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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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Thursday, 15 March 12
RESOURCE ALAM FY11 PROFIT UP 171% - INSIDER STORIES
Insider Stories reported that, coal mining company PT Resource Alam Indonesia Tbk (KKGI) reported a 171.16% jump in net profit last year on the back ...
Wednesday, 14 March 12
GLOBAL THERMAL TRADE FLOW CHANGES WILL ENSURE SECURITY OF THERMAL COAL SUPPLY, ALBEIT AT A HIGH PRICE - WOOD MACKENZIE
Wood Mackenzie Says Global Thermal Trade Flow Changes Will Ensure Security of Thermal Coal Supply, Albeit At a High Price Seaborne thermal demand by ...
Wednesday, 14 March 12
COKAL TAKES ANOTHER STEP IN DEVELOPING INFRASTRUCTURE TO FACILITATE METALLURGICAL COAL PRODUCTION
Global coal group, Cokal Limited (ASX-CKA), has signed Memorandums of Understanding (MoU’s) to develop two river ports and two small scale coa ...
Tuesday, 13 March 12
CLARIFICATION OF GR 24 OF 2012 REQUIRING DIVESTMENT OF FOREIGN OWNERSHIP OVER TIME
ASX Announcement
Global metallurgical coal group, Cokal Limited (ASX-CKA), is responding to the recent announcement of the Indonesian Ministry of ...
Tuesday, 13 March 12
EUROPEAN COAL CONTANGO: FURTHER STEEPNESS REQUIRED TO MAKE LARGE SCALE PHYSICAL TIME SPREAD ARBITRAGE MORE ATTRACTIVE - MISWIN MAHESH, BARCLAYS CAPITAL
COALspot.com - "With the contango between the Y+1 and M+1 ARA delivered contract now averaging above the $14/t level, there is an increasing in ...
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- Marubeni Corporation - India
- ICICI Bank Limited - India
- International Coal Ventures Pvt Ltd - India
- Bangladesh Power Developement Board
- Holcim Trading Pte Ltd - Singapore
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Indo Tambangraya Megah - Indonesia
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Meralco Power Generation, Philippines
- Agrawal Coal Company - India
- Salva Resources Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Deloitte Consulting - India
- Trasteel International SA, Italy
- Kapuas Tunggal Persada - Indonesia
- Essar Steel Hazira Ltd - India
- Barasentosa Lestari - Indonesia
- Parliament of New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Finance - Indonesia
- TeaM Sual Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Mercuria Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- Madhucon Powers Ltd - India
- Meenaskhi Energy Private Limited - India
- ASAPP Information Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Planning Commission, India
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement - Thailand
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- Minerals Council of Australia
- Kideco Jaya Agung - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- GVK Power & Infra Limited - India
- CIMB Investment Bank - Malaysia
- Indian Energy Exchange, India
- Georgia Ports Authority, United States
- Bukit Asam (Persero) Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Alfred C Toepfer International GmbH - Germany
- India Bulls Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Dalmia Cement Bharat India
- Merrill Lynch Commodities Europe
- White Energy Company Limited
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Romanian Commodities Exchange
- Star Paper Mills Limited - India
- South Luzon Thermal Energy Corporation
- Wilmar Investment Holdings
- VISA Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Bukit Makmur.PT - Indonesia
- Larsen & Toubro Limited - India
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Xindia Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Price Waterhouse Coopers - Russia
- MS Steel International - UAE
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Renaissance Capital - South Africa
- Parry Sugars Refinery, India
- PowerSource Philippines DevCo
- Semirara Mining and Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Coal and Oil Company - UAE
- Borneo Indobara - Indonesia
- Karaikal Port Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- Central Electricity Authority - India
- Malabar Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- McConnell Dowell - Australia
- CNBM International Corporation - China
- Samtan Co., Ltd - South Korea
- Orica Australia Pty. Ltd.
- Tata Chemicals Ltd - India
- LBH Netherlands Bv - Netherlands
- European Bulk Services B.V. - Netherlands
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Latin American Coal - Colombia
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Singapore Mercantile Exchange
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- Kartika Selabumi Mining - Indonesia
- Oldendorff Carriers - Singapore
- Medco Energi Mining Internasional
- Africa Commodities Group - South Africa
- Semirara Mining Corp, Philippines
- Videocon Industries ltd - India
- Sojitz Corporation - Japan
- Orica Mining Services - Indonesia
- Simpson Spence & Young - Indonesia
- Rio Tinto Coal - Australia
- Australian Commodity Traders Exchange
- SMC Global Power, Philippines
- Bayan Resources Tbk. - Indonesia
- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- Anglo American - United Kingdom
- Posco Energy - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- GMR Energy Limited - India
- Carbofer General Trading SA - India
- SMG Consultants - Indonesia
- Energy Link Ltd, New Zealand
- Bulk Trading Sa - Switzerland
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- Electricity Authority, New Zealand
- New Zealand Coal & Carbon
- IHS Mccloskey Coal Group - USA
- Gujarat Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Grasim Industreis Ltd - India
- Thai Mozambique Logistica
- Eastern Coal Council - USA
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- Mercator Lines Limited - India
- SN Aboitiz Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
- Sinarmas Energy and Mining - Indonesia
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- Tamil Nadu electricity Board
- Sical Logistics Limited - India
- AsiaOL BioFuels Corp., Philippines
- Coalindo Energy - Indonesia
- Heidelberg Cement - Germany
- Lanco Infratech Ltd - India
- Sakthi Sugars Limited - India
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Eastern Energy - Thailand
- Bhatia International Limited - India
- OPG Power Generation Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Ministry of Transport, Egypt
- Power Finance Corporation Ltd., India
- Indian Oil Corporation Limited
- Globalindo Alam Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- Savvy Resources Ltd - HongKong
- PTC India Limited - India
- Economic Council, Georgia
- Indika Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Kumho Petrochemical, South Korea
- Vedanta Resources Plc - India
- Attock Cement Pakistan Limited
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- Bharathi Cement Corporation - India
- London Commodity Brokers - England
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Krishnapatnam Port Company Ltd. - India
- The University of Queensland
- Mintek Dendrill Indonesia
- Vizag Seaport Private Limited - India
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