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.

Coal to remain world's top power source over next 20 years

Global energy demand will rise as much as 40% in the next 20 years, IHS Cambridge Energy Research Associates chairperson Daniel Yergin said. "In our scenarios for the future we expect by 2030 to see growth somewhere between 30% and 40% off a much larger base in demand. That's a very large number," he told the World Energy Congress in Montreal.
Demand for energy had grown by 40% since 1990.

Wheat Harvest, Exports From Australia May Surge After Rains, Bureau Says

Wheat exports from Australia, the fourth-largest shipper, may surge to the highest level in more than a decade after rains boosted this year’s harvest, according to revised predictions from the government’s forecaster. Output may be 25.1 million metric tons in 2010-2011, compared with a June estimate of 22.1 million and last year’s harvest of 21.7 million, the Australian Bureau of Agricultural and Resource Economics-Bureau of Rural Sciences forecast in a report today. Exports may surge to 18.4 million tons, the second-highest level on record, according to the report.

Chinese economy is "in good shape" said Wen Jiabao today

China’s Premier Wen Jiabao, a truly inspiring public leader, said in a statement this week that the world’s fastest growing economy is now in “good shape” “featuring fast growth, gradual structural improvement, rising employment and basic price stability” and this statement said at the 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.

WEEK36 - Dry Cargo Market “Highlights” – 03-September-2010 - 10-September-2010

This week was a market warm‐up. The Baltic Dry index is only a notch away from breaking the mostly psychological barrier of 3,000 points. In general, all 5 indices were “green” for week 36, with the Capes having an uncertain fluctuation only to finally close marginally higher than last week, while Panamaxes were the size segment with the most positive weekly gains, continuing on the momentum that they generated from previous week 35. The other two smaller sizes, the Supra’s and the Handymaxes, were positive this week contrary to week 35 that they were recorded as negative. It is worth noting that we are already counting the 10th consecutive positive run for the BDI, and what is also interesting as a pattern, is that after July 15th 2010 the Baltic Dry Index has produced two sets of consecutive increases, the firsts one lasted 12 days and then we had 2 negative days, while the next set lasted for 14 days and then again counted 2 negative days, to bring us here where we are looking at 10 days… and counting…! It seems the BDI has formed a behavioral pattern…!!

Baltic Trading: Essentially a Baltic Dry Index ETF?

New shipper company Baltic Trading (BALT) completed its initial public offering on March 15th. The new company immediately took its 228 million and began buying ships - a selection of cheap ships of varying sizes. Was this really a good time to do a shipper IPO, with shipper stocks suffering the disdain of the market? Maybe so. BALT had an idea for a different kind of shipping company, with a different kind of business plan.

The company operates as a wholly-owned subsidiary company of Genco (GNK), a major US shipping company. Not only that, but the company is largely a virtual creation, having only a single employee, its president. All the shipping operations are run by GNK.

Russian President signals end to grain export ban

Russia's grain export ban will be lifted as soon as it is clear how much has been harvested, Russian President Dmitry Medvedev has said. It contradicts Russian Prime Minister Vladimir Putin, who said last week that the ban could be lifted only after next year's harvest has been reaped. Usually, Russia's harvest results become clear in October.
Russia, one of the world's biggest producers of wheat, barley and rye, has been hit hard by drought and wildfires.
The subsequent export ban caused global wheat prices to rise sharply on the international commodity markets.
In 2009, Russia exported a quarter of its annual grain output of 97 million tonnes.
This year's crop could be as low as 60 million tonnes, but Russia needs almost 80 million just to cover domestic consumption.

India Globalization Capital Begins Iron Ore Shipments

India Globalization Capital, Inc., a company competing in the rapidly growing materials and infrastructure industry in India, announced today that it has begun its shipment of iron ore for its contracts. The Company has begun shipping Iron Ore from Orissa, India for one of its customers. As a result of continued monsoon rains in the Karnataka and Goa region of India, affecting ports from which IGC operates, the Company has moved some of its operations to the East Coast of India and has initiated servicing one customer from Vizag in Andra Pradesh. The iron ore grade being shipped is FE 63.5%.

Baltic index nears 3,000 on autumn hedging

The Baltic Exchange's main sea freight index rose by 13 points on Thursday to just below 3,000 as demand held firm at the beginning of the autumn hedging season in Europe and North America, traders said.

The index, which tracks rates to ship dry commodities including iron ore, cement, grain, coal and fertiliser, rose to 2,988 points in its ninth straight session of gains.

There was strong technical indication that the slight dip in late August may have been a technical bull-flag that historically occurs in late summer, just before many traders return from holidays and begin to hedge themselves for the upcoming winter.

Shipping Sector Points to Stronger Economy: Analyst

The strength in the shipping sector may indicate the US economy is in better shape than recent economic data suggests, according to Urs Dur, an analyst at Lazard Capital Markets.

“Right now you’re seeing a surprising growth in movement of containers globally,” Dur told CNBC Wednesday. “There’s fundamental demand that’s coming back. We just haven’t seen it in the GDP numbers yet.” 

"It doesn’t mean that the recovery is going to accelerate," he added, "(but) I feel there’s no double dip at this point.”

Dur has a net hold rating on the tanker side of the business, but does have buy ratings on Overseas Shipholding and Navios Maritime Holdings. 

He has "mostly" a buy on the dry bulk and container sides of the industry. His favorite stocks in the space include Seaspan on the container side and Genco and Eagle Bulk Shipping on the dry bulk side.

Source: CNBC

Iron Ore-China prices slip as mills cut production

Iron ore prices in China softened in anticipation of weaker demand after a number of energy-inefficient steel mills were told to reduce or halt production. Rebar, widely used in the construction sector, has been traded at high levels on the Shanghai Futures Exchange on tighter supply in coming months.
Thirty mostly medium-sized steel mills in Tangshan, capital of Hebei province, were told to limit production, with most cutting output by 50-70 percent.
The move came after 18 steel mills in Wuan, also in Hebei, were ordered to shut down for a month, while other provinces including Shanxi and Jiangsu have also trimmed electricity supply to high-energy-consuming steel mills.

Baltic index strengthens on ore buying flurry

* Indian state ore export ban watched - * Capesize market supported

LONDON, Sept 8 (Reuters) - The Baltic Exchange's main sea freight index .BADI, which tracks rates to ship dry commodities, rose on Wednesday with firmer iron ore activity boosting positive sentiment seen in recent days. The index, which gauges the cost of shipping commodities including iron ore, cement, grain, coal and fertiliser, rose 1.95 percent, or 57 points, to 2,975 points in an eighth straight session of gains.

France's wheat exports at full tilt

France is set to export a record11 million tonnes of wheat onto the world market this season andcould ship even more as it soaks up demand created by an exportban in drought-ravaged Russia, France's farm office said.

French and U.S. wheat exports have both soared since lastmonth after Russia's withdrawal from the world market andbecause of a lack of bread-quality wheat from a rain-blightedharvest in Germany.

"The French wheat balance this year is based on the ideathat there is room (on the world market) for 15 million tonnesof French wheat," Xavier Rousselin, head of FranceAgriMer'sgrains division, told Reuters in an interview prior to thepublication of the office's 2010/11 forecasts.

Iron ore spot prices feel the shock of anticipated production pruning in China

On back of the cutback of steel output in China and concerns of decreased iron ore demand, the physical iron ore market is under pressure. The buying took a dip amidst negativism setting in about truncated production

 as government tightens its belt on emission and power consumption. Steel production is likely to take a dip as they are earmarked as bootleggers.

Iron ore fine prices dipped by 1.5% on 8th September setting the tone for further slide.

A 62/61Fe cargo was concluded at USD 134 per tonne CFR and another Fe 63/62 lump and fine combined cargo was done at USD 147 per tonne. Iron ore fines Fe 63/63.5 offers are prevailing at USD 150 per tonne with few takers as the traders stick to wait and watch policy.

China's Interest In Overseas Iron Ore Is 30% Of Iron Ore Imports

China’s current interest in overseas iron ore totals 190 million tons, which accounts for 30 percent of China’s total iron ore imports, reports Beijing Times, citing Luo Bingsheng, vice chairman of the China Iron and Steel Industry Association. Luo said the target is to lift the proportion to 60 percent.
China currently has an interest in many exploration projects that are yet to start production.
Shares of Baoshan Iron and Steel (600019) rose 7.06 percent to close at 6.98 yuan on September 6.

Source: CapitalVue

Russia likely to resume grain exports by July 2011

Contrary to Russia’s announcement on lifting country’s grains exports ban, analysis group SovEcon said it expects the Russian government to consider lifting the ban in July. Russian Prime Minister Vladimir Putin last week said lifting of the export ban can only be considered after next year's crops have been harvested.
This statement, widely seen as a key factor in wheat prices rises over the last 24 hours, was seen as a reference to the close of the autumn grains harvest, notably of corn, in November.
However, SovEcon's said that statement was more likely a reference to the summer harvest, which starts in late June.

WEEK35 - Dry Cargo Market “Highlights” – 27-August-2010 until 03-September-2010

This week was a complete mirror image from last week. All red indices were green this week, and all green turned red. The larger Capes and Panamaxes showed some strong momentum and completed the 4 working day week 35 with a positive w2w comparison, while the smaller Supramaxes and Handymaxes made losses. As we mentioned this week was a shorter week,
having only 4 working days in the calendar as Monday the 30th August was a Bank Holiday in the UK and the Baltic Exchange had no indices nor fixtures published, however that did not stop the weekly data to contain strong dynamics and a good number of interesting fixtures that we will go through further in this report.

Still there are many ships chasing lesser/fewer cargoes and this imbalance of the market is self‐implicated and will sooner become far worse than better as we believe that owners been shooting at their own feet! We will be providing readers with a brief snapshot of the results of the Year to Year overcapacity reports we have produced with data from Aug 2009 and Aug 2010.

Brazil Aug corn, iron, sugar exports surge

Brazil's trade surplus in August slipped from a year earlier as imports grew faster than exports, but several of its main commodity exports remained strong or even surged, the trade ministry said. Brazilian white sugar exports, mostly 150 ICUMSA, jumped in August to over 1 million tonnes, up from the 852,200 tonnes in July and the 574,100 tonnes a year ago.  VHP Raw sugar shipments were also strong, at 2.211 million tonnes during the month, against 2.048 million tonnes in July and 1.530 million tonnes a year earlier. 

Russia signals much longer grain export freeze

Prime Minister Vladimir Putin's call for Russia's ban on grain exports to be kept in place until late 2011 further stirred up grain markets as it underlined the extent of the fallout from its worst drought in a century But while Putin's comments caught the market off guard, some operators said it merely confirmed a widely held view that Russia will be out of contention for exports well into 2011 and not just until end-2010 as currently stipulated in its ban.

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Baltic index rises; Russian grain export ban eyed

* Capesize market stays firm - * Iron ore, coal activity supporting rates


LONDON, Sept 3 (Reuters) - The Baltic Exchange's main sea freight index .BADI, which tracks rates to ship dry commodities, rose on Friday as firmer iron ore activity supported the larger capesize vessels.
Brokers also said Russia's plan to extend a grain export ban into 2011 was expected to be positive for the freight market.
The index, which gauges the cost of shipping commodities including iron ore, cement, grain, coal and fertiliser, rose 1.45 percent, or 41 points, to 2,876 points in a fifth straight session of gains.
"Capesize and panamax freight rates found support this week on the strength of firm demand for iron ore and coal. Moderate levels of congestion continue to support rates for these vessel classes as well,"

Heavy in dollars, China warns of depreciation

China on Friday offered a rare glimpse into its foreign exchange reserves, confirming that they are overwhelmingly allocated in dollars, while a central banker said the mountain of cash could face depreciation risks. The Chinese government's currency reserves, the world's largest such stockpile at $2.45 trillion, are held roughly in line with what was described as the global average: 65 percent in dollars, 26 percent in euros, 5 percent in pounds and 3 percent in yen.
The report in the China Securities Journal, an official newspaper, cited unnamed reserve managers.
The allocation of Chinese foreign exchange reserves is considered to be a state secret, but analysts have long estimated that about two-thirds are invested in dollar assets.

Total Chinese steel market inventory stands at 81 million mt

According to the vice president of the Chinese Federation of Logistics and Purchasing, Cai Jin, total steel inventory in the Chinese market now stands at 81 million mt, equal to a supply of nearly 37 days, more than the normal level of a 25-day supply Meanwhile, although steel prices in China have lately indicated a weakening, steel prices still show an increase compared to mid-July levels. As indicated by local media sources, on August 26 the high speed wire rod price in the Beijing market was RMB 4,180/mt ($615/mt), up RMB 340/mt ($50/mt) or 8.85 percent compared with the price in the mid-July. Meanwhile, rebar prices have risen by RMB 240/mt ($35/mt) or 6.4 percent to RMB 4,120/mt ($606/mt), compared with the price in mid-July.

Source: Steel Orbis

Baoshan Says Steel Prices May Drop Before Demand Rebound in Fourth Quarter

Baoshan Iron & Steel Co., China’s biggest publicly traded producer, said prices are likely to decline before demand revives in the fourth quarter. “Domestic prices are under pressure to trend lower because of falling demand and a removal of tax rebates, which hurts exports,” Baoshan General Manager Ma Guoqiang said today in an online investors conference. “Demand in some sectors may post a seasonal rebound in fourth quarter.”
Baoshan, supplier of half the domestic market for auto sheet, may post a profit of as much as 1.6 billion yuan ($235 million) in the third quarter, the smallest in five quarters as demand slows and high prices of raw materials shrink margins. Domestic steel prices fell 1.9 percent last week, the first drop in six, amid concerns slowing economic growth may curb demand.

Hebei to Make It a Steel Giant Province

Hebei Province unveiled a list of the province's top 100 enterprises in 2010 including 33 steel mills. Hebei Iron and Steel came to the No.1 with revenues of 177.09 billion yuan. The local government hopes to set up three to four large steel groups through mergers and acquisitions.
By 2015, the top five steelmakers will produce 75 percent of steel across the province, up from 48 percent now.

Source: Chinaisa.org.cn

Wheat Rises on Russian Export Ban

Wheat rose in Chicago after Russia, the world’s third-largest grower, extended a ban on grain exports into next year, raising the prospect of higher food prices that already have sparked riots in Mozambique. Wheat for December delivery rose as much as 1.5 percent to $7.2475 a bushel, advancing for a third day and taking this week’s gain to 4.3 percent. Russia, suffering from its worst drought in at least a half century, started an export ban Aug. 15 that was scheduled to end Dec. 31. Prime Minister Vladimir Putin said yesterday it wouldn’t be reviewed until after the next harvest and Agriculture Minister Yelena Skrynnik said Russians are hoarding staples.
“Russia was for the last couple of seasons a very large part of the world export market and now all of sudden they disappeared,” said Keith Flury, a grains analyst at Ratzeburg, Germany-based F.O. Licht. “This is kind of the new fundamental shift that not everybody was really ready for.”