Monday, June 22, 2009
Shipbuilder Rongsheng wins $484 mln Oman deal
Monday, 22 June 2009
Chinese shipbuilder Jiangsu Rongsheng Heavy Industries Co, which is aiming to sell shares to the public in 2009, won a $484 million deal to build four ships for Oman Shipping Co, a government official said on Sunday. The vessels would carry exports from an iron ore pellet plant in northern Oman which is expected to begin production in the second half of 2010. Brazil's Companhia Vale do Rio Doce (Vale) is building the $1 billion plant.
"The vessels will be delivered by the end of 2011 or beginning of 2012 and will be chartered to Vale for its exports," the official from Oman's Tender Board told Reuters.
The owner of the vessels is state-owned Oman Shipping Co which has said it plans to spend $4 billion on expanding its fleet.
Rongsheng is aiming for an initial public offering possibly in Hong Kong this year, its president said in April.
Rongsheng, backed by foreign funds including Goldman Sachs and U.S. fund D.E. Shaw, is seeking to tap capital markets to fund growth.
It eventually aims to compete with much bigger state-owned rivals such as Guangzhou Shipyard International Co.
Source: Reuters
India: Shipping industry seeks special fund to finance projects
Monday, 22 June 2009
With the avenues to secure loans for expansion and modernisation plans drying up, the shipping industry has asked the government to set up special fund to help the industry finance such projects. "We have approached the government for setting up of a fund for the shipping industry as all channels to secure debt has evaporated," Shipping Corporation of India Chairman and Managing Director S C Hajara told PTI.
The domestic shipping industry finds it difficult to raise money from the global market on account of the worldwide liquidity crisis. Also, many foreign banks prefer giving loans to shipping projects based in their respective countries.
"Many western banks have received loans from their respective governments. The government nominees in these banks insist on giving loans only to projects in their countries," he said.
The Indian shipping industry would have to invest $20 billion in the next few years to modernise its fleet and acquire new vessels.
Domestic shipping firms like to raise funds abroad, preferably Europe, due to the lower interest rates and long-term repayment norms.
Indian banks and financial institutions do not have an appetite to lend to shipping companies, Hajara said. With no global finance and no domestic finance, raising debt for Indian shippers have become difficult, he said.
Source: Economic Times India
India: Recession pulls port traffic down marginally
Monday, 22 June 2009
Port traffic declined 1.15 per cent in April-May 2009 compared with 2008 figures for the same period on account of the ongoing recession in western countries and the consequent slump in demand for goods from India. Total traffic went down from 92 million tonnes in April-May 2008 to 91 million tonnes this year. Of the 12 major ports in the country, eight have recorded negative growth in traffic according to official data.
The biggest hit has been taken by Kolkata at negative 18.87 per cent on account of a decline in import and export from the Haldia Dock Complex. Traffic at this complex went down 25 per cent on account of slowdown in petroleum products and iron ore movement. Haldia Dock Complex and Kolkata Dock System together account for the entire traffic for Kolkata Port. The other ports that recorded negative growth in traffic include Cochin at 14.47 per cent down, Kandla at 7.65 per cent, Mumbai at 6.7 per cent, Chennai at 6.85 per cent, Vizag at 3.04 per cent, JNPT at 1.69 per cent and Ennore at 0.62 per cent.
As far as commodity wise traffic slowdown is concerned a major slump has been registered in the movement of containers. In terms of tonnage the decline for containers stood at negative 8.22 per cent, while in terms of twenty foot equivalent units (TEUs) it stood at negative 12.38 per cent.
“Last year the first quarter was good while the last three quarters showed poor traffic growth on account of recessionary forces. This year the overall growth is expected to be better as we expect a rebound in the second quarter,” a senior government official told The Indian Express.
Ports that recorded a positive growth include Paradip at almost 20 per cent growth, Mormugao at 18.45 per cent, New Mangalore at 9.83 per cent and Tuticorin at 2.66 per cent. Paradip saw growth mainly on the back of POL products, while Mormugao grew on account of increased coal traffic.
Source: Indian Express
Malaysia's First Fully-automated Shipyard To Operate In 2013
Monday, 22 June 2009
The country's first fully-automated shipyard will be in operation at the Tanjung Agas Oil and Gas and Maritime Industrial Park here in 2013. It will be part of a RM4.8 billion project that comprises a fabrication and engineering yard, and marine repair and ship-building facilities on a 320-hectare site.
Vantech Dockyard (M) Sdn Bhd's managing director Azlan Sidol said the company would build and operate the facilities under a joint-venture effort with two South Korean giants, namely Daewoo and Handong.
"The construction of the shipyard will begin next year and it takes three years to complete," he told reporters after the ground-breaking ceremony of the industrial park here today.
Azlan said the company had already received advance bookings for the construction of eight ships worth RM7 billion.
The bookings, he said, came from local companies but enquiries have also been received from neighbouring countries, the Middle East and Europe.
Azlan also said that the company planned to cooperate with a leading university from South Korea to set up an academy for shipbuilding in Tanjung Agas.
"The academy is an important component as we required about 8,000 workers with 30 percent of them being engineers," he said.
The company, he added, will specialise in the construction of large ships weighing more than 100,000 metric tonnes, particularly liquefied natural gas (LNG) tankers.
According to Azlan, Vantech Dockyard's facilities will be capable of repairing 100 ships annually.
"We will also build other types of vessels, including battleships if there is a demand from customers," he said.
Vyborg not going bust, claims Arkhangelsky
David Osler - Friday 19 June 2009
Data shows Vyborg has six ships on order at Uljanik.
OSLO Marine Group president Vitaly Arkhangelsky insists that vessel-operating arm Vyborg Shipping is not going to go bust and that its recent moves to file for bankruptcy are largely designed to improve his poker hand with creditors.
“[The company] is not bankrupt or in administration. The company applied to the court to start the process and it will start it in July. It doesn’t mean anything yet,” he told Lloyd’s List by telephone from Moscow.
“The company is still trading and its office is full of staff and we are not withdrawing from any of our contracts. Creditors have to decide whether they want a bankruptcy or an agreement.”
All three Vyborg vessels — the 1995-built, 6,900 dwt OMG Gatchina; the 2000-built, 6,800 dwt OMG Kolpino; and the 2000-built, 6,800 dwt OMG Tosno — have recently been arrested after failure to pay salaries and bunker bills.
Dr Arkhangelsky said that Bank of St Petersburg was seeking to have the ships sold at auction, but added that his intention is to continue to trade them.
“To default, there has to be a court hearing and all this stuff and I don’t think it will work like this. Maybe our application to the court will stimulate the bank to withdraw their application to withdraw the loans. We believe we will be able to solve all the problems as soon as we find a common language with the Bank of St Petersburg,” he said.
Dr Arkhangelsky also argues that the company intends to see through at least 20 newbuilding orders at various European yards, although according to other sources, the status of these orders is unclear.
One industry standard database shows that Vyborg has 10 vessels on order at Damen Shipyard Group in the Netherlands and a further six at Uljanik in Croata. Dr Arkhangelsky claims that a further four are on order at Poland’s Remontowa.
Incorporated as recently as June 2005, OMG was until recently seen as a rising star in Russia’s maritime industries, and is active in real estate, insurance, timber production and distribution and port operations as well as shipping.
In a statement on the situation at Vyborg Shipping, Dr Arkhangelsky blasted the primitive methods used by Russian banks engaged in ship finance, saying that they do not understand the sector and are only ready to offer short-term loans.
“Terms and conditions of Russian banks make Russian applicants go to western banks and build ships in Asia,” it argued. “And in the case of building or buying a ship abroad, the shipowner most likely registers it under the flag of a suitable foreign country.”
China's iron ore mines face massive shakeout
Michelle Wiese Bockmann - Friday 19 June 2009
CHINA’s iron ore mines face a massive shakeout, with a “severe fall” in domestic production set to boost shipments from Brazil and Australia, according to the United Nations Conference on Trade and Development.
The agency’s annual report on the 2008 iron ore industry forecasts what it called a “great Chinese shakeout” resulting in widespread mine closures and even greater reliance on imported iron ore — a key driver of demand for the bulk carrier freight market.
“It is probable that between one third and one half of Chinese iron ore capacity will close over the next three years, with 40%, or 130-150m tonnes, being the most likely reduction figure,” the report said.
This would “catapult” the world’s top three iron ore miners to record levels of control of the global trade in seaborne iron ore.
Chinese substitution of imported iron ore over its own more expensive and poorer quality product, has emerged as the sole driver of rocketing freight rates in the last two months.
Capesize spot rates on the major trading route from Brazil to China have tripled since mid-April to exceed nearly $117,000 per day because of substitution.
Forecasts that this trend is set to accelerate is of major significance for the global capesize fleet, which now relies almost wholly on Chinese demand to set the market rate.
Brazil’s Vale and Australia’s BHP Billiton and Rio Tinto control 69% of iron ore shipments, which rose 7% to a record 845m tonnes in 2008.
The shakeout was forecast in “the next few years”, Unctad said.
China is currently the world’s largest iron ore producer, at 366m tonnes, or just over 20% of the world’s total production of 1.7bn tonnes.
But Unctad says that small and medium-sized Chinese producers will be “forced to substantially reduce their output, particularly since they are no longer protected by high freight costs for imported iron ore”.
Last month, Rio Tinto said half of domestic mines were already closed.
Unctad says lower freight rates and high costs have meant half of China’s 8,000 mines were operating at a loss, and reliant on government assistance.
Contract prices for iron ore were likely to remain at same level as spot prices of $70 per tonne for landed iron ore in China in the medium term.
“A consequence of this price shift is shakeout of Chinese iron ore mining,” the Unctad report said.
“The effect of the price fall will be reinforced, as far as Chinese mines are concerned by rising costs for health and safety measures, environmental management and rising energy prices.”
Chinese iron ore has average grade of about 27.5%, much lower than imported iron ore at about 60%.
The industry is highly fragmented, with only 49 mines classified as “major” and producing 188.3m tonnes, while “medium and small mines” produce 636m tonnes.
WORLD STEEL PRODUCTION up 7% in May
19-06-2009
World steel output in May totalled 95.6 Mt, up by 7% on the previous month, according to data from the World Steel Association. The world total for May marks a decline of 21% year-on-year.
Production in China reached 46.5 Mt, up just 0.6% on May 2008. In contrast, production in the rest of the world dropped by 34% year-on-year to 49.1 Mt during the same month. Of the major steelmaking centres, annual declines were most pronounced in the US (-50.6% to 4.6 Mt), Japan (-38.5% to 6.5Mt) and the EU-27 (-44.8% to 10.5 Mt).
Persian Gulf Tanker Rates Fall Most in Six Weeks
Monday, 22 June 2009
The cost of delivering Middle East crude to Asia, the world’s busiest route for supertankers, posted its biggest weekly drop in six as demand from oil companies for ships to load next month’s cargoes fell. Shipping costs on the Saudi Arabia to Japan route, the industry benchmark, fell 0.6 percent to 49.22 Worldscale points today, according to the London-based Baltic Exchange. That took the week’s decline to 4.8 percent, the largest such drop since the week to May 8. Daily earnings for ships plowing the route fell 3.4 percent to $30,340.
“Activity slowed down considerably” as oil companies delay hiring the ships they need to try and “cool” rates, Oslo-based PF Bassoe AS said in an e-mailed report today.
This week’s decline in demand and bookings comes after rental rates last week advanced by the most since January, amid speculation Middle East oil-producing nations were boosting output.
Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates for every voyage, quoted in U.S. dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.
Each flat rate assessment gives owners and oil companies a starting point for negotiating hire rates without having to calculate the value of each deal from scratch.
Source: Alaric Nightingale, Bloomberg
Saturday, June 20, 2009
US monitoring North Korean ship
Bocimar sells two capesizes
Grand China Logistics places largest shipbuilding order
Ningbo: Zhoushan Jinhaiwan Shipyard has secured a bumper order for 30 bulkers from fast emerging Grand China Logistics, one of the largest single orders placed in China of all time. Broken down, the vessels in the order were made up of 18 176,000-dwt Capesizes and 12 80,000-dwt Panamaxes.
With a total contract price of above $2 billion, the newbuildings are scheduled to be delivered between the third quarter of 2010 and the second quarter of 2012. Further, Grand China will invest in Zhoushan Jinhaiwan by acquiring 50% of the yard's stakes, according to the Kaiji Press. [19/06/09]
China in ore negotiations with Vale and Fortescue
Shanghai: The China Iron and Steel Association (CISA), the country's lead iron ore price negotiator, said on Thursday that it recently "exchanged opinions on iron ore cooperation" with Brazil's Vale and Australia's Fortescue Metals Group, writes Reuters.
The public acknowledgement of the meetings comes as time runs out for CISA to settle annual iron ore prices with Australian supplier Rio Tinto, a deal which would require an embarrassing Chinese climb-down or an admission of defeat by Rio.
Rio, which has said it wants a deal by June 30, first threw down the gauntlet to China by convincing Japanese and South Korean steelmakers to sign up for smaller price cuts than the Chinese were demanding.
CISA wants a price cut of at least 40% from Rio and its compatriot BHP Billiton, more than the 33% accepted by a swathe of other Asian steel mills.
The iron ore pricing system has traditionally seen Vale, Rio and BHP, which between them control about 70% of the global seaborne iron ore market, agree prices in Asia that then become the world benchmark for the year.
But several factors have suddenly thrown open the door to a change in the system, including the emergence of Fortescue as a smaller rival to BHP and Rio, the collapse in global demand and shipping rates, splits between the pricing systems favoured by the big three suppliers, and the possibility that abundant iron ore stocks could prompt China to rely on the spot market.
CISA officials were not immediately available to comment on the discussions with Vale and Fortescue.
CISA's General Secretary Shan Shanghua met Jose Carlos Martins, Vale's executive director for ferrous minerals on Tuesday, and Fortescue Chief Executive Andrew Forrest on Thursday, CISA said in two brief statements on its website.
The Chinese steel industry toughened its position last week by threatening to walk away from the iron ore price negotiations and said it was ready to cut steel output.
Vale, the world's largest producer of iron ore, said last week it was in talks with the Chinese to set prices after concluding deals with other Asian steel mills.
"Vale also hopes to reach an agreement with China, one of the main markets of Vale," it said in a statement. A press official said this meant the company had begun talks with China.
Meanwhile, Fortescue has said its charter is to become China's most important iron ore supplier and is aiming to be one of the first foreign companies to list on the Shanghai Stock Exchange. [19/06/09]
MacGREGOR bags hatch cover contracts for vessels at Asian yards
Tokyo: Cargotec Corporation subsidiary MacGREGOR has secured new orders worth close to €10 million for 32 shipsets of lift-away hatch covers destined for container ships under construction in Japan and South Korea
During the second quarter of 2009, MacGREGOR received orders from a Japanese shipyard and various South Korean yards that will see the company supply lift-away hatch covers (pictured) for a total of 32 container ships that range in size from 2,500teu-12,600teu.
These contracts include the design and key component delivery of lift-away covers for 30 ships on order at South Korean shipyards for three European owners (five of these also include fixed container fittings) as well as the design, key components and manufacture of lift-away hatch covers for two container vessels on order at a Japanese yard for Japanese owners.
MacGREGOR will deliver these orders from 2010 through to 2012. [19/06/09]
CPC to ramp up supertanker ownership
Taipei: Chinese Petroleum Corp (CPC) of Taiwan is planning boosting its VLCC fleet dramatically. The energy giant is in talks with both Chinese Maritime and U-Ming Marine Transport about a joint venture which could initially order seven 300,000-dwt VLCCs and one 80,000-dwt tanker. CPC wants to build up a 35-strong VLCC fleet eventually. [19/06/09]
Hyundai Samho agrees to later deliveries for Danaos
Mopko: Hyundai Samho Heavy Industries has put off the delivery of five 12,600 teu containerships it is building for Greek owner Danaos Shipping by about 12 months. The five vessels had initially been due for delivery between February and October 2011.
Danaos has also requested delivery postponement for five 8,530 teu vessels being built by Jiangnan Changxing Heavy Industry and five 6,500 teu vessels being built by Hanjin Heavy Industries & Construction by an average 200 days and about three months, respectively. [19/06/09]
Fredriksen orders still dominate at Jinhaiwan despite ownership change
Michelle Wiese Bockmann - Friday 19 June 2009
COMPANIES controlled by the powerful shipping tycoon John Fredriksen are uncertain about the impact of major ownership changes at China’s Zhoushan Jinhaiwan shipyard, despite the fact that nearly 60% of the vessels on order at the yard have been contracted by his interests.
New majority stakeholder Grand China Logistics, owned by a major Chinese airline, is not only taking a 51% share, but ordering 30 bulk carriers worth $2bn at the fledgling yard.
Mr Fredriksen’s Golden Ocean Group’s has seven capesize and six kamsarmax bulk carriers on order at Jinhaiwan, with another six recently transferred off the books to a single purpose vehicle to cut down capital expenditure. His tanker arm Frontline recently cancelled two very large crude carriers at the yard, but deposits were transferred to another four still on order there.
Asked if the 30-bulker order could be to fill existing slots due to cancellations, Golden Ocean Group chief executive Herman Billung said: “I don’t really know. Frontline did cancel some vessels, but how the yard structures the entire block fabrication at the yard is difficult for me to say.
“In China there are a lot of letters of intention; whether [the new order] is really firm, or a letter of intent, is not easy for me to say.”
He said any suggestion that the orders would incorporate cancellations was “pure speculation”.
“It must be positive for the yard as they are getting a new shareholder.”
Fredriksen Group vessels comprise 3.5m dwt of the 6.1m dwt on order, according to the Clarksons newbuilding database. Golden Ocean has seven of the 22 capesizes on order, and the other 10 ships are Fredriksen owned.
Mr Billung said there were no delays at the yard, which delivered its first vessels, two product tankers for Frontline, earlier this year.
Grand China Logistics has reportedly ordered 18 capesize and 12 kamsarmax bulkers. The company, which has signalled its intentions to build a strong bulk carrier fleet, took advantage of low prices to purchase a secondhand capesize vessel in late 2008, according to Shanghai-based brokers.
Friday, June 19, 2009
The Daily Fixtures Report - 18/06/2009
-------------------------
BDI 4073 UP 47
BCI 7980 UP 155
BPI 3162 DOWN 14
BSI 1735 UP 21
BHSI 783 DOWN 6
TIMECHARTER
'CHS World' Cosco Hong Kong relet 2005 174000 dwt dely Caofeidian 25-30 June trip via W C Australia redel China $85000 - BHP Billiton 'Channel Alliance' Classic relet 1996 171978 dwt dely PMO spot trip via Brazil redel China approx $100000 daily - cnr 'Glorius' 2004 171320 dwt dely Shanghai end June trip via W C Australia redel China approx $91000 - BHP Billiton 'Aquacharm' JAaron relet 2003 171009 dwt dely Qingdao 27 June/5 July trip via W C Australia redel China $87500 daily - BHP Billiton 'Jean LD' 2005 171000 dwt dely Qingdao 20/30 June trip via Brazil redel China $76750 daily - JAaron 'Maria A Angelicoussis' Swiss Marine relet 2001 169000 dwt dely El Ferrol
8/17
July trip via Brazil redel Cont approx $103000 daily - Bunge
'Yiannis B' 2008 82591 dwt - open>
'Queen Lily' 2004 76629 dwt dely Immingham 20-30 June trip via Hampton Roads with coal redel S Korea $38500 daily - Hanjin 'YM Virtue' 2003 76610 dwt dely Krishnaptnam prompt trip via E C South America with grain redel Singapore-Japan $26500 daily - cnr 'Maddalena d'Amato' 2001 74716 dwt dely Richards Bay 20/30 June trip with coal redel China $33000 daily - cnr 'Rosalia D'Amato' 2001 74500 dwt dely Butterworth 28-30 June trip via Indonesia with coal redel Hong Kong $23000 daily - Bhp Billiton 'Tian Du Feng' 2001 74201 dwt dely CJK 21/24 June trip via E C Australia redel China $25000 daily - Parakou 'Far Eastern Marina' 1997 73000 dwt dely PMO prompt trip via Richards Bay redel China $23100 daily - Morgan Stanley 'Juno Island' 1997 72080 dwt dely Hachinoe 25-30 June trip via Nopac redely Singapore-Japan $23000 - CNR 'New Leader' 1996 72072 dwt dely Port Said 25 June/10 July trip via Black Sea redel China $38000 daily - Richstone 'Nosco Glory' 1995 69000 dwt dely Gizan 1/10 July trip via Black Sea redel China $27000 - Richstone - 'Haina Wealth' 1989 68772 dwt dely Port Saleef prompt trip via Black Sea redel China $25500 daily - Richstone 'Theoforos 1' 1987 67300 dwt dely Port Said spot trip via Black Sea and Red Sea or AG redel Port Said option PMO at $21000 daily Port Said or $32000 daily PMO - Toepfer 'Santos Success' 1984 66894 dwt dely retro sailing Jingtang 10 June trip via Indonesia with coal redel China $15500 daily - Danzas 'Port Macau' 2008 58600 dwt dely Nagoya end June trip via Nopac redel China intention sulphur approx $19000 daily - Sinotrans 'Santa Anna' 2006 56042 dwt dely dop Richards Bay 21/23 June trip via East Coast South America redel South east Asia min 60 days $25000 daily - cnr 'Dubai Energy' 2004 55500 dwt dely WC India 20/24 June trip via East Coast South America redel Singapore-China duration abt 70-80 days $20000 daily 1st 55 days $21500 daily balance - Rio Tinto 'Novo Mesto' 2005 53608 dwt dely South Korea spot trip via Queensland redel India $13250 daily - cnr 'Matumba' 2005 53591 dwt dely US Atlantic spot trip via USGulf redel Singapore-Japan $31000 daily - Norden 'Angor' 2009 53000 dwt dely ex yard Yangzhou spot trip redel India $13000 daily - cnr 'Jaeger' 2004 52483 dwt dely South Korea spot trip redel USGulf approx $6750 daily - cnr - 'Star Delta' 2000 52434 dwt dely Buenaventura end June trip redel India $17000 daily + $725000 bb - Noble 'Syrena' 1997 48139 dwt dely USGulf spot trip redel East Med $25000 daily
-
Windrose
'Jin Hua' 1984 42310 dwt dely Luanda spot trip via West Africa redel Black Sea $12800 daily - Aquavita -
PERIOD
'Golden Feng' 2009 169000 dwt dely Dalien end june 5/7 months trading redel worldwide $59000 daily - Swiss Marine 'Torm Saltholm' 2008 83685 dwt dely Jintang 20/30 June 11/13 months trading redel worldwide approx $22500 daily - Cobelfret 'Tai Progress' STS Panocean relet 2004 77834 dwt dely La Corunna 18/22 June 5/7 months trading redel worldwide $32750 - Kru Trade 'Star of Sawara' 2008 76553 dwt dely La Spezia 22/30 June 11/13 months trading redel world wide $24500 daily - TMT 'Diamond Seas' 2001 74274 dwt dely China 15/30 July 9/10 months trading redel worldwide $23000 daily - Eastern Ocean 'Cos Lucky' 2003 52395 dwt dely South Korea end June in d/c 4/6 months trading approx $15250 daily - Oldendorff
ORE
'Dong Fang Ocean' 1986 200000/10 Tubarao/Qingdao 5/10 Aug $45.00 fio scale/30000sc - Vale 'Mineral Kyushu' Vitol relet 2006 170000/10 Port Hedland/Qingdao 20/30 July $20.80 fio scale/30000sc - BHP Billiton 'Ocean Clarion' NYK Europe relet 2009 170000/10 Port Hedland/Qingdao 20/30 July $20.70 fio scale/30000sc - BHP Billiton
'2 x Cargill tbn's' 160000/10 Port Hedland/Qingdao 1/15 July $20.50 fio scale/30000sc - BHP Billiton 'Alpha Friendship' FMG relet 1996 160000/10 Port Hedland/Qingdao 1/10 July $20.50 fio scale/30000sc - Atlas Singapore 'Keros Warrior' Deijulemar relet 1989 150000/10 Dampier/Qingdao 15/25 July $20.00 fio scale/30000sc - STX Panocean 'Cape Oceania' 1994 150000/10 Port Hedland/Qingdao 10/20 July $20.50 fio scale/30000sc - BHP Billiton
COAL
'Ocean Road' Swissmarine relet 2009 150000/10 Richards Bay/Rotterdam 15/29
July approx $21.00 scale/25000sc - BHP Billiton
Tankers storing oil glut seek shelter off Malta
Friday, 19 June 2009
A shoal of tankers has gathered around popular Mediterranean holiday spot Malta, storing enough oil to supply the EU's smallest island republic for nearly three years, Reuters data shows.
Shallow water, mild weather and its sheltered central Mediterranean location is becoming haven for tankers hired by oil and gas firms to exploit the market structure caused by the biggest fall in global oil demand in about 20 years, amid economic slowdown.
About six crude oil tankers, 20 oil product tankers and four liquefied natural gas (LNG) tankers are floating off Malta, the highest density of anchored tankers outside ports in the world, according to AISLive ship tracking data on Reuters.
That means at least 20 million barrels of oil, or about a quarter of the world's daily demand, are on the seas around Malta, while the data showed few in May.
"The ships have to float somewhere where they can get supplies etc, and they have to shelter somewhere," said one oil trader, whose company has stored some oil in tankers.
"The conditions sound good to me for anchoring. It has nothing to do with Malta."
Malta's total daily oil use is about 19,000 barrels a day or 0.2 percent of U.S. gasoline consumption.
Global oversupply has pulled down prompt oil prices to deep discounts to longer-dated contracts this year, or a market structure called contango, causing oil traders to store oil on land and at sea to make profit by selling later.
The trading play has piled up more than 110 million barrels of oil at sea across the globe, with most of them floating in Europe. Daily world oil consumption is about 83 million barrels.
Contango has been the steepest on the European oil futures market and European oil demand, especially gas oil for heating, has been falling more sharply than many other areas in the world.
Unusually, at least two newly built very large crude carriers, the largest type of such vessels, have been booked to store gluts of gas oil.
More ships, including crude tankers, are likely to arrive to seek shelter off Malta for a relatively long period of time until winter heating demand picks up and draws some oil from the tankers, traders said.
The oil derivatives market has shown deep discounts on gas oil to benchmark into the fourth quarter when gas oil turns to premiums, suggesting traders expect the gluts of these oil products to continue into winter.
"We need very cold winter to clear the overhang," another trader said.
"But it is months away."
LNG DEMAND
There is also a steep contango in the UK, Europe's biggest gas market, with prices for next winter almost double the current spot price because of an expected surge in winter heating demand.
But storing LNG in tankers for long periods is expensive because in most cases the valuable super-cooled gas slowly boils off and is lost and storage plays seem more likely closer to winter.
The world's largest LNG exporter Qatar uses a fleet of new tankers that can re-liquefy the gas onboard, making offshore storage possible.
Qatargas CEO Faisal Mohammed Al-Suwaidi said in May the company had used the waters around Malta to park some of those tankers for short periods but that he did not see offshore LNG storage there as a likely trend.
Oversupply in the global LNG market may be keeping the LNG tankers near Malta, awaiting orders to refill after delivering their cargoes last month.
The Tenaga Satu been off the east coast of Malta since May 27 after delivering to northwest France, while Qatargas' Tembek and two other tankers have been anchored there since early last month.
Source: Reuters
China's steelmakers possibly turn to spot market if price talks break down, analyst
Friday, 19 June 2009
The spot market would be the decisive factor in China's iron ore imports if the ongoing negotiations between the country's steel mills and the overseas miners break down , Thursday's China Daily quoted an industry insider as saying.
The supply chain would continue working smoothly on the spot market, for many domestic steel makers and foreign suppliers had been tapping this as a main business model recently, the newspaper quoted Hu Kai, an analyst with Umetal.com.
The 33 percent price reduction reached between Japanese steel makers and the Austrilian miners in late May, and the proposed alliance between Rio Tinto and BHP Billiton, the world's two largest miners, have imposed great pressure on the Chinese side in the negotiation.
But with only two weeks left for the expiry of last year's ironore supply contract, the China Iron and Steel Association (CISA), leader in the iron ore talks, insists a 40 percent price cut from the Australian miners.
The major reason that China's steel makers reject the 33 percent price cut was that the rate was at least 5 U.S. dollars higher than the current spot market price, according to Hu.
In addition, Chinese steel plants will suffer huge losses if they agree to a 33 percent price reduction this year, said the CISA earlier.
Many insiders believe if the Chinese side fails to reach the deal with suppliers before June 30, they may seek a new quarterly pricing system, within which the steel mills ask for quarterly price adjustment under the benchmark price in accordance with the ups and downs of steel mills' cost and prices.
The Chinese government also expressed strong opposition to the Rio Tinto and BHP Billiton's proposed alliance.
An official with the Ministry of Industry and Information Technology (MIIT) said the proposal had a "strong monoplistic color".
China might have to seek new policies and regulations to enable its companies to have a bigger say in iron ore price talks if the tie-up was found to be monopolistic, the newspaper quoted Chen Yanhai, another official with the MIIT.
Source: Xinhua
Chinese May coal imports hit record 9.43 mln T
Friday, 19 June 2009
China's coal imports hit an all-time record of 9.43 million tonnes in May, Customs data obtained by Reuters on Thursday showed.The figure surpasses the previous record of 9.16 million tonnes set in April, which analysts said was caused by a shutdown of small mines in China as well as thin demand on the international market, coupled with the failure of Chinese power firms to agree on a coal supply deal with domestic miners.
The huge level of shipments, more than twice the 4.16 million tonnes imported in May last year, brings China's coal imports in the first five months of 2009 to 32.2 million tonnes, 73 percent ahead of imports in the same months of 2008.
The surge in imports in April and May, a leap from previous monthly volumes ranging between 3 million and 6 million tonnes, comes despite a rebound in the cost of freight and a pick-up in coal prices.
Chinese coal remains relatively uncompetitive on the world market, with data released earlier this month showing exports of 1.19 million tonnes in May, the lowest monthly volume in more than 11 years.
That puts net imports at 8.24 million tonnes in the month, compared to net exports of 4.6 million tonnes in the whole of last year, turning China from a small seller to a major buyer on the world market.
China meets the vast majority of its coal needs from its own mines, which produce roughly three times as much as is traded on the world seaborne market.
But it also buys coal from Australia, Indonesia, Vietnam and Mongolia, and the circle of suppliers widened at the start of this year as shipping costs and global demand slumped.
The Customs data did not give any breakdown of the imports or exports. In the first four months of the year, the coal type showing the biggest increase in imports was coking coal, used by China's huge steel sector, which has continued producing at 2008 levels while most other steel firms have halved output.
But most of China's imports are coal grades suitable for power generation, with coking coal making up less than a third of the total.
Source: Reuters