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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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Monday, 10 September 12
TNPL, AN INDIAN PAPER MAKER IS SEEKING FOR 300K MT OF IMPORTED NON-COKING COAL
COALspot.com - Tamil Nadu Newsprint & Papers Ltd. , an Indian paper maker, is seeking 300,000 metric tons ± 5% (In 6 Shipments about 50,0 ...
Monday, 10 September 12
DRY BULK MARKET SLOWLY BUT SURELY REACHING CRITICAL STATUS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The radical consequences of the shifts in dry bulk demand and prices, especially for the most sought after commodity, concerning the industry, i.e. ...
Monday, 10 September 12
ORPHEUS ENERGY SECURES INDONESIAN COAL TRADING LICENSE
COALspot.com - Indonesian coal producer, Orpheus Energy (ASX:OEG) has announced today that the Indonesian Ministry of Energy and Mineral Resources h ...
Monday, 10 September 12
A SNAPSHOT ON THE ECONOMIC AND SHIPPING ENVIRONMENT - GOLDEN DESTINY / HELLENIC SHIPPING
The European Central Bank left its interest rate unchanged at 0.75% focusing on pushing down borrowing costs in troubled economies, Spain and Italy. ...
Sunday, 09 September 12
H213 SUB-BIT FOB INDONESIA COAL SWAPS ARE TRADING HIGHER
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for October 2012 delivery lost 0.14 percent W-O-W on 7 September 2012, Friday closing but gained ...
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- Bukit Asam (Persero) Tbk - Indonesia
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- Kideco Jaya Agung - Indonesia
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- Interocean Group of Companies - India
- Therma Luzon, Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Timah Investasi Mineral - Indoneisa
- Tamil Nadu electricity Board
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- Sinarmas Energy and Mining - Indonesia
- Vizag Seaport Private Limited - India
- Thiess Contractors Indonesia
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- Global Green Power PLC Corporation, Philippines
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- Romanian Commodities Exchange
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- GMR Energy Limited - India
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- The Treasury - Australian Government
- ICICI Bank Limited - India
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- IEA Clean Coal Centre - UK
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- Orica Mining Services - Indonesia
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- Ministry of Mines - Canada
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- Bulk Trading Sa - Switzerland
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- Orica Australia Pty. Ltd.
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- Renaissance Capital - South Africa
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- White Energy Company Limited
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- MS Steel International - UAE
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- Central Electricity Authority - India
- Jindal Steel & Power Ltd - India
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- Rashtriya Ispat Nigam Limited - India
- Videocon Industries ltd - India
- Eastern Energy - Thailand
- Bayan Resources Tbk. - Indonesia
- Heidelberg Cement - Germany
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- Agrawal Coal Company - India
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- SMC Global Power, Philippines
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- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
- Indian Energy Exchange, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Authority, New Zealand
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- Pendopo Energi Batubara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Link Ltd, New Zealand
- Economic Council, Georgia
- Makarim & Taira - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Africa Commodities Group - South Africa
- Medco Energi Mining Internasional
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- European Bulk Services B.V. - Netherlands
- Sojitz Corporation - Japan
- Bhushan Steel Limited - India
- Australian Commodity Traders Exchange
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- Altura Mining Limited, Indonesia
- Sical Logistics Limited - India
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- Aboitiz Power Corporation - Philippines
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- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Savvy Resources Ltd - HongKong
- Marubeni Corporation - India
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- McConnell Dowell - Australia
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- Metalloyd Limited - United Kingdom
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- Global Business Power Corporation, Philippines
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- Gujarat Mineral Development Corp Ltd - India
- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- Kohat Cement Company Ltd. - Pakistan
- New Zealand Coal & Carbon
- Karaikal Port Pvt Ltd - India
- Eastern Coal Council - USA
- Minerals Council of Australia
- Miang Besar Coal Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement PLC, Thailand
- Goldman Sachs - Singapore
- Star Paper Mills Limited - India
- The State Trading Corporation of India Ltd
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- Ministry of Transport, Egypt
- Central Java Power - Indonesia
- Chettinad Cement Corporation Ltd - India
- Global Coal Blending Company Limited - Australia
- Indogreen Group - Indonesia
- Edison Trading Spa - Italy
- Mercator Lines Limited - India
- Rio Tinto Coal - Australia
- Essar Steel Hazira Ltd - India
- Tata Chemicals Ltd - India
- Indian Oil Corporation Limited
- Karbindo Abesyapradhi - Indoneisa
- Banpu Public Company Limited - Thailand
- Bangladesh Power Developement Board
- Petron Corporation, Philippines
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- PNOC Exploration Corporation - Philippines
- Aditya Birla Group - India
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- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Intertek Mineral Services - Indonesia
- Merrill Lynch Commodities Europe
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- Ind-Barath Power Infra Limited - India
- Toyota Tsusho Corporation, Japan
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- Planning Commission, India
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- The University of Queensland
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