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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, 15 May 12
POTENTIAL BOOM OF CHINAS COAL IMPORTS COULD PROVIDE FURTHER SUPPORT TO DRY BULK MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has been moving sideways during the past week with the industry’s benchmark, the Baltic Dry Index (BDI) losing 0.53% on th ...
Saturday, 12 May 12
THE SHIPPING MARKET IS UNLIKELY TO SEE A REBOUND ANYTIME SOON - VISTAAR SINGAPORE
COALspot.com - The BDI softened this week and it was down by 1.64 pct closing at 1,138 points.
The cape index was up by 2.41 pct closing at 1,61 ...
Friday, 11 May 12
POLITICAL CHANGES COULD LEAD TO TEMPORARY HALT IN SHIPPING INVESTMENTS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The potential of changes of political leadership in many of the world’s leading economies could very well lead to significant shifts in the di ...
Thursday, 10 May 12
DRY BULK ERRATIC ON LACK OF DIRECTION - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept up its erratic behavior as it went down again during yesterday’s session, on a lack of direct guidance in terms o ...
Wednesday, 09 May 12
COAL INDIA SIGNS FSAS WITH 13 POWER UNITS SO FAR - PTI
Press Trust of India has reported that, coal India has so far entered into fuel supply pacts with 13 power units, including Reliance Power's Rosa P ...
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- Directorate General of MIneral and Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Kumho Petrochemical, South Korea
- Gujarat Sidhee Cement - India
- New Zealand Coal & Carbon
- Ambuja Cements Ltd - India
- Sojitz Corporation - Japan
- Baramulti Group, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Xindia Steels Limited - India
- Carbofer General Trading SA - India
- Miang Besar Coal Terminal - Indonesia
- Singapore Mercantile Exchange
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Gujarat Mineral Development Corp Ltd - India
- Trasteel International SA, Italy
- Barasentosa Lestari - Indonesia
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- Australian Coal Association
- Semirara Mining and Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Indo Tambangraya Megah - Indonesia
- ASAPP Information Group - India
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- IHS Mccloskey Coal Group - USA
- OPG Power Generation Pvt Ltd - India
- Ministry of Finance - Indonesia
- Bhushan Steel Limited - India
- Star Paper Mills Limited - India
- Sree Jayajothi Cements Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rashtriya Ispat Nigam Limited - India
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Merrill Lynch Commodities Europe
- Oldendorff Carriers - Singapore
- Timah Investasi Mineral - Indoneisa
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Straits Asia Resources Limited - Singapore
- Thai Mozambique Logistica
- Metalloyd Limited - United Kingdom
- Bhatia International Limited - India
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
- Toyota Tsusho Corporation, Japan
- Ministry of Transport, Egypt
- The University of Queensland
- Sindya Power Generating Company Private Ltd
- Karaikal Port Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- Jindal Steel & Power Ltd - India
- Medco Energi Mining Internasional
- Mercator Lines Limited - India
- Port Waratah Coal Services - Australia
- Gujarat Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chettinad Cement Corporation Ltd - India
- Price Waterhouse Coopers - Russia
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- Binh Thuan Hamico - Vietnam
- MS Steel International - UAE
- India Bulls Power Limited - India
- SMC Global Power, Philippines
- Larsen & Toubro Limited - India
- Planning Commission, India
- Kohat Cement Company Ltd. - Pakistan
- Goldman Sachs - Singapore
- Riau Bara Harum - Indonesia
- Jaiprakash Power Ventures ltd
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Petron Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Eastern Energy - Thailand
- AsiaOL BioFuels Corp., Philippines
- White Energy Company Limited
- Global Coal Blending Company Limited - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Africa Commodities Group - South Africa
- Vizag Seaport Private Limited - India
- Altura Mining Limited, Indonesia
- McConnell Dowell - Australia
- Parry Sugars Refinery, India
- Karbindo Abesyapradhi - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Eastern Coal Council - USA
- Agrawal Coal Company - India
- PowerSource Philippines DevCo
- San Jose City I Power Corp, Philippines
- SMG Consultants - Indonesia
- Globalindo Alam Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- Makarim & Taira - Indonesia
- Electricity Generating Authority of Thailand
- Neyveli Lignite Corporation Ltd, - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Cigading International Bulk Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Indogreen Group - Indonesia
- Bhoruka Overseas - Indonesia
- Sarangani Energy Corporation, Philippines
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- Deloitte Consulting - India
- Pendopo Energi Batubara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Therma Luzon, Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Coal and Oil Company - UAE
- Wilmar Investment Holdings
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- Sakthi Sugars Limited - India
- Indian Energy Exchange, India
- Kepco SPC Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Kalimantan Lumbung Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- PTC India Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Anglo American - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Edison Trading Spa - Italy
- Lanco Infratech Ltd - India
- ICICI Bank Limited - India
- Ceylon Electricity Board - Sri Lanka
- Bulk Trading Sa - Switzerland
- Independent Power Producers Association of India
- Bahari Cakrawala Sebuku - Indonesia
- PNOC Exploration Corporation - Philippines
- Indonesian Coal Mining Association
- Orica Mining Services - Indonesia
- Ind-Barath Power Infra Limited - India
- GMR Energy Limited - India
- Interocean Group of Companies - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bangladesh Power Developement Board
- Jorong Barutama Greston.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- European Bulk Services B.V. - Netherlands
- Chamber of Mines of South Africa
- Simpson Spence & Young - Indonesia
- Posco Energy - South Korea
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- Marubeni Corporation - India
- Ministry of Mines - Canada
- GVK Power & Infra Limited - India
- VISA Power Limited - India
- Sical Logistics Limited - India
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Romanian Commodities Exchange
- Heidelberg Cement - Germany
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Bukit Makmur.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- Tamil Nadu electricity Board
- Vedanta Resources Plc - India
- Mjunction Services Limited - India
- Borneo Indobara - Indonesia
- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asmin Koalindo Tuhup - Indonesia
- Renaissance Capital - South Africa
- Malabar Cements Ltd - India
- Cement Manufacturers Association - India
- Madhucon Powers Ltd - India
- Aditya Birla Group - India
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- Vijayanagar Sugar Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Intertek Mineral Services - Indonesia
- Mintek Dendrill Indonesia
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Georgia Ports Authority, United States
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