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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, 05 January 12
DRY BULK MARKET TAKES A PLUNGE OF LOW ACTIVITY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
As was widely expected the first days of the new year are characterized by significantly low chartering across the board of the dry bulk market, pus ...
Wednesday, 04 January 12
NEWBUILDING ORDERS PICKED UP IN 2011, BUT 2012 EXPECTED TO BE A DIFFERENT STORY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the BDI (Baltic Dry Index) starting the year on a sour note, losing 114 points and ending yesterday’s session, the first of the new year, ...
Wednesday, 04 January 12
MAHAGENCO TO IMPORT LOW MOISTURE COAL
COALspot.com - Maharashtra State Power Generation Co. Ltd. is the state power generation utility owned by Government of Maharashtra, intends to proc ...
Tuesday, 03 January 12
INDONESIA COAL REFERENCE PRICE FELL AGAIN
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia has sets the January 2012 coal reference price at US$ 109.29 per ton or US$ 3.3 ...
Tuesday, 03 January 12
WHICH WAY WILL THE DRY BULK MARKET HEAD ON FIRST WEEK OF THE YEAR? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Dry bulk ship owners will be wondering which way will the BDI (Baltic Dry Index), the industry’s benchmark, will head during the first days of ...
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- Eastern Coal Council - USA
- Kapuas Tunggal Persada - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Holcim Trading Pte Ltd - Singapore
- Maheswari Brothers Coal Limited - India
- Borneo Indobara - Indonesia
- Karaikal Port Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Chamber of Mines of South Africa
- Bayan Resources Tbk. - Indonesia
- PowerSource Philippines DevCo
- India Bulls Power Limited - India
- Rio Tinto Coal - Australia
- McConnell Dowell - Australia
- Neyveli Lignite Corporation Ltd, - India
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- Malabar Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kartika Selabumi Mining - Indonesia
- Planning Commission, India
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Sidhee Cement - India
- Riau Bara Harum - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Altura Mining Limited, Indonesia
- Orica Mining Services - Indonesia
- Formosa Plastics Group - Taiwan
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Ministry of Mines - Canada
- PTC India Limited - India
- Sinarmas Energy and Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- The University of Queensland
- Ministry of Finance - Indonesia
- IEA Clean Coal Centre - UK
- Rashtriya Ispat Nigam Limited - India
- Meralco Power Generation, Philippines
- Central Electricity Authority - India
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- ASAPP Information Group - India
- New Zealand Coal & Carbon
- Chettinad Cement Corporation Ltd - India
- VISA Power Limited - India
- Energy Development Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Antam Resourcindo - Indonesia
- Binh Thuan Hamico - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Kideco Jaya Agung - Indonesia
- Straits Asia Resources Limited - Singapore
- Wilmar Investment Holdings
- Commonwealth Bank - Australia
- Baramulti Group, Indonesia
- Therma Luzon, Inc, Philippines
- Kumho Petrochemical, South Korea
- Bangladesh Power Developement Board
- OPG Power Generation Pvt Ltd - India
- SMC Global Power, Philippines
- Dalmia Cement Bharat India
- Deloitte Consulting - India
- Krishnapatnam Port Company Ltd. - India
- Thai Mozambique Logistica
- Coalindo Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vizag Seaport Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Kepco SPC Power Corporation, Philippines
- Carbofer General Trading SA - India
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Simpson Spence & Young - Indonesia
- Manunggal Multi Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Power Finance Corporation Ltd., India
- GN Power Mariveles Coal Plant, Philippines
- Edison Trading Spa - Italy
- AsiaOL BioFuels Corp., Philippines
- Makarim & Taira - Indonesia
- Bukit Baiduri Energy - Indonesia
- Mercuria Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Vedanta Resources Plc - India
- Grasim Industreis Ltd - India
- Eastern Energy - Thailand
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- Toyota Tsusho Corporation, Japan
- Standard Chartered Bank - UAE
- Salva Resources Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Economic Council, Georgia
- ICICI Bank Limited - India
- Indika Energy - Indonesia
- Anglo American - United Kingdom
- TeaM Sual Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Star Paper Mills Limited - India
- Parry Sugars Refinery, India
- Sree Jayajothi Cements Limited - India
- Orica Australia Pty. Ltd.
- SMG Consultants - Indonesia
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- Latin American Coal - Colombia
- Heidelberg Cement - Germany
- PetroVietnam Power Coal Import and Supply Company
- Directorate Of Revenue Intelligence - India
- Vijayanagar Sugar Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Oldendorff Carriers - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Trasteel International SA, Italy
- Sojitz Corporation - Japan
- Indonesian Coal Mining Association
- Australian Commodity Traders Exchange
- Indogreen Group - Indonesia
- South Luzon Thermal Energy Corporation
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- Tamil Nadu electricity Board
- Jorong Barutama Greston.PT - Indonesia
- Bharathi Cement Corporation - India
- Indo Tambangraya Megah - Indonesia
- London Commodity Brokers - England
- Aditya Birla Group - India
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- GVK Power & Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Coastal Gujarat Power Limited - India
- Global Coal Blending Company Limited - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Interocean Group of Companies - India
- Mercator Lines Limited - India
- Cement Manufacturers Association - India
- International Coal Ventures Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Australian Coal Association
- European Bulk Services B.V. - Netherlands
- Marubeni Corporation - India
- Minerals Council of Australia
- Medco Energi Mining Internasional
- Uttam Galva Steels Limited - India
- Tata Chemicals Ltd - India
- Thiess Contractors Indonesia
- Africa Commodities Group - South Africa
- Iligan Light & Power Inc, Philippines
- Coal and Oil Company - UAE
- Renaissance Capital - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Attock Cement Pakistan Limited
- Sical Logistics Limited - India
- Metalloyd Limited - United Kingdom
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Agrawal Coal Company - India
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- Siam City Cement PLC, Thailand
- Xindia Steels Limited - India
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- Parliament of New Zealand
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
- CNBM International Corporation - China
- Mjunction Services Limited - India
- Siam City Cement - Thailand
- Electricity Generating Authority of Thailand
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- Indian Energy Exchange, India
- Sindya Power Generating Company Private Ltd
- Ministry of Transport, Egypt
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- Essar Steel Hazira Ltd - India
- Banpu Public Company Limited - Thailand
- White Energy Company Limited
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- SN Aboitiz Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Bhatia International Limited - India
- Independent Power Producers Association of India
- Posco Energy - South Korea
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
- Global Business Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Wood Mackenzie - Singapore
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