India shipping firms eye expansion in dire market

Tue Oct 11, 2011

* Indian shipping firms eye low asset prices
* Shipping Corp of India says will keep buying vessels
* India looking to nearly treble port capacity by 2020

By Aniruddha Basu and Siddesh Mayenkar

MUMBAI, Oct 11 (Reuters) - Indian shipping firms are planning to expand their fleet to take advantage of falling vessel prices and a sharp downturn in the global freight markets, industry executives said on Tuesday.

India's shipping firms view the difficult economic environment as a buying opportunity, as they expect to see a huge boom in seaborne trade in Asia's third largest economy over the next decade.

"We will look at expanding our fleet because asset prices are low, but it has to be strategically done," said Yudhishthir Khatau, vice chairman and managing director of oil carrier Varun Shipping , on the sidelines of the India Shipping Summit.

"With added capacity, we still have to face low freight rates."

A flood of new vessels this year has pushed the crude tanker market to unprecedented lows, with average daily earnings falling to negative territory for the first time.

A similar situation is expected to hit the dry bulk market over the next few months, as industry experts believe the oversupply of ships will reverse a recent rally.

Despite the adverse market conditions, state-run Shipping Corp of India has not received any directive from the government to stop acquiring vessels, a top official said.

Shipping Corp of India has an order book of 28 vessels, worth around $1.4 billion, for delivery by 2013/14 and plans to order at least 10 more vessels, said Chairman and Managing Director S Hajara.

India's shipping industry is considered vital to the country's efforts to secure the necessary crude oil, coal and other commodities necessary to maintain its strong economic growth.

In preparation for this fleet expansion, India expects to boost port capacity to 3.2 billion tonnes by 2020 from the current 1.1 billion tonnes, Shipping Secretary K. Mohandas said at the conference.

PIRACY

One of the biggest risks facing the growth of India's shipping industry is the threat of piracy, which is becoming more pronounced off the country's southwest.

Pirate attacks on oil tankers and other ships are costing the world economy billions of dollars a year and navies have struggled to combat the menace, especially in the vast Indian Ocean. Experts say seaborne gangs are set to ramp up attacks in the area after the monsoon season abates.

Maritime insurance premiums have increased due to the growing risks, but experts believe the added costs will not significantly impact India's shipping industry for now.

"The Indian market is relatively young and so will survive for awhile without paying too much premium," said a foreign insurance broker, who wished not to be identified.

Around 90 Indian seafarers have been taken hostage this year and 50 are still in captivity, according to the International Chamber of Shipping.

India has stationed a warship near the Gulf of Aden which has thwarted dozens of hijacking attempts and escorts vessels passing through the region. India is also detaining more than 100 pirates captured in rescue operations.

(sourced Reuters)

Implications of the Japan Crisis on steel, coal, shipping industry

Mar16, 2011

In the aftermath of the devastating earthquake that has hit Japan, fears are growing over the potential for radiation leaks from damaged nuclear plants. Equity markets have been hit while FFA prices have also sustained significant losses. With the situation still unfolding, the longer term impact of the disaster on commodity markets is unclear, although some initial conclusions can be drawn.

In the short term, shipping has been disrupted with 13 ports reported by Reuters to have closed, with some of these unlikely to be operational for several months or even years. Initial assessments by Macquarie and the Steel Index put production at five large steel mills in the worst-affected region at risk, accounting for 15-18 million tonnes (Mt) of annualized steel production capacity. That could potentially remove around 20-25 Mt of iron ore and 9-10 Mt of coking coal demand.

In the longer term, reconstruction should boost demand for steel with potential for significant increases in raw material imports. Whether the additional steel demand is met entirely by Japanese production or partially by China, Korea and/or Taiwan, the overall effect should be a boost to iron ore and coking coal imports into the region. Capesize vessel demand would therefore be the biggest beneficiary, with the Panamax sector boosted by extra coking coal demand alongside additional Handysize and Supramax employment on steel products, timber and grain trades. Should additional cargoes be required into China, this would entail more spot market chartering activity, in contrast to Japan’s traditional reliance on longer term freight contracts.

Meanwhile the nuclear crisis has led to rolling blackouts. Out of Japan’s 54 nuclear reactors, 11 are reported closed. The Fukushima Daiichi nuclear plant has so far suffered explosions at three of its reactors and it will almost certainly be decommissioned once the crisis is over. Japan depends on nuclear power for almost a third of its total energy needs. Recent parallels can be drawn with the closure of the Kashiwazaki-Kariwa nuclear plant for 21 months after the 2007 earthquake in Niigata prefecture and, perhaps more significantly, the temporary shutdown in 2003 of 17 nuclear power stations for emergency safety inspections after it was revealed that inspection reports had been falsified.

The 2003 closures led to an increased reliance on both oil and coal-fired power generation. There was an unexpected spike in Japan’s steam coal imports (including anthracite) in July and August 2003 to more than 15 Mt per month compared to an average of 14 Mt per month during the 1h03. This was a key factor in causing the chronic shortage of dry bulk tonnage at that time that led to the record-breaking surge in freight rates.

The rolling programme of emergency inspections in the months that followed led to a very gradual reopening of nuclear plants, which helped to ensure that Japan’s steam coal demand grew strongly. Combined steam coal and anthracite imports jumped from 112.0 Mt in 2003 to 123.6 Mt in 2004. Improved economic conditions in 2010 resulted in the annual import total rising by 14.1 Mt over 2009 to 131.2 Mt. Beyond the inevitable short-term disruptions, there is potential for further strong rises in steam coal demand. This could be particularly significant in the longer term if the latest tragic developments cause a rethink in Japan of the viability of nuclear generation as a key part of the country’s energy mix. (By Marinelink)

Shipping Corp to acquire 110 vessels by 2020: Vasan

Monday 7 March 2011, 2:36 PM

New Delhi, Mar 7 (PTI) Shipping Corporation of India plans to acquire 110 vessels of 5.21 million gross tonnage (GT) at an estimated cost of Rs 27,668 crore in next 10 years, Parliament was informed today.

Among these vessels, the Shipping Corporation is likely to place orders for 26 vessels by 2011-12, Shipping Minister G K Vasan said in a written reply to Lok Sabha.

He added that the acquisition of the vessels would take SCI''s total tonnage to about 7.21 million GT by 2020.

Gross tonnage is a unitless index related to a ship''s overall internal volume and is calculated based on the moulded volume of all enclosed spaces of the ship.

The Shipping Minister further said that SCI has placed orders for 36 vessels so far against the target of acquiring 62 vessels in 11th Five Year Plan, which includes acquisition of one resale vessel.

Of these, five vessels have been delivered while others are being built in different Indian, Chinese and South Korean shipyards, he said.

The Shipping Corporation currently has a fleet of 78 vessels of different types, having a total 3.19 million GT and total carrying capacity of 5.61 million DWT (dead weight tonnage).

During the first nine months of the ongoing fiscal, the Navratna company carried a total cargo of 23.08 million tonnes plus 1.27 lakh TEUs, Vasan said.

Dead weight tonnage (DWT) is a measure of how much weight a ship is carrying or can safely carry, while the twenty-foot equivalent unit (TEU) is an inexact unit of cargo capacity, used to describe the capacity of container ships and container terminals. (PTI)

SSY ATLANTIC CAPESIZE INDEX 21/02/2011- 28/02/2011

Monday, 28 February 2011 14:24

The Atlantic Capesize Index fell to a 2-week low of 5,341 points,down 420 points from last week. Atlantic round voyage rates for 172kdwt vessels have fallen from $7,500/day one week earlier to $4,000/day

Source: SSY Consultancy & Research Ltd

Baltic index rises, capesize market seen pressured

Monday,28 February 2011

he Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, turned barely positive on Friday, although sentiment was expected to remain weak due to a glut of vessels.

The index rose 0.24 percent or 3 points to 1,245 points, after falling in the four previous sessions. That slump followed ten days of gains.
"The main drag on rates this week was a lull in Chinese iron ore fixtures due to record stockpiles," said Jeffrey Landsberg, managing director of dry bulk consultancy Commodore Research. "This affected capesize rates.
"Gains are certainly possible for the coming week," he said.

Earlier this month before the modest rally, the index, which tracks the cost of shipping key commodities such as iron ore, cement, grain, coal and fertiliser, reached its lowest in two years.
The Baltic's main index has remained erratic since 2009 because of swings in Chinese demand for iron ore, the primary ingredient of steel.

"Since the capesize debacle has begun, $4,500/day to $5,000/day has been the artificial level that owners have maintained as a floor for average capesize rates," Landsberg said.
"Despite capesize vessel supply exceeding demand, owners have resisted chartering out their capes when rates have reached current levels."
The Baltic's capesize index .BACI fell 0.3 percent, with average daily earnings dropping to $4,653 in an ninth session of falls. Capesizes typically haul 150,000 tonne cargoes such as iron ore and coal.

"Capes in all regions are apparently unable to shake off the problems presented by significant oversupply and activity remains too limited to provide any boost in rates," Braemar Seascope said.
The Baltic's panamax index .BPNI fell 0.06 percent, with average daily earnings dropping to $14,530, falling for a fifth day after 12 sessions of gains previously. Panamax vessels usually transport 60,000-70,000 tonne cargoes of coal or grains.

"Grain fixtures have been slow to emerge, with Chinese buyers remaining quiet," Braemar said.
Adding to economic headwinds in western industrialised countries, a major source of shipping demand, are inflationary fears in China, which could potentially lead to further interest rate rises and a pullback in demand for ore, delivering another setback for shippers.

China's consumer confidence index dropped in the fourth quarter, the second consecutive quarterly decline, as expectations for rising prices hurt sentiment. While there are indications of some vessel cancellations and delays, analysts expect deliveries to gather pace between 2011 and 2012.(source: Reuters)

Dry bulk market keeps losing ground, Capesizes suffering - Nikos Roussanoglou,Hellenic Shipping

Thursday,Feb24, 2011

The dry bulk market lost further ground yesterday, as the industry’s benchmark, the Baltic Dry Index was rapidly falling, ending the session down by 2.03% to 1,253 points. As has been the established trend so far this week, the bigger ships have been taking the biggest toll, with Capesizes losing 3.24 percent on the day to just 1,345 points (Baltic Capesize Index), with daily rates still below break-even point, while the Panamaxes have also seen thin demand, with the Baltic Panamax Index retreating yesterday by 3.86% to 1,845 points, which is still way above the capesize segment, in yet another odd signs of the current times. On the positive side, Supramax owners have been enjoying the current robust demand for their carriers, with their rates up by 1.91% on the day.

Commenting on the Capesize market, Fearnley’s latest weekly report said yesterday that although there was a little more activity last week, this has slowed down and rates have fallen slightly. This combined with increased bunker prices result in even lower returns for owners. Despite an increasing number of vessels not trading the oversupply is still the major problem, and with new cyclones hitting major loading ports in East Australia the market becomes even more frustrated. Presently owners are willing to fix out their tonnage at usd 16000 per day for 12-month period, which is a considerable premium over the spot market, but these are new record low levels for this kind of fixture.

On the Panamax front it mentioned that “the positive trend from last week gradually faded out, lead by lack of fresh USG/ECSA grain requirements in the Atlantic, a sliding forward curve followed by a falling period market in the Pacific. Despite prompt vessels under pressure still some healthy numbers achieved in the Atlantic; typically 25000 + 500BB for Fronthaul and mid teens for transatlantic rounds. The Pacific saw rates coming off significantly to lower teens for Nopac rounds and a growing spread between spot- and period rates.

Charterers and operators are holding back and reducing their activity. Takers for longer periods clearly stand off as the forward curve test very low teens and most Owners still hope for a recovery to do high teens for same. On a positive note there is growing local enthusiasm with the commencement of the Nordic World ski championships in Oslo” said the shipbroker.

Meanwhile, the container market has yet to “recover” on the news of Maersk’s huge newbuilding order for 10 firm plus 20 optional 18,000 TEU container vessels. AP Møller has been in talks with DSME regarding the 18,000 TEU design for quite some time, and now finally confirmed. According to AP Møller, these vessels will burn 35% less fuel per container compared to the more standard 13,000 TEU container vessels operating today. In another report on the newbuilding market, Clarksons said that with the holidays now firmly behind us we continue to see the yards reporting new business being concluded. “As previously discussed, container enquiries in particular look to be the leading factor in generating this momentum as dry and wet remains relatively stagnant. With the container story continuing to press forward - this is ultimately inhibiting the shipyards willing to push pricing on other sectors and attempt to bridge the bid offer spread, that continues to stifle the potential for further volume.

In the short term, we don't anticipate this dynamic to change - and yards will want to exploit the shipbuilding demand that exists outside of dry and wet - and try to extend their forward orderbook coverage and take the pressure off themselves to yield to what is a weaker demand story so far. In terms of reported business; In Dry, Hanjin Shipping have contracted a pair of 180,000dwt Capesize bulk carriers at Daehan, these are scheduled for delivery in 2012 and the reported price for these is USD58.5 Mill per vessel. In China meanwhile, it has been reported that Shanhaiguan have won an order from Greathorse Shipping Holdings for 4 option 4 x 76,000dwt panamax bulkers, with the firm vessels due to deliver in 2H 2012 and 1Q 2013. It is understood that these vessels may have been signed at the end of last year and are only fully coming to light now” said Clarksons.

Source: Nikos Roussanoglou, Hellenic Shipping


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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

ANALYSIS-Small ships to unlock rate boon for bulk owners

Feb8, 2011 17:32 EST

By Krishna N Das and Jonathan Saul
BANGALORE/LONDON, Feb8(Reuters) – Dry cargo shippers with smaller vessels are shifting to more-risk, more-reward spot markets, eyeing rising demand for sugar and grains — commodities well suited to versatile supramax and handysize ships.
Ship owners generally prefer long-term charters in a weak market. The Baltic Dry Index <.BADI> o-year lows in recent weeks but confidence has been rocked by South Korean dry bulk group Korea Line Corp <005880.ks> filing for bankruptcy protection, highlighting the risk of charter-party defaults.
“Concerns now persist industry-wide, as speculation grows as to whether faults,” Deutsche Bank analyst Justin Yagerman said.
“Continued charterer defaults could bring into question many companies’ above-market charters.” Flooding in Australia, the world’s biggest coal exporter, and weather-srupted coal shipments and dented sentiment for capesize vessels — the giants of seaborne trade routes, typically hauling 150,000 tonne cargoes such as iron ore and coal.
Demand for grains, though, has soared. Wheat prices in the European Union, the world’s No.2 exporter, a year, aided by a Russian export ban due to drought and strong demand from North Africa and Middle East countries.
Global food prices, which hit their highest level on record last month, is a mounting worry for world leaders. Recent catastrophic weather around the globe could put yet more pressure on the cost of food, an issue that has already helped spark protests across the Middle East. Egypt is the world’s biggest wheat importer.
Eagle Bulk Shipping , which operates supramax vessels that typically have around half the capacity of a capesize, lowing them to haul a wider range of cargoes, has placed half its ships in the spot market.
That strategy has been welcomed by investors, and Eagle Bulk Shipping’s price-to-earnings ratio of almost 35 is the highest among its peers, Thomson Reuters StarMine data shows.
“We prefer smaller vessels due to the more favorable supply dynamics, more diverse cargo loading options, record spot fixture activity for the last five months due to a recovering worldwide economy, and the increasing ton-mile in the grain trade,” FBR analyst Doug Garber said in a note.
Genco Shipping and Trading could be another to gain from a near-term rebound in day rates — the cost of renting a ship by the day — as it has roughly half its 2011 days in open or linked-to-index charters.
Conversely, Diana Shipping , DryShips , Navios Maritime Partners LP and others whose fleets are dominated by bigger ships, have placed more vessels in long-term contracts, hoping for steady returns. Diana and DryShips trade at just above 5 and 8 times forward earnings, respectively.
Iron ore and coal are the main drivers of the dry bulk trade, accounting for some two-thirds of demand, but both are highly dependent on China, making the shippers that own bigger vessels more vulnerable to demand swings in the world’s biggest commodity consumer.
Sterne Agee expects Baltic Dry Index spot rates to drop 16 percent this year and 9 percent in 2012, noting these declines will be hardest felt by those owning capesizes, where fleet growth is seen at 17 percent this year and 14 percent in 2012.
For capesizes, the brokerage forecast a 25 percent fall in spot rates this year to below $25,000 a day. Only three years ago, owners of these vessels could charge day rates in excess of $100,000 a day.
Supramax rates are seen dropping about 7 percent to $20,845.
“The largest part of the order book concerns the larger ships, the capes. It is actually the capes that are of a bigger concern to everybody in the industry,” said Michael Bodouroglou, chairman and CEO of Greece’s Paragon Shipping Inc , which has smaller supramax and handymax vessels among its fleet.
“The panamaxes, the supramaxes and in particular the handies I think they will fare a lot better particularly in the second quarter which is the season where the grain trades pick up from South America etc — these are trades which are accommodated in the smaller sizes,” he told Reuters.
The Baltic capesize Index <.BACI> has fallen by two-thirds in the past 3 months to its lowest in more than 2 years. Rates for supramax vessels were faring slightly better, though the Baltic’s supramax index <.BASI> has dropped by a quarter in the last 3 weeks.
“In the next few months, a moderate amount of cargo demand is likely to continue to surface, which is likely to result in supramax and handysize rates remaining at healthy levels,” said Jeffrey Landsberg, managing director of dry bulk consultancy Commodore Research.
“Global grain demand remains strong and will lend support to rates once the South American export season kicks in to full gear.” (sourced:reuters)

Tags: coal, drybulk, grains, iron ore, shipping, dry cargo shippers, vessels, spot market, Supramaxes, Handysizes, The Baltic Supramax Index, The Baltic Dry Index, Eagel Bulk Shipping, FBR analyst, Genco Shipping, Conversely, Diana Shipping , DryShips, Navios Maritime Partners LP

ANCHORAGE loading point moved to Muara Jawa

Saturday, 05 February 2011
The Ministry of Transportation Republic Indonesia has announced that, the loading point at Muara Berau, East kalimantan has been moved to Muara Jawa, East Kalimantan due to seasonal weather conditions from 1st February 2011.
According to letetr No: GM.76/1/9/Ad-Smd.2011 issued by administration office of Ssmarinda port, to ensure the safety of stevedoring activities and vessels that are loading in the open sea, all the loading operations that take place at Muara Berau will be moved to Muara Jawa with effect from 1st February 2011 for a period of 6 months.
All the vessels calling Samarinda anchorage for coal loading will anchored Muara Jawa Anchorage for loading activites untill at least July 2011.(sourced:coalspot)

THE FUTURES FOR 2011-2013 WAS AT AROUND US$ 16,500 & US$ 15,000 PANAMAX & SUPRAMAX PER DAY RESPECTIVELY

Sunday, 06 February 11
With the Chinese new year holidays this week, the market has been fairly quite as expected.
The BDI saw a bigger drop compared to last week and was down by about 8 pct and closed at 1,043 points. It will be interesting to see if the BDI will go below 1,000 points. But seems the BDI has almost bottomed out and may not go down much.
The Cape index also was down by about 5 pct and closed at 1,299 points, with the average charter rate at all time low at US$ 5,161 per day. The Panamax index was almost steady and was up just by about 1 pct and closed at 1,348 points. Supramax and Handy size index was also down by about 10 pct and closed at 1,090 points and 643 points respectively.
The cyclonic weather in Queensland and shippers declaring force majeure the situation has added to the market woes. The situation is expected to return to normal in about a week time.
The average charter rates was at Cape/US$ 5,161 per day , Panamax/US$ 10,786 per day , Supramax/US$ 11,398 per day and Handy size/US$ 9,422 per day.
The Supramax index in the feast (S6 route) was down by US$ 404 per day (down by 5.23 pct) and closed at US$ 7,310 per day (last week US$ 7,714 per day). The EC India/ China (S7 route) was down by 128 points (up by 1.11 pct) and closed at US$ 11,370 per day (last week US$ 11,498 per day). The S6 route is likely to be steady/soft next week.
According to Vistaar singapore, the futures for three years (2011-2013) was at around Cape/US$ 20,000 per day, Panamax/US$ 16,500 per day, Supramax/US$ 15,000 per day , Handy size/US$ 10,750 per day.
The congestion in EC Australia was almost same at 107 vessels this week (last week 106 vessels). The vessels waiting at main coal loading ports were at Hay point/17, DBCT/33, Gladstone/10, Abbot Point/2, New Castle/39, Port Kembla/4 vessels. On the WC Australia iron ore vessels waiting increased to 45 vessels (last week 31 vessels).
The waiting at Indian ports for coal vessels was quite normal except for Paradip, Haldia, Kandla where the berthing delays was high with berthing delays of about 10/12 days.
The crude prices firmed up mainly due to Egyptian crisis and Brent crude prices was at US$ 100.12 per barrel (last week US$ 99.31 per barrel). Bunker prices also firmed up sharply and was at US$ 582.00 pmt (last week US$ 552.00 pmt) for IFO 380 cst ex Singapore on 4th Feb 2011.
Reported by Vistaar Shipping, Singapore
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Coal Ships Seek to Avoid Path of Queensland Cyclone

February 02, 2011 By Ben Sharples

(Bloomberg) -- Coal ships sailed away from the Queensland coast after ports and rail transport lines were closed as Tropical Cyclone Yasi approached Australia, the biggest exporter of the fuel.
At least 32 vessels have headed out to sea after Hay Point harbor and the Abbot Point export terminal were shut, according to North Queensland Bulks Ports Corp. and Dalrymple Bay Coal Terminal Pty. Yasi, a category five storm, is expected to strike the coast late today, packing winds in excess of 280 kilometers (174 miles) an hour.

“They’ll try and move away from land,” Greg Smith, general manager of operations at the Dalrymple Bay export facility, said by phone today. “Their biggest fear will be getting blown onto some form of shallow, so they’ll probably seek deeper water off the continental shelf, or try and steam as far south, where they’ll be out of reach of the winds.”
BHP Billiton Ltd., Rio Tinto Group and Xstrata Plc are among producers that export through Hay Point, the world’s biggest export harbor for steelmaking coal. Yasi was 445 kilometers east of Cairns at 10 a.m. local time, according to the Bureau of Meteorology. Category five is the highest level in the storm classification system.

About 30 ships were waiting to load at Dalrymple Bay, Smith said. The facility is one of two terminals at Hay Point, about 1,000 kilometers north of the state capital Brisbane, and has combined capacity to export 129 million tons a year.
‘Deeper Anchorages’
“For the safety of the vessels and crew, they are sent to deeper anchorages,” Mary Steele, a Brisbane-based spokeswoman for North Queensland Bulk Ports, said in an e-mailed response to questions today. The company manages Abbot Point, 25 kilometers north of the town of Bowen. Two ships were waiting to load cargoes, Steele said.

Abbot Point has one terminal with an export capacity of 21 million tons a year. It shipped 16.9 million tons and handled 224 vessels in the 12 months ended June 30, 2010, the North Queensland Bulk Ports Corp website shows. Bowen is about 1,100 kilometers north of Brisbane.
QR National Ltd., Australia’s biggest transporter of coal by rail, halted train services on the Newlands line to Abbot Point and the Goonyella network serving Hay Point, Mark Hairsine, a spokesman for the company, said yesterday.

The cyclone, which comes just weeks after the state’s capital Brisbane was hit by the worst flooding since 1974, is “likely to be more life threatening than any experienced during recent generations,” according to the bureau. It is forecast to be more severe than Cyclone Larry, which wiped out most of Australia’s banana crop and devastated sugar cane fields when it struck northern Queensland almost five years ago.
--Editors: John Viljoen, Paul Gordon.

Some Indonesia coal traders declare force majeure on rule change-assoc

JAKARTA Feb 1,2011
(Reuters) Some Indonesian coal traders have declared force majeure after a trade rule change, with around 60-70 vessels stuck in various ports and 3.5 million tonnes unable to be shipped, the chairman of the Indonesian Coal Mining Association said on Tuesday.

It was not immediately clear which trading companies and which buyers were affected, Bob Kamandanu told reporters, after a new trade regulation caused the delays in the world's top thermal coal exporter.
The problems have come after the trade ministry ordered surveyors in January to temporarily halt issuing surveyor reports to traders who are in the process of reapplying for trading permits under a new coal and mining law system. The surveyor reports are documents required for shipping the fuel.
The rule appeared to affect traders who do not own mines and buy blended coal, or aggregate coal, from various small miners, as well as traders who buy coal in barges. It was not clear which firms had declared force majeure.

"The vessels have been stuck in various coal ports around the country. Stockpiles have been building up because the coal can't be loaded to vessels," Bob Kamandanu said.
Most of the vessels were shipping the coal to buyers in India and China, he said.
Indonesia has required exports of mining products including coal and tin to be checked by surveyors before shipping them out as the country seeks to keep illegal mining in check and boost revenue from the sector.

"They have submitted requests for processing permits to the energy and mines ministry since three months ago but with no response," Kamandanu told reporters.
Surveyor reports show the origin of the cargoes and are used to calculate royalties.
The trade rule so far has not affected shipments from coal firms such as top producers Bumi Resources and Adaro Energy , as surveyors are still allowed to issue reports for coal exports from producers.
But it could affect the country's production if the delays run for a longer period, said Kamandanu.
The delays come as Indian traders and end-users are close to resuming prompt buying on thermal coal after a break of several months, some of India's largest traders said last week.
Australia's thermal coal prices on the globalCOAL weekly index, a benchmark for Asia, closed at $127 per tonne for the week to date on Monday, up from $124.25 a week earlier.(Reporting by Alfian; Writing by by Fitri Wulandari; Editing by Neil Chatterjee, sourced: reuters)

Hyundai Heavy to increase use of steel plate by 14pct in 2011

Thursday, 27 Jan 2011

Bloomberg reported that Hyundai Heavy Industries Co plans to increase use of steel plate by 14% in 2011 to the most since 2008 as it boosts production of container vessels and oil tankers.Mr Kim Ki Young, a spokesman of Hyundai Heavy Industries Co, said that it expects to use 4 million tonnes of plate in 2011 as compared with about 3.5 million tonnes in 2010. Consumption among the world's six largest yards, all based in South Korea, will rise 12% to 8 million tonnes, based on company figures.

Mr Cho In Karp head of research at Heungkuk Securities Co said that the increase in demand may help POSCO and Dongkuk Steel Mill Co, the biggest South Korean plate makers, raise prices that have tumbled 33% in two years amid a slowdown in ship deliveries and rising competition. Shipyards may be able to pass on higher costs as demand for vessels rebounds following the end of the global recession.He added that "It will give shipyards ammunition to raise ship prices, which will be positive in the long term. In the short term, higher plate costs could crimp margins."Shipyards spend the equivalent of about 15% of sales on steel plate, used to make hulls, making it their biggest materials expense. Prices have been unchanged at KRW 950,000 per tonne since the mills' last increase in July 2010.

Hyundai Steel Co, South Korea's second biggest steelmaker, began making plate in 2010 challenging POSCO, Dongkuk and Chinese and Japanese producers.Mr Moon Jeong Up, an analyst at Daishin Securities Co, said that "Demand is going to allow steelmakers to raise prices. Demand for steel plate is sure to increase because shipyards are planning to build more in 2011."According to Credit Suisse Group AG, prices for most types of steel are rising as increasing demand and flooding in Australia’s mining region pushes up materials costs. Coking coal may jump to a record USD 250 a tonne in 2011. Prices for iron ore arriving at Tianjin, China surged to a nine month high on January 21st 2011.

Samsung Heavy Industries Co, the world's second largest shipyard, plans to use 1.5 million tonnes of steel plate in 2011, a 15% increase. Third ranked Daewoo Shipbuilding & Marine Engineering Co expects use to climb 6.3% to about 1.7 million tonnes. STX Shipbuilding & Offshore Co, the No 4 yard, plans to use 810,000 tonnes, up by 5.9% YoY.Hyundai Heavy's steel plate tally includes units Hyundai Mipo Dockyard Co and Hyundai Samho Heavy Industries Co, the world's fifth and sixth biggest yards.
(Sourced from www.bloomberg.net)

DRY BULK RATES CONTINUED TO TUMBLE LAST WEEK - BRS

Tuesday, 25 January 11

With weather-related problems affecting the short-term outlook, and new building deliveries the longer-term picture, dry bulk rates continued to tumble last week and the BDI and Capesize 4TC are now at their lowest levels for 2 years. Thursday saw the BDI bottom out at 1,438 points, a result mainly of softness in the Cape market. Rising commodity prices indicate there is still good demand for product, which suggests new building deliveries are the main issue affecting rates. After two weeks of 2011, 20 new Capes have been delivered, 9 Panamaxes, 28 Supramaxes, and 21 Handysizes, indicating the pace of delivery is increasing. In the FFA market, 2H 2011 is now trading at around US$21,000 per day compared to US$24,000 six months ago.

Capesize

Another period of softening rates in the Cape market, and the BCI lost a further 15% or 270 points Friday-to-Friday. The Cape 4TC, at just under US$9,700, is now below the time charter equivalent for all the other bulk sizes. Players reported a sharp drop in Australian business, with coal operations still disrupted due to weather factors, and a lacklustre demand for ore. In the period market, it was reported that a 161,000 tonner was taken for 3-5 months at US$13,000 per day. However the sole one-year charter was signed at a BCI index-linked rate. On Monday however the BCI lost just 5 points, raising hopes among owners that the market may be bottoming out.

Panamax

The Panamax 4TC average stayed flat this week and hovered between US$15,300 and US$15,400 per day. However the two basins went in opposite directions. The Pacific showed some resistance due to the number of ballasters going to the USG and ECSA, and ships caught in the congestion in Queensland created some opportunities for the other vessels. The Nopac route gained US$500 and closed the week at US$10,000 per day. West of Suez, in the Atlantic, the market eased by US$1,000 as very few fresh requirements hit the market and the fleet supply end Jan was growing day by day. Regarding the period market, all major operators were quiet and the few ships which went on short period for delivery China or India were getting fixed at US$16,500 per day.

Supramax/Handy

The Baltic Supramax Index has shown a few signs of recovery with most of the routes following a slight upward trend. Delays in the southern part of the Atlantic due to bad weather/congestion have resulted in charterers having to come on the market looking for substitute vessels, of which very few are available. The Baltic gained 48 points to finish at 1,393 points last week, while the average of the TC routes gained US$506 to finish at US$14,570. The US Gulf and the Continent were the drivers of the Atlantic where fewer fixtures were seen from East Coast South America. A Supra delivery west Africa for a trip via Brazil/ Argentina to the Singapore/Japan range was rumoured to have fixed at US$24,000 dop. From the USG, modern Supras were fixed to the Continent around the mid US$20,000s, and to the Singapore/Japan range in the low/ mid to mid US$30,000s. For the smaller sizes, the trend of the Baltic Handysize index has been steady, finishing at 765 points with no difference noted as it had started at 765 points. Only the TC Handysize average showed very minor signs of improvement, as it gained US$25 to finish the week at US$11,129 per day.

For Handies, the driver has been East Coast South America which has been more active than the US Gulf or the Continent (which has seen a few scrap orders back to the east Med), and the Black Sea which remains silent. A couple of Modern Supramaxes ex Far East for 2-4 month periods were fixed between US$12-13,000. The Pacific has continued to weaken with Supramaxes being fixed for backhauls at around US$7,000 ex Taiwan, while ex Japan to Australia/Nopac were fixed around US$7,500.

Source: Barry Rogliano Salles (BRS)