia
- Intertek Mineral Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- OPG Power Generation Pvt Ltd - India
- ASAPP Information Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Antam Resourcindo - Indonesia
- Borneo Indobara - Indonesia
- McConnell Dowell - Australia
- The Treasury - Australian Government
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
- Sarangani Energy Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Interocean Group of Companies - India
- Vijayanagar Sugar Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Makarim & Taira - Indonesia
- Bulk Trading Sa - Switzerland
- Larsen & Toubro Limited - India
- Kaltim Prima Coal - Indonesia
- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Carbofer General Trading SA - India
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
- Chamber of Mines of South Africa
- Indonesian Coal Mining Association
- San Jose City I Power Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- India Bulls Power Limited - India
- Tamil Nadu electricity Board
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- White Energy Company Limited
- Trasteel International SA, Italy
- Lanco Infratech Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Renaissance Capital - South Africa
- Vizag Seaport Private Limited - India
- Petron Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Planning Commission, India
- Posco Energy - South Korea
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- Holcim Trading Pte Ltd - Singapore
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- Eastern Energy - Thailand
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- Indogreen Group - Indonesia
- Indian Energy Exchange, India
- Commonwealth Bank - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Price Waterhouse Coopers - Russia
- Vedanta Resources Plc - India
- CIMB Investment Bank - Malaysia
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Singapore Mercantile Exchange
- Tata Chemicals Ltd - India
- Maheswari Brothers Coal Limited - India
- Kobexindo Tractors - Indoneisa
- Altura Mining Limited, Indonesia
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- Meralco Power Generation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Jorong Barutama Greston.PT - Indonesia
- Sakthi Sugars Limited - India
- Romanian Commodities Exchange
- Eastern Coal Council - USA
- Bhushan Steel Limited - India
- Electricity Generating Authority of Thailand
- Essar Steel Hazira Ltd - India
- Port Waratah Coal Services - Australia
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- PTC India Limited - India
- Economic Council, Georgia
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- Australian Commodity Traders Exchange
- Indo Tambangraya Megah - Indonesia
- Ministry of Mines - Canada
- Therma Luzon, Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Pendopo Energi Batubara - Indonesia
- IEA Clean Coal Centre - UK
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- Toyota Tsusho Corporation, Japan
- SMC Global Power, Philippines
- Gujarat Sidhee Cement - India
- GAC Shipping (India) Pvt Ltd
- Sical Logistics Limited - India
- Bhoruka Overseas - Indonesia
- Malabar Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Timah Investasi Mineral - Indoneisa
- Globalindo Alam Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kumho Petrochemical, South Korea
- Straits Asia Resources Limited - Singapore
- Attock Cement Pakistan Limited
- Sojitz Corporation - Japan
- Minerals Council of Australia
- Petrochimia International Co. Ltd.- Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Jaiprakash Power Ventures ltd
- Latin American Coal - Colombia
- Oldendorff Carriers - Singapore
- Chettinad Cement Corporation Ltd - India
- European Bulk Services B.V. - Netherlands
- Global Business Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Parliament of New Zealand
- Kideco Jaya Agung - Indonesia
- GVK Power & Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Dalmia Cement Bharat India
- Electricity Authority, New Zealand
- Standard Chartered Bank - UAE
- Global Green Power PLC Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Rio Tinto Coal - Australia
- Indian Oil Corporation Limited
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kepco SPC Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Aditya Birla Group - India
- Medco Energi Mining Internasional
- Goldman Sachs - Singapore
- ICICI Bank Limited - India
- Mercator Lines Limited - India
- Sindya Power Generating Company Private Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Mercuria Energy - Indonesia
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