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Monday, 20 February 12
WEEKLY DRY MARKET OVERVIEW - MARIA BERTZELETOU
 The dry market experienced one more disappointing week with tonnage oversupply and limited cargo demand that pushes earnings for shipping players to levels near or below operating expenses. The Baltic Dry Index closed at 717 points on Friday of February 17th, gaining only two points more than the previous week’s closing and it is now standing 55 points above from the historical low level in the last 26 years of 662 points on February 1st. The dry market normally shows a plunge at the beginning of every year as Chinese festivities bring a lull in iron ore buying activity with the BDI finding its pace upon the return from holidays. However, the index now seems that struggles to keep a steady pace of growth since it is still below the psychological barrier of 1,000 points and it is unquestionable if would surpass this level till the end of February. Following its positive upward movement in the previous week by gaining 68 points more on a weekly basis and panamaxes being the best performers, the sentiment is again distrustful with capesize earnings being extremely flat and handysizes showing a stronger resilience this week.
The BHSI showed a 3.5% week-on-week increase in contrast with a 1.8% week-on-week fall in the BPI from its 39.5% remarkable increase in the week ending February 10th. Overall, the BDI showed a minimal rise of 0.2% on a weekly basis by falling for the last three consecutive days of the week and ending to loose 12 points from the high of 729 points at the beginning of the week. Average time charter earnings for all vessel sizes are still floating at low levels, below $10,000/day, with increased worries for a prompt revival before the end of the first quarter of the year. Panamax and supramax vessels seem to have a better outlook to break the barrier of $10,000/day by earning ground from a strong Chinese coal demand, while capesizes may suffer for a longer period of time since the Chinese iron ore buying appetite, the main driver for healthier capesize earnings, is still fragile.
For large size vessels, capesizes, the market was extremely flat with the BCI gaining only 4 points more at the end of the week by closing at 1461 points, up by 0.27% on a weekly basis. The Atlantic market remains particular inactive despite some iron ore activity from Western Australia. W Australia/Qingdao rates is said to have improved only slightly, to $7,70/tonne, compared to $7,60/tonne last week. In the panamax market, the week opened with a degree of optimism with the index surpassing the 1,000 points mark level, but by the end of the week it fell to 949 points, loosing 18 points, down 1.86% from previous week’s closing.
The week ended also negative for supramax owners with a retreat of decline in Atlantic supramax rates and a rise in Pacific from record lows. Owners with tonnage in the European side found almost impossible to consider the ballast option at the prevailing freight rates and bunkering expenses, while owners in the East with tonnage seem to have better chance with rates covering operating expenses. Some reasonable mineral business from Indonesia gave a substance in the segment with the BSI loosing only 4 points from previous week’s closing and ending at 641 points, down by 0.6% week-on-week basis.
The current status of China’s steel market and the high levels of iron ore inventories do not currently support massive iron ore imports enough to lift the BDI above 1,000 points and capesize earnings at the levels of more than $10,000 day.
According to Data from the General Administration of Customs, imports by China, the world’s biggest buyer of the steel making ingredient, fell 7.4% to 59,32 million tons in January from a month earlier due to the Lunar New Year holiday. Even January gives a distorted picture for Chinese buying sentiment due to National Festivities; China’s steel market remains sluggish. The China Iron and Steel Association reported that daily crude steel production averaged 1,67 million tons from January 21 to January 31. This is similar with the average daily production that occurred during January 11 to January 20, but is down significantly from last year’s record of 2,02 mt average daily production that occurred during June 21 to June 30.
Furthermore, Chinese iron ore inventories reached the alarming level of nearly 100 million mt by the beginning of February and fell to 99.97 million tons by February 13th, but it is still hefty and indicates the slump in demand for steel production in China. Due to lower demand as a result of the slowing economy and tight liquidity, steel prices have been plunging since last October, leaving steel mills with marginal profits or making losses. Major mill Angang Steel, for instance, announced a net loss of some 2.2 billion yuan for 2011 due to rising raw material costs. CISA Chairman Zhu Jimin said that the possibility of losses and meager profits for steel mills is likely to increase this year as increased costs, falling demand and financing difficulties will continue to distress the steel industry.
The hefty amount of Chinese inventories and the lower from the biggest consumer China have plunged the iron ore price last week in the lowest level since October. Ore with 62 percent content at the Chinese port of Tianjin fell 1.6 percent to $137.40 per metric ton on Thursday 16th, data from The Steel Index showed. Vale S.A., the world’s second largest miner by volume, reported a 20% fall in its net profit for the fourth quarter of last year by recording $4,67 billion compared with a $5,92 billion a year earlier, citing as primary reason the decline in the iron ore price. Vale reported quarterly sales of $14,8 billion from reduced iron ore prices and the debt crisis that caused European shipments to slump. Credit Suisse predicted in a report that tighter market conditions would continue in 2012 with iron ore prices expected to be weaker. The report stated Brazilian iron ore miners will face lower year-on-year results due to lack of volume growth and 10% lower year on year average price.
However, Australia’s mega iron ore producers are planning to boost production amid current slow Chinese steel demand. Australia supplies about 43 percent of China's iron ore imports, with most coming from BHP, Rio and Fortescue. According to Bank of America-Merrill Lynch forecasts, China's steel demand is expected to grow 6 percent in 2012 and 5.8 percent in 2013, down from the stunning 12.8 percent compound annual growth during 2008-11.
BHP Billiton Ltd., the biggest mining company, said Feb. 12 a price decline probably won’t affect plans to spend $80 billion over the next five years to boost output along with copper and coal. “The Chinese have been buying well in advance,” said Gavin Wendt, founder and senior resource analyst at Mine Life Pty in Sydney. “They like to buy these commodities when the price is low and buy it in significant volumes, essentially more than what they need and stockpile it”.
Fortescue Metals Group is under a construction program to nearly triple production to 155 million tonnes in a year after securing funding last October. Fortescue Metals Group expects iron ore prices will remain around $US140 ($A131.48) per tonne in the short-to-medium term as Chinese demand remains strong but little new supply comes onto the market.Rio Tinto also assigned $3.4 billion to expand iron ore mining in Australia, and expects its iron ore production in Australia to reach 230 million tonnes by the end of this quarter and 283 million by the end of calendar 2013.
The recent downturn of the dry market stemming mainly from slow Chinese demand does not hamper major iron ore producers that still see future in China’s buying power that could lead steel market and vessels earnings at higher levels. The question now is how the freight markets will response to a revamping of Chinese iron ore consuming at the current oversupply tonnage.
Source: Maria Bertzeletou 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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- Central Electricity Authority - India
- Krishnapatnam Port Company Ltd. - India
- Marubeni Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Sical Logistics Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Merrill Lynch Commodities Europe
- Sakthi Sugars Limited - India
- New Zealand Coal & Carbon
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Mines - Canada
- Thiess Contractors Indonesia
- Dalmia Cement Bharat India
- SMG Consultants - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- London Commodity Brokers - England
- Cement Manufacturers Association - India
- Indika Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Ministry of Transport, Egypt
- GMR Energy Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- Price Waterhouse Coopers - Russia
- Kohat Cement Company Ltd. - Pakistan
- Petron Corporation, Philippines
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- Electricity Authority, New Zealand
- Bhushan Steel Limited - India
- Altura Mining Limited, Indonesia
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- Meralco Power Generation, Philippines
- Metalloyd Limited - United Kingdom
- Bangladesh Power Developement Board
- Indo Tambangraya Megah - Indonesia
- Mercuria Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Trasteel International SA, Italy
- Meenaskhi Energy Private Limited - India
- The Treasury - Australian Government
- Kalimantan Lumbung Energi - Indonesia
- Bharathi Cement Corporation - India
- Coal and Oil Company - UAE
- Billiton Holdings Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Uttam Galva Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Anglo American - United Kingdom
- Agrawal Coal Company - India
- Power Finance Corporation Ltd., India
- Orica Australia Pty. Ltd.
- Global Green Power PLC Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Madhucon Powers Ltd - India
- Lanco Infratech Ltd - India
- Toyota Tsusho Corporation, Japan
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- Electricity Generating Authority of Thailand
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- LBH Netherlands Bv - Netherlands
- Aditya Birla Group - India
- Bhatia International Limited - India
- Semirara Mining Corp, Philippines
- Latin American Coal - Colombia
- Energy Link Ltd, New Zealand
- Independent Power Producers Association of India
- Economic Council, Georgia
- Carbofer General Trading SA - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indogreen Group - Indonesia
- Siam City Cement PLC, Thailand
- Sindya Power Generating Company Private Ltd
- Wood Mackenzie - Singapore
- Star Paper Mills Limited - India
- Bulk Trading Sa - Switzerland
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- Africa Commodities Group - South Africa
- Planning Commission, India
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Globalindo Alam Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Vizag Seaport Private Limited - India
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Gujarat Mineral Development Corp Ltd - India
- Indian Oil Corporation Limited
- Australian Coal Association
- Manunggal Multi Energi - Indonesia
- Renaissance Capital - South Africa
- Rashtriya Ispat Nigam Limited - India
- MS Steel International - UAE
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- Sree Jayajothi Cements Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement - Thailand
- GVK Power & Infra Limited - India
- Malabar Cements Ltd - India
- Central Java Power - Indonesia
- White Energy Company Limited
- Semirara Mining and Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Interocean Group of Companies - India
- Antam Resourcindo - Indonesia
- Posco Energy - South Korea
- McConnell Dowell - Australia
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- Tamil Nadu electricity Board
- Miang Besar Coal Terminal - Indonesia
- Standard Chartered Bank - UAE
- Deloitte Consulting - India
- Barasentosa Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Indonesian Coal Mining Association
- Australian Commodity Traders Exchange
- Pendopo Energi Batubara - Indonesia
- ASAPP Information Group - India
- Banpu Public Company Limited - Thailand
- Parliament of New Zealand
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- International Coal Ventures Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Thai Mozambique Logistica
- VISA Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Videocon Industries ltd - India
- Makarim & Taira - Indonesia
- Coalindo Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Bukit Baiduri Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- India Bulls Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Global Coal Blending Company Limited - Australia
- Ind-Barath Power Infra Limited - India
- Kumho Petrochemical, South Korea
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Goldman Sachs - Singapore
- Edison Trading Spa - Italy
- Chamber of Mines of South Africa
- Straits Asia Resources Limited - Singapore
- Jindal Steel & Power Ltd - India
- Kideco Jaya Agung - Indonesia
- Eastern Coal Council - USA
- Heidelberg Cement - Germany
- Bahari Cakrawala Sebuku - Indonesia
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- CNBM International Corporation - China
- Sojitz Corporation - Japan
- Essar Steel Hazira Ltd - India
- Kartika Selabumi Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Singapore Mercantile Exchange
- The University of Queensland
- Intertek Mineral Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- South Luzon Thermal Energy Corporation
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