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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, 04 May 12
DEMOLITION KEY FOR DRY BULK MARKET RECOVERY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The overflow of newbuilding vessels which “spilled over” into 2012 from 2011 brought the dry bulk market to a near collapse level at the ...
Thursday, 03 May 12
DRY BULK MARKET REMAINS INACTIVE, POSTING MILD DECREASE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept retreating this week, although at a very low pace, on the back of a lull in demand. The industry's benchmark, th ...
Thursday, 03 May 12
MINERS DEMAND LEGAL CERTAINTY ON PRE-BAN INTERIM POLICY - THE JAKARTA POST
The Jakarta Post reported that, Mining companies represented by the Indonesian Mining Association (IMA) welcomed the government’s plan to impo ...
Thursday, 03 May 12
HANDY EAST COAST INDIA - CHINA AROUND USD 7000 - FEARNLEYS AS
Handy - Stable demand in the Atlantic offered good rates for the tonnage.
USG/Cont was worth USD 17500 and more. Baltic and Black Sea appeared to ...
Wednesday, 02 May 12
CHINA BLACKOUTS HIGHLIGHT PRICING POLICY WEAKNESS - FITCH
Fitch reported that, the likelihood of further electricity blackouts in China this summer underlines Fitch's view of the basic problem f ...
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- Trasteel International SA, Italy
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
- CIMB Investment Bank - Malaysia
- Singapore Mercantile Exchange
- PNOC Exploration Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
- Directorate Of Revenue Intelligence - India
- Ministry of Transport, Egypt
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Grasim Industreis Ltd - India
- Globalindo Alam Lestari - Indonesia
- Carbofer General Trading SA - India
- Bukit Asam (Persero) Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- Madhucon Powers Ltd - India
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- McConnell Dowell - Australia
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- Binh Thuan Hamico - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Gujarat Sidhee Cement - India
- Malabar Cements Ltd - India
- VISA Power Limited - India
- Indian Energy Exchange, India
- Star Paper Mills Limited - India
- Siam City Cement - Thailand
- Simpson Spence & Young - Indonesia
- Samtan Co., Ltd - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Central Electricity Authority - India
- Bahari Cakrawala Sebuku - Indonesia
- MS Steel International - UAE
- Maharashtra Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- GN Power Mariveles Coal Plant, Philippines
- Indogreen Group - Indonesia
- Standard Chartered Bank - UAE
- Toyota Tsusho Corporation, Japan
- The University of Queensland
- The Treasury - Australian Government
- Posco Energy - South Korea
- Semirara Mining Corp, Philippines
- Anglo American - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- Latin American Coal - Colombia
- Lanco Infratech Ltd - India
- Electricity Authority, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Riau Bara Harum - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Renaissance Capital - South Africa
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Mercuria Energy - Indonesia
- ICICI Bank Limited - India
- Cement Manufacturers Association - India
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- SMC Global Power, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- Parliament of New Zealand
- Energy Link Ltd, New Zealand
- India Bulls Power Limited - India
- Global Business Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Minerals Council of Australia
- Tata Chemicals Ltd - India
- Semirara Mining and Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Mercator Lines Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Ministry of Mines - Canada
- Interocean Group of Companies - India
- Directorate General of MIneral and Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Ministry of Finance - Indonesia
- Bhushan Steel Limited - India
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- Eastern Energy - Thailand
- White Energy Company Limited
- Borneo Indobara - Indonesia
- Deloitte Consulting - India
- Sakthi Sugars Limited - India
- Rio Tinto Coal - Australia
- Jaiprakash Power Ventures ltd
- Independent Power Producers Association of India
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- London Commodity Brokers - England
- Gujarat Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Bharathi Cement Corporation - India
- Australian Coal Association
- Parry Sugars Refinery, India
- Aboitiz Power Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- ASAPP Information Group - India
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Medco Energi Mining Internasional
- Wilmar Investment Holdings
- Bayan Resources Tbk. - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Electricity Generating Authority of Thailand
- Thiess Contractors Indonesia
- Aditya Birla Group - India
- Romanian Commodities Exchange
- Kalimantan Lumbung Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Sojitz Corporation - Japan
- Uttam Galva Steels Limited - India
- SMG Consultants - Indonesia
- Kideco Jaya Agung - Indonesia
- PTC India Limited - India
- Meralco Power Generation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Ind-Barath Power Infra Limited - India
- Central Java Power - Indonesia
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- Mintek Dendrill Indonesia
- Indonesian Coal Mining Association
- Economic Council, Georgia
- Kepco SPC Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- SN Aboitiz Power Inc, Philippines
- Vedanta Resources Plc - India
- Miang Besar Coal Terminal - Indonesia
- Sical Logistics Limited - India
- Savvy Resources Ltd - HongKong
- Bangladesh Power Developement Board
- Oldendorff Carriers - Singapore
- Coalindo Energy - Indonesia
- GMR Energy Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Orica Australia Pty. Ltd.
- Energy Development Corp, Philippines
- Edison Trading Spa - Italy
- Global Coal Blending Company Limited - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Georgia Ports Authority, United States
- Iligan Light & Power Inc, Philippines
- Dalmia Cement Bharat India
- Port Waratah Coal Services - Australia
- Neyveli Lignite Corporation Ltd, - India
- Intertek Mineral Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ambuja Cements Ltd - India
- Power Finance Corporation Ltd., India
- Larsen & Toubro Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Indika Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Kumho Petrochemical, South Korea
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- Meenaskhi Energy Private Limited - India
- Siam City Cement PLC, Thailand
- Metalloyd Limited - United Kingdom
- CNBM International Corporation - China
- New Zealand Coal & Carbon
- Africa Commodities Group - South Africa
- Agrawal Coal Company - India
- Thai Mozambique Logistica
- South Luzon Thermal Energy Corporation
- Offshore Bulk Terminal Pte Ltd, Singapore
- Xindia Steels Limited - India
- San Jose City I Power Corp, Philippines
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Banpu Public Company Limited - Thailand
- Australian Commodity Traders Exchange
- Altura Mining Limited, Indonesia
- Coal and Oil Company - UAE
- Baramulti Group, Indonesia
- Marubeni Corporation - India
- OPG Power Generation Pvt Ltd - India
- Mjunction Services Limited - India
- Leighton Contractors Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Kobexindo Tractors - Indoneisa
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