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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, 13 April 10
CHINA COAL SEEING 'STRONG DEMAND,' PUDA COAL CFO SAYS - BUSINESS WEEK
Business Week reported that, China coal prices will increase this year as the nation’s industry expands and a drought in the southwest region ...
Tuesday, 13 April 10
PEABODY, COAL INDIA CONFIRM 'EARLY STAGE' TALKS - MINING WEEKLY
Mining Weekly reported that, US coal-miner Peabody Energy is holding discussions with Coal India, the company said on Monday, after an Australian ne ...
Tuesday, 13 April 10
ANGLO PREDICTS HIGH COAL PRICES, STEADY SUPPLY
Busrep / Reuters reported that, Coal prices were expected to remain strong this year, while exports would match last year's despite rail cons ...
Tuesday, 13 April 10
THE PANAMAX MARKET CONTINUED TO STRENGTHEN - BRS DRY BULK
Panamax rates continue to beat the market, and the Panamax 4TC is now trading at a 25% premium to the Cape 4TC — the biggest margin since the ...
Monday, 12 April 10
INDIA'S NALCO TO INVEST BIG IN INDONESIA'S ALUMINIUM PROJECT - BERNAMA
Bernama reported that, India's state- owned National Aluminium Company Ltd (Nalco) is to pump in massive investment to set up a aluminium smelter a ...
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- Jaiprakash Power Ventures ltd
- Central Electricity Authority - India
- Marubeni Corporation - India
- Thiess Contractors Indonesia
- Indogreen Group - Indonesia
- SMC Global Power, Philippines
- Medco Energi Mining Internasional
- Tata Chemicals Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- Semirara Mining Corp, Philippines
- Trasteel International SA, Italy
- Merrill Lynch Commodities Europe
- Offshore Bulk Terminal Pte Ltd, Singapore
- AsiaOL BioFuels Corp., Philippines
- Kumho Petrochemical, South Korea
- McConnell Dowell - Australia
- Edison Trading Spa - Italy
- Lanco Infratech Ltd - India
- ASAPP Information Group - India
- Miang Besar Coal Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- CNBM International Corporation - China
- Aboitiz Power Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- Ministry of Transport, Egypt
- Wilmar Investment Holdings
- Neyveli Lignite Corporation Ltd, - India
- Orica Australia Pty. Ltd.
- The Treasury - Australian Government
- Indika Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Planning Commission, India
- Bharathi Cement Corporation - India
- Commonwealth Bank - Australia
- Deloitte Consulting - India
- CIMB Investment Bank - Malaysia
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Electricity Authority, New Zealand
- Coalindo Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Binh Thuan Hamico - Vietnam
- Kepco SPC Power Corporation, Philippines
- Bangladesh Power Developement Board
- Africa Commodities Group - South Africa
- Orica Mining Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- Carbofer General Trading SA - India
- PowerSource Philippines DevCo
- LBH Netherlands Bv - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Wood Mackenzie - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Malabar Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Goldman Sachs - Singapore
- Energy Link Ltd, New Zealand
- Romanian Commodities Exchange
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Australian Coal Association
- Vizag Seaport Private Limited - India
- Siam City Cement PLC, Thailand
- Barasentosa Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Attock Cement Pakistan Limited
- South Luzon Thermal Energy Corporation
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Sojitz Corporation - Japan
- Sarangani Energy Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Borneo Indobara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- Sakthi Sugars Limited - India
- White Energy Company Limited
- Globalindo Alam Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Indonesian Coal Mining Association
- Mercator Lines Limited - India
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- Eastern Energy - Thailand
- GMR Energy Limited - India
- Kideco Jaya Agung - Indonesia
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- Simpson Spence & Young - Indonesia
- IEA Clean Coal Centre - UK
- Eastern Coal Council - USA
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sree Jayajothi Cements Limited - India
- Vedanta Resources Plc - India
- Jindal Steel & Power Ltd - India
- Toyota Tsusho Corporation, Japan
- MS Steel International - UAE
- Antam Resourcindo - Indonesia
- Kaltim Prima Coal - Indonesia
- ICICI Bank Limited - India
- VISA Power Limited - India
- Bulk Trading Sa - Switzerland
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- SN Aboitiz Power Inc, Philippines
- Georgia Ports Authority, United States
- Global Green Power PLC Corporation, Philippines
- Oldendorff Carriers - Singapore
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- Mintek Dendrill Indonesia
- Energy Development Corp, Philippines
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- India Bulls Power Limited - India
- Interocean Group of Companies - India
- Vijayanagar Sugar Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- Dalmia Cement Bharat India
- Sical Logistics Limited - India
- PTC India Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Global Coal Blending Company Limited - Australia
- Larsen & Toubro Limited - India
- Minerals Council of Australia
- Price Waterhouse Coopers - Russia
- Mercuria Energy - Indonesia
- Chamber of Mines of South Africa
- Baramulti Group, Indonesia
- Savvy Resources Ltd - HongKong
- The State Trading Corporation of India Ltd
- GVK Power & Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Salva Resources Pvt Ltd - India
- Coal and Oil Company - UAE
- Meralco Power Generation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Xindia Steels Limited - India
- Therma Luzon, Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Mines - Canada
- The University of Queensland
- Mjunction Services Limited - India
- Samtan Co., Ltd - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- Anglo American - United Kingdom
- Riau Bara Harum - Indonesia
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- Agrawal Coal Company - India
- Standard Chartered Bank - UAE
- Essar Steel Hazira Ltd - India
- Videocon Industries ltd - India
- Maheswari Brothers Coal Limited - India
- Petron Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Manunggal Multi Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bhushan Steel Limited - India
- Madhucon Powers Ltd - India
- European Bulk Services B.V. - Netherlands
- Rio Tinto Coal - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sindya Power Generating Company Private Ltd
- Bukit Baiduri Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Australian Commodity Traders Exchange
- Cement Manufacturers Association - India
- Formosa Plastics Group - Taiwan
- International Coal Ventures Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- Independent Power Producers Association of India
- Central Java Power - Indonesia
- Siam City Cement - Thailand
- Star Paper Mills Limited - India
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