AERB To Consider Action Against Delhi University

Fresh Fears Over Cobalt-60 Pencils

India’s Atomic Energy Regulatory Board (AERB) will meet soon to decide on the action to be taken against Delhi University in the wake of the recent cobalt-60 scare in the city.

The board has received a response to its request for information from the university after an irradiation machine containing the cobalt-60 was sold to a scrap dealer in the city. A number of cobalt-60 pencils are still missing.

The resultant leak of cobalt-60 caused the death of one person and the hospitalisation f seven others.

Dr Ompal Singh, secretary of the AERB, said it was ‘‘too early’’ to comment on the the university’s response. However, senior officers at AERB and BARC said they had found “discrepancies”.

‘‘We are waiting for the police to investigate the auction and those involved in it. We will collaborate the two reports before taking a final decision,’’ a board member told The Times of India.

An AERB team visited Delhi University on Monday to check levels of uranium near the university’s science laboratories.

‘‘We have received a communication from the Mumbai headquarters of AERB stating that searches are still going on. A final report will be sent to us only when the entire process is over,’’ said DCP (North) Sagarpreet Hooda.

It is believed that the lead cover of the gamma irradiator -- in which the radioactive metal was kept -- was melted at a furnace at Rewari in Haryana by a scrap dealer and there are fears that some of the cobalt-60 pencils had fallen into the “wrong hands”.

The Delhi government has directed all medical establishments in the city to dispose of radioactive material strictly as per rules and regulations framed by the AERB.

SAIL Signs Shipping Joint Venture Agreement

SAIL, Shipping Corp of India JV To Ship Imported Raw Materials

Steel Authority of India Ltd (SAIL) is to form a joint venture company with the Shipping Corporation of India (SCI) that will cater to the growing raw material import needs of the steel maker.

"SAIL is keenly focused on ensuring its long-term raw material security and will continue to give thrust on logistics facilities and creation of infrastructure for smooth flow of raw materials and movement of finished products," the company's Chairman S.K. Roongta said.

The two state-run companies entered into an agreement on Monday to set up the JV in which both will have equal stake. The agreement was signed by SAIL Director (Finance) Mr. Soiles Bhattacharya and SCI Director (Technical & Off-shore Services) Mr. U.C. Grover in the presence of SAIL Chairman Mr. S.K. Roongta and SCI Chairman Mr. S. Hajara. Mr. Roongta said that SAIL is keenly focused on ensuring its long-term raw material security and will continue to give thrust on logistics facilities and creation of infrastructure for smooth flow of raw materials and movement of finished products.

The JV will ship around one million tonnes a year of raw materials used by the steel company with the prospect of an expansion in capacity later.

The deal enables SAIL, India's largest public-sector steel producer, to have control over part of its coking coal supply chain and mitigate the risks existing in avolatile shipping market.

SAIL currently imports around 10 million tonnes coking coal each year, a major input for steel making. The company expects its requirement of imported coking coal to increase as it plans to double its hot metal production capacity in the coming years from the current level of around 14 million tonnes.

SCI, India's largest shipping company, will bring its expertise in the shipping arena to the JV. It is already in the process of acquiring new vessels, according to a statement issued by SAIL.

Baltic Dry Index Hits Quarterly Low

With demand for iron ore in China sliding and more vessel capacity coming online through the end of the year, dry bulk freight rates have sunk to four-month lows on the Baltic Dry Index this week and look to continue down, according to several experts.

The Baltic Dry Index, which measures dry bulk ocean freight rates in a collection of lanes, has dropped steadily from a recent peak in June above 4,000 to its close yesterday of 2,175. Reuters reports that average Capesize earnings, for example, have fallen to $23,762 this week, down 74% since their June peak this year.

"Panamaxes are beginning to feel the pressure as well on increased competition from Capes as well as lighter volumes than last week," Dahlman Rose & Company said in a note.

One of the biggest drivers of drybulk freight demand is iron ore shipping to China for steelmaking. With stimulus-fed production slipping, China's iron-ore imports declined 14% in August from July and coal imports slid 15%, a second consecutive monthly decline, according to a Bloomberg analysis of customs data. And the outlook for iron ore demand from most analysts points to a short-term slump.

"Lower Chinese imports will slow iron-ore trade in late 2009," said Piet-Hein Ingen Housz, managing director of metals commodities at Fortis, in a Bloomberg report. "Iron-ore trade growth will be slow in the first half of 2010, with activity increasing" later that year, he said.

But at the same time, there is a continuing overcapacity issue in drybulk freight markets. The rally in drybulk rates earlier this year may have been enough to convince some shipbuilders to avoid retiring older ships or scrapping plans for new ones, creating overcapacity on the water, especially in the all-important lanes between Asia and North and South America. And port congestion that once plagued the market is much less of an issue with the lower volumes.

Morgan Stanley analyst Ole Slorer says, "While the impressive recovery in dry bulk markedly lifted rates and values in 2009, it also resulted in a near-halt in scrapping and less incentive to cancel newbuildings from a total orderbook that currently stands at 65% of the fleet."

Another Fortis analyst tells Bloomberg there are still more than 100 Capesizes are due for delivery by year-end and one such ship will be delivered every day next year, as shipowners placed orders in the last few years as rates rose.

Source: Purchasing.com

Baltic Dry Index Has Worst Week Since October

The Baltic Dry Index, a measure of shipping costs for commodities, had its worst week since October as Chinese demand for shipments of coal and iron ore slowed.

The index tracking transportation costs on international trade routes today slid 135 points, or 4.6 percent, to 2,772 points, according to the Baltic Exchange. That took its weekly drop to 17 percent, the most since the end of October.

“The Chinese have backed off and it’s starting to show in the number of shipments this month,” Gavin Durrell, a Cape Town-based official at Island View Shipping SA, Africa’s biggest commodities shipping line, said by phone today. “Iron ore and coal seem to be slowing down.”

China’s record coal and iron ore imports in the first half helped the index to advance as much as fivefold this year, reversing some of the record 92 percent collapse in 2008. Demand rose after the country’s government announced a 4 trillion yuan ($586 billion) stimulus package.

Daily rental rates for every class of ship tracked by the bourse declined today, led by a 5.6 percent slump to $20,880 for panamaxes, ships designed to navigate the Panama Canal.

Capesizes, ships most commonly used to haul about 170,000 metric tons of iron ore around South Africa’s Cape of Good Hope or Chile’s Cape Horn, lost 5.2 percent to $45,428 a day. Smaller supramaxes fell 5 percent to $19,242 a day and handysize ships lost 2 percent to $12,051 a day.

Rates are declining as Chinese steelmakers delay imports while they negotiate annual iron ore prices with producers such as Rio Tinto Group, BHP Billiton Ltd. and Vale SA, Durrell said. “I don’t think they will come back until they agree,” he said.

The drop reflects a wider slide in demand for raw materials that will likely push prices for metals, commodities and energy lower, Eugen Weinberg, a senior commodity analyst at Commerzbank AG in Frankfurt, said by phone yesterday.

The Baltic Dry Index has slumped 35 percent from this year’s high on June 3. The Standard & Poor’s GSCI Index of 24 commodities has climbed 7 percent over the same period.

Derivatives betting on the Baltic Exchange’s future assessments fell for a third day, indicating the declining spot market is causing traders’ future expectations to deteriorate.

October-to-December forward freight agreements, or FFAs, for capesizes lost 4.7 percent to $36,750 a day, according to prices from Imarex ASA, a broker of the accords. That implies traders expect the market to drop 19 percent by year-end.

Panamax contracts fell 1 percent to $17,625 a day, implying a 16 percent decline.

Source: Bloomberg

Baltic Dry Index At Highest Since October

The Baltic Dry Index, a measure of shipping costs for commodities, surpassed 3,000 points for the first time since October, buoyed by Chinese demand for iron ore.

The index tracking transport costs on international trade routes rose 222 points, or 7.6 percent, to 3,164 points, according to the Baltic Exchange today. The measure posted an 18th straight gain, its longest advance in two years.

Such is demand that shippers “are almost pleading” to hire vessels, Stuart Rae, co-managing director of M2M Management Ltd., a hedge fund group that trades freight derivatives and operates carriers, said by phone today. The rally “is being driven by iron ore, by congestion in China, and by a lack” of ships available for hire in the Atlantic.

China’s 4 trillion-yuan ($586 billion) package to stimulate its economy “gives hope for a V-shaped” economic recovery there, Sam Walsh, chief executive officer of Rio Tinto Group, the world’s third-largest mining group, said yesterday. Chinese buying is setting a floor for bulk commodities prices, Goldman Sachs JBWere Pty analysts said.

Rental rates for capesize vessels advanced 12 percent to $56,698 a day, according to the Baltic Exchange. Daily rentals for smaller panamax ships added 10 percent to $20,934. A capesize normally hauls about 175,000 metric tons, while a panamax is half the size.

“It feels very strong out there,” Michael Gaylard, strategic director at broker Freight Investor Services Ltd., said by phone today from London. The supply of capesizes is “really tight in places, so it’s driving some routes higher.”

The Baltic Dry Index advanced fourfold since the start of the year, recovering some of last year’s record 92 percent collapse. China’s iron ore imports ran at a record pace in February, March and April, according to customs data.

The line of capesize vessels at Chinese ports has climbed to 70 from 33 two months ago, according to data from Simpson, Spence & Young Ltd., the world’s second-largest shipbroker. The carriers are waiting nine days to unload, compared with five on March 25.

Contracts indicating future freight costs surged. July-to- September forward freight agreements, bets on the exchange’s future price assessments, rose 21 percent to $47,000 a day for rentals on capesizes. Panamaxes gained 16 percent to $21,250.

Sourc: Bloomberg

Baltic Dry Index At Its Highest In Almost A Month

The Baltic Dry Index, a measure of world trade, rose to its highest in almost a month on demand to transport iron ore to China and on South American grains.

The index of commodity-shipping costs advanced 55 points, or 3.3 percent, to 1,737 points, according to the Baltic Exchange today, the highest since March 25. Rents for panamax ships that haul grains jumped 3.7 percent to $12,955 a day, building on last week’s 36 percent gain. Bigger capesizes that transport iron ore climbed 4.4 percent to $20,772.

“Grain is a big driver of the market,” Steve Rodley, a London-based director of shipping hedge fund manager M2M Management Ltd., said by phone today. "Some ships are sailing from Southeast Asia to collect the grain cargoes and iron ore is still shipping to China, even as stocks there grow", he added.

Grain shipments may only slow from the end of April onwards before the August to October season starts, according to Sirima Dissara, an analyst with KGI Securities Co. in Bangkok. Argentina will sell 50,000 metric tons of yellow corn and 20,000 tons of meat to Venezuela, the Argentine foreign ministry said today. Iron ore inventories in China, the biggest buyer of the material used to make steel, have grown 16 percent since the end of February.

China’s government has committed 4 trillion yuan ($585 billion) in spending to support the economy that expanded at the slowest pace in almost a decade in the first three months of this year. That may boost demand for steel production for infrastructure projects. China is the biggest steelmaker and globally the industry accounts for almost half of all seaborne bulk cargoes, according to Amrita Sen, an analyst with Barclays Capital in London.

Capesize forward freight agreements for the third quarter, used to bet on future shipping rates, were 0.2 percent higher at $22,125 a day as of 4:31 p.m. in Oslo. Panamax FFAs for the same period fell 0.2 percent to $13,375 a day. The data are from broker Imarex NOS ASA.

Source: Bloomberg

Baltic Dry Index Falls To Two-Month Low

The Baltic Dry Index, a measure of world trade, fell to the lowest in more than two months on speculation Chinese demand is waning for iron ore to make steel.

The index of commodity-shipping costs on international routes slid 20 points, or 1.3 percent, to 1,486 points, according to the Baltic Exchange today. That’s the lowest since Feb. 4. Rents for capesize vessels that typically ship iron ore had a 10th straight retreat to $17,081 a day, while rates for smaller panamax ships that compete for the cargoes and also carry grains fell 3.6 percent to $9,162 a day.

“China started buying more iron ore in late 2008 and early this year as Chinese steel prices recovered,” Alain William, an analyst with Societe Generale SA in Paris, wrote in a report dated April 3. “There are now fears that too much material is being stocked up in Chinese ports.”

Demand for steel from carmakers and builders has slumped with the world economy, expected to shrink 1.7 percent this year by the World Bank. Iron ore stockpiles in China, the world’s biggest steelmaker, grew 14 percent last month while domestic prices for hot rolled sheet, a benchmark product, fell 3.4 percent.

Steel demand globally will shrink 9 percent in 2009 compared with last year, Citigroup analyst Johan U. Rode in London wrote in a report dated April 3. That will cut demand for premium-grade and higher-priced iron ore, the report said. David S. Martin, a New York-based analyst with Deutsche Bank AG, expects global steel consumption to contract 17 percent this year, according to a report dated today.

The 265-year-old Baltic Exchange, seeking to encourage more freight-market speculation by hedge funds and other investors, plans to introduce an index of rates for hiring dry-bulk vessels in coming weeks, Chief Executive Officer Jeremy Penn said by phone today.

Trades in so-called forward freight agreements, used to bet on shipping costs, fell 27 percent from a year earlier in the fourth quarter, London-based shipbrokers Simpson, Spence & Young said on Jan. 7.

Source: Bloomberg

Iron Ore Demand Fall Hits Shipping Sector

China seems to be controlling the fate of the world's shipping industry. If any changes are happening in China’s freight operations, that will immediately be reflected in the world’s shipping industry.

This week, commodity shipping rates are all set to crash because China has halted iron ore imports from India. Rates had gone up at the beginning of this month but a dip in demand for Indian iron ore from China, which is negotiating its long-term contracts with Australia and Brazil, has sent a chill down the spine of the shipping trade.

A lull in the dry bulk freight market is expected until China finalises its long-term contracts in about a week’s time.

While China, the top iron ore importer in the world, sources most of its committed iron ore from Australia and Brazil, its short-term spot requirements are met by imports from India. About 80% of India’s iron ore exports are to China.

According to reports from ports, no China-bound iron ore cargo has moved out of India in the past four days.

The situation has worsened so much that exporters who have committed ships and have already brought the cargo in the port are faced with situations where buyers have withdrawn.

The Baltic Dry Index, an index for commodity shipping rates on 26 global routes, posted three consecutive drops early last week on falling rates to haul coal and iron ore for making steel.

China’s contract negotiations will lead to a temporary weakening of the freight market. However, what is more important to look out for is the outcome of these negotiations, he said.

With the commodity demand collapse leading to lack of enough cargo to fill up a Capesize, many of these vessels have been idled.

China’s renewed long-term contracts will get some strength back in the commodity market. India has also seen other critical exports come down. In the past few months, exports of agri-commodity such as soybean meal have come down along with the textile market.

Source: Commodity Online

Lull In Shipping As China Expects To Finalise Iron Ore Price

Commodity shipping rates, which rose in early February giving some respite to shipping companies, are expected to fall in the near term, industry observers say, following a drop in demand for Indian iron ore from China, which is negotiating its long-term contracts with Australia and Brazil.

"We will see a temporary lull in the dry bulk freight market till China finalises its long-term contracts," said an un-named executive from a leading Indian ship chartering company. The contracts are expected to be finalised in the next ten days.

While China, the top iron ore importer in the world, sources most of its committed iron ore from Australia and Brazil, its short-term spot requirements are met by imports from India. About 80% of India's iron ore exports are to China.

According to a shipping agent, no China-bound iron ore cargo has moved out of India in the past four days. The situation has worsened so much that exporters who have committed ships and have already brought the cargo in the port are faced with a situation where buyers have withdrawn.

Another shipping agent said that until early last week the trend was of exporters taking advantage of softer freight rates and booking as much cargo as they could before the year end. This had even seen the Baltic Dry Index, the index of commodity shipping rates, to rise from its December 2008 lows.

However, the situation has changed in a week where now the end user/buyer is not confirmed and hence no fresh contracts are being signed. "We are hoping this to be a short-term event," the agent said.

The Baltic Dry Index, an index for commodity shipping rates on 26 global routes, posted three consecutive drops early last week on falling rates to haul coal and iron ore for making steel.

This, coupled with lack of credit, as the banks are not honouring their letters of credit, is making things more difficult for shipping companies.

AR Ramakrishnan, director, Essar Shipping, said China's contract negotiations will lead to a temporary weakening of the freight market. However, what is more important to look out for is the outcome of these negotiations, he said.

"Indian iron ore exporters are looking forward for an increment in the iron ore rates as compared to last year, rate of as much as $90 per tonne," he said.

An executive from a leading shipping company, which has almost 50% of its vessels on the dry bulk market, said that the freight rates for Panamax size vessels will still be better. "The short-term softening of rates will be mainly for the Capesizes as we see demand mainly coming from Panamax." Besides the Indian imports are still strong, he said.

With the commodity demand collapse leading to lack of enough cargo to fill up a Capesize, many of these vessels have been idled. This, however, worked well for the Panamax vessel rates, which rose due to demand for smaller vessel types.

China's renewed long-term contracts will get some strength back in the commodity market.

"This will be able to sail us through March with reasonable demand and better freight rates," said the ship chartering executive.

India has also seen other critical exports come down. In the past few months, exports of agri-commodity such as soyabean meal have come down along with the textile market, which has almost collapsed.

It would at least take another two quarters to judge which direction the market is moving, Ramakrishnan said.

Delivery of the number of new-built Capesizes in 2009 is also expected to put pressure on the already weak market. "If this is coupled by a drop in demand of iron ore from China, it will take the Baltic Dry Index further down," Ramakrishnan said.

Source: Daily News & Analysis, Mumbai

Baltic Dry Index Showing Signs Of Revival

The Baltic Dry Index (BDI) has shown signs of revival, rising 8.9% over the three trading days to last Friday on stronger booking demand for iron ore and coal transportation to China.

The BDI, a measure of shipping cost for commodities, rose to 945 points on Jan 22 from 868 points on Jan 19.

According to Bloomberg, China, the world’s biggest steel maker, may want to secure raw material shipments before its national holiday starting today to Jan 30.

But this marginal increase may be considered short-term comfort as the long-term outlook for the dry bulk business, which largely depends on China’s economic growth, is still unclear.

China’s economic growth dropped to 6.8% last quarter, dragging down the pace of expansion to a seven-year low of 9%, said Reuters.

Nevertheless, the temporary relief was welcomed by most dry bulk players, as they were battered when the BDI slumped almost 92% last year from its peak of 11,793 points on May 20.

The record-high BDI in 2008 was mainly fuelled by China’s preparation for the Olympics and many other factors that are worthwhile to revisit.

According to Maritime Institute of Malaysia senior fellow Nazery Khalid, to fulfil demand for coal and iron ore last year, China began to import from non-traditional and faraway markets such as Brazil.

“The huge volumes involved and the longer voyages required to ship these commodities to China resulted in a huge demand for even larger dry bulkers.

“This prompted demand for larger iron ore carriers. A 300,000 dead-weight tonne (dwt) bulk vessel – a groundbreaking feat from a technical standpoint – was being ordered by the hundreds by bulk operators like Mitsui OSK Lines from South Korean and Chinese shipyards.

“An accommodating ship-financing market also helped fuel the order frenzy by providing cheap loan in abundance.

“Ports went into overdrive to beef up capacity and improve bulk-cargo handling capabilities to handle greater throughput and to lure more bulk vessels,” he told StarBiz.

Nazery said due to the inelastic demand in the market, the dry bulk trade was deemed to be performing spectacularly on its own merits.

He said perhaps due to dry bulk’s non-speculative nature, analysts and economists rarely spoke of mismatch between demand and supply in the trade, and hence were confident that the bull run would continue indefinitely.

“Such was the level of confidence and the exuberance behind the superlative rally of the dry bulk trade. At its peak in mid-2008, the dry bulk trade was the darling of investors in the shipping industry. Things were almost too good to be true,” he said.

The infrastructure to handle huge volumes began to strain under the tremendous weight of the booming trade.

Dry bulk ports struggled to efficiently handle the tremendous volumes and to quickly turn around rising dry bulk shipping calls.

Dry bulk vessels calling at Australia’s Newcastle Port, the world’s largest and busiest coal port, experienced acute berthing delays of up to three weeks.

Likewise, ports in Brazil creaked under the avalanche of dry bulk ship calls to transport commodities like iron ore, soyabean, sugar and coffee to meet the insatiable demand from China.

Nazery said freight rates also skyrocketed to their highest levels and earnings of bulk vessel operators reached historical highs. Daily rates for Capesize vessels touched an unprecedented US$230,000 per day in mid-2008.

Then it all turned sour very dramatically for the dry bulk trade; the market overheated and collapsed under its own weight.

“The prick that burst the bubble was the US financial crisis that punctured a massive hole in the integrity and stability of the global financial system.

“The harsh decline of the dry bulk trade began as the financial markets worldwide began to melt down and fears over the health of the global economy surfaced. This severely affected business activities, industrial production, consumer confidence and global trade.

“As a result, demand for dry bulk goods and bulk vessels slumped, and freight futures headed south,” he said.

Capesize daily rate collapsed to a mere US$2,700 in early December 2008, only six months from its all-time high level.

The BDI, from its all-time high level in May, slumped to a paltry 663 points on Dec 5, close to its all-time low recorded back in 1986.

Going forward it is estimated by Clarkson, the world’s largest shipbroker, that over 700 Capesize vessels are due for delivery in the next three to four years.

Although the prospect of huge new tonnage coming into the trade contributed to the current pessimism of shipping analysts toward the dry bulk trade, some remain somewhat unperturbed by this.

“The optimists’ camp contend that it would take a while before the market suffers from a glut of capacity as demand for dry bulk commodities from China is expected to remain strong and should be able to absorb the arrival of new tonnage,” Nazery said.

He added that it would be interesting to see the impact of the growing clout and financial means of Chinese steel mills on dry bulk shipping.

“It would be possible that more of them would start thinking of developing their own fleet to control their supply chain better and reduce their dependence on and exposure to foreign carriers.

“Some are already doing that, to the anxiety of major bulk carriers,” he said.

Source: The Star, Malaysia