India's largest coal handling agency - Mjunction

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Logistics Freight rates improve strongly in end-Oct Sarbani Haldar Dry bulk freight rates were strongly volatile throughout September on the back of varied vessel chartering activities. Though rates improved somewhat during the beginning of the month, they later declined on the back of low chartering activity as a result of less cargo to be shipped. However, towards the end of the month, rates unexpectedly improved, mainly in the Capesize segment, due to the rising demand for iron ore from China. Over the next few weeks, the rates remained at nearly the same level with the Capesize segment witnessing very strong improvements during the initial days of October. With iron ore inventory in the country being low, it is likely that China would be importing a lot of iron ore for the fourth quarter. In the last week of October too, iron ore producer Vale secured more than 12 vessels. Around the end of the same week, the Capesize freight rates on the Australia to China route were around $11.75 to $12 per ton, while freight rates in the Brazil to China route were around $31 to $31.5 per ton. The sentiments in this region are also upbeat at the moment as several vessels continue to be fixed from Port Hedland and Dampier. As per market sources, rates in the South America to China route climbed steadily, with reports of freight rates being fixed at $34 per ton at Itaqui/Qingdao. China’s iron ore imports would continue to pull up rates in the Capesize segment in the coming days as well, as presently the iron ore stocks in the country are low and domestic rates are also high thereby making imports favourable. Besides, keeping in mind the winter season, demand for thermal coal from this region too, would improve further thereby supporting the rates. However, rates in both the Supramax and the Panamax segments have cooled down to some extent during this week. Much of the weakness in the Supramax rates was owing to less trading activity in the India to China route during this week. 4500 4000 3500 3000 2500 2000 1500 1000 2-Aug 11-Aug 20-Aug 29-Aug 7-Sep 16-Sep 25-Sep 4-Oct 13-Oct 22-Oct Baltic Dry Index Baltic Supramax Index Source: Insights Research Baltic Exchange Index Baltic Capsize Index Baltic Panamax Index Tex Report data has revealed that spot freight rates in the Brazil to China route have improved since September. For transporting 1,60,000 tons of iron ore in a Capesize vessel from Tubarao, Brazil to Qingdao, China, the freight rate had been fixed at $30.60 per ton for a laycan scheduled for October 30 to November 5. Earlier, in the same route, in September, for transporting the same quantity of iron ore for the same destination, the freight rate was $29.50 per ton for a laycan scheduled for October 1 to October 10. Rates in the Western Australia to China route have also behaved in the same manner. According to Tex Report data, spot rates for transporting 1,70,000 tons of iron ore from Port Hedland, Western Australia to Qingdao, China, the freight rate was $11.80 per ton for a laycan scheduled for November 1 to November 10. Earlier, in the same route, for transporting the same quantity from Port Hedland, Australia to Qingdao, China, the freight rate has been fixed at $10.15 per ton for a laycan scheduled for October 6 to October 15. Although the present market conditions would be conducive for improvement in the Capesize rates, the large supply of new building vessels coming on stream during this week could be a source of weakness in rates. As per market sources, 20 new vessels have been handed over to the owners as compared to 11 vessels being sent to the scrapyard. Going by the way the dry bulk market is poised, Capesize rates could see some improvement due to the iron ore demand, provided China continues to source ore. Keeping everything in mind, rates might just continue to hover at the present levels in the coming week with a minor upward or downward correction. Earlier, towards the end of September, rates in the Capesize segment rose due to improving demand for chartering vessels ahead of the long Chinese holidays. Spot rates in the Brazil to China route were reported to be around $28 per ton. In the Western Australia to China route, the Capesize fixture rates stood at $10.81 per ton. The increasing iron ore prices also supported rates to a large extent. Besides, the rates were buoyed by growing expectations of firm demand from Chinese steel mills, which have been asked to resume production after a governmentimposed shutdown. As per available information, several mills in China’s steel production hub of Hebei province, which have been either shut down or told to cut output by as much as 70 percent as part of Beijing’s power-saving drive, have been directed to restart production. Another factor affecting rates in India, is the ban on importing of iron ore from Karnataka, which has put pressure on the supply of ore, thereby pulling up rates. Earlier in September, reports of China taking measures to shut down obsolete steel mills and other plants together with its power conservation drive, weighed down on the market sentiments, which in turn pulled COAL INSIGHTS 66 October 2010
Logistics down rates and increased vessel supply. Going by the way the market is poised right now, rates might improve. There are many cargo requirements building from the US, Gulf and ECSA which should be good news. But, demand for iron ore is likely to slow down in some segments which might result in rates to stabilise. In the long term, rates would improve as China and other European countries would be looking to replenish their stocks before the end of the winter holidays. On the whole, there is a strong chance that rates might improve in the coming week. Baltic Dry Index The absence of sustained demand and low interest in chartering vessels have resulted in fluctuations in the freight rates which were reflected in the way the Baltic Dry Index (BDI) moved over the past one month. But, rates have improved and are going steady since the beginning of October. After beginning on 2741 points on September 1, the BDI improved to 2995 points on September 10. However, it displayed strong volatility over the next few days and slid to 2452 points on October 1, improving again to 2727 points on October 22. Much of the volatility in the BDI during September was owing to high fluctuations in the Capesize rates. The Baltic Capesize Index (BCI) which began on 3643 points on September 1 improved to 4024 points on September 8. However, low demand from China pulled down the Index over the next few days and the BCI declined to its lowest at 3104 points on September 23. Improving demand for vessels later pulled up the BCI to 3149 points on October 1 but it rebounded strongly to record 4373 points on October 22. The Baltic Supramax Index (BSI) too, declined over the past one month. After beginning on 2029 points on September 1, the Index improved to 2046 points on September 10. Around the end of the month, the Index slipped to 1843 points on October 1, rebounding later to 1894 points on October 8. However, it declined later to 1791 points on October 22. The Baltic Panamax Index (BPI) which had began on a low of 2955 points on September 1 improved to 3396 points on September 9. However, it declined later to 2412 points on October 1 and slid further to 2403 points on October 8. It declined again to 2219 points on October 22. Railways traffic improves in Sept Sarbani Haldar Traffic movement by the Indian Railways has improved in September 2010 as compared to the same period a year ago. For this month too, coal movement by the Indian Railways strongly improved while traffic volumes for iron ore and other cargoes remained low. During September 2010 the traffic movement by the Indian Railways improved 2.35 percent as it moved 71.47 million tons (mt) of freight traffic compared to 69.83 mt moved by it during the corresponding period of the previous year. However, with regard to the traffic volumes moved in August, the Railways witnessed a decline in its traffic in September. In August 2010, the Indian Railways had moved 74.20 mt of freight traffic. According to the recent data published by the Indian Railways, during September 2010, the total coal movement improved by 7.09 percent to 31.89 mt as compared to 29.78 mt of coal moved by it during the corresponding period of the previous year. Incidentally, the coal traffic movement by the Indian Railways during the month has declined by 6.86 percent as compared to 34.24 mt of coal moved by it during August 2010. The coal movement for the washeries witnessed the strongest improvement of 33.33 percent to 0.12 mt as compared to 0.09 mt of coal moved during the corresponding period of the previous year. Besides, coal movement for steel plants improved 7.69 percent to 3.64 mt as compared to 3.38 mt moved during the corresponding period of the previous year. Other than this, coal traffic movement for public use improved 10.91 percent to 6.81 mt as compared to 6.14 mt moved during the corresponding period of the previous year. Meanwhile, iron ore traffic moved by the Indian Railways continued to decline even for this month. As per the data, during September 2010, iron ore movement by the Indian Railways declined by 20.14 percent to 8.92 mt as compared to 11.17 mt moved by it during the corresponding period of the previous year. During August 2010, iron ore movement by the Indian Railways fell by a massive 23.56 percent to 9.41 mt. In terms of volumes, however, iron ore movement by the Railways has declined. In September 2010, the Indian Railways moved 8.92 mt of iron ore. Volumes of iron ore meant for exports, moved by the Indian Railways, more than halved during September 2010 as compared to the corresponding period of the previous year. As per data in September 2010, iron ore meant for exports declined by 50.99 percent to 1.98 mt as compared to 4.04 mt moved by it during the corresponding period of the previous year. However, pig iron and finished steel movement by the Indian Railways improved by 6.43 percent to 2.65 mt in August 2010, as compared to 2.49 mt moved by it during the corresponding period of the previous year. Besides, movement of raw material for steel plants, except iron ore, have improved 3.13 percent to 0.99 mt as compared to 0.96 mt moved by it during the corresponding period of the previous year. In September 2010, cement movement by the Indian Railways increased 4.03 percent to 7.23 mt as compared to 6.95 mt moved during the corresponding period of the previous year. Container service movement during September 2010 has witnessed a massive improvement of 29.43 percent to 3.43 mt as compared to 2.65 mt moved during the corresponding period of the previous year. Other goods movement by the Indian Railways during September 2010 declined by 8.70 percent to 5.14 mt as compared to 5.63 mt moved during the corresponding period of the previous year. Meanwhil,e the total traffic movement by the Indian Railways during the period April 1, 2010 to September 30, 2010 improved 2.34 percent to 438.20 mt as compared to 428.16 mt moved during the corresponding period of the previous year. COAL INSIGHTS 67 October 2010
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Chief Editor Rakesh Dubey, Tel: +91
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India’s largest coal handling age
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Cover Story INDUSTRIAL GROWTH INDIC
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Cover Story India, China lead globa
Page 16: Cover Story Beml plans to double tu
Page 20: Cover Story complete longwall minin
Page 23 and 24: coal market fundamentals Coking coa
Page 25 and 26: Feature Competitive bidding: Will i
Page 27 and 28: Feature allotment of captive coal b
Page 29 and 30: Feature Coal ministry puts illegal
Page 31 and 32: Feature Coke shortage may hamper st
Page 33 and 34: Feature How coke making evolved Tho
Page 35 and 36: Feature Cement makers to hike price
Page 37 and 38: Feature increased imports, which is
Page 39 and 40: Feature Forestry clearance delays m
Page 41 and 42: Feature embarked on a massive affor
Page 43 and 44: Feature India misses Sept power gen
Page 45: government Coal ministry firm on pr
Page 49 and 50: INTERNATIONAL Forum seeks Canada-In
Page 51 and 52: INTERNATIONAL UAE 269,462 331,688 1
Page 53 and 54: INTERNATIONAL EIA raises 2010 US co
Page 55 and 56: Expert Speak Heat recovery chinese
Page 57 and 58: Expert Speak Refractory lining work
Page 59 and 60: Expert Speak and in a hard copy for
Page 61 and 62: CORPORATE We have already commissio
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Page 69 and 70: Power sector update PROGRAMME AND P
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Page 73 and 74: Power sector update Northern WESTER
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Page 90: port DATA Major Ports Through Which
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