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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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Tuesday, 31 January 12
THERE ARE MANY GOOD REASONS FOR COAL IN GERMANY - DR CIESLIK
COALspot.com - "The year 2011 was again marked by many changes on the markets and energy policies, at times in line with expectations, but at o ...
Tuesday, 31 January 12
DRY BULK MARKET KEEPS FALLING FOR WORST MONTH IN YEARS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market didn't manage to put a halt in its downfall, with the industry's benchmark, the BDI (Baltic Dry Index), posting yet another fa ...
Monday, 30 January 12
CHINA'S HUNGER FOR COAL LEAVES DENT IN PENNSYLVANIA'S SUPPLY - THOMAS LESKIN
With the price of heating oil on the rise, one of Pennsylvania's greatest natural resources - coal - is in high demand, and not just locally.
Et ...
Saturday, 28 January 12
WILL FREIGHT MARKET STABILIZE FROM NEXT WEEK?
COALspot.com - The markets continued to soften with BDI at 663 points down by 15.78 pct closing at 726 points and cape index was down by 5.73 pct cl ...
Friday, 27 January 12
DEMOLITION ACTIVITY NEEDS TO INCREASE SIGNIFICANTLY THIS YEAR AS WELL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The oversupply of vessels in most shipping sectors is so intense that it’s become clear to ship owners that unless they scrap as many of their ...
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- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- Manunggal Multi Energi - Indonesia
- Riau Bara Harum - Indonesia
- Commonwealth Bank - Australia
- Ceylon Electricity Board - Sri Lanka
- Billiton Holdings Pty Ltd - Australia
- Chamber of Mines of South Africa
- Goldman Sachs - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Generating Authority of Thailand
- Orica Australia Pty. Ltd.
- Kepco SPC Power Corporation, Philippines
- India Bulls Power Limited - India
- Merrill Lynch Commodities Europe
- TNB Fuel Sdn Bhd - Malaysia
- ICICI Bank Limited - India
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- Formosa Plastics Group - Taiwan
- Barasentosa Lestari - Indonesia
- Minerals Council of Australia
- Deloitte Consulting - India
- Bhushan Steel Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- CNBM International Corporation - China
- Independent Power Producers Association of India
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- Timah Investasi Mineral - Indoneisa
- McConnell Dowell - Australia
- Videocon Industries ltd - India
- Port Waratah Coal Services - Australia
- Electricity Authority, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- The Treasury - Australian Government
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Sical Logistics Limited - India
- Singapore Mercantile Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Wilmar Investment Holdings
- Bangladesh Power Developement Board
- PTC India Limited - India
- SMC Global Power, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CIMB Investment Bank - Malaysia
- Ministry of Finance - Indonesia
- Bharathi Cement Corporation - India
- Indian Energy Exchange, India
- Kaltim Prima Coal - Indonesia
- Indonesian Coal Mining Association
- Iligan Light & Power Inc, Philippines
- Wood Mackenzie - Singapore
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Bukit Makmur.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Tata Chemicals Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Sinarmas Energy and Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Meralco Power Generation, Philippines
- The State Trading Corporation of India Ltd
- Antam Resourcindo - Indonesia
- Australian Coal Association
- Kumho Petrochemical, South Korea
- Kartika Selabumi Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Mercator Lines Limited - India
- Thai Mozambique Logistica
- Heidelberg Cement - Germany
- Energy Link Ltd, New Zealand
- San Jose City I Power Corp, Philippines
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- Central Java Power - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bhatia International Limited - India
- Baramulti Group, Indonesia
- Malabar Cements Ltd - India
- Simpson Spence & Young - Indonesia
- IHS Mccloskey Coal Group - USA
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jorong Barutama Greston.PT - Indonesia
- Economic Council, Georgia
- Medco Energi Mining Internasional
- Straits Asia Resources Limited - Singapore
- Bhoruka Overseas - Indonesia
- The University of Queensland
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Siam City Cement - Thailand
- GAC Shipping (India) Pvt Ltd
- Oldendorff Carriers - Singapore
- Attock Cement Pakistan Limited
- Agrawal Coal Company - India
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- Ambuja Cements Ltd - India
- Dalmia Cement Bharat India
- Parliament of New Zealand
- Petron Corporation, Philippines
- Rio Tinto Coal - Australia
- Planning Commission, India
- Altura Mining Limited, Indonesia
- Bayan Resources Tbk. - Indonesia
- LBH Netherlands Bv - Netherlands
- Bukit Baiduri Energy - Indonesia
- Indian Oil Corporation Limited
- Borneo Indobara - Indonesia
- London Commodity Brokers - England
- Lanco Infratech Ltd - India
- Savvy Resources Ltd - HongKong
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- GVK Power & Infra Limited - India
- Samtan Co., Ltd - South Korea
- MS Steel International - UAE
- Makarim & Taira - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
- IEA Clean Coal Centre - UK
- Ministry of Mines - Canada
- Eastern Coal Council - USA
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Aditya Birla Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Larsen & Toubro Limited - India
- Karaikal Port Pvt Ltd - India
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Sakthi Sugars Limited - India
- Africa Commodities Group - South Africa
- Standard Chartered Bank - UAE
- Directorate Of Revenue Intelligence - India
- Star Paper Mills Limited - India
- OPG Power Generation Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Mintek Dendrill Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Latin American Coal - Colombia
- Price Waterhouse Coopers - Russia
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- Indika Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Georgia Ports Authority, United States
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Cement Manufacturers Association - India
- New Zealand Coal & Carbon
- GN Power Mariveles Coal Plant, Philippines
- Coalindo Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Gujarat Sidhee Cement - India
- Edison Trading Spa - Italy
- Coal and Oil Company - UAE
- Indogreen Group - Indonesia
- Marubeni Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Thiess Contractors Indonesia
- Coastal Gujarat Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- ASAPP Information Group - India
- Parry Sugars Refinery, India
- Rashtriya Ispat Nigam Limited - India
- Global Green Power PLC Corporation, Philippines
- GMR Energy Limited - India
- White Energy Company Limited
- Bulk Trading Sa - Switzerland
- Globalindo Alam Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Salva Resources Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Mining Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- Banpu Public Company Limited - Thailand
- Sojitz Corporation - Japan
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Grasim Industreis Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- SN Aboitiz Power Inc, Philippines
- Xindia Steels Limited - India
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