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BULK - Week 15 / BDI +3,30% / Weekly Market Report

28267 fcras 17/4 2010 11:16

BDI week 15

Baltic Dry Index 3009 +96 (+3,30%)

Baltic Capesize 3071 +87 (+2,92%)
Baltic Panamax 4034 +82 (+2,07%)
Baltic Supramax 2594 +104 (+4,18%)
Baltic Handysize 1373 +18 (+1,33%)


April 16th, 2010 / Week 15

Improving rates are pushing the indices upwards albeit at a steadier pace. All the market indices have finished the week positively with increases between 1-4%.

No doubt there is solid demand from China and coupled with the continued congestion around the world's main loading/discharging ports we are seeing a supply/demand imbalance.

Worldwide congestion currently stands at around 31 million deadweight. Australia and Brazil are accounting for about one third of this. At Australia's loading ports there are 5.7 million deadweight of ships waiting (half of which are panamax bulkers with 40 odd of these ships stuck in waiting). The figure is slightly less in Brazil at 4.7 mill deadweight.

As the talks continue between the Chinese steel mills and the major mining producers (BHP Billiton, Rio Tinto and Vale) more and more of the Chinese importation is done via spot fixtures from other areas with India getting the lion's share.

This means that supramax and panamax bulkers are benefiting and presently experiencing strong freight numbers. Panamax bulkers seem to be benefiting the most at the moment from the congestion and we are seeing the BPI standing at a 25% premium over the BCI (4,034 and 3,071 respectively). Both the supramax and panamax segments have also been assisted by the good grain trading volumes.

On the S&P side we witnessed another very active week. Capesize re-sales with forward delivery have been concluded in the high 50's/low 60's and if the market's momentum is carried forward into autumn then these deals could prove to be realistic.

Another panamax has also been sold, this time to Greeks. The Italian controlled ?FILOMENA L? (76k/2003 Japan) was sold for US$ 36.50 million with a 6-9 month balance of charter at lower than market prices. On a charter free basis would have commanded a higher price.

- more here:

17/4 2010 11:20 fcras 028268

Saturday, 17 April 2010

A strong Chinese steel market is set to cushion the flood of new Capesize vessels entering the dry bulk fleet Demand: The first quarter of 2010 saw ups and down for the BDI with the index hovering around 3,000. It seems as if the market is balanced on a knife edge. High supply is likely to overmatch even very healthy demand growth rates ? strongly dependant on China.

Chinese iron ore imports continue to remain firm. In the first quarter of this year, China has imported an average of 51.68 million tons (mt) of ore. In 2009, iron ore imports reached a monthly average of 52.37mt, leaving this year?s ore imports just 1% short of 2009 levels, but still very healthy at 14.7mt (40%) more than 2008 levels. With steel prices rising above those of 2009 ? Chinese iron ore imports will continue as the prime driver in the dry bulk market.

However, the present spot rates are not expected to stay that low as time charter rates stay strong as illustrated by the reported BHP Billiton booking of a Capesize vessel for 3-5 months at USD/day 37,000 - more than 30% premium to spot. The current FFA (Forward Freight Agreement) rates also point in that direction with Capesize Q2 FFA going up to USD/day 35,750 and Panamax Q2 going down to USD/day 28,500.

The active fleet has grown by 3.5% during first quarter of 2010, caused by deliveries of 16 million DWT of newbuildings offset by just 1 million DWT being demolished. Since BIMCO Bulletin 1/2010, the total dry bulk order book has increased by 5.5 million DWT. It seems as though the optimism from surprisingly healthy freight rate levels in 2009 has made contracting go on ? despite the fact that the 285 million DWT that comprises the order book today is doomed to make challenging markets in short as well as long-term.

Year-to-date deliveries in capesize amount to 47 ships comprising 8.7 million new DWT, resulting in an increased fleet size of 5% so far in 2010 and active Capesize vessel number 1,000 has just been delivered. At the beginning of 2009, 822 Capesize vessels were active, but an inflow of 112 newbuildings and 29 converted vessels was added to the existing fleet, counterbalanced by just 9 demolitions, leaving a fleet tonnage growth of 18.5% in 2009.

An additional 305 Capesize vessels are scheduled for delivery in 2010, but ?only? 183 will hit the water, when applying the BIMCO assumptions for supply forecast as described next to the graphics. In total, this will in turn mean that Capesize tonnage could grow by 21% when fine-tuning for an average scrapping age of 26 years for Capesize vessels
as compared to the average of 30 years for the overall fleet.

BIMCO forecasts inflow of new dry bulk tonnage in 2010 to reach 76 million DWT, offset by demolition of as much as 13 million DWT. This could make the fleet grow by 14% in 2010 as compared to 10% in 2009. Deliveries in 2011 are forecast to be even higher before supply growth comes down in 2012.

Clarkson?s have scheduled deliveries of 120-130 million DWT in 2010. BIMCO assumes that 10% of the entire order book will not be built and one third of the rest will be deferred by one year. Furthermore, the demolition potential is calculated to 49 million DWT, equal to all vessels aged 30 or above to be demolished by the end of 2013.

The fortunes of the dry bulk markets are basically down to the fortunes of China. March was the 13th straight month that the official Chinese PMI (Purchasing Managers Index) has stood above the threshold of 50 that demarcates expansion from contraction, indicating that the Chinese economy is on a stable and relatively fast growth track.

PMI rose to 55.1% in March, up 3.1% on last month, according to data released by the China Federation of Logistics & Purchasing.

The housing market and huge infrastructure projects have been primary beneficiaries of the Chinese Government?s stimulus package. With the construction sector being the number one steel user, consuming around 50% of Chinese steel, it goes without saying that a continuance of the strength in this sector is vital for the health of the dry bulk freight rates.

Freight rates are forecast by MSI to drift sideways on current levels over the next 6 months. Capesize rates are forecast to stay around USD 30-35,000 per day while the smaller vessel types could see rates go down from current levels to around USD 16-24,000 per day.

Current news:
BHP Billiton has reached agreement to sell the majority of its iron ore to Asian steel mills on shorter term contracts, ending more than 40 years of annual pricing. Brazilian Vale have also inked new iron ore prices ? resulting in price hikes of around 90%? indicating a continued strong demand for the vital raw material in steel production. Contract prices for coking coal are also expected higher.

Meanwhile, the China-Rio Tinto bribery case has just been settled. The court in Shanghai sentenced the four convicted Australian mining giant Rio Tinto employees to prison for a total 39 years. They were found guilty after having admitted to accepting about USD 13 million in bribes from private steel mills that wanted to avoid purchasing iron ore from more costly state-run mills. The arrangement undercut the state?s China Iron and Steel Association?s desire for a united front in negotiating with Australian suppliers.

Shortly after the verdict the employees were sacked for clear violation of Chinese Law and Rio Tinto?s code of conduct. China claims its steel sector paid as much at USD 160 million too much last year for iron ore because of bribery and espionage. While the three Chinese defendants have decided to appeal terms, the Australian national Stern Hu appears to be the only one not appealing terms.

Source: Bimco >

17/4 2010 11:45 fcras 028270

Saturday, 17 April 2010

Malaysian Bulk Carriers Bhd (Maybulk), the country?s major dry-bulk shipping company, feels that the sector is still vulnerable to volatility although it has been showing strong recovery in the last six months.

The Baltic Dry Index (BDI), the barometer of dry-bulk vessels rates, averaged 3,249 points in the last six months from the lowest point of last year of 772 points on Jan 5 at the height of the global economic meltdown.

Chief executive officer Kuok Khoon Kuan said the outlook of the dry-bulk sector remained foggy although the global economy was showing stronger growth.

?The outlook of the market would depend on investors? appetite to place new orders for vessels as the price of newbuilding is relatively low compared with a couple of years back as shipyards are now giving discounts to secure new orders,? he told reporters after the company?s AGM yesterday.

?If investors keep on ordering, it may create an oversupply of vessels for the recovering global economy to absorb. We are also concerned about the impact to the global economy of the pulling back of stimulus packages by some governments that might affect the sector.?

Dry-bulk ships carry most of the world?s major commodities such as coal, various types of grains and iron, cement and chemicals, among many others.

But executive chairman Teo Joo Kim added that although the outlook would be quite uncertain, it would not be as bearish as in late 2008 and early last year.

?This is because since then we have seen a lot of scrapping and cancellation of orders. Currently, there is no serious overcapacity situation as most vessels are held up by port congestion in Australia and China,? he said.

Nevertheless, Kuok said the dry-bulk market was full of surprises and difficult to predict.

?For example, no one ever predicted that the dry-bulk market was going to reach its peak on May 20, 2008 when the BDI was at record high of 11,793 points and then crashed to only 663 points within a six-month period.

?For us, the spurts of the sectors do not really bother us but, more importantly, our strategies are for long-term growth of the company,? he said.

?For instance, we sold our vessels when the prices were high back in 2008 and now we are strategising to re-grow our fleet when the prices of vessels are only a fraction of the prices quoted in 2008.?

Maybulk had revealed at its financial results briefing early last month that it was on the lookout to acquire young and modern second-hand dry-bulk ships.

?Since then, we had been inspecting some vessels but none had met our criteria so far in terms of price and specification. We will continue be on the lookout,? said Teo.

Source: The Star

18/4 2010 10:26 fcras 028295

Big Brazil bonus***

A Greek panamax commanded a $1m bonus and a hefty day rate out of Brazil on a day where major players bought into Atlantic voyages in the sector.

The panamax period market was also awash with eye-catching deals like a two-year charter from a Korean outfit and a pricey short-term stint.


Capesizes (Index 16.04.10 > 26.419 usd/day)

Voyage rates are still soft here and one charterer spent just $31,500 a day on a Michel Bottiglieri 92,500-dwt newbuilding from the Far East to South America and back.

Swiss Marine tied up the 169,200-dwt Front Striver (built 1992) for four to six months from China in late April at $28,000.


Panamaxes (Index 16.04.10 > 32.472 uas/day)

Excel Maritime?s 82,200-dwt Ore Hansa (built 2006) has been taken by CSE for a trip from Brazil to Taiwan at $47,000 a day plus a huge bonus of $1m.

Windrose is running the 73,500-dwt Sea joy (built 2000) from the Med to the US Gulf and back at $36,000 with Swiss Marine having the 73,800-dwt Helena (built 1999) for another Atlantic roundtrip at $34,000.

Louis Dreyfus has been very active in the charter market in the past month and returned for the 74,000-dwt Ioannis Zafirakis (built 2004) from China to South America and back to the Far East at $32,000 a day.

The French player also spent $36,000 a day on the 75,100-dwt Danae (built 2001) on a roundtrip from Southeast Asia to South America.

GOLDEN OCEAN has the 74,500-dwt Ribbon (built 1998) for a similar roundtrip at $34,500, but from Southeast Asia to South Africa.

Two ships were booked from the Indian Ocean to South America and the Far East, the 71,800-dwt Samjohn Light (built 1994) costing $35,000 a day and the 70,200-dwt Peoria (built 1996) $33,000.

Hyundai Merchant booked the 73,600-dwt Clymene (built 2006) for two years from the Med in May at $25,000.

The 75,100-dwt Umberto d?Amato (built 2008) and the 76,300-dwt Atlantic Breeze (built 2004) were each taken for a year at $28,000 and $25,500 a day respectively. Both are from the Far East but the former promptly and the latter towards the end of the summer.

Associated Bulk spent a huge $41,500 a day on two to three months with the 71,700-dwt Giant Pescadores (built 1998).

Swiss Marine spent $32,00 daily for four to six months with the 82,100-dwt newbuilding Torm Island out of Japan soon.


Supramaxes (Index 16.04.10 > 27.124 usd/day)

The 53,500-dwt Navios Arc (built 2003) has picked up a cool $45,000 a day for a trip from Europe to the Indian Ocean soon.

Bunge spent $30,000 a day on the 53,400-dwt Simge Aksoy (built 2006) from the Med to South America and back.

Trnasgrain continues to grab tonnage, this time booking the 53,000-dwt Jin Cheng (built 2003) for a year from China in April.

And Marimpex spent $25,000 a day on four to six months with the 57,000-dwt Flush Royal (built 2010).

By Eoin O'Cinneide in London
Published: 12:52 GMT, 16 Apr 10 | updated: 12:52 GMT, 16 Apr 10


*** (Big Brazil bonus)

Ballast bonus (BB). It may occur that charterers, in order to attract tonnage agree to pay a certain ballast bonus. The ballast bonus serves as a compensation and incentive for the ballast (empty) trip from the ship's last port of discharge to the port where the charter will commence, for example, the first place of loading under a voyage charter or the point of delivery under a time charter. It is more common under time charters, especially in a good market when charterers are unable to obtain ships easily or at a low rate of hire.

For the shipowner, the BB covers the cost of fuel and time in proceeding to the port where the contract commences and from where the freight or hire will begin to earn the owner some money. In a "good market" the shipowner can and does use this during the negotiating stages and the amount agreed upon depends on the negotiating strength of the owner and his shipbroker. The freight rate and time charter rate of hire can sometimes reflect the effect of a high ballast bonus.

The BB is usually a lump-sum payment and is paid in full either in advance or with the first hire payment. If the BB is paid free of any commissions and brokerage it is termed "Nett ballast bonus", and "Gross ballast bonus" if paid after deducting commissions and brokerage.

Sometimes the BB may also be paid by the shipowner to the time-charterer when the ship is being redelivered on termination of the time charter. This may apply when the market is not good for the shipowner.