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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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- Bayan Resources Tbk. - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Simpson Spence & Young - Indonesia
- Grasim Industreis Ltd - India
- Madhucon Powers Ltd - India
- Antam Resourcindo - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Planning Commission, India
- GN Power Mariveles Coal Plant, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Mintek Dendrill Indonesia
- London Commodity Brokers - England
- Economic Council, Georgia
- Sree Jayajothi Cements Limited - India
- Global Business Power Corporation, Philippines
- Aditya Birla Group - India
- Dalmia Cement Bharat India
- Sakthi Sugars Limited - India
- Orica Mining Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Vizag Seaport Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Makarim & Taira - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Edison Trading Spa - Italy
- Trasteel International SA, Italy
- Holcim Trading Pte Ltd - Singapore
- Posco Energy - South Korea
- Larsen & Toubro Limited - India
- PowerSource Philippines DevCo
- AsiaOL BioFuels Corp., Philippines
- SMC Global Power, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bulk Trading Sa - Switzerland
- Bhatia International Limited - India
- Aboitiz Power Corporation - Philippines
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Commonwealth Bank - Australia
- Siam City Cement PLC, Thailand
- Globalindo Alam Lestari - Indonesia
- Marubeni Corporation - India
- Anglo American - United Kingdom
- White Energy Company Limited
- Neyveli Lignite Corporation Ltd, - India
- Australian Commodity Traders Exchange
- MS Steel International - UAE
- Borneo Indobara - Indonesia
- Ceylon Electricity Board - Sri Lanka
- GMR Energy Limited - India
- Essar Steel Hazira Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- McConnell Dowell - Australia
- Banpu Public Company Limited - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Lanco Infratech Ltd - India
- Thai Mozambique Logistica
- Bhoruka Overseas - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Petron Corporation, Philippines
- Siam City Cement - Thailand
- Indogreen Group - Indonesia
- Carbofer General Trading SA - India
- Kumho Petrochemical, South Korea
- Central Electricity Authority - India
- Energy Link Ltd, New Zealand
- Rio Tinto Coal - Australia
- Oldendorff Carriers - Singapore
- Indian Oil Corporation Limited
- Ministry of Mines - Canada
- Wood Mackenzie - Singapore
- Coalindo Energy - Indonesia
- PTC India Limited - India
- Central Java Power - Indonesia
- Indonesian Coal Mining Association
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Savvy Resources Ltd - HongKong
- Xindia Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Australian Coal Association
- Tamil Nadu electricity Board
- CNBM International Corporation - China
- The University of Queensland
- Kobexindo Tractors - Indoneisa
- Africa Commodities Group - South Africa
- TeaM Sual Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining and Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Mjunction Services Limited - India
- Riau Bara Harum - Indonesia
- South Luzon Thermal Energy Corporation
- Straits Asia Resources Limited - Singapore
- Bukit Baiduri Energy - Indonesia
- VISA Power Limited - India
- Star Paper Mills Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- CIMB Investment Bank - Malaysia
- TNB Fuel Sdn Bhd - Malaysia
- Baramulti Group, Indonesia
- Medco Energi Mining Internasional
- Parry Sugars Refinery, India
- Kepco SPC Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Sarangani Energy Corporation, Philippines
- Metalloyd Limited - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Heidelberg Cement - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- ICICI Bank Limited - India
- Meenaskhi Energy Private Limited - India
- Ministry of Transport, Egypt
- Price Waterhouse Coopers - Russia
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- The State Trading Corporation of India Ltd
- Coal and Oil Company - UAE
- Cement Manufacturers Association - India
- Indo Tambangraya Megah - Indonesia
- Mercator Lines Limited - India
- Standard Chartered Bank - UAE
- International Coal Ventures Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Renaissance Capital - South Africa
- Attock Cement Pakistan Limited
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- Electricity Authority, New Zealand
- New Zealand Coal & Carbon
- Uttam Galva Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Interocean Group of Companies - India
- Leighton Contractors Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMG Consultants - Indonesia
- Maheswari Brothers Coal Limited - India
- Binh Thuan Hamico - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- Gujarat Sidhee Cement - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parliament of New Zealand
- Thiess Contractors Indonesia
- Videocon Industries ltd - India
- Global Coal Blending Company Limited - Australia
- Vedanta Resources Plc - India
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- Orica Australia Pty. Ltd.
- GVK Power & Infra Limited - India
- Bharathi Cement Corporation - India
- LBH Netherlands Bv - Netherlands
- Ind-Barath Power Infra Limited - India
- Chamber of Mines of South Africa
- Salva Resources Pvt Ltd - India
- Agrawal Coal Company - India
- GAC Shipping (India) Pvt Ltd
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- Port Waratah Coal Services - Australia
- Altura Mining Limited, Indonesia
- IEA Clean Coal Centre - UK
- Cigading International Bulk Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- Coastal Gujarat Power Limited - India
- San Jose City I Power Corp, Philippines
- Goldman Sachs - Singapore
- Wilmar Investment Holdings
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- SN Aboitiz Power Inc, Philippines
- Singapore Mercantile Exchange
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Coal Council - USA
- Miang Besar Coal Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Bahari Cakrawala Sebuku - Indonesia
- Latin American Coal - Colombia
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- Romanian Commodities Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- Power Finance Corporation Ltd., India
- Jindal Steel & Power Ltd - India
- Indian Energy Exchange, India
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