35 Miles of Ships.....Freight Rates Tumbling

[GoFlyKiteNow]

Freight Rates Tumbling as 35 Miles of Ships Passes Ore Demand
Bloomberg

At a time when analysts anticipate record profits for the biggest mining companies and a third year of gains in commodity prices, shipping lines carrying raw materials are set for the lowest freight rates since 2002.

Leasing costs for capesizes, 1,000-foot-long ships hauling iron ore and coal, will drop 34 percent to average $22,000 a day this year, according to the median in a Bloomberg survey of eight fund managers and analysts.

While Clarkson Plc, the world’s biggest shipbroker, expects seaborne trade in the two cargoes to exceed 2 billion metric tons for the first time this year, the 7 percent increase won’t be enough to eliminate a glut.

About 200 capesizes, spanning some 35 miles end-to-end, will leave shipyards this year, expanding the fleet by 18 percent, the Bloomberg survey showed.

Rates averaged $34,913 a day in the final three months of 2010, 33 percent more than in the previous quarter.

Tariffs are already plunging, dropping 7.7 percent today to $11,900, the lowest rate since Jan. 8, 2009, as ships leave yards in China, Japan, the Philippines and South Korea, according to data from the London-based Baltic Exchange, which publishes assessments for more than 50 shipping routes.
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[longbow]

Article is illustrative of slowdown in China. Central Bank has been reducing liquidity with higher reserve requirements, draconian rules on owning 2nd and 3rd property, etc - combat inflation.

With China growing at close to 10.5% a slowdown to 9% will weaken commodity prices. Unfortunately the combined GDP of the remaining members of the BRIC countries - Brazil, Russia and India do not even add up to that of China and they are unable to take up the slack.

 

[longbow]

Perhaps there is no slowdown in Chinese GDP; at least any that impacts iron ore.

China's domestic iron ore production up 24%!!!! Hence less imports.

Iron ore imports decline

(China Daily)
Updated: 2010-12-14 09:41
Counter:299


Imported iron ore will account for 60 percent of China's ore consumption this year, down 2.4 percent from 2009, the first drop in recent years, thanks to rising domestic ore production, an industry official said.

Domestic ore output increased 24.4 percent year-on-year in the first 10 months, while iron ore imports dropped 2.2 percent over the same period, said Luo Bingsheng, vice-chairman of the steel lobby group, the China Iron and Steel Association (CISA). Luo said the concentration of China's steel industry grew by 6.3 percent year-on-year in the first 10 months, with the top 10 steelmakers producing 46.6 percent of the country's total crude steel output.

Rising domestic iron ore production has hit some foreign miners and affected the global market, he said. The big three suppliers, Vale SA, BHP Billiton Ltd and Rio Tinto Group, accounted for 77 percent of total deliveries in October, down from 80 percent in September, with Iran, Ukraine and Russia picking up the slack.

Analysts said the continuing rising price of iron ore imports forced China to find supplies either domestically or by boosting other sources.

Indian ore with a 63.5 percent ore content remained at $173 to $175 per ton including freight on Monday after hitting that six-month peak in November, according to industry consultancy Mysteel.

Rio Tinto, the world's second-largest iron ore producer, has informed some customers in South Korea and China of first-quarter iron ore contract prices, up 7.6 to 7.7 percent compared with fourth-quarter prices, sources at three steel mills said on Friday.

"The rising price of imported ore is the main factor that drove Chinese steelmakers to turn to domestic supply, pushing up domestic ore output," said Du Wei, a senior analyst from Umetals.com.

China has domestic ore reserves of 62.4 billion tons, but most mines have low iron content, increasing the cost of mining. Rising imported ore prices encouraged Chinese miners to source from the domestic market.

China's iron ore output is expected to exceed 1.3 billion tons within three to five years, Zhou Zhongshu, president of China Minmetals Corp, said earlier at a conference in Tianjin.

India, the world's third-largest ore exporter, which cut iron ore exports in July, also contributed to the declining proportion of ore imports, said Du.

India accounted for 6.4 percent of China's total ore imports in October, down from almost 20 percent in May, before India's southern Karnataka state banned iron ore exports in July in a crackdown on illegal mining. October imports from India stood at 2.91 million tons, down 39 percent from September, and 44 percent compared with the same period last year, according to data released by the General Administration of Customs last month.

 

[syed putra]

with all these ships coming in, there will be no new building for years to come, means not much steel used, and price of iron ore will drop.

 

[GoFlyKiteNow]

Article is illustrative of slowdown in China. Central Bank has been reducing liquidity with higher reserve requirements, draconian rules on owning 2nd and 3rd property, etc - combat inflation.

With China growing at close to 10.5% a slowdown to 9% will weaken commodity prices. Unfortunately the combined GDP of the remaining members of the BRIC countries - Brazil, Russia and India do not even add up to that of China and they are unable to take up the slack.

In your opinion....will shipping stocks, marine stocks be affected ?
If so, when the slide ?.
Which stocks to watch out for here in Sg ?

What about oil rig and marine rig stocks ?

 

[annexa]

China is doing something that all these "experts" don't even know. They are building a lot of fast rail transports across China. Ores and coal mined from Central and North China where development is not as fast, to fast developing and energy hungry South China. It is a lot of internal trading.