Shipping Markets: Dry Cargo Market “Highlights” - Week 49 (03/12/2010 - 10/12/2010)

This was another non-decisive week with the main motive being the total lack of any clear direction and trend. We feel that going this way on our job as analysts becomes really dull and sometimes we feel practically “useless” as not being able to read  and deduct any signals from the super volatile market fluctuations  makes us just wonder how ill or  not is the fate of the Dry Bulk markets? This week’s interesting moves were those of the Capes that made a small shortlived uprise towards the end of last week that momentarily gave us some happy thoughts that were quickly reversed as the index made 4 consecutive falls closing the week with a bitter after-taste. The Panamax size segment has already added more fuel to the existing volatility and has altered the uncertain moving pattern to ups and downs that start now to fluctuate every 2-3 days!!!! It is  rather odd that only the smaller sizes the Supramaxes and the Handysize ships are on a constant upward sloped pattern, and the Supras after 29 negative Baltic Exchange sessions are already counting 14 consecutive positive sessions and during the past 3 weeks have regained more than 23% of their strength. On a similar manner the smaller Handies
have 13 positive sessions and this seems to be on a steady motive that may last during the week to come.

Read the full Dry Bulk Market Highlights - Week 49 (03/12/2010 - 10/12/2010)

Best Regards

Theo Scholiadis - S&P Broker

Shipping Markets: Dry Cargo Market “Highlights” - Week 48 (26/11/2010 - 03/12/2010)

This was another week of mixed feelings that failed to give us any real sense of direction. However we feel that the Large ships, namely the Capes and VLOC’s are in for some hard times ahead. Not necessarily “tomorrow”, but surely in the year to come. We are one month away from clearing out 2010 and this year was overall a very good one, all “other things considering”…!!! We feel that China has lead the way forward, has given us some positive demand for cargoes, has generated momentum and has been the steam engine that gave power to the dry bulk markets. Had it not been for China’s constant and insatiable appetite for raw materials, and general imports together with providing the world with a massive wealth of exports, we would be facing a collapsed dry cargo freight market. Simply as that! The effects of the inflow and vast additions of many new ships in 2010 has been moderated by China and partly by the other developing and emerging countries.

Read the full Dry Bulk Market Highlights - Week 48 (26/11/2010 - 03/12/2010)

Best Regards

Theo Scholiadis - S&P Broker

Shipping Markets: Dry Cargo Market “Highlights” - Week 47 (19/11/2010 - 26/11/2010)

This was a week of mixed feelings and mixed sentiments with no certain trends that can be clearly seen to be developing. To the contrary more uncertainty and more volatility and a directionless week that shows that all indices are actually ready to move towards in either direction. This totally irregular pattern was more evident in the Panamax size segment which has been performing like a sawtooth and every week it seems to gain what it had lost during the previous week. One week we have -12% losses and the following week we get a +12% gain, that will continue and has continued over the past 1 ½ month on this behavioral pattern. This week we saw the rise of the Panamax Index by more than 14% and we are counting 5 cShipponsecutive positive days, the fall of the Capes by more than 8% after a 5 day increase that was short lived, and the rise of the Supras that after 32 consecutive failing days returned to a positive slope and made some positive gains.

Read the full Dry Bulk Market Highlights - Week 47 (19/11/2010 - 26/11/2010)

Best Regards
Theo Scholiadis - Save as DraftS&P Broker

Shipping Markets: Where are the VL's going?

Dear Readers,

I'm sure you've all read the interesting rumours regarding VLBCs (and/or Chinamaxes) and VLCCs. What puts these behemoths in the "Top News" sections is that the sheer volume of cargo they carry and the economies of scale that they allow, can do nothing other than cause a shift in the market. So let's put these rumours to rest and see what the facts say:

Tankers:
With 102 VLCCs available for the next 30 days in the Arabian Gulf, I think it is safe to say that it is a bit overcrowded. In the AG - Far East route, VLCCs were making around $31,000/day more 2 weeks ago, and now they can make around $17,000/day more in the West Africa - U.S. route, than what they are making today. This explains why at least 5 vessels have made their way to West Africa, in ballast conditions no less, and upon hearing a WS77.5 on that route, other owners are also considering it a viable option. This action will no doubt push the West Africa market, while tightening the Arabian Gulf one, hopefully balancing out the oversupply issues that exist.

Bulk Carriers:
Capesizes are the ones that usually lead the market, since the volume they carry has a big impact on commodities. But this looks like it's changing, leaving a big question mark as to whether or not the Capesize vessels will survive. Akis Tsirigakis of Nasdaq-listed Star Bulk Carriers has put in an order for Capes, 2 of which will be delivered next year. He believes that economies of scale will move people to order larger vessels. On that note, Vale is expecting their first of 30 VLBCs (around 400,000dwt) in 2011. Even their competitor Rio Tinto has gone that route, and they want to make a "Brazil - China Highway" for Iron Ore (to begin with). Their argument is that these are expected to cost around $20/ton freight, whereas Capes cost close to $29/ton. This makes one wonder if the Capes will be "marginalised" out of the market.

In a world with price-driven demand promoting economies of scale, it looks like more and more owners are going "big", and proof of that is that the order book contains 166 dry cargo vessels larger than 200,000dwt, 74 of which are over 280,000dwt.

So will owners follow the markets and go "big", or will they look left when everyone is looking right?

Best Regards,
Theo Scholiadis - S&P Broker


Main articles used (list not exhaustive):

- Vale Threat to Cape Owners
[Source: TradeWinds] [Date: 18/11/2010]

- Does Size Matter?
[Source: TradeWinds] [Date: 18/11/2010]

- Supertankers May Sail Empty to West Africa for Oil
[Source: Bloomberg] [Date: 18/11/2010]

Shipping Markets: Dry Cargo Market “Highlights” - Week 46 (12/11/2010 - 19/11/2010)

 Last week was “saved by the Panamaxes”, this week it was the Panamax sector that suffered the most. Increased volatility, greater fluctuations, and weekly or monthly periodicity of peaks and troughs have definitely altered the shipping markets. This was an overall negative week with all indices being red and most of the smaller indices producing long consecutive falling trends. For this coming week the BDI recorded its 17th consecutive drop, and it closed the week just like previous weeks with another strong loss of -7.3%. Capes may have found a bottom as the index mid-week marginally gained and this could be the possibility to start building on another rising period while Asian thermal Coal imports that will be needed to cover for the strong winter that is still ahead, may support the charter market showing some clear signs of new prompt and available cargoes.

Read the full Dry Bulk Market Highlights - Week 46 (12/11/2010 - 19/11/2010)!

Best Regards,
Theo Scholiadis - S&P Broker

Shipping Markets: QE2 Worries are Proving True

Dear Readers,

It seems that our worries about the drop in the value of the dollar are not only felt by us, but by the financial community at large. The Federal Reserve Chairman Ben Bernanke has stood by and defended his monetary stimulus, and even went so far as to implicitly accuse China that they are not doing enough to strengthen their own currency. Adding to that the fact that the Euro has strengthened for the third day in a row and that the rising commodity prices have boosted consumer price inflation in China, the financial community fears that the dollar "will become the world's 'weakest currency'". Now, whether this will be a good thing for shipping, or not, is yet to be seen by the strategies that the shipping companies will decide to enforce.

Read our original article: Shipping Markets: Quantitative Easing Round 2 - $600 billion

Best Regards,
Theo Scholiadis - S&P Broker


Main articles used (list not exhaustive):

- Dollar to Become World's 'Weakest Currency,' Drop to 75 Yen, JP Morgan Says
[Source: Hellenic Shipping News Worldwide] [Date: 18/11/2010]

- Bernanke Defends Fed' Policy, Turns Tables on China
[Source: Bloomberg Businessweek] [Date: 19/11/2010]

- Euro Gains for Third Day; Asian Stocks, Metals Pare Weekly Drop
[Source: Bloomberg Businessweek] [Date: 19/11/2010]

Shipping Markets: Cyprus and Eastern Med Gas Deposits

Dear Readers,

In a previous post, our reader Omiros Angelidis (of CERES LNG Services / BG LNG Services), asked me to research and write about the Gas deposits found around the South of Cyprus and the Eastern Med, about who will exploit them and how it will affect the LNG market.

Personally, I believe that the LNG market is an underrated one and that the shipping world (or rather the energy world) will veer towards it in the not too distant future. The past has shown us that finds like these tend to change markets, so it was with a keen interest that we undertook this research. But you don't want opinions, you want facts:

A little over 3 years ago, Cyprus launched an exploration procedure that uncovered gas deposits around the South of Cyprus. As this was in international waters, bordering with 6 other nations, they needed to get approval before any drilling, as well as to outline what area will belong to which nation. Following that, further exploration revealed the area known as the Levant Basin Province is estimated to hold more natural gas resources than any region explored in the United States (it is estimated to hold 122tcf - trillion cubic feet). Needless to say, the countries that want in the game are Israel, Lebanon, Syria, Cyprus, Turkey and Egypt. 

Of course we do not need to remind everyone that this is a "political hot zone". Israel and Lebanon ties are tense (although they seem to agree on energy matters), Turkey does not recognise the Cypriot government, and the deaths of the Turkish crew members by the Israeli attack on the "Gaza aid flotilla" can only be an obstacle. Cyprus is being hindered by Turkey in any way possible, while at the same time they are trying to finalise an agreement with Israel. There are even talks of a pipeline from Israel to Cyprus.

So, to our question: "How does this affect shipping?"

At the moment, the largest natural gas reserves are located in the Middle East and Russia, followed by the United States and Africa. The main trading routes are from the Arabian Gulf to the Far East and the Arabian Gulf to the Northern Continent, since Russia supplies most of its natural gas by pipelines aided by the Black Sea trade routes. To top that, companies are building vessels known as Q-maxes (or Qatarmaxes), optimised to take LNG from Qatar to the Northern Continent. So now I ask you: What will happen to that route once one of the largest natural gas deposits is "open for trade" in the Eastern Med?

The Straits of Gibraltar currently have no vessel size restrictions, which means that economies of scale will be put to good use since the Suez canal restrictions will be moot. In addition, depending on the costs, it might be cheaper for the Med countries to get their natural gas from the Levant rather than the pipelines from Russia, thus indirectly affecting Russia's market as well as the Black Sea routes. Will it also be cheaper for the U.S. to import their extra gas requirements from the Levant?

To close, a lot of countries and companies are spending billions in trying to find new ways to use alternative fuels. One of the largest deposits in the world situated near Europe (considered to be fully developed) is bound to affect markets. Shipping companies are already building LNG fleets (albeit customised to certain trades for the moment), which shows that some shipowners also believe that this will be one of the possible futures of energy, and are updating their fleets accordingly. Now as to who will exploit the deposit, that's a matter that, unfortunately, is in the hands of the politicians and only time will show its outcome.

Best Regards,

Theo Scholiadis - S&P Broker

Main articles used (list not exhaustive):

- Cyprus minister confirms reports on natural gas deposits

[Site: FinancialMirror.com] [Date: 23/06/2010]

- Large Natural Gas Deposit Found in Eastern Med

[Site: Science 2.0] [Date: 09/04/2010]

- Offshore Drilling: Ownership of Israel Gas Deposits Up in Air

[Site: Trading Metro] [Date: 15/07/2010]

- Turkey announces plans to explore offshore Cyprus

[Site: PennEnergy] [Date: 22/10/2010]

Shipping Markets: Quantitative Easing Round 2 - $600 billion

Dear Readers,

As you no doubt have noticed, there has been a big debate over the $600 billion for Ben Bernanke's "long-term treasury purchases". Here is a quick recap of the debate to date:

On the 3rd of November 2010 the Federal Reserve announced Round 2 of Quantitative Easing, purchasing $600 billion of long-term Treasury securities through the second quarter of 2011, forking out $75 billion per month through next June. A group of economists launched an "attack" on the Federal Reserve with an open letter to Fed Chairman Ben Bernanke (published in the Wall Street Journal and the New York Times), saying that this will "risk currency debasement and inflation". This decision has also raised some concerns with some of the U.S. trading partners, including China, Germany and Brazil, some of which are already battling inflation problems. The Fed's response was that the "plan" will always be amenable to change, depending on the effects it has on world markets.

So, the question for which you are all here: "What does this mean for shipping?"

$600 billion is a large amount by anybody's standard. It is highly likely that this huge influx of cash will devalue the U.S. dollar to some degree. This, of course, will affect anybody holding U.S. dollars, be they shipping companies "sitting" on cash for good purchase opportunities, or governments like China. As a broker friend of mine said "inflation is the enemy of idle or risk-averse money". Could this mean that shipowners will try and make use of that money before it loses value? Could we see a move for more vessel purchases while "their money is good"? On the flip-side, could we see the shipowner sellers holding out in order not to receive U.S. dollars before its devaluation? Many brokers are expecting vessel prices to finally come down and reflect the existing market. Could a combination of these 2 factors come to play, and we see an unchanged market, reflecting even more uncertainty?

This influx will also affect other sectors of the market, like Breakers and Shipyards. To use shipyards as an example, they are paid in U.S. dollars, but they pay their workers and suppliers in their local currency. A devaluation of the U.S. dollar will mean a decrease in their profit margins, since their expenses will remain the same. In order to keep their margins constant, they will likely raise the U.S. dollar price making the vessel more expensive to the shipowner "sitting" on cash. Could this mean that we will see more newbuilding deals in order to capitalise on the current value of their dollar? Even if they decide to ask for payment in their local currency, the effective increase in price will be the same to the buying shipowner.

Bernanke wanted to "move the economy" with this money. Both sides of the argument have valid points and only time will show the victor of the argument. However, will "rush" purchases be a good thing (i.e."Buy now before I lose my money!!!")?

I hope that this won't cause decision makers to make hasty decisions, because "he who hurries, stumbles".

Best Regards,
Theo Scholiadis - S&P Broker


Main articles used (list not exhaustive):

- Bernanke's Fed Sets Sail With $600 Billion QE2
[Site: Forbes.com] [Date: 03/11/2010]

- Fed's Bond-Buying Plan Faces New Assault By Critics
[Site: Los Angeles Times - Business] [Date: 14/11/2010]

- Open Letter to Ben Bernanke
[Site: Real Time Economics] [Date: 15/11/2010]

Shipping Markets: Dry Cargo Market “Highlights” - Week 45 (05/11/2010 - 12/11/2010)

Once again the week was “saved” by the Panamaxes. What could have been an all red and negative week was marginally salvaged by the BPI that closed the week with only a small gain having lost dynamics after midweek of week 45 went by. For this coming week the BDI recorded its 12th consecutive drop, and it closed the week just like week44 with a -7.3% loss. Capes are still toneless with China further reducing the quantities of Iron/Ore imported and the charter market still showing some unfortunate clear signs of lack of prompt and available cargoes.

Meanwhile, the sluggish performance so far of the Dry Bulk Index for nearly 4-5 weeks, has been shrugged off as coal shipments have been drastically increasing in the latter half of 2010 as China is preparing for a colder than normal winter. If we didn’t have these boosts of coal, we might have been talking about a seriously negatively affected dry bulk market, and here are some positive news coming from Xu Xu (Xu “squared” it could well be!!), the chairman of the China Chamber of Commerce of Metals, who expects that demand is expected to pick up as he announced that China's iron ore imports are expected to rise for the rest of the year as steel mills embark on a period of restocking -- in September we saw an 18 percent sequential rise in China's iron ore imports.

Read the full Dry Bulk Market Highlights - Week 45 (05/11/2010 - 12/11/2010)!

Best Regards,
Theo Scholiadis - S&P Broker

Shipping Markets: New Look

Dear Readers,

As you will no doubt have noticed our CEO, John N. Cotzias, has been co-hosting the "Shipping Report" on Channel9, Greece's business TV network. In order to keep in line with the spirit of analysis and reporting that NCS Consulting provides the Shipping Community at large, we have decided to give this Blog a new look:

We will no longer simply inform you of the articles that we find interesting.

We will now do the work for you!

We will read the articles and analyse them for you, so that you get the crux of the stories and the conjectures that we believe can be derived from these. We are not going to pretend we know what the market will do in the future; as the last few years have shown, anyone attempting that feat is more likely pretending to know what he is talking about. We will try and provide the most logical conclusion from what we read, in order for you to get the most useful information as quickly as possible without you having to do any of the legwork.

Why, you ask, we would provide this information with what seems like "No strings attached"? Well, we believe in cooperative competition. "Game Theory" teaches us that cooperating will provide a better outcome for all parties involved. We are not afraid to tell people how we think and what we believe, since quality can not be duplicated... only imitated!

We believe that if your business goes well, so will ours!


So here's to productivity and profits, in a market that seems to have them elude us.

See you all next time.....

Best Regards,
Theo Scholiadis - S&P Broker

Vale CEO sees iron ore prices at USD 130 to USD 160

Mr Roger Agnelli CEO of Brazilian mining giant Vale said on Monday that he expects iron ore prices to average between USD 130 per tonne to USD 160 per tonne this year and expects a similar range in 2011 Agnelli told reporters at a news conference in New York that the range depends on issues like freight costs and quality.

Source: Reuters

Karnataka ore ban hits biz of New Mangalore Port

The Karnataka government’s ban on mining and movement of iron ore in the state has impacted the business of New Mangalore Port Trust (NMPT). Along with Tadiri and Billikere, NMPT ships close to a half of Karnataka’s 30 million tonne of iron ore. Tadiri and Billikere are minor ports and normally remain shut during monsoon.
A recent report on the port sector by broking house Motilal Oswal notes that while other ports, notably Ennore and Kolkata, reported a healthy 25%-plus year-on-year growth in cargo in September, Kandla and NMPT were the laggards, with the latter being the worst performer. NMPT accounts for 5% of the country’s cargo composition. The report says iron ore shipments from India were 4.5 million tonne in September 2010 compared to 5.2 million tonne in September 2009.

Global wheat output to hit surplus next year

Global wheat production will return to surplus next year, but not by enough to refill inventories by more than a fraction, Macquarie has said. The Australia based banker also forecasted that Chicago prices will remain above $6 a bushel for at least two years.
The bank forecast a jump of more than 5% in wheat production in 2011-12, the sowings for which have begun in northern hemisphere countries, as growers raise plantings to capitalise on firmer prices.
"European Union, US and Canadian farmers are expected to expand wheat plantings at the expense of other crops," Macquarie said.

Congested Asian ports struggle to sate Chinese demand

Australia, India and Indonesia are under the gun to expand port capacity so exporters can cash in on China's commodities boom or face losing billions of dollars in business to other markets. China, already the top iron ore importer and coal user, is expected to consume even greater amounts of commodities over the next few years to help fuel the rapid growth of the world's second largest economy.
But major congestion at ports from Newcastle to Paradip to Balikpapan could force the world's most populous country to turn to imports from suppliers further afield, such as the United States and Canada, which don't have the same bottlenecks.
"It seems that (Asia Pacific) port capacity is constantly running behind actual demand," said Klaus Nyborg, chief executive of Hong Kong-based dry bulk shipping firm Pacific Basin, one of Asia's biggest small-sized shipowners.

WEEK41 - Dry Cargo Market “Highlights” – 08-October-2010 - 15-October-2010

Yet another week passed by with China being the drive force of the main size segment the Capes. All indices went down during this week with Capes still moving positively and the reason for this is the continuing growth in demand for iron ore imported in China.  Yes that’s no news one would say and that is absolutely right. We are not happy to be forced to repeat the same old song every week, but this status quo could also be assuring depending on how you might want to see it. Further in this report we will explain what we feel about China and what we may call “welcome to the comfort zone”…
To get a peek at how this week did not have the same number as period and timecharter fixtures in the Cape sector, as we have more or less 12, but all period and T/C fixtures for the first 15 days of October have reached 38 in total, one more than the 37 we had recorded for last September. This is surely a sample of the increased demand and the heating up of the Capesize market that managed to raise the average daily performance to a level over $40,000 dollars per day. We shall see in detail how the daily earnings of all sizes of ships moved this week, however briefly similar to last week the Capes is once again this weeks big winner with all the other smaller sizes and especially the Panamax size segment performing the worst.

You may download the full version from our webserver:

WEEK 41 DRY BULK ANALYSIS

BHP Billiton and Rio Tinto Terminate the Iron Ore Production Joint Venture

BHP Billiton and Rio Tinto signed core principles to establish a production joint venture covering the entirety of both companies’ Western Australian Iron Ore assets.  This resulted in the signing of definitive agreements on 5 December 2009. The completion of these agreements was subject to a number of conditions, including regulatory approvals.
Since the agreement was signed it has become increasingly apparent that regulatory approvals of the joint venture are unlikely to be achieved.  Consequently, BHP Billiton and Rio Tinto have reluctantly agreed to dissolve the proposed joint venture.

Iron Ore-Index near 5-month top, up for 8th straight session

Iron ore prices rose for an eight consecutive session on Friday to their highest in nearly five months, marking their longest winning streak since March on strong Chinese demand. Chinese steelmakers have resumed buying supplies as government-enforced curbs on production eased and mills stockpile iron ore ahead of winter. But the surge in iron ore prices coincides with falling steel rebar futures in Shanghai SRBc8, suggesting market players may soon put the brakes on the iron ore rally given the hazy outlook for steel demand, with China bent on taming its red-hot property market. "The recent rises in iron ore prices, we think, will be short lived," said Judy Zhu, commodity analyst at Standard Chartered Bank. "The price gains have been driven by Chinese mills' stockpiling, but I do not expect them to stockpile a huge amount of it when domestic steel demand remains so-so." Industry data showed crude steel output in China, the world's biggest producer, fell to about 48.54 million tonnes in September from 51.64 million tonnes in August after Beijing curbed production to meet a year-end energy efficiency target.

Currency wars to propel Commodity Super Cycle

While the United States remains the world's No.1 economy, it is increasingly feeling the heat of the Chinese dragon breathing down its neck, writes Gary Dorsch, editor of Global Money Trends. At the beginning of the twenty-first century, the US economy was eight times larger than China's – a decade later the figure was down to three times. China's $5 trillion economy has eclipsed Japan, Germany, France and Britain, to become the second-biggest, after three decades of blistering growth, and is now within reach of overtaking the US within 10 years. With China's economic growth rate at 10% and the US economy struggling at 1.5% growth – this long-term prediction doesn't sound that far-fetched.
China, with 10 times Japan's population, has long been expected to catch up with its neighbor. But the global crisis and Japan's sluggish growth brought that point forward by many years. China has emerged to become the world's largest exporter, overtaking Germany, which held the title since 2002. Factories employing low-paid workers to assemble iPods, computers, shoes, and toys are leading the boom. China has also passed the US as the world's largest auto market and producer. Two decades ago, a car industry barely existed in China.

Fortescue Metals Iron Ore Shipments Exceed Guidance

Fortescue Metals Group Ltd., Australia’s third-biggest producer of iron ore, said first- quarter shipments rose a better-than-expected 6 percent as production increased. The company’s share of shipments was 10.1 million metric tons in the three months ended June 30, from 9.5 million tons a year ago, Perth-based Fortescue said today in a statement. It had forecast 9.5 million tons.
Fortescue said this week it had agreed a $2.04 billion loan to refinance debt in order to pursue expansions. Production will continue to operate at an annual rate of 40 million tons until February, when it will rise to 55 million tons, the company said.

Q+A-What's next for troubled RIO-BHP iron ore JV?

A $116 billion iron ore joint venture between Rio Tinto and BHP Billiton has suffered a blow after German regulators said they would block it, foreshadowing a rejection by the European Union Combining their vast Australian iron ore mining operations would surpass Brazil's Vale in size, producing a combined 385 million tonnes of ore initially and aimed at saving $10 billion in costs.
But Germany's competition watchdog said it would prohibit the deal and sources said regulators from the European Union, deemed the biggest hurdle to the venture, are set to say the merger could hurt competition.
A leak of Rio Tinto boardroom discussions earlier this month indicated the company was determined to walk away from the venture.

Cargill Profit Surges 68 Percent As Volatile Grain Markets Boost Trading

Cargill, Inc., said quarterly profit surged 68 percent, to $883 million, helped by volatile grain markets that boosted trading revenue for one of the world’s largest agricultural companies Results in Cargill’s origination and processing business, which includes commodity trading, rose “significantly” in the quarter, the Minneapolis-based company said in a statement today. That reflected “renewed market volatility and changes in trade flows (that) created opportunities for trading and for serving customers' price risk and raw material needs,” Cargill said.

BHP-Rio antitrust report expected soon

There was no surprise for Rio Tinto and BHP Billiton in a report saying the European Commission would soon announce the result of its antitrust investigation into their proposed $US116 billion ($A118 billion) iron ore production joint venture in the Pilbara.

The joint-venture proposal has a December 31 deadline from the companies and has been under investigation by the commission since being announced in June last year.
Both companies have also indicated previously that they expect to hear back from the regulator in the second (calendar) half of this year. Even so, BusinessDay reported last week that Rio's board had already begun planning the best way to announce that the joint venture would not proceed due to unacceptable conditions likely to be imposed by antitrust regulators.

China iron ore concentrates price rises again in few regions

It is reported that iron ore concentrate prices rises again. 1. In Liaoning.Iron ore concentrates price went up by around CNY 30 per tonne during the first few days of the national holiday. But it became steady in the last few days of the holiday with enquires increased and good transaction. Local steel mills sudden purchases increase promoted the market activity, and miners were busy with the production and sales. Recently, local steel mills increased the purchase price by CNY 30 per tonne and today the market also increase by CNY 20 per tonne to CNY 30 per tonne.

Shandong to invest RMB 100 bln in coal industry by end of 2015

The Coal Industry Bureau of Shandong Province announced plan to inject more than RMB 100 billion into coal industry by the end of the 12th five-year plan starting from 2010 to 2015, sources reported.
In the period, the province hopes to kick off construction on 16 collieries with a designed annual output capacity totaling 12.6 million tons and to put 18 mines into operation to add capacity of 16.65 million tons.
The total capacity of Shandong is expected to maintain around 150 million tons of coal in the next 20 years.
However, Wang Liting, deputy director of the coal industry bureau, said that the province has 935 coal developers, an amount 18.7% more than the planned figure in the province, adding that Shandong will wash out backward capacity in the future to optimize the coal industrial structure.

Source: China Knowledge

India's sugar supply to ease global prices

Peaked sugar global market is expected to be pacified with the supply of sugar from India. Sugar production in India is projected to touch 25.5 million tons thanks to favorable monsoon rains.
The industry opined that the country could export three million tons of surplus sugar in the current marketing year.
With an expected sugar output of 25.5 million tons and the carryover stocks of 5.8 million will facilitate to ship around three million tons of surplus sugar this year, Indian Sugar Mills Association Director General Abinash Verma was quoted by Dow Jones Newswires.

WEEK40 - Dry Cargo Market “Highlights” – 01-October-2010 - 08-October-2010

We were a bit hasty to mention last week as a peculiar and weird one… well this current week was definitely the “weird week”, as our estimate and many more shipping analysts forecast and expectation expressed last week that this current week’s festive mid-autumn festival holidays would have surely caused a slack in the Cape activity and subsequently would bring Capes to lower freight rates fell through…. It seems that the opposite happened and the Cape market shot up, with a massive near 20% increase in the index and a 19% increase in actual daily earnings!

It came as a pleasant surprise that the Capes (ships 3 times the length of a normal soccer field) were in good demand and attracted many Timecharter and period fixtures, about 28 a record number. We can also comment and point out that on Thursday the 7th Oct 2010 9 T/C and Period fixtures for Capes were recorded, a record number that we had not seen for a long time.

You may download the complete report from our WEBSERVER:

WEEK 40 DRY BULK ANALYSIS

Rio Tinto Says China Shows 'Positive' Signs of Growth as Industries Expand

Rio Tinto Group, which gets almost a quarter of its revenue from China, said the East Asian country has begun to show “positive” signs of growth again as its manufacturing and construction industries recover. “Two months ago there were jitters in financial markets about the sustainability of Chinese growth,” Vivek Tulpule, chief economist for the world’s third-biggest mining company, said today at a briefing in Melbourne. “Since then signs have turned more positive. China is surprising us again on the upside.’’
While China’s economic growth cooled to an annual 10.3 percent in the second quarter from 11.9 percent in the first, manufacturing, trade and construction are now rebounding, Tulpule said. China last year became Rio’s biggest customer, surpassing North America and Europe. The London-based company is the world’s second-largest exporter of iron ore.

Baosteel's net profit for Jan-Sept expected to rise by 170-190 percent

Leading Chinese steelmaker Baosteel estimates that in the first three quarters of the current year its total net profit will register an increase of 170-190 percent on year-on-year basis. Detailed data will be made available in the company's Q3 report, which has not been issued yet.
According to its report for the first half of 2010, Baosteel's net profit for the first six months of the current year was 140-160 percent higher compared to the same period of the previous year

Source: SteelOrbis

Scrap import offers have remained stable in Turkey

The Turkish market has been quieter than expected in the post-Eid period. There has been no visible bounce in demand. Transactions have been sporadic. This has been partially the result of on local steelworks actively sourcing material during the religious festival. Mill input costs edge higher in China
Provincial billet and scrap values strengthed in early September trading. The upward movement has been attributed to the government’s decision to scale back the country’s overcapacity. Outdated steel facilities have been shutdown. Inadvertently the domestic supply of billet has been tightened. The majors have recently cut their scrap purchasing prices and temporarily suspended purchases.
CIS semis producers struggle to sell material
Russian and Ukrainian metallurgical plants have witnessed little evidence of an autumn recovery. Export offers were lifted under the premise of stronger trading activity. However, many long established clients have found the latest offers too expensive. Re-stocking activity has been limited. Expectations are now pointing towards a price correction in October.

Source: MEPS

China found 900 mineral locations in past 12 years

During the past 12 years, Chinese scientists have discovered more than 900 locations containing mineral deposits which are estimated to hold 5 billion tons of iron ore, as well as a vast array of other resources, the country's geological authorities said Saturday. The large number of discoveries, including newly found reserves of iron and copper ores, coal, gas, and other types of raw minerals, came after a major geological mapping was launched in 1999, officials with the China Geological Survey (CGS) said at a press conference held in Beijing Saturday.
The CGS is a government-owned non-profit entity directly under the Ministry of Land and Resources.
Among the discoveries, 152 locations were identified as holding huge amounts of deposits. These findings would pave the way for future development and reduce the risks for commercial prospecting for resources, a statement from the CGS website said.

Rio Tinto CEO says iron ore merger process 'more challenging'

Anglo-Australian miners Rio Tinto and BHP Billiton are continuing talks with regulators over their proposed $116 billion Pilbara production joint venture but high global iron ore prices is making the process "more challenging," Rio Tinto CEO Tom Albanese said Thursday. "We've seen higher iron ore pricing as good for our business but it has been making the regulator picture quite challenging," Albanese said on CNBC Thursday when asked how the merger was progressing. "We said from the beginning, we respect the regulatory process. We are continuing our discussion with the regulators, but it is more challenging than it was a couple of months ago." Albanese was making his first public statement since details of an informal teleconference between Rio Tinto board members were leaked to an Australian newspaper on Monday, at which there was reportedly discussion about the best way to inform BHP Billiton of the company's intention to bow out of the joint venture agreement. Rio Tinto issued a three paragraph statement Tuesday in response to the report confirming a board meeting had been held at which the joint venture was among a "range of issues" discussed, but said the board had not made any final decisions relating to the proposal. It has also launched an internal probe into the source of the leak, the Sydney Morning Herald, which broke the story, reported Thursday.

Chinese iron ore concentrates buyers in wait and see mode

It is reported that the iron ore concentrates in Hanxing saw mix offers during the national holiday. Now holiday just passed and iron ore concentrates price quotations in some area are evidently higher than those before the holiday. Affected by increasing market activities in nearby areas, the iron ore concentrates prices in Hanxing saw rebound and inquiries increased, yet with normal transaction.

Rio Tinto CEO says iron ore merger process 'more challenging'

Anglo-Australian miners Rio Tinto and BHP Billiton are continuing talks with regulators over their proposed $116 billion Pilbara production joint venture but high global iron ore prices is making the process "more challenging," Rio Tinto CEO Tom Albanese said Thursday. "We've seen higher iron ore pricing as good for our business but it has been making the regulator picture quite challenging," Albanese said on CNBC Thursday when asked how the merger was progressing. "We said from the beginning, we respect the regulatory process. We are continuing our discussion with the regulators, but it is more challenging than it was a couple of months ago."

Global iron ore prices decline as China consumes less steel

The value of Australian iron ore assets has sunk by half over the past quarter, led by a decline in prices of the commodity. “We had valued the asset at $230 million, but now I don’t think we should pay more than half of that,” said a domestic mining company bidding for one of these assets. Chinese policies — phasing out of stimulus packages, hemming of the real estate sector and closing of obsolete units — are being blamed for this.

Iron Ore-Index hits 7-week top as China buyers return

Iron ore spot prices extended gains on Monday, lifting the benchmark index to its highest in seven weeks, fuelled by tighter supplies and revival in Chinese demand. Market watchers had expected Chinese buyers to return after a week-long public holiday that ended on Thursday, with demand from the world's biggest iron ore importer seen revving up as many steel mills restart production after state-imposed curbs. Offers for Indian ore with 63-63.5 percent iron content climbed on Monday to $155-$157 a tonne, cost and freight delivered to China, from $151-$153 a tonne on Friday, according to Chinese industry consultant Mysteel. "Chinese steel mills have started to replenish stocks after the week-long break," said an iron ore trader in China's eastern Shandong province.

Rio Tinto sticks with quarterly pricing

Despite angst from the Chinese steel industry and radical proposals to move toward spot iron ore pricing, Rio Tinto remains content with the new system of quarterly supply contracts. RTP will continue to reprice its supply arrangements on a quarterly basis to ensure some relatively long-term stability in the steel industry, which depends on steady ore pricing to plan its operations.

Indonesia May Import 300,000 Tons of Rice, First Bulk Purchase Since 2007

Indonesia, the world’s third-largest rice producer, may have to import 300,000 metric tons of the grain, the first bulk purchase since 2007, to meet an expected shortfall in government supplies, Bulog executives said. “Now our stockpiles are about 1.2 million metric tons and we should have 1.5 million tons in December,” Sutarto Alimoeso, president director at the state food company, told reporters in Jakarta today. “We are prepared to buy 300,000 tons of rice from Thailand and Vietnam.”

Worldsteel Short Range Outlook

The World Steel Association (worldsteel) today released its October 2010 short range outlook (SRO) for 2010 and 2011. worldsteel forecasts that apparent steel use will increase by 13.1% to 1,272 mmt in 2010 after contracting by - 6.6% in 2009. This represents an improvement of 35 mmt over the April SRO for 2010 exceeding the pre-crisis peak of 1,222 mmt in 2007. In 2011, it is forecast that world steel demand will grow by 5.3% to reach a record 1,340 mmt.
The worldsteel Economics Committee met in Rio de Janeiro in September 2010 to discuss the October 2010 SRO.

Chinese domestic steel prices in October may be worse off

On the last day of September, Shanghai Futures Exchange witnessed a mild rise of steel futures. However, it has not changed the downward trend of Chinese steel market.

According to industry insiders, the market is now facing quite a lot of negative news and uncertain policies.
So if there is anything to be sure, that is that steel price will not go back up soon. Basic conditions are against sharp price rise after the National Day Holiday
Judging from the storage of steel products in the recent days, demand in China’s domestic steel market is obviously not strong enough to bring about any dramatic change. Until September 25, the national storage volume of rebar has increased by 0.16%, and that of wire rod has increased by 4.59%, which has ended previous shrinking of construction steel storage. The rising storage will surely shock the market quite much.
As pointed out by analysis, demand is largely replaced by wait and see during the steel price is falling. Moreover, the 11 day long National Day Holiday also affects the behavior of traders and steel factory to some extent.
Therefore, it is quite possible that the sales level of October will not reach that of September.

Source: Steel Guru

BRIC nations to fuel Aluminium demand by 13%

Chinese demand for aluminium will keep up the global consumption of the metal, which is poised to grow at 13% in the current year. Higher consumption will come mainly from the automobile industry and the electronic equipments industry in the country. The Chinese auto sector has showed robust growth over past several months with heavy truck and trailers taking the largest pie of the total consumption.

WEEK39 - Dry Cargo Market “Highlights” – 24-September-2010 - 01-October-2010

This week was a “weird” week with no clear direction given from the Baltic Indices. We can claim that our estimate of last week was practically proven right. We had given during week 38 an indication that the upcoming holidays of China in week40 and  the Mid-Autumn Festival of 1st Oct 7th Oct 2010 would cause a pre-holiday advance activity just strong enough to clear the outstanding orders that would secure that there will not be a shortage of incoming cargoes during this holiday period. Panamax vessels are the size segment that was affected the most during this week and the Supramaxes followed, with the Handymaxes also in the red. The capes survived and performed positively with a 9.55% increase this week and that was enough to counterweight the losses of the other 3 smaller size sectors, ultimately giving the BDI the smallest week on week percentage rise of just 0.33%, an increase of just 8 points. We expect the same trends to continue over the holiday week though.
In the table on the left, we see the level of Chinese Imports of Iron/Ore for the period of 2006 until Sep 2010. It is clearly evident that we are reaching the lowest levels since Jan 2009, when the markets were struggling to recover from the post Oct 2008 financial markets crash that lead to a near standstill of world trade. The total imports of the essential raw material for the production of steel, iron/ore for China in 2009 was 628 mil tones a number about 30% higher than the total imports for 2008 that had totaled 444 mil tones a number again 14% higher than the previous figures of 2007 that were amounting to 383 mil tones. For 2010 the numbers so far present a 5% reduction compared to 2009, with the 4th quarter expected to continue at a similar pace as the whole of 2010 had progressed, and the total estimate for this year is that imports of iron/ore will gross to about 600 mil tones.

You may download the complete report from our WEBSERVER:

WEEK39 DRY BULK ANALYSIS

India: Steel prices and demand is set to rise in 2011

Global steel prices and demand is set to rise in 2011. Demand for steel is set to rise 13.1 percent to 1.27 billion tonnes this year, higher than an earlier forecast of 8.4 percent growth. Strong demand for steel is expected in China, India, Brazil, Turkey, Saudi Arabia ,Qatar ,Europe and other developed economies due to restocking and government stimulus packages in addition to continued robust demand.

China's not a superpower in the commodities markets

China is a dominant player in global trade, but it’s not the superpower in the commodities market it appears to be. After the maritime dispute between China and Japan in the East China Sea, China may have played some cards in global trade to persuade Japan to release the captain of the fishing vessel sailing in disputed waters.
Speculation emerged last week that China had halted or restricted shipments of rare-earth resources to Japan.
And earlier this week, China hiked inspections for Japanese exports and imports and raised the anti-dumping duty on U.S. chicken products.
“China has discovered that being an important customer gives one some leverage,” said Ned Schmidt, editor of the Agri-Food Value View Report, because when it comes to commodity imports, “China has the check book. No other market can replace Chinese demand for commodities.”

Focus on long-run growth

The exuberance over the Asian Development Bank’s upgrade of the country’s GDP growth forecast -- from 3.8 to 6.2 % -- may be short-lived. The recent adjustment simply reflects the "higher-than-expected growth in the first half of 2010." But that’s history. It was a consequence of one-time spending for the presidential and legislative elections in May 2010 and the mad rush to complete, and pay, Arroyo’s pet capital projects. The economic challenges for the second half of the year look tough, and for next year and beyond even tougher.

The Philippine economy’s growth rate during the first half of 2010 was faster than any analyst’s imagination. It rebounded by 7.9%, up from just 0.9% in the first half of 2009. But ADB is less optimistic about the Philippine economy during the second half of the year and next year.

Beijing, U.S. businesses in China slam yuan bill

Groups ranging from the Chinese Commerce Ministry to an association of American businesses in China voice criticism Thursday over U.S. lawmakers’ approval of legislation threatening duties on Chinese exports if the value of the yuan doesn’t rise soon.

At the same time, some analysts said the move runs the risk of escalating a trade war between the two economic superpowers if the U.S. stance is seen in Beiiing as too aggressive. Chinese Commerce Ministry spokesman Yao Jian was quoted by Chinese state-run media as saying that the U.S. legislation targeting China and its currency policy was a breach of World Trade Organization rules.

China's 2010 iron-ore imports expected to fall

China's iron ore imports this year will likely fall from last year, partly because domestic production of the raw material has picked up this year, Shan Shanghua, the secretary general of the industry group China Iron & Steel Association said. Shan made the comments at a conference in the coastal city Dalian in Northeastern China's Liaoning province.
Last year, China imported 628 million metric tons of iron ore, the key raw material for steelmaking. The imports in the first eight months of this year reached 405 million tons, unchanged from the same period last year.

Sugar Mills in Brazil's Northeast Step Up Sales Amid Port Backlog in South

Sugar mills in northeastern Brazil are accelerating sales to take advantage of higher prices and a port backlog that is delaying shipments from southern producers. Shipments abroad from the region, which started harvesting this month, are already a month ahead of schedule, Pedro Roberio, head of the Sindacucar-AL industry group in Brazil’s northeastern Alagoas state, said yesterday in an e-mailed response to questions. The Northeast produces 12 percent of the nation’s sugar, the Agriculture Ministry said Sept. 2.
The number of vessels waiting to load at the northeastern ports of Recife and Maceio rose to 17 today, compared with none a year ago, according to Santos Associados and shipping agency Unimar Agenciamentos Maritimos Ltda. The ships are expected to load 349,349 metric tons of sugar.
The mills are stepping up sales as southern ports struggle to ship the sweetener fast enough to keep up with global demand. Coastal rains in the southeastern states of Sao Paulo and Parana have slowed ship loading this year and delayed shipments from Brazil’s Center South, which accounts for 87 percent of output.
A total of 89 ships are waiting to load sugar at Brazil’s two biggest ports -- Santos in Sao Paulo and Paranagua in Parana -- up from 50 vessels a year earlier.
Sugar prices rose 36 percent this month in New York, the best performer of 22 commodities tracked by Bloomberg News.

Source: Bloomberg

Baltic Dry freight rises as Chinese demand rebounds

* Baltic Dry Index driven by strong Capesize rates
* Coal also supports freight
* Panamax, Supramax yet to rebound

By Henning Gloystein
LONDON, Sept 28 (Reuters) - The Baltic Exchange's main sea freight index .BADI was pushed up on Tuesday, after Chinese demand picked up following the end of last week's holiday, traders said.
The BADI, which gauges the cost of shipping commodities including iron ore, cement, grain, coal and fertiliser, rose 2.16 percent, to 2,504 points, driven mainly by its Capesize component, which rose 7.32 percent to 3,431 points.

Traders said the main reason for this week's rise has been stronger demand in China following the end of last week's mid-autumn lunar calendar holiday.  "The Chinese market, and Capesize in particular, has seen a lot more activity this week, as they are caught between last week's festivities and China's national holiday on October 1, which will see most of the country on vacation next week," one source said.

Russia could lift grain export ban this yr-official

A Russian diplomat said on Monday the country's ban on grain exports could be lifted this year but also gave harvest figures showing Russia could ill afford to ship its grain abroad The Russian government imposed the export ban from Aug. 15 to stabilise domestic prices after the worst drought in more than a century killed a significant part of the crop.
Oleg Kobiakov, first councillor of the foreign ministry's international organisations department, said Russia had sufficient grain stocks.
Russia's grain output, including wheat, is estimated at 55 million tonnes, with 25 to 26 million tonnes in reserve against an expected domestic demand of 77 million tonnes, the foreign ministry official said on the sidelines of a meeting of the United Nation's Food and Agriculture Organisation.
"We now have assured (supply of) next year's domestic grains."

Vale: Iron ore consumption to increase

The world’s biggest exporter of iron ore Vale said that the demand for the steelmaking ingredient might grow at the end of the year after the Chinese government executed the policy to limit power to steelmakers and to ask companies to shut obsolete plants.

Under this policy, the nation posted the biggest decline of the iron ore imports in seven months in August.

However, Jose Carlos Martins, executive director of sales and marketing and strategy, told reporters in Dalian, China, today “We see this stable market for two to three months, until we grow again. We need to prepare for the growth from the end of this year, beginning of next year.”

Rio Tinto Doesn't See Any Iron Ore Demand Slowdown on China's Power Cut

Rio Tinto Group, the world’s second-biggest exporter of iron ore, hasn’t seen any demand slowdown after China cut power supplies to some steelmakers to meet energy efficiency targets. “We haven’t seen any drop in our forward shipping schedule for the rest of this year,” Warwick Smith, managing director of sales and marketing for Rio’s iron ore business, told reporters at a conference in Dalian. “We’re running at full capacity.”
The Chinese government limited power to steelmakers this month, trimming supply in the world’s biggest producer, as it rushed to meet energy consumption targets. The nation’s demand for iron ore, used in steelmaking, rose to a record 628 million metric tons last year.

More South Korean firms to invest in Indonesia

Following a 6-billion-dollar joint venture between state-owned steel producer PT Krakatau Steel and Posco to build a steel plant in Cilegon, Bantena, Indonesia government expects a 15-percent-increase in direct investment from South Korea next year and believes other companies will consider doing the same.

The most of South Korean companies' investments went to the metal and machinery sectors, the electronics industry, construction and the textile industry.

China seeks more favourable iron ore pricing

China on Tuesday pushed for a more favourable iron ore pricing system, and warned it will not pay more for costs arising from a looming Australian mining tax. Shan Shanghua, secretary general of the China Iron & Steel Association (CISA), said iron ore prices should be based on steel prices. China is also the world's biggest steelmaker.
"I view iron ore as an intermediate ingredient that only has value because it is processed into steel by the steel industry," Shan told a conference in the Chinese port of Dalian.

India ready for huge coal import boom

Adani expects Asia's No. 3 economy to have the infrastructure in place to handle a surge in domestic coal demand from power, steel and cement industries, a senior executive said on Tuesday. Coal powers more than half of India's electricity plants and import demand for the commodity, projected at 135 million tonnes by 2012, is expected to rise sharply along with its booming economy.
"The government is on track on this one. I don't see a major issue arising from potential infrastructure bottlenecks because a lot of port-based power plants are coming up," said Sandeep Mehta, chief executive of Adani's container and logistics business on the sidelines of an industry event.
Adani plans to import more than 40 million tonnes of coal this year, up from 30 million tonnes last year, Mehta said.

India plans to invest $20 bn to expand 13 major ports

India is looking at investing about $ 20.8 billion in 276 projects which are part of the government's endeavour to expand 13 major ports in the country, Shipping Minister G K Vasan said here today. Addressing an 'Indian Port and Maritime' seminar, Vasan said 22 projects are ready for bids as the country's pressing on increasing the port capacity, mostly through public and private sector participation (PPP).
Referring to specifically Singapore, he said: "I firmly believe that India and Singapore have tremendous scope for partnership in this sector, including collaboration in areas like port development, cruise shipping, bunkering and ship building, ship repair and others."

China seeks more favourable iron ore pricing

China on Tuesday pushed for a more favourable iron ore pricing system, and warned it will not pay more for costs arising from a looming Australian mining tax. Shan Shanghua, secretary general of the China Iron & Steel Association (CISA), said iron ore prices should be based on steel prices. China is also the world's biggest steelmaker.
"I view iron ore as an intermediate ingredient that only has value because it is processed into steel by the steel industry," Shan told a conference in the Chinese port of Dalian.

WEEK38 - Dry Cargo Market “Highlights” – 17-September-2010 - 24-September-2010

This week was a purely red week, with some serious losses especially in the Cape size segment, followed closely by the Panamax and Supramax size segments. The Baltic Dry index had reached only a notch away from breaking the psychological barrier of 3,000 points, 2 weeks ago, and today has failed to sustain above the 2.5k barrier. It failed to continue its rise and is counting 10 consecutive falling days of Baltic Exchange sessions. In general, all 5 indices were “red” for week 38, with only the smaller sized Handymaxes to contain their losses.

This slowdown is partly attributed to once more the usual culprit named China that has continued to reduce their imports of iron/ore as domestic demand for steel is low. This week we had a short holiday in the Far East, with China, Taiwan, Japan and S. Korea being on a festive mode, business activity remained soft toned. We see a serious lack of cargoes in the market and as week 40 will be another holiday period (the Mid‐Autumn Festival) in China that will halt business activity from October 1st until the 7th of October, we feel that unless activity really picks up during week 39 (next week) in anticipation of the festive week when it is expected that most industries will cool‐down and reduce their output, then we may be heading… practically “headon” for another 2 weeks of serious reductions in seaborne trade. Topping on this, the Chinese Government’s decision that China needs to comply by year end by executing fully the 5 year

Taiwan's steel prices expected to rise on Chinese production cuts

Affected by cuts in steel production by China, the world's largest maker of the metal, Taiwan's steel prices are likely to rebound after hitting bottom in the second quarter of this year, local steel companies said Steel production by China, the world's largest energy consumer, may decrease by 10 percent in September because China has begun restricting power supply to mills this month to meet its energy efficiency targets, according to the Taiwanese steel makers.
China's energy consumption per unit of GDP is required to be reduced by 20 percent, from 2006 to 2010.
With reductions in China's steel production expected to step up between October and December, Chinese steel prices will continue to rise until the end of this year, and that will boost steel prices in Asian markets, including Taiwan's, Taiwanese steel producers said.
"The rise of Chinese steel prices will also reduce the possibility of the dumping of Chinese steel products in Taiwan, and that will help stabilize, or even boost Taiwan's steel prices, " said an official of a local downstream steel firm, who declined to be named.

Baltic index at 5-week low, ore buying dives

By Jonathan Saul
LONDON, Sept 22 (Reuters) - The Baltic Exchange's main sea freight index .BADI, which tracks rates to ship dry commodities, fell to its lowest in over five weeks on Wednesday as weak iron ore activity took its toll on the market.
The index, which gauges the cost of shipping commodities including iron ore, cement, grain, coal and fertiliser, fell 2.97 percent, or 76 points, to 2,486 points, dropping for an eighth straight session and was at its lowest since Aug. 13. The index has dropped 17 percent since the recent move lower.
"Chartering activity on the capesize market has been relatively quiet and we are entering the holiday period in China," said Derek Langston, a director with SSY Consultancy.
"With such rapid fleet growth there are not sufficient new iron ore cargoes entering the market to lift freight rates."
Shippers continue to look for signs that the Chinese government will call on more steel mills to cut output further, which could reduce iron ore imports and pressure the dry bulk market. Spot iron ore prices have slipped with market sentiment staying weak on uncertainty over when demand will take off.
The Baltic's main index has been erratic this year, as it was in 2009, because of swings in Chinese demand for iron ore, the primary ingredient of steel.
"Bulk carriers are becoming less attractive to charterers as fewer cargoes need to be shipped in the short-term," broker Lorentzen & Stemoco said.
The capesize market has seen volatile activity in recent weeks. A rally in August was driven by Chinese iron ore imports from Australia and Brazil on capesizes after Karnataka, India's second-largest ore producing state, banned exports from 10 of its ports in July.
The Baltic's capesize index .BACI fell 4.31 percent, with average capesize earnings falling to $28,840, and below the $30,000 a day level for the first time since August. Capesizes typically haul 150,000-tonne cargoes such as iron ore and coal.
The Baltic's panamax index .BPNI fell 1.94 percent on Wednesday, with average daily earnings falling to $22,696, while the supramax index .BASI fell 1.17 percent.
Brokers said there were hopes that firmer U.S. grains export activity, helped by a Russian grain export ban, would provide support to the smaller ships later this year.
Analysts said freight rates would be dampened this year by the pace at which new ships are set to enter the market this year and next, despite indications of some vessel cancellations and delays.
SSY said 150 capesize vessels had entered the fleet so far this year compared with 112 for the whole of 2009. A further 10 ships had been converted from tankers into capes this year compared with 31 conversions for the whole of 2009, it added.
"This puts net fleet growth for 2010 on target for 71 to 72 million deadweight tonnes (dwt) compared with 38 million dwt in 2009 and 27 million dwt in 2008," SSY's Langston said.
The rise in fleet growth this year has not been matched by commodity demand.
"Further freight rate increases should still be limited in the coming months by the strong fleet growth," Societe Generale said.
(Editing by Alison Birrane)

China daily steel output up slightly in early Sept - CISA

China's daily crude steel output grew by a modest 0.9 percent in the first ten days of September, overturning market expectations for slower steel production after output cuts China produced 1.697 million tonnes of crude steel on a daily basis in the 10-day period, marginally higher than 1.682 million tonnes in late August, according to the latest China Iron & Steel Association data seen by Reuters.
The unexpected rise comes after a large number of steel mills in the country's biggest steel-producing province Hebei in northern China were urged to reduce production to meet year-end energy saving targets.
"It is hard to understand why the country's steel production figures inched higher in early September as some provinces have kicked off a round of production and electricity cuts," said Hu Yanping, an analyst at Custeel.com.
China is striving to meet a deadline to improve energy efficiency in the five years to 2010.
Data also showed that CISA members, usually known as 78 bigger steel mills, produced 1.372 million tonnes of crude steel in the first ten days of September, 1.9 percent less than the last eleven days of August.
Crude steel production is expected to average at a daily 1.592-1.674 million tonnes for the rest of the year, with full-year production estimated at 620-630 million tonnes.

Source: Reuters

Posco to start Indonesia steel project in November

South Korea’s Posco said today it will start building the Indonesia steel project under the joint venture with PT Krakatau Steel in the coming November.

It is said that the new steel project to be built in Cilegon, West Java will have an annual capacity of 3 million tons, and the project is to be finished in 2013.

Posco expects to meet strong demand in Southeast Asian market, where the annual steel consumption amount to over 30 million tons.

China Steel Corp. to buy 5% of Formosa Plastics' Vietnam Unit

Taiwan's largest steel producer China Steel Corp. (CSC) plans to spend US$135 million for a 5 percent stake in a Vietnam-based steel maker owned by Formosa Plastics Corp.in order to expand its production base.

The company did not state the reason for the acquisition even though earlier it planned to acquire 10 percent of Formosa Plastics' steel plant in Vietnam.

CSC's revenue for the six months ended June 30 rose by 54 percent to NT$112.51 billion from NT$73.28 billion.

In the meanwhile, its net profit for the first half year is about NT$23.82 billion, reversing from a net loss of NT$6.45 billion a year earlier.

WEEK37 - Dry Cargo Market “Highlights” – 10-September-2010 - 17-September-2010

This week was a red week, with some serious losses especially in the Panamax and Cape size segment. The Baltic Dry index having reached only a notch away from breaking the psychological barrier of 3,000 points, failed to continue its rise and after 10 consecutive days of increase this week reversed into a 5 day negative downfall. In general, all 4 indices were “red” for week 37, with only the smaller sized Handymaxes to perform on a positive tone. It could be a corrective downturn of the markets, with September being traditionally a month of great activity may well have more to give us, during the next 2 weeks. This slowdown is partly attributed to China that has reduced their imports of iron/ore as the domestic demand for steel has seriously been reduced, demanding less shipments of raw materials. On a positive note China’s Premier Wen Jiabao, a very inspiring public leader, said in a statement this week that the world’s fastestgrowing economy is now in “good shape” “featuring fast growth, gradual structural improvement, rising employment and basic price stability” and this statement said atthe World Economic Summer Forum in Tianjin, can be seen as a positive sign that boosts the general investors confidence that the nation will avoid a sharp slowdown. He added that China’s growth will drive a global Economic recovery, and Wen’s appraisal came to validate his saying of June 30th this year that China’s economy was headed in the right direction. Growth in the second quarter slowed to 10.3 percent from 11.9 percent in the first three months of the year after the government increased requirements for mortgages and halted loans for third homes to rein in gains in home prices.

China Expected to Have World's Largest Clean Coal Conversion Industry by 2020

China is expected to develop its coal conversion industry into the world's largest by 2020, as the world's largest coal producer and consumer is seeking clean uses of its huge coal resources, industry insiders forecast. "China's capacity of coal liquefaction projects would hit the equivalent of 20 million tonnes of oil, that of coal-to-gas would reach 50 billion cubic meters, and coal-to-chemical totaled 10 million tonnes of oil equivalent," Du Minghua, Deputy Director of China Shenhua CTL & CTC Research Institute, said at an energy forum in Taiyuan, capital of Shanxi Province. The scale would then become the largest in the world, while some of the technologies would be the top level in the world, he noted. He said that so far, China has finished construction on 8 pilot clean coal conversion projects. Annual coal liquefaction capacity stands at 1.68 million tonnes, and that for coal-to-gas 15 billion cubic meters. Capacity for coal-to-olefin stands at 1.7 million tonnes, Du said.

Baltic Dry Index: Dark clouds on the horizon?

Investors in mature-market equities, commodity prices, emerging markets and commodity-related currencies cheered the August PMIs released earlier this month as they came in better than expected, especially those of China. At the same time the Baltic Dry Index, seen as an important indicator of global trade, surged.

On the Investment Postcards blog in August I pointed out what was happening to the Baltic Dry Index and what the surge in that index implied. Thankfully, my analysis turned out to be not too far from what transpired. Yes, you may ask what prompted me to say that dark clouds may be on the horizon for the Baltic Dry Index.

Well, firstly, the Shanghai containerised freight indices for the major routes, Europe (Mediterranean) and North America, have plummeted over the past few weeks, taking the composite index to levels last seen in May this year.

India's Exports Up 22.5% In August

India's exports grew by 22.5% to USD 16.64 billion in August compared to the year-ago month, Rahul Khullar, Commerce Secretary, stated at a press interaction today. Imports, meanwhile, rose by 32.6% to USD 29.7 billion year-over-year.

Between April-August 2010-11, exports reached a level of USD 85.27 billion registering a growth of 28.6%, while the imports grew by 33.2% to USD 141.89 billion, netting a trade deficit of $ 56.62 billion. 

Some sectors are doing extremely well and the country is on track to achieve its target of $200 million, Khulllar added.

Source: RTTNews

China imports 20.9 mln tons of crude oil in Aug

China's crude oil imports were 20.9 million tons or 4.94 million barrels per day in August, up from the 19 million tons recorded in July or 18.47 million tons in the same month of last year, according to statistics released by the General Administration of Customs of China.

However, the August figure is significantly lower than June, when the country imported a record 22.27 million tons of crude oil.

In the first seven months of this year, the country imported 157.87 million tons of crude oil, 22.6% more than in the same period of last year due to the rising domestic demand.

Last month, China imported 2.56 million tons of refined oil while it exported 2.07 million tons, said the customs.

China is the world second-largest oil consumption country, only next to the U.S.

Source: China Knowledge

Chinese Leading Economic Index Continues To Rise

China's leading economic index continued to improve in July, the Conference Board said. But the strengths among the leading indicators were less widespread than the weaknesses this month.

The indicator rose 0.5% in July after increasing 0.7% in June. The four of the six components that make up the leading index decreased in July. During the six-month span through July, the indicator gained 3.4%. 

The Conference Board coincident economic index, a measure of current economic activity, also rose 0.5% in July. The indicator had increased 1% in June and 0.9% in May. Value-added industrial production eased for the first time since January this year, while all the other coincident indicators advanced in July.

With this month's gain, the coincident economic index moved up 6.5% in the six-month period through July, slightly better than the gain of 5.9% recorded for the previous six months. Moreover, the strengths among the coincident indicators remained very widespread, with all components advancing in recent months.

Source: RTTNews

Wheat Advances as Drought Threatens New Crop Planting in Russia, Ukraine

Wheat gained on speculation that persistent drought in Russia, Kazakhstan and East Ukraine may disrupt the planting of next year’s crop and Egypt, the world’s biggest buyer, continued purchases, boosting demand. Corn rose for a fifth day, the best run in more than three months.

December-delivery wheat gained as much as 1.1 percent to $7.44 a bushel on the Chicago Board of Trade, and traded at $7.42 at 3:17 p.m. in Singapore. The contract slumped as much as 2 percent yesterday after Australia, the world’s fourth-largest exporter, said that shipments in the 2010-2011 season may be the second-highest on record as rains boosted the harvest.

Iron Ore-Prices steady, China sees limited impact from cutbacks

Asian iron ore spot prices were little changed on Wednesday, with the Steel Index benchmark languishing at near seven-week lows as the demand outlook remained hazy. Upcoming public holidays in China, the biggest buyer of the steelmaking ingredient , also limited activity in both the physical and forward swaps markets. Chinese markets are shut on Sept. 22-24 for the Mid-Autumn Festival and on Oct. 1-7 for the National Day holiday. "The market is quiet ahead of the Chinese holidays, not much going on," said Destiny Guo, an iron ore physical and derivatives broker at London Dry Bulk in Hong Kong.

Indian coal imports to almost triple by 2020

India will nearly triple coal imports to some 250-million tons a year by 2020, one of the country’s biggest producers of the fuel said. Northern Coalfields CEO Vinay Kumar Singh told Mining Weekly Online that current import rates were 80-million to 100-million tons. “Over the next ten years it will increase to about 250-million tons a year,” he said in an interview on the sidelines of the World Energy Congress being held in Montreal.
India planned to increase power generation capacity by 100 000 MW over the next ten years, mainly by building coal-fired plants, Singh said earlier in a speech.

Indian iron ore miners cut output on low steel mill demand

BS reported that India’s independent iron ore mining companies have cut output by 80% since June due to uncertainty over exports and recovery in demand from domestic steel mills Mr RK Sharma secretary general of the Federation of Indian Mineral Industries said that Southern Railway, which used to transport 25 rakes everyday is handling only five. The same is the case for the entire country. Hardly 20% of India’s normal total annual output of 235 million tonnes is being extracted from mines across the country.
Independent iron ore miners do not have steel production facilities and therefore sell the entire output to others.
There are 3 reasons for the fall in output.