India: Iron ore exports to hit a new low in FY13

Monday, 13 February 2012

India’s iron ore exports are likely to hit a new low during the 2012-13 financial year and settle at about 40 million tonnes (mt), a drop of close to 35 per cent over the current year’s estimates. Exports are estimated to decline to about 60 mt in 2011-12 from 100 mt in 2010-11, a fall of 40 per cent.

“The decline in exports is mainly due to rise in export duty to 30 per cent and railway freight, which is highly discriminatory for exports compared to domestic freight rates. Before 2003, nobody bought low-grade ore from India. In the future, too, apart from China, nobody will buy low-grade ore,” said Basant Poddar, chairman, Federation of Indian Mineral Industries, South.

For example, the railways charge Rs 600 a tonne as freight for movement of ore for domestic consumption and Rs 2,800 a tonne for ore meant for exports. This has discouraged miners from exporting, he said. Another major factor for low exports is the ban in Karnataka. In addition, the stoppage of mining in Karna-taka, following the Supreme Court order in July, added to a decline in exports during the current financial year.

Orissa’s exports have come down mainly due to differential railway freight rates. Goa’s exports have also declined substantially this year and may settle at about 34 mt, down from 55 mt last year, he said. Karnataka’s share in national exports was about 35 mt till 2009-10. Since August 2010, there have been no exports from the state. Next year, India’s exports will touch the lowest level in the past decade.

“Demand from China is steady, but they are also getting ore from Australia and Brazil also. Australia and Brazil are together adding about 500 mt of exportable capacity in the next five years. Whereas, in India, we are closing our mines and losing our status as the third-largest exporter of ore in the world. We may drop to sixth or seventh position,” Poddar said.

During the current year, India’s share of exports in the world market is set to decline to about 10 per cent. In the next year, it is likely to further drop to about five per cent, at 35-40 mt. Prices of 63 Fe grade iron ore, presently at $130-135 a tonne on a FoB basis in the international market, are likely to go up 8-10 per cent during the current quarter, as the demand from China is picking up after the beginning of the new year. At the same time, Indian miners are losing their position due to various reasons, said Praveen Kumar, chairman, Maya Iron Ores, a derivative commodity brokerage firm.

“If the Supreme Court accepts the Central Empow-ered Committee’s (CEC) recommendation and puts a cap on the production of iron ore at 30 mt in Karnataka, investments in the steel sector will not only be affected, but it would also lead to loss of market share for India in the export market,” he said.
The loss means future investments to the tune of about $5-10 billion in the ports and railway sectors taken up on a public-private partnership basis will be in jeopardy, Poddar noted.

“The Indian steel industry uses high grade ore and there is no market for low-grade ore, due to poor technology with steel mills. So, why stop low-grade ore exports , which has huge demand from China? If we can’t export it, there will be a problem in managing low-grade fines and it would cause environmental damage,” he added. (sourced Business-Standard)

Baltic index higher, capesizes at over 1-yr high

Monday, 12 December 2011

The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, rose for a third day on Friday helped by firm iron ore trade to China with earnings for the larger capesizes jumping to their highest in over a year.
Nevertheless, the shipping sector is expected to see more turmoil in coming months as a supply glut and growing economic gloom keep earnings under pressure with growing worries over the outlook for Chinese raw materials demand.

The overall index rose 40 points or 2.13 percent to 1,922 points.
"Despite the demand headwinds from muted steel production in China and slowing industrial production, the capesize segment has been remarkably resilient. Mix of factors including higher port congestion, recovery in coal exports from Australia and increasing Chinese iron ore imports from Brazil, aiding tonne mile have supported the segment," RS Platou Markets said.

"Declining steel output and slowing industrial production remains a key challenge going into 2012 for dry bulk demand and we still expect rates to see a gradual decline."
China's industrial output growth hit its slowest pace in more than two years in November and inflation tumbled as economic conditions deteriorated, raising expectations Beijing will ease monetary policy again.

Iron ore shipments account for around a third of seaborne volumes on the larger capesizes, and brokers said price developments remained a key factor for dry freight.
Shanghai rebar futures dropped for a second day on Friday, weighed down by a weak outlook for steel demand in top market China after fresh data suggested the Chinese economy was cooling off rapidly, although hopes of further monetary easing capped losses.

Capesizes, which typically transport 150,000 tonne cargoes such as iron ore and coal, had driven a recent rally, helped by firmer coal and iron ore exports from Australia and Brazil to China as well as a pick-up in Japanese coal imports. A build-up of port congestion also provided support.
The Baltic's capesize index rose 4.76 percent on Friday, with average daily earnings rising to $32,617 and at their highest since November 2010.

In August, the overall index, which gauges the cost of shipping commodities including iron ore, coal and grain, fell for 18 consecutive sessions and reached its lowest in more than three months. It has remained erratic and is still down over 12 percent from the same period last year.

The Baltic's panamax index rose 1.18 percent. Average daily earnings for panamaxes, which usually transport 60,000-70,000 tonne cargoes of coal or grains, reached $$13,682.
"In the Pacific, the Christmas holiday lull is biting further and business conditions have continued to slow, with much of owners' focus on securing sufficient employment duration to see their (panamax) vessels past the holiday period," broker Braemar Seascope said. "The outlook for the remainder of the year is still flat/negative."

Growing ship supply, which is outpacing commodity demand, is set to cap dry bulk freight rate gains in the coming months, with economic uncertainty and a slowdown in China adding to headwinds.
Daewoo Shipbuilding & Marine Engineering said on Friday it had lost an order from a European customer, including two dry bulk vessels, worth over half a billion dollars in a sign of worsening conditions in the seaborne sector and a growing euro zone lending squeeze.

Source: Reuters

Vale SA in advanced negotiations to sell 19 vessels - Report

Sunday, 11 Dec 2011

Bloomberg reported that Vale SA, the iron ore producer building a fleet of the world's largest commodities ships, confirmed it's in advanced talks to sell 19 of the vessels after the plan spurred opposition from Chinese ship owners.

Mr Murilo Ferreira CEO of Vale has said that he is willing to sell the ships only if the company can lease them back under long term contracts. The talks were reported earlier by the O Globo newspaper, which cited an interview with Mr Ferreira.

Vale is spending at least USD 8.1 billion on the so called valemax vessels, including buying 19 very large ore carriers and leasing another 16 in long term contracts, as at seeks to lower freight costs from Brazil to China, its biggest market. The China Shipowners Association, whose members control about 80% of the nation’s shipping capacity, advised companies not use the vessels, according to Executive Vice Chairman Zhang Shouguo. None of the six vessels already in operation since April have called at Chinese ports.

(sourced from Bloomberg.net)

Indonesia to India Freight likely to remain soft

Saturday, 29 October 11

The market continued to slow down and all segment were down this week.

The biggest drop was in the Cape Index down by 8.19 pct followed by Panamax index down by 4.29 pct. The Supramax and handy size index was marginally down by about 1 pct. The BDI was down by 6.27 point and closed at 2,018 points.

“The short period rates for Panamax remained firm at around $ 14,000 per day. However no short period candidates reported on Supramax”, said Capt. Reddy, Director of Vistaar Shipping Singapore. Vistaar shipping is an experienced ship operator, operating out of Singapore.

Charter rates for Supramax delivery N. China for trips via Indonesia were reported around $ 9,000-10,000 per day. The freight rate from Indonesia to India likely to remain soft next week.

According to Vistaar Shipping of Singapore, the average charter rates was at Cape/$ 28,214 per day , Panamax/$ 15,521 per day , Supramax/$ 16,155 per day and Handy size/$ 11,254 per day.

The Supramax index in the feast (S6 route) was down by 10.30 pct and closed at $ 12,086 per day (last week $ 13,474 per day). The EC India/China (S7 route) was also down by7.92 pct and closed at $ 10,142 per day (last week $ 11,015 per day). The S6 and S& route likely to remain soft next week.

The futures for three years (2011-2013) was at around Cape/$ 16,000 per day, Panamax/$ 13,500 per day, Supramax/$ 13,500 per day , Handy size/$ 10,500 per day.

The congestion in EC Australia increased to 100 vessels this week (last week 92 vessels). The vessels waiting at main coal loading ports were at Hay point/7, DBCT/22, Gladstone/12, Abbot Point/Nil, New Castle/49, Port Kembla/9 vessels. On the WC Australia iron ore vessels waiting was at 37 vessels (last week 44 vessels).

The Brent crude oil prices was almost at same level and closed at $ 110.05 per barrel (last week $ 109.75 per barrel). However bunker prices moved up by almost $ 20 pmt and closed $ 692.00 pmt (last week $ 674.50 pmt) for IFO 380 CST ex Singapore on 28th Oct 2011.

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sourced coalspot

China coal freight rate slumps

Wednesday, 26 Oct 2011

According to industry portal China Coal Resource freight rate for coal vessels from Qinhuangdao to other coastal ports has kept declining for 3 consecutive weeks to approaching the lowest level this year.

CCR database showed that as of October 19 the freight for vessels of 20,000-30,000 DWT from Qinhuangdao to Shanghai port decreased 2.56% from a week ago to CNY 38 per tonne with a sharp dropping of CNY 10 per t or 22.83% since late September. Meanwhile, the freight for vessels of 40,000-50,000 DWT from Qinhuangdao to Guangzhou port was CNY 51 per tonne down 3.77% from one week prior.

It has decreased CNY 9 per tonne or 15% in the past three weeks. The sharp fall is mainly due to reduced vessels from downstream users as dampened by the low coal inventory at Qinhuangdao port and relatively high stock at power plants.

(sourced sxcoal)

US freight shipments reach two-year high

Friday, 14 October 2011

The US Department of Transportation's Bureau of Transportation Statistics (BTS) announced Thursday that the Freight Transportation Services Index (TSI) rose 0.4 percent in August from July, reaching the highest level since July 2008. Freight shipments have increased 19 of the last 28 months.

Freight shipments were also up 4.6 percent from August 2010 and 10.3 percent from August 2009. For the first eight months of 2011, however, the index increased by a more measured pace of 1.6 percent over 2010 levels.

(sourced steelorbis)

Tags: USA , North America , freight , trading

Freight woes cut Siberia coal shipments - Governor

Friday, 19 Aug 2011

Reuters reported that coal shipments from the Kuznetsk Basin were 4 million tonnes less than planned during May to July due to problems caused by a large number of freight firms.

Mr Aman Tuleyev governor of Kemerovo which includes the Kuzbass fields said that regional coal miners had built up stockpiles of 10.7 million tonnes of coal, double normal levels.

He said that the shortfall was caused by a lack of coordination among freight operators in Kemerovo, where more than 200 firms are active.

A statement on the Kemerovo region's website said that "The situation could worsen in winter, when shipments to thermal power stations begin.”

Shipping delays are frequent in the winter months, when difficulties such as those associated with unloading frozen coal delay unloading.

A large number of private freight operators have entered the market in recent years, and Tuleyev said the problem has been compounded by the ongoing privatisation of the RZhD Russian state rail company's freight operations.

The governor said that "In order to resolve the problem, it is necessary to improve the legal and regulatory framework.”

He asked Russian Prime Minister Mr Vladimir Putin to order the relevant ministries and government departments to take steps to ensure that coal can be shipped from the Kuzbass.

The statement further said that "A number of companies have cut coal output because it is not possible to ship production.”

(sourced from Thomson Reuters)

Return of Australian coal exports key to freight recovery: Genco

Friday, Feb25, 2011 617 am EST/1117 GMT

New York (Platts)

A return of export volumes of coking coal from the east coast of Australia and in iron ore volumes from Brazil could lead to a recovery of Capesize freight rates during the course of 2011, New York-listed dry bulk ship owner Genco Shipping & Trading said Thursday.

Speaking at the company's fourth-quarter earnings call, Robert Buchanan, president of Genco, said the disruptions caused by the severe flooding in Queensland in December and January and weather-related delays to iron ore shipments from Brazil and South Africa, accounted for approximately 5% of global coal and iron ore seaborne trade, quoting estimates from commodities and ship broking group ICAP.

He also said that a cold winter with high snowfall in the US had limited the amount of coking coal shipments from the US east coast to make up for shortfalls of shipments from Queensland.

Earlier Thursday, Asian coal consumers told Platts that Rio Tinto had lifted a force majeure on its Kestrel semi-hard coking coal brand after almost two months. A Rio Tinto Coal Australia spokesman confirmed that force majeure had been lifted from both the Blair Athol Mine in Queensland and from the Kestrel Mine.

Kestrel is believed to be the first major Australian coking coal brand to have a force majeure lifted since the flooding.

The Kestrel mine supplies 4.2 million mt of coking and thermal coal to customers worldwide.

Buchanan said the expected influx of new ships from the shipyards this year may not be as bad as appeared on paper, because of the likelihood of up to 40% slippage in delivery schedules, following a trend seen in the last few years.

He conceded that the effect of China's tightening monetary policy, in terms of increasing the capital reserve requirements of banks, and the Korea Lines bankruptcy were having a negative effect on sentiment, "but this is reflected more in the forward market."

Genco does not have any exposure to Korea Lines, which filed for the equivalent of bankruptcy protection on January 25. Korea Lines is one of Asia's largest operators of dry bulk tonnage and, according to analysts, fell victim of the collapse in freight rates, having chartered-in its fleet at much higher rates than can be obtained by re-letting the ships on the spot market.

Buchanan also predicted a hefty increase in the scrapping of dry bulk carriers, saying that 2.1 million dwt of dry bulk tonnage had already been scrapped this year compared with 5.7 million dwt in the whole of 2010.

"According to our internal company estimates, we calculate that the cash breakeven for [a fully amortized], 20-year-old Capesize is approximately $12,500/day," said Buchanan. However, the freight market is showing returns of around $4,000-$5,000/day.

Buchanan said it is the larger ships that get scrapped first, because of the wear and tear they endure compared with smaller vessels. "Think about the length and the twisting of the steel that goes on and add iron ore into the equation," he said. Iron ore exerts more stresses on the hull of a dry bulk carrier than any other cargo type.

He said that with a Capsize approaching 20 years of age, and its fifth special survey at a cost of around $3 million, with another special survey due every 2.5 years thereafter, several owners might decide that it is better to sell for scrap.

Buchanan said that 21% of the dry bulk fleet was more than 25 years old and 28% was more than 20 years of age.

He said prices offered by ship breakers were around $500/light displacement ton. "As long as the price of steel stays firm, the scrap price should stay firm," he said.

On Wednesday, Genco reported fourth-quarter net attributable income of $34.8 million, down slightly from $35.5 million a year earlier. In the full year it reported net income of $141.2 million, down from $148.62 million.

Genco saw Q4 voyage revenues climb to $129.9 million from $96.2 million a year earlier, helped by an expansion in its fleet. Total revenues were $130.7 million, up from $96.2 million a year earlier. In the full-year, voyage revenues rose to $447.4 million from $379.5 million in 2009. Total full-year revenues were $448.7 million, up from $379.5 million in 2009. (By Platts)

S.China ports coal prices remain stable

Saturday,Feb 19,2011

Coal price at ports of South China was unchanged in the week from Feb 12 to 18, according to a report by Qinhuangdao Seaborne Coal Market.

During the week, the prices of premium mix with calorific value of 5000Kcal/kg and 5500Kcal/kg remained at 765 yuan/t and 880 yuan/t at Guangzhou port, showed data issued by the coal portal.

At Ningbo port, Shenmu slack with heating value of 6000 Kcal/kg was priced at 955 yuan/t, and Shenmu lump with energy value of 6500 Kcal/kg was traded at 1200 yuan/t, keeping the same level for six consecutive weeks, the report said.

As of Feb 16, the freight rate for vessels of 20,000 to 30,000 DWT from Qinhuangdao to Guangzhou and Ningbo ports were 66 yuan/t and 35 yuan/t, according to data released by Qinhuangdao Tongying Shipping Co., Ltd.

The freight for vessels of 5,000 DWT from Tianjin to Ningbo ports dropped 2 yuan/t or 4.35 percent to 44 yuan/t, and that of 40,000 to 50,000 DWT from Qinhuangdao to Guangzhou ports fell 4 yuan/t to 45 yuan/t, showed data released by Shanghai Shipping Exchange.

(sourced:en.sxcoal.com)

Tags:South China,China ports coal prices, Ningbo Port, Qinhuangdao, Guangzhou,Seaborne Coal Market

Iron Ore-Prices steady near record highs, Aussie ports reopen

Thursday Jan 27, 2011
* Buying activity slows as Lunar New Year nears
* Offers firm as Indian freight cost up
* Australia's Port Hedland reopens after cyclone (Adds trader's comment, swaps, details)
By Manolo Serapio Jr.
SINGAPORE, Jan 27 (Reuters) - Spot iron ore prices remained firm on Thursday as key indexes steadied near record highs, supported by tight Indian cargoes even as Chinese buying stalled ahead of the Lunar New Year holiday next week.
Key ports at top iron ore exporter Australia reopened after briefly shutting due to a cyclone, helping calm supply concerns.
Iron ore exports from India, already falling thanks to a ban on shipments from its southern Karnataka state, are likely to get costlier after India's railway operator raised freight cost on iron ore exports by 50 percent from Thursday as it rides on rising prices of the steelmaking ingredient.

India is the world's third-largest iron ore exporter, although its shipments have dropped for the sixth straight month in December because of the Karnataka ban.
Indian ore with 63.5 percent iron content was being quoted around $193-$195 a tonne, cost and freight to China, up from about $190 earlier in the week, although takers were scarce, traders said.
"The physical market is still strong because of tight supply but there's no buying interest," said an iron ore trader in Singapore.
"If somebody has to sell a cargo within this week they have to lower the price. Otherwise, those who have cleared their positions and are not in a hurry to sell will wait until after Chinese New Year."
China's week-long Spring Festival holiday begins on Feb. 2.

Platts' 62 percent iron ore index IODBZ00-PLT was flat at $186 a tonne, cost and freight delivered to China, on Wednesday, just a tad off the record $186.50 hit last week.
The Steel Index (TSI) 62 percent benchmark .IO62-CNI=SI ticked up 20 cents to $185.60 a tonne, just off the record $185.70 touched last Friday.
Metal Bulletin's 62 percent gauge .IO62-CNO=MB slipped 27 cents to $183.21 a tonne after hitting a record $184.43 on Monday.

PORT HEDLAND REOPENS
"Chinese market participants have their minds firmly on the impending Spring Festival celebrations," TSI said in a note, adding the market was "extremely quiet" on Wednesday "with very few Indian cargoes moving and little if anything from Australia with Port Hedland closed temporarily by a cyclone."
Port Hedland, Australia's major iron ore export terminal, reopened to all shipping traffic on Thursday. Rio Tinto , the world's No. 2 iron ore supplier, said it was resuming normal operations at its Port of Dampier iron ore terminal in northwest Australia after a passing cyclone briefly forced it to restrict port operations.

Prices of iron ore forward swaps <0#sgxios:> rose on Wednesday although levels were below the current indexes.
The Singapore Exchange-cleared February contract gained a dollar to $179.50 a tonne, March added 22 cents to $169.10 and April was up 55 cents at $161.80.
Singapore and rival bourses in the United States and Europe are competing for business in the iron ore swaps market, hoping to attract steelmakers into hedging iron ore costs after the industry moved to a quarterly contract pricing system afer the collapse of a decades-old annual benchmark scheme.
But the increasing need for a more transparent pricing mechanism has India and Singapore racing to launch the world's first iron ore futures market this year.

(Reporting by Manolo Serapio Jr, sourced Reuters)

Traders in Europe more relaxed as steam coal prices go down

Thursday, 27 Jan 2011

Traders in Europe are describing a more relaxed Northern Hemisphere coal market after thermal product prices returned to their lowest levels since early in December, marking falls of up to USD 15 per tonne across the past fortnight.

In start of the week trading, prices for European and South African coal prices fell by USD 2 per tonne to around USD 116 per tonne as traders and utilities forecast more falls.

They’re saying that fears of supply disruptions around the world in the face of severe weather in South Africa, Australia, Colombia and Indonesia spurred end users to replace lost and delayed cargoes at higher, but now the markets more relaxed and prices are down on European demand that’s back to the minimal buying of before December despite a bomb blast that killed 31 at Moscow's Domodedovo airport raising concerns about Russia's stability and the potential for more attacks on its infrastructure.

Also, end users in Europe and India seeking prompt coal are holding out for further falls in prices and freight costs. Two March-loading South African cargoes traded on globalCOAL at USD 116.10 per tonne and USD 116 per tonne by USD 2, while a March loading SA shipment was bid at USD 115.50 and offered at USD 117 per tonne. An April delivery DES ARA cargo was bid at USD 115 per tonne and offered at USD 120.
(Sourced from coalportal.com)

Indian iron ore export cost to go up by USD 11 further on rail freight hike

Tuesday, 25 Jan 2011
Business Line reported that from Thursday, Indian iron ore exporters will have to shell out INR 500 extra for every tonne of traffic moved by rail.
This follows a move by the Indian Railways to increase the distance based charge, which is a charge on top of the freight rates, for iron ore exports by INR 500 a tonne.
Now, an iron ore exporter will have to pay a distance based charge of INR 1,500 per tonne.
This hike is over and above the higher amounts that the exporters were already paying. For instance, in December 2010, to move one tonne of iron ore for a distance of one kilometer, exporters were already paying 66% higher to the Railways compared with what they paid in December 2009.
The move will help the Railways beef up freight revenues in the backdrop of low level of loading of iron ore exports. In fact, despite a 41%t dip in loadings of iron ore exports in December 2010 against December 2009, the Railways had recorded a 7.87% increase in revenue earnings from iron ore export movement.
The Railways moved 2.09 million tonne of iron ore export traffic in December 2010 and earned INR 413.87 crore. (Sourced from thehindu.co.in)