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