container 29-aug-11 aug avg avg ytd 2010 avg thursday, …

All details given in good faith but without guarantee Deep Sea Tankers +44 (0)20 7535 2626 Dry Cargo Chartering +44 (0)20 7535 2666 Container Chartering +44 (0)20 7535 2867

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Braemar Seascope Thursday, 01 September 2011

Market Indicator Wet 31-Aug-11 Aug Avg Avg YTD 2010 Avg

TCE ( US $ / Da y ) TCE ( US $ / Da y ) TCE ( US $ / Da y ) TCE ( US $ / Da y )

260,000 NHC AG/EAST TD3 -1,500 -1,500 9,500 40,500

130,000 NHC WAFR/USAC TD5 1,500 4,500 11,000 24,000

80,000 NHC UK/CONT TD7 4,000 7,500 13,000 19,000

55,000 CLN AG/JAPAN TC5 11,000 8,500 6,000 9,500

37,000 CLN CONT/USAC TC2 5,000 7,500 12,500 12,000

38,000 CLN CARIB/USAC TC3 9,500 10,000 10,500 8,500

Dry 31-Aug-11 Aug Avg Avg YTD 2010 Avg

BDI 1,619 1,387 1,373 2,758

BCI 2,598 2,054 1,732 3,480

BPI 1,628 1,546 1,723 3,115

BSI 1,382 1,302 1,360 1,365

Container 29-Aug-11 Aug Avg Avg YTD 2010 Avg

B O X i 83.55 95.35 94.30 63.83

Financial 31-Aug-11 Aug Avg Avg YTD 2010 Avg

BRENT CRUDE US$/bbl 114.90 109.82 111.45 79.49

IFO 380 ROTT US$/mt 657.50 632.00 609.55 449.24

YEN/US$ 76.52 76.99 80.95 87.70

WON/US$ 1,064 1,074 1,092 1,155

US$/EURO 1.44 1.43 1.41 1.33

US$/STERLING 1.63 1.64 1.62 1.55

GOLD /US$ 1,829 1,758 1,503 1,224

Braemar Seascope Weekly Chartering Report 2

01/09/2011

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VLCC

The AG VLCC market has been very sluggish once again. Owners have been unable to achieve earnings which cover their operating expenses, however they have stopped short of actually subsiding charterers' costs. It's a rather sad story and actually daily earnings have once again reversed on last week. Perhaps one day owners and shipyards will stop adding ships to an already hugely oversupplied market. The recent drop in secondhand values of VLCCs shows that the poor outlook is not simply a short-term problem, but it reaches forwards into the next five years. Recently we have seen relatively high demand figures, and the number of spot fixtures each month has increased relatively. How-ever the crushing weight of the tonnage list means that rates will not improve significantly. West Africa has been very quiet, and not even the effects of a huge hurricane tearing up the eastern coast of the USA had any positive effect. A quiet week from the Indians, with no cargoes being fixed as the charterers wait for firm stem dates from suppliers which shall be declared next week. We are assessing the W Africa/WC India market at US$2.65m and W Africa/EC India at US$2.80m. The 30 day availability of VLCCs in the AG is exactly the same as last week, with 73 double hulls and two single hulls. So far for the month of September we have seen 64 spot cargoes fixed, leaving about maximum 50 for the balance of the month. Using this analysis it seems we have another month of oversupply, ignoring those vessels which are so far unidentified but may yet populate the list. The freight rate for 280,000mt AG/US Gulf is ws34.0, the same as last week, and with bunkers at US$669.50/tonne, compared to US$666/tonne last week. This gives owners approximate earnings of: Double Hull TCE: US$-8,800/day (US$-8,500/day last week) The freight rate for 270,000mt AG/S.Korea is ws46.0, one ws point less than last week. This gives owners approxi-mate earnings of: Double Hull TCE: US$2,200/day (US$3,900/day last week)

China38%

Korea/Japan13%

USA14%

Spore/Indo19% India

10%

S Africa3%

Med/Red Sea3%

VLCC AG Weekly Spot Fixtures by VolumeIntended Discharge (24 - 31 August 2011)

Route Size Load Discharge Today’s Assessment Last Week’s Average

TD1 280,000 Ras Tanura LOOP ws34.0 ws34.5

TD2 265,000 Ras Tanura Singapore ws46.0 ws47.0

TD3 265,000 Ras Tanura Chiba ws46.0 ws47.0

TD4 260,000 Bonny LOOP ws47.0 ws47.0

TD15 260,000 West Africa China ws43.0 ws43.0

Long East53%

Short East21%

West26%

VLCC AG Monthly Spot Fixtures by VolumeFinal Destination (August 2011)

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01/09/2011

This week brought a flurry of activity, with several vessels being covered in the first three days. Rates remained weak with levels similar, if not slightly less, than those seen last week. A lack of VLCC fixing helped volumes, but did little to aid rates. With a surplus of tonnage in most areas, much more fixing is required to shorten tonnage lists. TD5 barely moved off ws65.0 as one charterer managed to cover three vessels in a very short time at what became a conference rate for the week. Voyages with options managed to attract premiums for the flexibility, but even these were minimal. Next week is expected to be very similar as dates move towards the end of the month. It has been a busier week in both the Med and the Black Sea, despite the ongoing problems in the area. The amount of available tonnage has capped rates as the majority of cargoes attracted upwards of eight offers. Shorter voyages were preferred as owners took refuge, hoping the market would improve in the short term. Stability in the aframax sector did little if anything to bolster suezmax rates. With further Black Sea enquiry expected next week, the outlook is likely to mirror the current situation as tonnage begins to build up. Continuing cargo interest for voyages west yielded a steady flow of fixtures as the week progressed and charterers look to cover their supply shortfall due to the problems in the Med. Indian charterers were again responsible for the bulk of vessels fixed. Almost all were at the same rate, irrespective of dates, showing just how many available vessels remain in the area.

Suezmax

USA50%

NW Europe33%

W Africa17%

Suezmax WAFR Weekly Spot Fixtures by VolumeIntended Discharge (24 - 31 August 2011)


TD5 130,000 Bonny Philadelphia ws65.0 ws65.0

TD6 135,000 Novorossiysk Augusta ws70.0 ws70.0

135,000 Mediterranean UK Cont ws65.0 ws65.0

135,000 North Sea US Gulf ws57.5 ws57.5

135,000 Ras Tanura South East Asia ws75.0 ws77.5

W Africa26%

Med/Red Sea9%

Black Sea5%AG

26%

Carib/EC Mex13%

S America8%

NW Europe13%

Suezmax Weekly Spot Fixtures by VolumeLoad Area (24 - 31 August 2011)


01/09/2011

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Aframax

The aframax market as a whole has been fairly uneventful this week. Rates in the North Sea and Baltic have re-mained as they were this time last week. With a short fixing week in the UK, things were not helped as it was another day where tonnage was allowed to build up, leaving the tonnage list inundated with prompt ships. Charterers have continued to cover usual Primorsk stems but in general the Baltic has been notably quieter. Fuel activity has also been down from the last couple of weeks. In the North Sea, a small amount of fixtures have been concluded. How-ever, overall things have been painstakingly slow for owners. At the time of writing TD7 is rated at 80kt x ws95.42 and TD17 at 100kt x ws74.75. The Mediterranean and Black Sea has been quiet as most expected. A lack of enquiry and a long list has meant char-terers have succeeded in pushing rate levels to the "bottom", meaning minimum earnings for owners. For Black Sea and Ceyhan cargoes, charterers are paying 80kt x ws90.0. For a standard cross-Med voyage, charterers are paying in the region of 80kt x ws85.0. With a long list and limited enquiry, the outlook looks very flat. In the Caribbean, rates have continued to soften, mainly due to the market being over-tonnaged, coupled with low demand. Hurricane Irene didn't have an impact in the US Gulf or Caribbean markets. There are some tropical storms which may cause some slight disturbances, in addition to northerly winds. These cause some draft issues in the ports, which should take out some tonnage. We may see a slight firming in rates but that is a slight possibility, even though we expect to see a few ships disappear. It has been a trying week for aframax owners in the eastern hemisphere, with rates dipping to sub ws110.0 on TD8 and the low to mid-ws90s for TD14. This is only in part due to Eid holidays; the main cause lies in the imbalance of tonnage supply and demand. Furthermore, activity in the suezmax sector created more competition for the aframaxes with at least eight units fully fixed this week. There have been a few anomalies, however. For instance, two units failed the same northwest shelf cargo northbound because they missed their laycans. Charterers subsequently fixed at

ws110.0. Perhaps next week, with Appec in full tilt in Singapore, owners may find a small source of happiness.

NW Europe44%

Med/Red Sea43%

USA8%

India East5%

Aframax (West of Suez) Weekly Spot FixturesIntended Discharge Area (24 - 31 August 2011)

Baltic40%

N Africa/E Med34%

Black Sea19%

UK Cont5%

W Africa2%

Aframax (West of Suez) Weekly Spot FixturesLoad Area (24 - 31 August 2011)


TD7 80,000 Sullom Voe Wilhelmshaven ws97.5 ws97.0

TD8 80,000 Mina Al Ahmadi Singapore ws107.5 ws108.0

TD9 70,000 Puerto La Cruz Corpus Christi ws90.0 ws95.5

TD11 80,000 Banias Lavera ws95.0 ws95.0

TD14 80,000 Seria Sydney ws95.0 ws95.0

TD17 100,000 Primorsk Wilhelmshaven ws75.0 ws75.0


01/09/2011

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Su

mm

ary

-20,000

0

20,000

40,000

60,000

80,000

100,000

120,000

Ja

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Fe

b

Ma

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Ap

r

Ma

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Ju

n

Ju

l

Au

g

Se

p

Oc

t

No

v

De

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US

$/D

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TD3 - 260 - Ras Tanura - Chiba TCE

2009

2010

2011

0

20,000

40,000

60,000

80,000

Ja

n

Fe

b

Ma

r

Ap

r

Ma

y

Ju

n

Ju

l

Au

g

Se

p

Oc

t

No

v

De

c

US

$/D

ay

TD5 - 130 - Bonny - Philadelphia TCE

2009

2010

2011

0

20,000

40,000

60,000

80,000

Ja

n

Fe

b

Ma

r

Ap

r

Ma

y

Ju

n

Ju

l

Au

g

Se

p

Oc

t

No

v

De

c

US

$/D

ay

TD7 - 80 - Sullom Voe - Wilhelmshaven TCE

2009

2010

2011

-3,000

7,000

17,000

27,000

37,000

47,000

Ja

n

Fe

b

Ma

r

Ap

r

Ma

y

Ju

n

Ju

l

Au

g

Se

p

Oc

t

No

v

De

c

US

$/D

ay

TD9 - 70 Puerto La Cruz- Corpus Christi TCE

2009

2010

2011


01/09/2011

There was a lot of anticipation that LR1s would struggle to hold on to their recent gains, and the ws147.5 to Japan report-edly fixed by the Freight Margie appears to bear that out. Tonnage lists look a little more sparse, but lack of activity and an underlying lack of confidence means owners are quick to run for cover at the first sign of a slowdown in activity. LR2s remain steady. With a bank holiday in London this week, and another in Singapore next week, it’s not surprising that activity has slowed down somewhat. Little has been done in the way of MR movements, and WC India/Japan is still rated at the ws160.0 level. Numbers for WC India/Gizan have dropped, with reports of US$850,000 being fixed compared to last week’s US$925,000. Movements to E and S Africa continue to pay their piracy premium.

CP

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Clean Products - East

0

10,000

20,000

30,000

40,000

Ja

n

Fe

b

Ma

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Ap

r

Ma

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Ju

n

Ju

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Au

g

Se

p

Oc

t

No

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De

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US

$/D

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TC1 - 75 - Ras Tanura - Yokohama TCE

2009

2010

2011

0

10,000

20,000

30,000

Ja

n

Fe

b

Ma

r

Ap

r

Ma

y

Ju

n

Ju

l

Au

g

Se

p

Oc

t

No

v

De

c

US

$/D

ay

TC5 - 55 - Ras Tanura - Yokohama TCE

2009

2010

2011


TC1 75,000 Ras Tanura Yokohama ws125.0 ws125.0

TC5 55,000 Ras Tanura Yokohama ws150.0 ws152.0

TC4 30,000 Singapore Chiba ws157.5 ws156.5

TC12 35,000 WC India Japan ws162.0 ws163.0


01/09/2011

CP

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Clean Products - West

0

10,000

20,000

30,000

Ja

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Fe

b

Ma

r

Ap

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Ma

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Ju

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Ju

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Au

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Se

p

Oc

t

No

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De

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US

$/D

ay

TC2 - 37 - Rotterdam - New York TCE

2009

2010

2011

0

5,000

10,000

15,000

20,000

Ja

n

Fe

b

Ma

r

Ap

r

Ma

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Ju

n

Ju

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Au

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Se

p

Oc

t

No

v

De

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US

$/D

ay

TC3 - 38 - Aruba - New York TCE

2009

2010

2011


TC2 37,000 Rotterdam New York ws130.0 ws135.5

TC3 38,000 Aruba New York ws145.0 ws155.0

TC6 30,000 Skikda Lavera ws137.5 ws137.5

The market in the Continent has slipped into the abyss. Rates ex-Cont for TC2 are now reaching levels whereby it is becoming virtually pointless to run the numbers on a round voyage basis as, with bunkers now at US$650/tonne in Rotterdam, daily returns are US$1,400/day on a round voyage. This shows a voyage surplus of US$34,800. Conse-quently, there is a considerable risk in putting a ship to sea with cargo on board versus an absolutely negligible com-mercial reward. Despite this, ships continue to get fixed, with the only explanation being that owners are counting on the back haul to drag the returns up into an area where opex at least is covered. Rate-wise, 37kt x ws135.0 was con-firmed yesterday, and today rumours are abound of 37kt x ws130.0 on subs. It has to be said: can it go any lower? Logically, the answer should be "no, absolutely not", but history has shown that every time the bottom appears to have been reached, someone decides that they can shave off more of what's not there in the first place. The only hope at the moment is that once the prompt tonnage has been cleared out, there will be a collective will to try and force rates up. However, based on what has happened in the past, this does seem to be somewhat misplaced opti-mism. Yet again, we write a report saying nothing's really changed in the Mediterranean. Cross-Med is still mired at 30kt x ws137.5. ENI had ten offers for a Genoa/trans-Atlantic movement midweek, which has fixed today at 30k x ws155.0. West Med/trans-Atlantic is currently on subs at 35kt x ws140.0, piling misery on depression. There do now seem to be premiums for owners willing to fix into Libya, with rates here as high as 30kt x ws200.0, but not everyone is willing to do this. It is also doubtful whether there will be enough of this business to impact the wider market to any signifi-cant degree. Hurricane Irene has had an exclusively negative impact on the shipping markets in the Caribbean, as power outages on the US eastern seaboard have offset any reduction in refining capacity. This has led to some nervous owners un-dercutting what was considered to be a reasonably strong market, according to the majority of market watchers state-side. Back haul is now on subs at 38kt x ws110.0, down from ws115.0. Caribbean/USAC is at 38kt x ws145.0, down from ws155.0. The reasons for this are slightly hard to fathom, but lack of experience and market presence has been suggested contributory factors.

Tanker Freight Futures

Tanker

Fre

ight

Futu

res


TD3 VLCC 260kmt Ras Tanura - Chiba

TD5 Suezmax 130kmt Bonny - Philadelphia

TD7 Aframax 80kmt Sullom Voe - Wilhelmshaven

TC2 MR 37kmt Continent - USAC

These indicative numbers do not reflect the annual flat rate change.

01/09/2011

30

40

50

60

70

80

90

100

110

Wo

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TD3 +1 Month Contract

+ 1 Month

10 day MA

Bollinger (20,2)

50

60

70

80

90

100

110

120

130

140

Wo

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+ 1 Month

40 Day MA

Bollinger (20,2)

60

70

80

90

100

110

120

130

140

150

160

Wo

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+1 Month

20 MA

Bollinger (20,2)

80

100

120

140

160

180

200

220

Wo

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scal

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TC2 +1 Month Contract

Series5

40 MA

Bollinger (20,2)

TD3 WS Change

Spot 47.50 0.50

Sep 49.50 0.50

Oct 52.00 0.75

Q411 54.50 0.67

Q112 48.00 0.50

Q212 48.50 1.00

CAL12 48.50 0.50

CAL13 47.50 -1.50

TD 5 WS Change

Spot 65.00 0.00

Sep 69.50 -0.25

Oct 72.50 -0.50

Q411 74.00 0.00

Q112 66.50 1.50

Q212 67.00 2.00

CAL12 67.50 1.50

CAL13 69.00 -2.00

TD 7 WS Change

Spot 95.00 0.00

Sep 102.00 2.00

Oct 106.00 2.00

Q411 111.00 3.00

Q112 97.00 -1.00

Q212 95.00 0.00

CAL12 95.75 -0.25

CAL13 100.00 -2.00

TC 2 WS Change

Spot 130.00 -13.00

Sep 141.00 -15.00

Oct 151.00 -11.50

Q411 160.00 -7.00

Q112 150.00 0.00

Q212 149.50 1.50

CAL12 150.00 1.00

CAL13 147.00 -1.00

45

50

55

60

65

Spot Sep Oct Q411 Q112 Q212 CAL12 CAL13

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TD3 Forward Curve

25/08/2011

31/08/2011

60

65

70

75

80

85

Wo

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sca

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TD5 Forward Curve

25/08/2011

31/08/2011

90

95

100

105

110

115


Wo

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sca

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TD7 Forward Curve

25/08/2011

31/08/2011

125

130

135

140

145

150

155

160

165

170

175

180


Wo

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TC2 Forward Curve

25/08/2011

31/08/2011

01/09/2011

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After witnessing the market top out last Wednesday, rates steadily fell. Rather unexpectedly we saw a reversal after the long weekend, with trans-Atlantic rates pushing up significantly. Since Tuesday, rates have climbed considerably, now standing at a 4 TC average of US$21,901/day, compared to US$16,716/day last Friday. With owners seeing the market recover quickly and push on to new recent highs, there is added confidence at present, backed up by plenty of fresh cargo. W Australia/China is now rumoured to have fixed at US$11/tonne, with several charterers paying US$10.90/tonne today. Front haul is now rumoured to have been fixed as high as US$43,000/day, with the Tubarao/Qingdao rate around US$27/tonne. With tonnage in the Atlantic very tight, owners are now rating trans-Atlantic at least at US$25,000/day. Those with time to spare are keeping a low profile. Short period has been fixed at an improved US$17,250/day, with one year period fixing at US$14,000-15,000/day level.

Capesize

0

2,000

4,000

6,000

8,000

10,000

0

25,000

50,000

75,000

100,000

125,000

01

-Ja

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9

01

-Ap

r-0

9

01

-Ju

l-0

9

01

-Oc

t-0

9

01

-Ja

n-1

0

01

-Ap

r-1

0

01

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l-1

0

01

-Oc

t-1

0

01

-Ja

n-1

1

01

-Ap

r-1

1

01

-Ju

l-1

1

BC

I

US

$/d

ay

The Baltic Capesize Index vs Atlantic & Pacific Earnings

Atlantic Pacific BCI

Dry

Carg

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01/09/2011

The Atlantic market has continued to fall all week as we see more tonnage deciding to ballast and play spot against a lack of fresh orders, particularly in the north Atlantic. We have also encountered delays this week due to hurricane Irene crawling her way up the East Coast of the USA systematically stopping all the shipping activity in this area. The US Gulf grain season has started to come to life as we saw the first few spot grain stems being fixed from a mix of both Atlantic ships, and those that have ballasted into this area from the East. We expect the Atlantic market to remain weak in the short term, despite the recent spike in panamax paper. A combination of increased coal stems, slight tightening of early tonnage and respectable Q4 FFA (approx. US$13,000/day) numbers conducive to short period activity has helped the rate levels in the Pacific to firm up. Moving into next week, we anticipate conditions to remain relatively stable as both charterers and owners seek to tie up their business prior to the major public holidays in S Korea and China.


Panamax

0

1,000

2,000

3,000

4,000

5,000

6,000

0

20,000

40,000

60,000

01

-Ja

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9

01

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r-0

9

01

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9

01

-Oc

t-0

9

01

-Ja

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0

01

-Ap

r-1

0

01

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0

01

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t-1

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01

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n-1

1

01

-Ap

r-1

1

01

-Ju

l-1

1

BP

I

US

$/d

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The Baltic Panamax Index vs Atlantic & Pacific Earnings

Atlantic Pacific BPI

Dry

Carg

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ha

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01/09/2011


Rates for supramaxes in the Far East continued to improve from the end of last week with more spot requirements to maintain the upward momentum. There has been an increase in activity in the North Pacific and continued interest for short periods. Although SE Asia and W Australia have seen less activity, rates have remained steady and the tonnage supply has been fairly balanced. It has been another steady week on the Continent. A handymax scrap stem Cont/East Med was reportedly fixed at US$ 17,000/day holding firm from the previous week. Handysize supply is still outweighing demand with the larger sizes able to fix firm rates ex continent or ballast to US Gulf/EC South America direction. Supramaxes are rating around mid US$20,000s/day levels for trips from continent to Far East via Goa. The East Med market has continued to maintain good hire levels as seen last week. Vessels of 28-32,000 dwt are re-ceiving rates in the region of US$8,000-US$9,000/day daily for trips down to EC South America and US$12,000-US13,000/day for W Med/Cont discharge. Owners are receiving rates in the low US$20,000/day for cargoes to India-Far East. Cargoes are still being put out onto the market at a steady rate. Slowly we are starting to see more vessels creeping into the Med which could steady rates in the next two weeks. With the Indian festivities and the end of Ramadan little activity has emerged in the market this week. The few cargoes that have emerged in the handy/supra sizes have by and large included loading ex-Haldia, which is never an owner’s preferred choice. Rates have continued at a low level of around US$14-15/tonne for a 40,000 tonne +/- 10% stem. Handymax sugar stems from the EC S America to the Black Sea have come into the market and been withdrawn or fixed with increasing speed over the last week. Charterers take advantage of owners’ desire to fix a normally reliable cargo. For a 40,000 tonne stem charterers’ numbers have dropped as a result from previous dates and can now be found at the US$ 40/tonne mark, perhaps a tick above. There was a decrease in the usual number of orders coming out of the US Gulf continues with cargoes still being pre-dominately petcoke. There has been a slight increase in the number of coal cargoes in the market. A supramax has been reported fixed to the Continent at around US$25,500/day. Due to oversupply of vessels, charterers are not willing to pay these levels towards end of the week. Charterers are rating trips to Med at around US$25,000/day APS, but we have seen as high as US$27,000/day. Overall, there seems to be more movement in Atlantic market as we come into September.

Handy/Handymax/Supramax

0

1,000

2,000

3,000

4,000

5,000

0

10,000

20,000

30,000

40,000

50,000

01

-Ja

n-0

9

01

-Ap

r-0

9

01

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l-0

9

01

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t-0

9

01

-Ja

n-1

0

01

-Ap

r-1

0

01

-Ju

l-1

0

01

-Oc

t-1

0

01

-Ja

n-1

1

01

-Ap

r-1

1

01

-Ju

l-1

1

BS

I

US

$/d

ay

The Baltic Supramax Index vs Atlantic & Pacific Earnings

Atlantic Pacific BSI


01/09/2011

India planning to hike iron ore export duty The Indian government is likely to increase the export duty on iron ore further from the current 20% in a bid to dis-courage exports and help domestic steel production.The country continued to export around 50% of its iron ore pro-duction during the past three years even as imports of finished steel into the country continued to outstrip its ex-ports, minister for steel Beni Prasad Verma told the Lok Sabha today."We have increased the export duty from 5% to 20%. We may increase it further," Verma said. He said under the present export policy of the government, export of all iron ore of Fe content up to 64% is freely allowed. India exported 105.86m tonnes (49.7%) of the 212.96m tonnes of iron ore produced in 2008-09, while it exported 117.37m tonnes (53.7%) of the 218.64m tonnes ore produced in 2009-10. Iron ore exports from the country in 2010-11 are estimated at 97.66m tonnes (46.9%) while production stood at 208.11m tonnes, he said. [Domain-b.com] China Faces Dwindling Labour Supply China's three-decade-old, one-child policy will accelerate declines in the workforce, forcing companies to upgrade to higher-value products in the way Japan did in the 1960s and 70s. China may have as little as five years to make the transition to avoid a slump in economic growth, according to Sun Mingchun, an analyst at Daiwa Capital Markets in Hong. He said growth may decline in 2016-20 as low-cost producers fail and investment falls away. The pool of 15 to 24 year-olds, a mainstay for factories making cheap clothes, toys and electronic products, will fall by almost 62m people to a total of 164m in the 15 years through 2025, United Nations projections show. [Bloomberg] BHP Billiton moves customers to shorter contracts BHP Billiton has shifted at least half of its coking coal customers from quarterly to monthly contracts in just six months as it seeks to shorten pricing terms, mirroring its move in the iron ore market. The news is fresh evidence of BHP chief executive Marius Kloppers' determination to move to ever shorter contracts. The former McKinsey con-sultant is pushing harder than his rivals at Anglo American and Rio Tinto, which use quarterly contracts. As the world's largest coking coal exporter, BHP is in a stronger position. The contracts are based on an index price, which means fewer tortured negotiations with customers. "In coking coal, we are probably at around 50% or more monthly pricing," Mr Kloppers said as he reported record profits in London last week. But he said the market was not developed enough to seek any shorter contracts. [The Australian Financial Review] GVK to buy Hancock's Galilee coalmines in Queensland THE board of Indian company GVK will meet within a week to endorse the A$2.2bn purchase of Hancock Coal's two coalmines and associated infrastructure in the nascent Galilee Basin minefield. The two companies have been in exclusive talks since February and the deadline has been extended twice. India's Economic Times reports that the sale is imminent. If the sale goes ahead, GVK will join another Indian company, Adani, as the biggest coalminer in the Galilee Basin, with local billionaire Clive Palmer holding the only other tenement of similar size in the area about 400km inland from the coast. According to banks involved in the deal, GVK will pay A$1.3bn for the two Han-cock mines in the Galilee Basin, Alpha Coal and Kevin's Corner, as well as A$900m for rail and port infrastructure. [The Australian] BHP to spend US$367m on Newcastle port BHP Billiton has approved a further US$367m (A$344.3m) investment for its share in the third and final stage of the Newcastle Coal Infrastructure Group's coal handling facility in Newcastle. The six owners of the NCIG coal terminal, including BHP Billiton, completed finance arrangements for the A$1billion final stage of the terminal yesterday. BHP Billiton energy coal president Jimmy Wilson said the company was assessing growth options in the Hunter Valley to supply coal to the port. "We are steadily growing the Mt Arthur mine and evaluating the development of Caroona. This port expansion underpins the future of these two sites," he said. The final expansion of NCIG would increase BHP Billiton's allocation at the coal terminal by 4.6m tonnes to 19.2m tonnes a year, the company said in a statement on Wednesday. Most of the increased port allocation would be sup-plied by BHP Billiton's expanded Mt Arthur Coal mine, already the largest coalmine in the Hunter Valley. [Sydney Morning Herald] Rio flags 'staggering' rise in iron ore demand Global iron ore production growth will need to be at a rate of at least 100m tonnes per annum over the next eight years to meet rising demand, mining giant Rio Tinto says. This represents a staggering increase in demand, David Joyce, managing director of Rio Tinto Iron Ore expansion projects, said in a speech to be delivered to the Africa Down Under mining conference in Perth today. Mr Joyce said many African nations were well placed to meet de-mand growth. ''As markets like China, India, Indonesia, Vietnam and countries in Africa and South America continue to industrialise and urbanise, we will see an increase in demand for better housing, cars, infrastructure and mobile phones,'' Mr Joyce said. [Sydney Morning Herald]

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The Box Index B O X i

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01/09/2011


Where the 2800teu sector dominated the limited fixing activity last week, most activity this week has been in the mid-size feeders, albeit at reduced rates on last done. Generally across the board, the popular B170 and other similar designs have now slipped to mid US$9s levels this week, with a couple of exceptions either side, dependent on specification or particular trade. While rates have slid, one positive is that fixing activity does remain steady in this sector, with one or two main players again taking advan-tage of falling rates and flexible periods on offer again from owners. Even on these attractive terms, however, some lines are still barely breaking even. As such, it appears that the quest for further market share continues even in the feeder markets. Elsewhere, in the stagnant panamax sector it has been reported that one 5000teu unit is close to fixing as low as US$12 flat for 12 months, as owners move to fight their way past the long list of panamax relet tonnage and secure employment for the next 6-12 months. With the last similar unit being concluded at US$17,000/day for a shorter six month period only two weeks ago, it remains to be seen whether owners have actually made an astute decision in locking in a longer period now, albeit at a heavily discounted rate. Even with utilisation figures generally remaining strong, capacity also remains high and it would seem the peak sea-son we have been eagerly anticipating for several months may not finally materialise, with the majority of lines delay-ing traditional peak season surcharges several times and time fast running out in which they could still have a chance to apply them. With further losses emerging for the first six months of the year, generally the lines have gone into re-planning mode as they look to control their costs for the remainder of the year as a starting point, in an envi-ronment of uncertain revenue streams. While this may have a negative impact on fixing activity at the moment, one would hope that this will have a more positive effect in the longer term.

Containers

83.54

Vessel (Teu/Hmg) Gear Speed Knots Index + / -510/285 Gearless 15.5 4.61 ▼ 0.06

700/440 Gearless 17.5 5.25 ▼ 0.10

750/415 Geared 16.0 5.68 ► 0.00

1000/650 Geared 17.5 7.00 ▼ 0.30

1100/715 Geared 20.0 8.67 ▼ 0.27

1350/925 Geared 20.0 6.16 ▼ 0.27

1600/1150 Gearless 18.0 8.22 ▼ 0.17

1700/1125 Geared 19.5 7.37 ▼ 0.19

1740/1300 Geared 20.5 7.71 ▼ 0.16

2000/1600 Geared 21.0 3.21 ► 0.00

2500/1900 Geared 22.0 6.18 ► 0.00

2800/2000 Gearless 22.0 5.85 ▼ 0.11

3500/2500 Gearless 23.0 4.30 ▼ 0.15

4250/2800 Gearless 24.0 3.33 ▼ 0.21

Index Total 83.54 ▼ 1.99

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