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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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Saturday, 24 December 11
CHINAS LEVEL OF GROWTH TO DETERMINE COURSE OF DRY BULK MARKET IN 2012 SAYS SHIPBROKER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In its latest report, shipbroker Intermodal attempted to find a silver lining in the tough year that was 2011, as well as what one could expect from ...
Friday, 23 December 11
SPOT PACIFIC CAPESIZE VESSELS HAVE COMMANDED HIGH PREMIUMS - FEARNLEYS
Handy
Rates in the Atlantic kept stable from last week, with a touch of negativity closer to the end. Less spot cargoes seen, and owners are ...
Friday, 23 December 11
CONTENTIOUS ISSUES IN CONTRACT RENEGOTIATION - THE JAKARTA POST
The government has been renegotiating mining contracts, especially those 30-40 years old, with almost all mining companies, including PT Freeport In ...
Friday, 23 December 11
LANCO JOINS HANDS WITH BUKIT ASAM FOR INDONESIAN POWER PROJECT
COALspot.com - PT Tambang Batubara Bukit Asam, Indonesia's state owned coal miner and Indian based Lanco Infratech Ltd plans to build steam power p ...
Thursday, 22 December 11
RI WILL NOT PLAY CATCH-UP WITH GLOBAL COAL DEMAND - THE JAKARTA POST
The Jakarta Post reported that, the International Energy Agency (IEA) has predicted in its Coal Market Report 2011 that over the next five years, gl ...
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- Manunggal Multi Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Thiess Contractors Indonesia
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMC Global Power, Philippines
- Trasteel International SA, Italy
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- Vedanta Resources Plc - India
- The University of Queensland
- Tata Chemicals Ltd - India
- Medco Energi Mining Internasional
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Mintek Dendrill Indonesia
- Carbofer General Trading SA - India
- Energy Link Ltd, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Electricity Generating Authority of Thailand
- Commonwealth Bank - Australia
- Sinarmas Energy and Mining - Indonesia
- San Jose City I Power Corp, Philippines
- CNBM International Corporation - China
- Gujarat Sidhee Cement - India
- Rio Tinto Coal - Australia
- Antam Resourcindo - Indonesia
- Parliament of New Zealand
- Uttam Galva Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Bayan Resources Tbk. - Indonesia
- Kaltim Prima Coal - Indonesia
- Merrill Lynch Commodities Europe
- Star Paper Mills Limited - India
- Simpson Spence & Young - Indonesia
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- VISA Power Limited - India
- Kumho Petrochemical, South Korea
- Chettinad Cement Corporation Ltd - India
- Standard Chartered Bank - UAE
- CIMB Investment Bank - Malaysia
- Larsen & Toubro Limited - India
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Grasim Industreis Ltd - India
- Xindia Steels Limited - India
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- Marubeni Corporation - India
- Ambuja Cements Ltd - India
- Baramulti Group, Indonesia
- Central Java Power - Indonesia
- Straits Asia Resources Limited - Singapore
- Coal and Oil Company - UAE
- Vizag Seaport Private Limited - India
- Georgia Ports Authority, United States
- Posco Energy - South Korea
- Indogreen Group - Indonesia
- Toyota Tsusho Corporation, Japan
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- Attock Cement Pakistan Limited
- Dalmia Cement Bharat India
- Heidelberg Cement - Germany
- Orica Australia Pty. Ltd.
- LBH Netherlands Bv - Netherlands
- Africa Commodities Group - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Maharashtra Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Essar Steel Hazira Ltd - India
- IEA Clean Coal Centre - UK
- Neyveli Lignite Corporation Ltd, - India
- Indika Energy - Indonesia
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Indian Energy Exchange, India
- Borneo Indobara - Indonesia
- Chamber of Mines of South Africa
- Anglo American - United Kingdom
- Bhatia International Limited - India
- Billiton Holdings Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Jaiprakash Power Ventures ltd
- Maheswari Brothers Coal Limited - India
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- Jindal Steel & Power Ltd - India
- Coastal Gujarat Power Limited - India
- Mjunction Services Limited - India
- Ceylon Electricity Board - Sri Lanka
- Tamil Nadu electricity Board
- Parry Sugars Refinery, India
- Samtan Co., Ltd - South Korea
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- Kapuas Tunggal Persada - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kobexindo Tractors - Indoneisa
- Electricity Authority, New Zealand
- The State Trading Corporation of India Ltd
- Australian Commodity Traders Exchange
- Timah Investasi Mineral - Indoneisa
- TeaM Sual Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- The Treasury - Australian Government
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- Interocean Group of Companies - India
- Holcim Trading Pte Ltd - Singapore
- Indonesian Coal Mining Association
- Cement Manufacturers Association - India
- Riau Bara Harum - Indonesia
- Latin American Coal - Colombia
- Energy Development Corp, Philippines
- Independent Power Producers Association of India
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- Central Electricity Authority - India
- Minerals Council of Australia
- Global Coal Blending Company Limited - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Oldendorff Carriers - Singapore
- Kepco SPC Power Corporation, Philippines
- Romanian Commodities Exchange
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Edison Trading Spa - Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- MS Steel International - UAE
- Iligan Light & Power Inc, Philippines
- Malabar Cements Ltd - India
- Barasentosa Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Global Green Power PLC Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Ministry of Mines - Canada
- Wood Mackenzie - Singapore
- White Energy Company Limited
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Port Waratah Coal Services - Australia
- Bangladesh Power Developement Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- Planning Commission, India
- Sree Jayajothi Cements Limited - India
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Sical Logistics Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Bahari Cakrawala Sebuku - Indonesia
- Madhucon Powers Ltd - India
- Mercator Lines Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Price Waterhouse Coopers - Russia
- ASAPP Information Group - India
- Coalindo Energy - Indonesia
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sarangani Energy Corporation, Philippines
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Singapore Mercantile Exchange
- Altura Mining Limited, Indonesia
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- Lanco Infratech Ltd - India
- Gujarat Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Mining Services - Indonesia
- Ministry of Transport, Egypt
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- Sojitz Corporation - Japan
- Sindya Power Generating Company Private Ltd
- Mercuria Energy - Indonesia
- New Zealand Coal & Carbon
- PTC India Limited - India
- International Coal Ventures Pvt Ltd - India
- McConnell Dowell - Australia
- Cigading International Bulk Terminal - Indonesia
- Australian Coal Association
- Sakthi Sugars Limited - India
- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thai Mozambique Logistica
- Leighton Contractors Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Pendopo Energi Batubara - Indonesia
- Meralco Power Generation, Philippines
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