ECSEI Dry Bulk Shipping Industry Report 2009

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ECSEI Global Dry Bulk Shipping Industry Report

Index

Abbreviations and Explanatory Notes The Effects of Global Financial Crisis WTO sees 9% global trade decline in 2009 as recession strikes World Financial Crisis an Update on the Effects on Shipping and Shipbuilding

Freight market dropped sharply The Dry Bulk Shipping Industry

� Introduction � World Bulk Carrier Fleet � Age Profile of the World Bulk Carrier Fleet � Size Dimensions of the World Bulk Carrier Fleet � Ownerships Patterns of the World Bulk Carrier Fleet

Major Dry Bulk Commodities – Production, Consumption and Trade Patterns.

The demand for two commodities - coal and iron ore will drive the dry bulk industry in the near future

China`s import of iron-ore. The Steel Product market of China

The Baltic Exchange Dry Index. The Shipbuilding Market for Bulk Carriers

� Financial Crisis has brought huge strikes to the shipbuilding market � The environments of shipbuilding market are deteriorating rapidly � World shipbuilding market might step into more than 3 years

recession.

ECSEI Summary Report The Egyptian Center for Studies of Export & Import

November 2009

General Manager Mr.Medhat Saad Eldin

Legal Consultations www.ecsei.com

www.ecsei-eg.com

Email: [email protected] [email protected]

Direct: 0020-123514312

Global Dry Bulk Shipping Industry 2008/2009

Page (1)



Abbreviations and Explanatory Notes

Average number of vessels

This is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of calendar days each vessel was a part of our fleet during the period divided by the number of calendar days in that period. Total calendar days

We define these as the total days we owned the vessels in our fleet for the relevant period including off hire days associated with major repairs, dry-docking or special or intermediate surveys. Calendar days are an indicator of the size of the fleet over a period and affect both the amount of revenues and the amount of expenses that are recorded during a period. Net available days

These are the calendar days less the aggregate number of off-hire days associated with major repairs, dry-docks or special or intermediate surveys and the aggregate amount of time spent positioning vessels and any unforeseen off-hire. The shipping industry uses net available days to measure the number of days in a period during which vessels should be capable of generating revenue.

Net available days under spot / short duration charter

This is defined as net available days under spot charters and / or time charters of a duration of less than six months. Fleet utilization

This is the percentage of time that our vessels were available for revenue generating days, and is determined by dividing available days by calendar days for the relevant period. Time charter equivalent per ship per day (“TCE”)

This is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating TCE is consistent with industry standards and is determined by dividing revenue generated from voyage charters net of voyage expenses, by net available days for the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract, as well as commissions. TCE is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company’s performance despite changes in the mix of charter types (i.e., spot voyage charters, time charters and bareboat charters) under which the vessels may be employed between the periods.

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Daily vessel operating expenses

This includes crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs and is calculated by dividing vessel operating expenses by total calendar days for the relevant time period.

Daily general and administrative expense

This is calculated by dividing general and administrative expense by total Calendar days for the relevant time period. Average number of vessels

This is the number of vessels that constituted our fleet for the relevant period, as Measured by the sum of the number of calendar days each vessel was a part of our fleet during the period divided by the number of calendar days in that period. Total ownership days

We define these as the total days we owned the vessels in our fleet for the relevant period including off hire days associated with major repairs, dry-docking or special or intermediate surveys. Ownership days are an indicator of the size of the fleet over a period and affect both the amount of revenues and the amount of expenses that are recorded during a period. Net Operating days

These are the ownership days less the aggregate number of off-hire days associated with major repairs, dry-docks or special or intermediate surveys and the aggregate amount of time spent positioning vessels and any unforeseen off-hire. The shipping industry uses net operating days to measure the number of days in a period during which vessels should be capable of generating revenue. Net Operating days under spot / short duration charter

This is defined as net operating days under spot charters and / or time charters of a duration of less than six months. Fleet utilization

This is the percentage of time that our vessels were available for revenue generating days, and is determined by dividing available days by ownership days for the relevant period. Time charter equivalent per ship per day (“TCE”)

This is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating TCE is consistent with industry standards and is determined by dividing revenue generated from voyage charters net of voyage expenses, by net operating days for the relevant time period.

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Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter

contract, as well as commissions.

TCE is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company’s performance despite changes in the mix of charter types (i.e., spot voyage charters, time charters and bareboat charters) under which the vessels may be employed between the periods.

Daily vessel operating expenses

This includes crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs and is calculated by dividing vessel operating expenses by total ownership days for the relevant time period. Daily general and administrative expense

This is calculated by dividing general and administrative expense by total ownership days for the relevant time period BAF Bunkering adjustment factor

Bcm Billion cubic metres

Bpd Barrels per day

BRIC Countries Brazil, Russian Federation, India and China

CAF Currency adjustment factor

Dwt Deadweight tons

FPSO Floating Production Storage and Offloading

GDP Gross domestic product

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GT Gross tons

ISPS Code International Ship and Port Facility Security Code

ITO International terminal operator

LNG Liquefied natural gas

LPG Liquefied petroleum gas

MBPD Million barrels per day

MTOE Million tons oil equivalent

N.A. Not available

N.E.S. Not elsewhere specified

ULCC

Ultra-large crude carrier

VLCC

Very large crude carrier

VLOC Very large ore carrier

VLOO

Very large ore oiler Crude oil tankers ULCC

Double-hull 350,000 dwt plus

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ULCC

Single hull 320,000 dwt plus VLCC

Double-hull 200,000–349,999 dwt VLCC

Single hull 200,000–319,999 dwt

Suezmax crude tanker 125,000–199,999 dwt Aframax crude tanker 80,000– 124,999 dwt; moulded breadth > 32.31m Panamax crude tanker 50,000– 79,999 dwt; moulded breadth < 32.31m

Dry bulk and ore carriers Large capesize bulk carrier 150,000 dwt plus Small capesize bulk carrier 80,000–149,999 dwt; moulded breadth >32.31m Panamax bulk carrier 55,000–84,999 dwt; moulded breadth < 32.31m Handymax bulk carrier 35,000–54,999 dwt Handy-size bulk carrier 10,000–34,999 dwt

Ore/Oil carrier VLOO 200,000 dwt

………………………………………………….

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The Effects of Global Financial Crisis

This summary is quite simplistic.

The global financial crisis probably represents the most significant disruption to the world economy that any of us has seen in our adult lives.

A significant flow of capital earlier this decade from High-saving East Asian economies to developed economies in North America and Europe caused Significant declines in real risk-free rates of interest.

Very low interest rates drove an expansion of credit and a search for yield.

Sharp increases in asset prices and growth in securitized credit were the result, especially in the United States.

After some time, the lending positions and inflated asset prices necessarily began to unwind, bringing a large amount of pressure to bear on the books of many financial institutions.

Credit markets began to seize up more generally as a result, and there was an inevitable feedback to real economic activity.

The effects of the global financial crisis have hit almost all parts of the global economy and of global trade.

Not only in the USA, Europe and Japan, the signs point to a recession.

The global financial crisis of 2008–2009 is an ongoing major financial crisis.

It became prominently visible in September 2008 with the failure, merger or conservatorship of several large United States-based financial firms.

The underlying causes leading to the crisis had been reported in business journals for many months before September, with commentary about the financial stability of leading U.S. and European investment banks, insurance firms and Mortgage banks consequent to the subprime mortgage crisis.

Beginning with failures of large financial institutions in the United States, it rapidly evolved into a global credit crisis, deflation and sharp reductions in shipping.

Large reductions in the market value of equities (stock), commodities worldwide and the credit crisis were exacerbated of the Emergency Economic Stabilization.

The crisis led to a liquidity problem and the de-leveraging of financial institutions especially in the United States and Europe, which further accelerated the liquidity crisis, and a decrease in international shipping and commerce.

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WTO sees 9% global trade decline in 2009 as recession strikes

The collapse in global demand brought on by the biggest economic downturn in decades will drive exports down by roughly 9% in volume terms1 in 2009, the biggest such contraction since the Second World War, WTO economists forecast today.

Real GDP and trade growth of OECD countries, 2007-2008 changes on a year to year basis Source: OECD National Accounts.

The contraction in developed countries will be particularly severe with exports falling by 10% this year.

In developing countries, which are far more dependent on trade for growth, exports will shrink by some 2%-3% in 2009, WTO economists say.

Economic contraction in most of the industrial world and steep export declines already posted in the early months of this year by most major economies — particularly those in Asia — makes for an unusually bleak 2009 trade assessment, said the WTO in its annual assessment of global trade.

Prices of selected primary products, January 1998 — January 2009 Index, January 2002=100 Source: IMF International Financial Statistics

Signs of the sharp deterioration in trade were evident In the latter part of 2008 as demand sagged and production slowed. Although world trade grew by 2% in volume terms for the whole of 2008 it tapered off in the last six months and was well down on the 6% volume increase posted in 2007.

Growth in the volume of world merchandise trade and GDP, 1998-2008 Annual % change Source: WTO Secretariat.

Real merchandise trade growth by region, 2008 Annual % change (a) includes the Caribbean. Source: WTO Secretariat.

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World Financial Crisis an

Update on the Effects on

Shipping and Shipbuilding

The global financial crisis has hit

the shipping industry hard,

reducing volumes and sending

charter rates for dry bulk cargo

such as iron ore, coal, steel, grain

and other commodities plunging by

about 90 percent.

With the international financial crisis leading banks to sharply cut back on lending, and consumer spending contracting in many places, it is much harder to move goods, and there are fewer goods to move.

The crisis means that "fewer

consumer products are sold

because people don't have money

to buy them; therefore this has a

knock-on effect on the sector,

which is particularly globalized and

prone to all these fluctuations,.

There had been "a violent drop from June to today" in the dry bulk and container sector, with oil and gas tankers weathering the storm the best so far.

Shipowners, brokers and analysts say ships that earned $50,000-100,000 a day a few months ago are now struggling to take in $5,000-10,000 a day. The Baltic Exchange Dry Index, an indicator of dry bulk freight rates, has plunged from a record high of 11,793 points in May to a nine-year low of just 815 on Nov. 4. The economic downturn has hit shipbuilding hard. New orders have contracted by up to 90% and cancellations have increased, which is likely to result in significant excess shipbuilding capacity. This outlook is unlikely to improve for some time.

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There was agreement that governments should avoid actions that increase protectionism or distort the shipbuilding market, and that serious efforts should be made to restart the paused Shipbuilding Agreement negotiations

In virtually all economies, the unprecedented financial crisis has led to a sharp contraction in investment, economic activity, employment and international trade. While initially shipbuilding was to some degree insulated from these effects because of very strong order books, in the last six months new orders have fallen by over 90% and cancellations are increasing. The recent falls in orders, which are virtually unprecedented, were triggered by the economic downturn, but that impact took some time to filter through to the shipbuilding sector.

There are two principal reasons for this. First, the construction of ships is a significant undertaking with long lead times and the impacts of economic downturns need to work their way through the global demand and supply chain before ordering patterns for new vessels are affected, so that changes in economic conditions do not impact immediately on the industry. Second, shipbuilding has experienced an ordering boom over the past decade, and most yards have strong order books. Although shipbuilders are now under pressure from ship buyers to cancel or defer contracts, the order books have to some extent cushioned the immediate impact of the crisis. However, there has been strong evidence over the last six months that shipbuilding has not escaped the effects of the economic crisis The balance of shipping market would deteriorate earlier than expected

As the demand decreasing and supply increasing, the balance of world shipping market would get worse obviously. • Seriously surplus fleet would appear during 2009 and 2010.

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The Egyptian Center for Studies of Export & Import

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Dry cargo Industry

An average day, the commodities used and the raw materials delivered by Bulk CarriersBulk carriers are those ships that carry unpackaged commodities such as coal, ore or cereals. Part of the reason for their success tbecause they are exposed to the resources cycle: more coal or iron ore being mined in places like Australia and demanded in places like China obviously requires more dry bulkers to carry it all

Today, you probably used twenty dry bulk products wiimportant role that shipping and the efforts that bringing these everyday items to These are just the dry bulk commodities. Other types of ships play their part and gas carriers bringing the energy for homes and cars; Container-ships crossing the world’s oceans with consumer goods and reefer ships transporting fruit and meat for the world’s consumers. Other ships play an equally significant role in Bulk carriers carry the equivalent of over year and are an immensely efficient and environmentally friendly means of transport.

Dry bulk trades comprise iron ore, coal, grain, timber, steel and osimilar cargoes which are shipped in bulk as opposed to carried in containers or other unit loads.

Delivering these commodities every day requires an efficient dry cargo shipping industry

Dry bulk shipping refers to the movement of significant commodities carried in bulk :

� The soproducts (coils, plates and rods), lumber or log carriers and other commodities classified as the minor bulks.

The importance of the dry bulk industry is that without the estimated million deadweight tons of dry bulk shipping, global trade, industry and ultimately our current lifestyles, could not be maintained.

According to Fearnleys’ structural analysis of

trade,

World Seaborne Trade of Major dry Bulk Commodities

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Dry cargo Industry

An average day, the commodities used and the raw materials delivered by Bulk Carriers. Bulk carriers are those ships that carry unpackaged commodities such as coal, ore or cereals. Part of the reason for their success today is because they are exposed to the resources cycle: more coal or iron ore being mined in places like Australia and demanded in places like China obviously requires more dry bulkers to carry it all.

Today, you probably used twenty dry bulk products without realizing the important role that shipping and the efforts that 500 seafarers played in bringing these everyday items to Customers.

These are just the dry bulk commodities.

Other types of ships play their part – often unseen, in our daily lives wand gas carriers bringing the energy for homes and cars;

ships crossing the world’s oceans with consumer goods and reefer ships transporting fruit and meat for the world’s consumers.

Other ships play an equally significant role in our daily existence. Bulk carriers carry the equivalent of over 8 Billion Ton-miles of commodities a year and are an immensely efficient and environmentally friendly means of

Dry bulk trades comprise iron ore, coal, grain, timber, steel and osimilar cargoes which are shipped in bulk as opposed to carried in containers or other unit loads.

Delivering these commodities every day requires an efficient dry cargo shipping industry - without which, world trade as we know it would cease.

ulk shipping refers to the movement of significant commodities

The so-called major bulks, together with ships carrying steel products (coils, plates and rods), lumber or log carriers and other commodities classified as the minor bulks.

The importance of the dry bulk industry is that without the estimated million deadweight tons of dry bulk shipping, global trade, industry and ultimately our current lifestyles, could not be maintained.

According to Fearnleys’ structural analysis of world seaborne

World Seaborne Trade of Major dry Bulk Commodities 1980

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oday is because they are exposed to the resources cycle: more coal or iron ore being mined in places like Australia and demanded in places like China obviously

thout realizing the seafarers played in

often unseen, in our daily lives with tankers

ships crossing the world’s oceans with consumer goods and reefer

miles of commodities a year and are an immensely efficient and environmentally friendly means of

Dry bulk trades comprise iron ore, coal, grain, timber, steel and other similar cargoes which are shipped in bulk as opposed to carried in

Delivering these commodities every day requires an efficient dry cargo without which, world trade as we know it would cease.

ulk shipping refers to the movement of significant commodities

called major bulks, together with ships carrying steel products (coils, plates and rods), lumber or log carriers and other commodities classified as the minor bulks.

The importance of the dry bulk industry is that without the estimated 285 million deadweight tons of dry bulk shipping, global trade, industry and

world seaborne

1980-2007



Based on foreign trade data weighted with shipment information (tonneseaborne trade in dry bulk commodities grew by about 146 mill tonnes to a tottonnes in 2006.

During the last ten years, seaborne dry bulk trade increased on average by yearly.

With nearly 95 per cent incoal, iron ore and grain reflected bydemand in dry bulk trades.

In terms of tonne-

Major sources / seabourne exporters of commodities

dry bulk productsAggregates Alumina Barley Bauxite Cement Coal

Copper Gypsum Iron Ore Maize Nickle Ore Potash Salt Steel Sugar Sulphur Timber Wheat Woodchips

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Based on foreign trade data weighted with shipment information (tonne-miles), world seaborne trade in dry bulk commodities grew by

mill tonnes to a total of 1.9 billion

During the last ten years, seaborne dry bulk on average by 5.7 per cent

per cent in 2006 the shipments of coal, iron ore and grain reflected by far the most important shipping

d in dry bulk trades. -miles, their share even amounted to 95.8

Major sources / seabourne exporters of commodities

Countries dry bulk products Norway and Scotland Australia, Brazil, Guinea and Jamaica Australia, Canada and Ukraine Australia, Brazil, Guinea and Jamaica India Australia, Columbia, Indonesia, Russia and South Africa Chile, Canada, and USA Canada and Thailand Australia and Brazil Argentina, Brazil and USA Australia and New Caledonia Canada USA China, EU, Japan and Russia Australia, Brazil and Thailand Canada and Russia Canada, Malaysia and USA Argentina and Australia; EU 25 Australia and Brazil

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far the most important shipping

per cent.



The World Merchant Fleet

THE world merchant fleet increased astronomically between according to the review of maritime transport by the United Nation Trade and Development (UNCTAD). According to the United Nations trade organ, the world merchant fleet expanded by 7.2 per cent in 2007 to of 2008. By that percentage increase82 million dwt over the corresponding period of previous year The organization attributed the increase to the historical high demand for shipping capacity that was responded to by the world shipping industry by ordering new tonnage, especially in the dry bulk sector.

According to the organization, the tonnage of dry bulk ships on order at the end

of 2007 was 72 times higher than it was in

orders outstrip those of any other vesse

0.04

0.36

World merchant fleet

By deadweight tonnage

0.04

0.36

World merchant fleet


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The World Merchant Fleet 2008 (by deadweight tonnage

THE world merchant fleet increased astronomically between 2007 and according to the review of maritime transport by the United Nation Trade and Development (UNCTAD).

According to the United Nations trade organ, the world merchant fleet expanded to 1.12 billion deadweight tonnes (dwt) at the beginning

By that percentage increase, the organization said there was a gain of million dwt over the corresponding period of previous year.

The organization attributed the increase to the historical high demand for shipping capacity that was responded to by the world shipping industry by

w tonnage, especially in the dry bulk sector.


times higher than it was in 2002. It said since mid 2007

orders outstrip those of any other vessel type.

0.37

0.140.09

World merchant fleet 2008


Tankers

Container Ships

Ro/Ro

Others

Bulk Carriers

0.37

0.140.09

World merchant fleet 2008


Tankers

Container Ships

Ro/Ro

Others

Bulk Carriers

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by deadweight tonnage)

and 2008, according to the review of maritime transport by the United Nation Conference on

According to the United Nations trade organ, the world merchant fleet expanded at the beginning

ation said there was a gain of

The organization attributed the increase to the historical high demand for shipping capacity that was responded to by the world shipping industry by


2007, dry bulk

Container Ships

Bulk Carriers

Tankers

Container Ships

Bulk Carriers



Types of bulk cargo ships

Types of Break Bulk Cargo

In shipping, break bulk cargo or general cargo is a term that covers a great variety neither of goods that must be loaded Individually, and not in intermodal containers nor in bulk as with oil or grain.

Ships that carry this sort of cargo are often called general cargo ships.

The term break bulk derives from the phrase breaking bulk, a term meaning the extraction of a portion of the cargo of a ship or the beginning of the unloading process from the ship's holds.

These goods may be in bags, cases, crates, drums, barrels, or they may be kept together by baling or loaded onto pallets.

There are many sorts of break bulk cargo but amongst them are:

Bagged cargo

Should be stowed on double dunnage and kept clear of the ship's sides and bulkheads.

Bags should be kept away from pillars and stanchions by covering with matting or waterproof paper.

Baled cargo

These should be stowed on single dunnage at least 50mm thick. The bales should be clean with all the bands intact. Stained or oily bales should be rejected. Bags should be kept away from pillars and stanchions by covering with matting or waterproof paper.

Barrels and Casks

Wooden barrels should be stowed on their sides on "beds" of dunnage which keeps the middle of the side (the bilge) off the deck and they should be stowed with the bung at the top.

To prevent movement wedges called quoins are put in on top of the "beds".

Cartons

Cartons (cardboard boxes) should be stowed on a good layer of dunnage and kept clear of any moisture.

They should not be overstowed with anything other than similar cartons.

They are frequently loaded on pallets, if so the slings that are used to load the cargo are frequently left on to facilitate discharge.

Cased goods

Wooden cases or crates should be stowed on double dunnage in the holds and single dunnage in the 'tween decks.

Heavy cases should be given bottom stowage. The loading slings are often left on to aid discharge.

)Page (14



Drums

Metal drums should be stowed on end with dunnage between tiers. Paper reels

These are generally stowed on their sides but care must be taken to make sure they are not crushed. Cars

These are lifted on board and then secured using lashings. A great deal of care should be taken to make sure they do not get damaged.

Vehicles must also be prepared by ensuring potentially hazardous

liquids (gasoline, etc) have been removed. Steel girders

Any long heavy item should be stowed fore and aft. If they are stowed athwart ships they are liable to shift if the ship rolls heavily and pierce the side of the ship. Project cargo

The Port of Antwerp has years of experience in handing project and heavy lift cargo from train carriages to windmills, heavy machinery, oil well supplies, manufacturing equipment and cranes. Forest Products

Handling an annual volume of around 2.7 million tonnes of noncontainerized forest products, the Port of Antwerp offers dedicated terminals and specialized warehouses for all kinds of products from paper and pulp to wood, timber, plywood, etc. Fruit

The Port of Antwerp has some of the most sophisticated infrastructure in the world for the handling of fresh produce including refrigerated warehouses, Europe’s only automated storage system and a range of value-added services such as (re)packaging, quality control and ripening.

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Types of bulk cargo Vessels

Bulk carriers are ships in which cargoes are carried in bulk quantities rather than in barrels, containers, bags etc. and are usually homogeneous and loaded with the help of gravity.

A bulk cargo is defined as a "loose" cargo that can be loaded easily and directly into a vessel's cargo holds. These cargoes are usually cargoes of grain, coal, cement, soybeans, iron ore, steel pellets and in some cases fertilizers.

The most predominant types of bulk cargo ships are the handymax and the panamax types.

Panamax bulk carriers continue to grow in cargo capacity as the pressure of worldwide competition has forced yards to build ships that can carry extra extra cargo.

Capesize vessels

Capesize ships are cargo Ships originally too large to transit the Suez Canal (i.e., larger than both Panamax and Suezmax vessels).

Vessels this size can now transit the Suez Canal as long as they meet the draft restriction (18.91 m/62 ft as of 2008).

Capesize vessels are typically above 150,000 long tons deadweight (DWT), and ships in this class include Oil Tankers in the Very Large Crude Carrier (VLCC) and Ultra Large Crude Carrier (ULCC) classes; supertankers and Bulk Carriers transporting coal, ore, and other commodity raw materials.

The term "capesize" is most commonly used to describe bulk carriers rather than tankers.

A standard capesize bulker is around 175,000 DWT, although larger ships (normally dedicated to ore transportation) have been built, up to 400,000 DWT.

The large dimensions and deep drafts of such vessels mean that only the largest deep water terminals can accommodate them.

Panamax Vessels

"Panamax ships" are the largest Ships that can pass through Panama Canal.

The size is limited by the dimensions of the Lock chambers and the depth of the water in the canal.

An increasing number of ships are built to the Panamax limit to carry the maximum amount of cargo through the canal.

The increasing prevalence of vessels of the maximum size is a problem for the canal as a Panamax ship is a tight fit that requires precise control of the vessel in the locks, possibly resulting in longer lock time, and requiring that these ships transit in daylight.

Because the largest ships travelling in opposite directions cannot pass safely within the Gaillard Cut, the canal effectively operates an alternating one-way system for these ships.

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Handysize Vessels

Handysize most usually refers to a Dry Bulk Vessel (or, less commonly, to a product Tanker) with deadweight of about 15,000–35,000 tons and there is no well-defined or widely accepted size sector below 15,000 tons.

Handysize is numerically the most common size of bulk carrier, with nearly 2000 units in service totalling about 43 million tons.

Handysize ships are very flexible because their size allows them to enter smaller ports, and in most cases they are 'geared' - i.e. fitted with cranes - which means that they can load and discharge cargoes at ports which lack cranes or other cargo handling systems.

Compared to larger bulk carriers, handysizes carry a wider variety of cargo types. These include steel products, grain, metal ores, phosphate, cement, logs, woodchips and other types of so-called Break Bulk Cargo.

Handymax or Supramax

Handymax or Supramax is a Naval Architecture term for a Bulk Carrier typically between 35,000 and 60,000 metric tons Deadweight (DWT).

A handymax ship is typically 150–200 m (492–656 ft) in length, though certain bulk terminal restrictions, such as those in Japan, mean that many handymax ships are just less than 190 meters (623 ft) in overall length.

Modern handymax designs are typically 52,000-58,000 DWT in size, have five cargo holds, and four cranes of 30 Tonnes (33.1 ST, 29.5LT) lifting capacity.

Kamsarmax Vessels

Kamsarmax a special vessel has been built, called "Kamsarmax".

This is the biggest size ship able to load at the world’s largest bauxite port, Port Kamsar in Equatorial Guinea.

A Kamsarmax type bulk carrier is basically a 82,000 dwt Panamax with an increased LOA = 229 m (for Port Kamsar in Equatorial Guinea).

Roll-on/roll-off (RORO or ro-ro)

Roll-on/roll-off (RORO or ro-ro) Ships are vessels designed to carry wheeled Cargo such as Automobiles, Trucks, Semi-trailer trucks, Trailers, or Railroad Cars that are driven on and off the ship on their own wheels.

This is in contrast to lo-lo (lift on-lift off) vessels which use a Crane to load and unload cargo.

RORO vessels have built-in Ramps which allow the cargo to be efficiently "rolled on" and "rolled off" the vessel when in port. While smaller ferries that operate across Rivers and other short distances still often have built-in ramps, the term RORO is generally reserved for larger ocean-going vessels. The ramps and doors may be stern-only, or bow and stern for quick loading.

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Bulk carrier fleet development

As of January 1st, 2008, was composed of 7,156 bulk carriersThe total bulk carrier fleet in At the beginning of 2008specified by LR/Fairplay, can be

Bulk Carrier

Type No

5947 Bulk Carrier

70 Ore Carrier

174 Wood Chips

98 Self

Discharging

402 Cement

354 Aggregates

52 Others

48 Bulk/ Oil

Carriers

38 Ore/Oil

Carriers

7156

Total

Notes:

An OBO carrier is a vessel that can trade with Oil, Bulk and Ore cahence the name.

The idea was that it would function as a tanker when the tanker markets were good and a bulk / ore carrier when these markets were good.

It would also be able to take "wet" cargo (oil) one way and "dry" cargo (bulk cargoes / ore) thballast (i.e. empty).

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Bulk carrier fleet development

, the total bulk carrier fleet for ships of 300 gt and over bulk carriers including 86 Ore/Bulk/Oil carriers

bulk carrier fleet in 2007 increased by 6.3 per cent.

, the following “Special types”, namely sub, can be distinguished:

Share of av. Ship Size % Share

dwt 1000 dwt of No

92.1 357994 83.1

2.6 10134 1.0

1.7 6749 2.1

0.9

3662

1.4

0.7 2754 5.6

0.1 438 4.9

0.2 620 0.7

1.1

4141

0.7

0.0

157

0.5

100.0

386649

100.0

An OBO carrier is a vessel that can trade with Oil, Bulk and Ore ca

The idea was that it would function as a tanker when the tanker markets were good and a bulk / ore carrier when these markets were good.It would also be able to take "wet" cargo (oil) one way and "dry" cargo (bulk cargoes / ore) the other way, thus reducing the time it had to sail in ballast (i.e. empty).

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gt and over Oil carriers (OBOs).

Special types”, namely sub-types

Share of av. Ship Size

Dwt

60197

144771

45912

37367

6851

1237

11923

86271

4132

54031

An OBO carrier is a vessel that can trade with Oil, Bulk and Ore cargoes,

The idea was that it would function as a tanker when the tanker markets were good and a bulk / ore carrier when these markets were good. It would also be able to take "wet" cargo (oil) one way and "dry" cargo

e other way, thus reducing the time it had to sail in



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World bulk carrier fleet 1990 – 2008 (average dwt

Compared with results increased by about extraordinary growth path since

As in previous years, the bulk carrier tonnage balance between additions and reductions show

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World bulk carrier fleet – size development as of January average dwt)

Compared with results at the beginning of 2007, the total world bulk fleet increased by about 23.0 mill dwt to 386.7 mill dwt, thus continuing its extraordinary growth path since 2005. As in previous years, the bulk carrier tonnage balance between additions and reductions showed a much higher level of additions.

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size development as of January 1st,

the total world bulk fleet thus continuing its

As in previous years, the bulk carrier tonnage balance between additions



Age profile of the world bulk carrier fleet

At the beginning of years compared to

At the beginning of year of build showed the following structure:

� 1,368 bulk carriers equal to

into service within the last � 1,661 bulkers equal to

service for more than � 1,823 bulk carriers representing

tonnage were built in the period

Size dimensions of the world bulk carrier fleet

size structure of the world bulk carribeginning of 2008:

3,388 bulk carriers with carriers (incl. mini bulkerscarriers is trading since more than

849 bulk carriers wiHandymax class.

609 bulk carriers with Supramax size class

At the beginning of 5.9 years.

Bulk carrier fleet – tonnage development of major shipping nations (controlled tonnage

yearly average growth rate)

1,344 bulk carriers were attributable to the Panamax size segment

With 96.2 mill dwt they ha

tonnage.

The 966 Capesize bulk carriers

equal to a share of

Within this size segment

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Age profile of the world bulk carrier fleet

At the beginning of 2008, the average age of all bulk carriers was years compared to 15.3 years at the beginning of 2004. At the beginning of 2008, the age profile of the total bulk carrier fleet by year of build showed the following structure:

bulk carriers equal to 26.7 per cent of the bulk tonnage came into service within the last 5 years.

bulkers equal to 23 per cent of the total bulk fleet service for more than 25 years.

bulk carriers representing 26.7 per cent of the total bulk tonnage were built in the period 1988-1997.

Size dimensions of the world bulk carrier fleet Key figures on the

size structure of the world bulk carrier fleet indicate that at the

bulk carriers with 68.0 mill dwt were attributable to Handysize mini bulkers) up to 40,000 dwt. The majority of these

carriers is trading since more than 20 years. bulk carriers with 38.2 mill dwt (10.3 per cent) belonged to the

bulk carriers with 32.5 mill dwt were attributable to the “new”

Supramax size class (50,000–59,999 dwt). At the beginning of 2007, these “newcomers” had an average age of only

tonnage development of major shipping controlled tonnage) as of January 1st, 2004-2008

yearly average growth rate)

bulk carriers were attributable to the Panamax size segment

mill dwt they had a share of 24.9 per cent of the total bulk

Capesize bulk carriers (80,000 dwt+) totaled 150.3 mill dwt

equal to a share of 38.9 per cent of the total world bulk carrier tonnage

Within this size segment, 626 carriers have capacities above

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the average age of all bulk carriers was 16.0

profile of the total bulk carrier fleet by

per cent of the bulk tonnage came

per cent of the total bulk fleet were in

per cent of the total bulk

Key figures on the

er fleet indicate that at the

mill dwt were attributable to Handysize The majority of these

belonged to the

mill dwt were attributable to the “new”

these “newcomers” had an average age of only

tonnage development of major shipping 2008 (dwt –

bulk carriers were attributable to the Panamax size segment.

per cent of the total bulk

mill dwt,

per cent of the total world bulk carrier tonnage.

ove 150,000 dwt.



FUNDAMENTALS OF THE BULK CARRIER MARKET Major dry bulk commodities

patterns

Recent figures provided by the International Iron and Steel Institute (IISI) indicate that China had a share production in 2007

China’s average yearly production growth rate in the period 2007stood at 21.7

Despite the moderate slowdown of production growth it still mirrors the dynamic market development, which hairon ore imports in recent years.

Building the Fleet

As a result, orders for bulk carrier newbuildings have risen to unprecedented levels.

The orderbook currently consists of totaling 147 million dwtfleet has risen to over orderbook-to-existing

This momentum has been maintained throughout the first half of 2007.

Last year, bulk carrier orders totaled This year’s orders already total some representing 46%

The resulting surge in fleet supply means that fleet growth is expected to be maintained at around per year through to

A significant trend is China’s growing market share of the shipbuilding industry.

China has confirmed its status as the market leader for bulk carriernewbuilding, winning 2007.

During 2006, South Korea accountedplaced worldwide.

So far this year, 26%where shipyards can offer relatively early newbuilding slots to owners eager to capitalize on the buoyant markets.

shows the distribution of the existing bulk carrier fleeteach size segment as a proportion of thedeadweight total.

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FUNDAMENTALS OF THE BULK CARRIER MARKET2007/2008

Major dry bulk commodities – production, consumption and trade

Recent figures provided by the International Iron and Steel Institute (IISI) indicate that China had a share of 36 per cent in the world steel

2007 . China’s average yearly production growth rate in the period

21.7 per cent. Despite the moderate slowdown of production growth it still mirrors the dynamic market development, which has affected the growth of Chinese iron ore imports in recent years.

Building the Fleet

As a result, orders for bulk carrier newbuildings have risen to unprecedented levels.

The orderbook currently consists of 1,650 vessels million dwt, while the existing bulk carrier

fleet has risen to over 350 million dwt and the existing-ships ratio has surpassed 40%.

This momentum has been maintained throughout the

bulk carrier orders totaled 37 million dwt. rders already total some 65 million dwt, 46% of the total bulk carrier orderbook.

The resulting surge in fleet supply means that fleet growth is expected to be maintained at around 6% to 7% per year through to 2010.

t trend is China’s growing market share of the shipbuilding industry. China has confirmed its status as the market leader for bulk carrier

winning 48% of all contracts placed during the first

South Korea accounted for 10% of all bulk carrier contracts . 26% of all contracts have been placed in South Korea

where shipyards can offer relatively early newbuilding slots to owners eager to capitalize on the buoyant markets.

distribution of the existing bulk carrier fleet and orderbook for each size segment as a proportion of the

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2007/2008

production, consumption and trade

Recent figures provided by the International Iron and Steel Institute (IISI) per cent in the world steel

China’s average yearly production growth rate in the period 2003-

Despite the moderate slowdown of production growth it still mirrors the s affected the growth of Chinese

China has confirmed its status as the market leader for bulk carrier of all contracts placed during the first quarter of

of all bulk carrier contracts

of all contracts have been placed in South Korea, where shipyards can offer relatively early newbuilding slots to owners

and orderbook for



With more than 1,500potential for fleet renewal is vast.

Supramax tonnage would apptonnage, where ordering has not been as active.

Longer voyages and a substantial increase in demand for majorcommodities have meant increased deadweight demand for biggereconomies of scale.

By 2010, the bulk carrier fleet will look somewhat different with an expansion of the capsize segment and contraction of the handysize/max segment to overall fleet, respectively.

The increase in ship prices reflects the trend towards conversion

The average price of a capesize bulk carrier newbuilding has nowsuezmax tanker at around

Meanwhile, second hand prices have also soared to record levels as a result of the vast earnings potential of capsizevessels.

A10-year-old capsize can command prices of more than

The Baltic Exchange

The Baltic Exchange was established at the beginning of this year into which the business of producing the freight market indices has been

BEISL is a separate legal entity, whollyLimited, with its own board of directors and is now the recipient of all income derived from the distribution of freight market information and bears all the associated cos

The financial assets of the Baltic and the property in St. Mary Axe continue to be held in The Baltic Exchange Limited.

Key performance measures at the end of March memberships stood at

Page (23)



1,500 handysize vessels over 20 years of agepotential for fleet renewal is vast. Supramax tonnage would appear to be replacing the older handymax tonnage, where ordering has not been as active. Longer voyages and a substantial increase in demand for majorcommodities have meant increased deadweight demand for bigger ships to capitalize on economies of scale.

the bulk carrier fleet will look somewhat different with an expansion of the capsize segment and contraction of the

max segment to 41% and 37% of the overall fleet, respectively. The increase in ship prices reflects the trend

version. The average price of a capesize bulk carrier newbuilding has now converged with that of a suezmax tanker at around $88 million. Meanwhile, second hand prices have also soared to record levels as a result of the vast earnings potential of capsize

old capsize can command prices of more than $75

The Baltic Exchange

The Baltic Exchange was established at the beginning of this year into which the business of producing the freight market indices has been transferred. BEISL is a separate legal entity, wholly-owned by The Baltic Exchange Limited, with its own board of directors and is now the recipient of all income derived from the distribution of freight market information and bears all the associated costs. The financial assets of the Baltic and the property in St. Mary Axe continue to be held in The Baltic Exchange Limited. Key performance measures at the end of March 2009 corporate memberships stood at 585, compared with 562 at the same time last year

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years of age, the

ear to be replacing the older handymax

Longer voyages and a substantial increase in demand for major

to record levels as a result of the vast earnings potential of capsize

million.

The Baltic Exchange was established at the beginning of this year into

owned by The Baltic Exchange Limited, with its own board of directors and is now the recipient of all income derived from the distribution of freight market information and

The financial assets of the Baltic and the property in St. Mary Axe continue

corporate at the same time last year.



Membership growth outside the UK, especially in Asia, reflects our commitment to ensuring the worldwide consensus around the Baltic, and especially the use of its rates for derivatives (FFA) settlement, is maintained and enhanced.

The Membership Committee has made strenuous efforts to attract and retain UK-based smaller firm members during the last 12 months and has achieved some successes.

Attrition of members which offsets some of the gains achieved in the last 12 months follows little pattern, with bankruptcies, cost control measures and changing business patterns being the main causes of losses, which are not restricted to small or long-standing members.

Market developments and member services The first 2 quarters of calendar 2008 saw extraordinary growth in volumes in the freight derivatives (FFA) market.

In Q2 just over 600,000 lots were traded in dry bulk FFAs (one lot representing 1 day of timecharter or 1000 MT of voyage transportation).

By Q1 2009 volumes had fallen to 292,000 lots. Despite this fall, it is clear that the dry bulk derivatives market is here to stay.

The wholesale departures from the market predicted by some have not come about, while the steady development of the OTC clearing mechanism over the last three years has meant that many participants were more or less immune to settlement problems after the sudden market shock. Since last autumn the migration to a cleared model has accelerated.

Baltic Exchange Dry Index

The London-based Baltic Exchange Dry Index (BDI) closely monitors shipping costs to deliver raw materials via 26 pre-selected waterway routes.

The BDI directly measures the demand for bulk freight ships that carry raw materials such as iron ore, grain and coal.

This demand reflects the amount of raw material cargo traded in specific markets around the world. Therefore the BDI is considered an accurate gauge of international trade.

In short, the index provides an accurate assessment of the price of moving major raw materials by sea.

Each working day, brokers from around the globe provide quotes to the Baltic Exchange for the latest charges for shipping raw materials through the monitored seaway routes.

Page (24)



Examples of Baltic Dry Index Components The daily pricing exercise might include the following raw materials, shipping charges and volumes. 100,000 tons of iron ore from Brazil to China 1,000,000 tons of wheat from America to Italy 100,000 tons of coal from Australia to Japan.

Baltic Dry Index Is Important

Broker-based information makes the BDI an objective measure of current prices required to book large cargo shipments. The index is also highly responsive to changes in demand for shipping. That’s because the supply of container ships is relatively fixed, given that new ships require two years to build and the prohibitive expense to take existing vessels out of service. Any reduction in demand results in an immediate downward spike in the BDI, just as a demand increase causes an upward BDI surge.

On October 28, 2008, the BDI slipped to 982 points – its lowest level in 6 years and down 90% from just 10 months earlier.

White House economists must have been paying attention to the BDI’s sharp plunge. Just 5 days earlier, George W. Bush had called for an emergency 20-nation summit in Washington to deal with a crisis frighteningly reminiscent of the Great Depression.

Large shippers like Ukraine’s Industrial Carriers declared bankruptcy. Equity markets crashed, with even blue chip stocks in the S&P 500 falling by 25% from their highs of just one month earlier

Baltic Dry Index Shows Worldwide Improvements

By December 2008, the BDI had continued to fall to 663 points down over 95% on the year.

With an increasing number of their cohorts going under, many shippers couldn’t arrange letters of credit traditionally required to load cargoes and depart from ports.

After Barack Obama became president, there was a glimmer of hope. By February 2009, shipments of raw resources had improved to 1,316 points – up about 5% from their depressed levels in late 2008.

The index crawled ahead 1.5% to 1,336 as of April 17. (Update: 5 days later, the BDI had improved a further 35% to 1,797.)

Economist Howard Simons has chartered the BDI against prices for S&P 500 stocks and found that the Baltic benchmark is a very good leading indicator for share prices.

Page (25)



It seems that as long as the BDI continues its current course of improvement, the global economy and stock markets should trace similar trajectories upwards.

The Dry Bulk Market Environment 2009

A significant slow-down in China's economy

would lead to declining commodities demand

This would impact upon shipping companies

with vessel oversupply potentially leading to a

sharp decline in freight rates

Between 2009 and 2010 the size of the world

dry bulk shipping fleet will expand more than

25%, such is the volume of new vessels being

delivered.

A bigger concern is the extraordinary quantity

of new ships on order

Dry bulk demand is driven by emerging

economies

(which have a more pressing need for raw materials)

The sector is leveraged to the slow-down in developed economies, and

2009 could see oversupply due to weaker demand

The supply side of shipping in 2009

A lot actually - 2009 is set to be a monster year for a new inflow of tonnage in all the major shipping segments.

So far, cancellations on a large scale have not happened, but some slippage in deliveries is visible. (With vessels of unknown delivery month, delivery in December is assumed in this article).

Unfortunately, a demand side to match this massive inflow is difficult to see right now.

A total tonnage increase of 16-17% gross was causing the industry headaches even before the current financial crisis chipped in and worsened the fundamental supply/demand balance from tight to extremely challenging.

Dry cargo deliveries are set to hike Following years of a manageable fleet growth of 6-7% since 2004, the fleet has already grown 4.2% in 2009. Expected increase in gross dry bulk ship supply was scheduled to be 71.3 million DWT, equal to 17% of active dry cargo fleet.

In terms of tonnage, the total bulk fleet still to come on stream so far in 2009 exceeds that of 2008 as a whole. On top of the tonnage already delivered, 46.1 million DWT over the next 5 months is due to leave the yards and enter into the active fleet.

Page (26)



As can be seen from the graph, the monthly average of delivered tonnage in the first seven months of 2009 was 3.5 million DWT. That average figure has to go up to 9 million DWT during the last 5 months if the total scheduled order-book is to be delivered before year-end.

Tendencies to some delays have materialized, but can still be considered insignificant.

The delayed tonnage has been added on to the remaining deliveries to calculate the monthly average.

Supply side pressure to emerge despite surprisingly strong demand.

Since the low-point of the BDI in December 2008 and January 2009, demand has surprised on the upside and has returned the BDI to a more “normal” level above 2,000. It should be noted that this has happened while the active fleet has grown by a significant 17.7 million DWT.

This supply side pressure is bound to affect rates downwards, especially if this is coupled with an anticipated weaker demand.

So far, 6.8 million DWT has been demolished in 2009. And that figure is bound to increase due to the scrapping potential of the bulker fleet. 67.5 million DWT is more than 25 years old.

Moreover, very low scrapping during the most recent super-cycle has resulted in an overhang of old tonnage still in business.

This has left the average scrapping age in recent years closer to 30 years rather than 25 years of age.

Increased scrapping is deemed necessary to prevent considerable weakening of the market balance.

Analyses the global seaborne dry bulk industry

Rapid increase of China’s iron ore imports (1H08: 230mil. tons → 1H09: 297mil. tons).

China’s shift to net coal importer (increase in ton-mile). Decrease in export Volume (1H08: 48.2mil. tons → 1H09: 41.1mil. tons)

Robust Increase in import volume (1H08: 11.7mil. tons → 1H09: 45.3mil. tons).

Page (27)



India’s coal import increased (1H09: 37mil. tons, +28%yoy), continued iron ore import(1H: 54mil. tons) .

Lack of supply realized in Atlantic market due to continuous demand of grain and iron ore

Despite economic recession, the fundamentals of the dry bulk industry remain attractive with demand for dry bulk commodities continue to be positive.

The primary driver for the dry bulk shipping industry continues to be sustained demand in East Asia led by strong demand for commodities in China and increasingly India.

China`s infrastructure building programs as per its 11th Five Year Plan will continue to drive demand for steel and that in turn will stimulate demand for iron ore and coal.

Driven by infrastructure spending by the government, over time, China has become the epicenter of dry bulk demand.

With China`s import of 2 billion tonnes of iron-ore, coal and grain in the year 2007 and its steel production increasing by 16.5% in the same year, the global dry bulk industry is expected to continue its growth momentum, albeit at a slower rate in the next few years.

Further with high growth of Indian economy and scarcity of its natural resources, India is likely to continue its demand for dry bulk commodities.

The demand for two commodities - coal and iron ore will drive the dry bulk industry in the near future.

As the demand for steel is growing, especially in the Asian countries, iron ore is expected to see the highest growth among the dry bulk commodities.

Further, coal is also likely to be much-in-demand commodity with new power plants being installed in the Asian countries.

The demand for two commodities - coal and iron ore will drive the dry bulk industry in the near future.

As the demand for steel is growing, especially in the Asian countries, iron ore is expected to see the highest growth among the dry bulk commodities.

Further, coal is also likely to be much-in-demand commodity with new power plants being installed in the Asian countries.

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Focus on major dry bulk commodities

)9Page (2



Focus on major dry bulk commodities 2009

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China Factor in the Structural Change of World Shipping Industry

Demand of Iron ore in China World shipping industry has been undergoing a structural change over last decade and thechanged map has never been clearer now The feature of the change is that, Asia, notably East Asia, has overwhelmingly become the power house of world shipping business as the largest importer of raw materials and the largest exporter of manufactured goods and In shipping, the volu value matters.

China- the Powerhouse of World Shipping Market After witnessing a consecutive strong growth in joining WTO in late 2001, surprisingly high rate of over last two years, and continue into this year.

It is even more obvious in the dry bulk business thatstructural change to shipping world. In the past decade, the annual growth rate of major dry bulk sea borne trade of China is 17.2%, Japan 5.4% The speed for China has been accelerating over the recent three years, with an average growth rate of 19%cargo shipping net demand increase since

In a word, such an economy will need to import more energy and raw materials like crude oil and iron ore, though a much more efficient use of them is very necessary, and will export more manufactured goods to the rest of world.

Page (29)




Demand of Iron ore in China

World shipping industry has been undergoing change over last decade and the

changed map has never been clearer nowadays.

The feature of the change is that, Asia, notably overwhelmingly become

house of world shipping business as the largest importer of raw materials and the largest exporter of manufactured goods

he volume rather than

the Powerhouse of World Shipping Market

After witnessing a consecutive strong growth in 1990s, especially after China , the country’s foreign trade continues to grow at a

ate of over 30 percent on an already big enough base figure last two years, and continue into this year.

It is even more obvious in the dry bulk business that China has brought in a structural change to shipping world.

cade, the annual growth rate of major dry bulk sea borne trade of 5.4%, European Union 2.3%, and the US negative

The speed for China has been accelerating over the recent three years, with an 19%. Actually, China has contributed 50% of world dry

cargo shipping net demand increase since 1999.

In a word, such an economy will need to import more energy and raw materials like crude oil and iron ore, though a much more efficient use of them is very

will export more manufactured goods to the rest of world.

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especially after China the country’s foreign trade continues to grow at a

percent on an already big enough base figure

China has brought in a

cade, the annual growth rate of major dry bulk sea borne trade of and the US negative.

The speed for China has been accelerating over the recent three years, with an of world dry

In a word, such an economy will need to import more energy and raw materials like crude oil and iron ore, though a much more efficient use of them is very

will export more manufactured goods to the rest of world.



Recent figures provided by the International Iron and Steel Institute (IISI) indicate that China had a share of 36 per cent in the world steel production in 2007. China’s average yearly production growth rate in the period 2003-2007stood at 21.7 per cent. Despite the moderate slowdown of production growth it still mirrors the dynamic market development, which has affected the growth of Chinese iron ore imports in recent years. Thus, China is the biggest iron ore importer followed by the EU and Japan importing 160.2 mill tonnes and 134.5 mill tonnes, respectively. Industry sources estimate that the share of Chinese iron ore imports in 2007 accounted for about 49 per cent. It is interesting to note that already current Chinese imports were partly sourced from long haul exporters such as Brazil which has a direct impact on the demand side due to the tonne-mile increase. Latin America (primarily Brazil) is the world’s leading export region for iron ore, directly followed by Australia. Their export volumes in 2006 achieved 247 mill tonnes and 242 mill tonnes, respectively.

Page (30)



Low iron ore demand causes fall in capsize bulk carriers

It is reported that resurgent iron ore demand from European and Japanese steel mills has underscored falls in the number of capsize bulk carriers hired on the spot market, as industrial giants emerge from the freight market collapse a year ago determined to take greater control of commodity and transportation costs.

Brokers are reporting that restocking mills have returned to using renegotiated contracts of affreightment and consecutive voyage contracts as they buy iron ore from miners under contract.

A lot of iron ore is being shipped but you have seen a reduction not a cancellation of spot market fixtures as Europe and Japan have come back in.

The iron ore market is not slowing down, it is shipping the most quantities of iron ore ever. But it is switched off the spot, on to the contract.

The shift towards contract shipping coincides with this year’s collapse of the 40 year old annual benchmark pricing system for iron ore, which provides employment for 70% of the world’s fleet of 900 capsize bulk carriers.

With Australian iron ore now diverted to Japan, we are forecasts short term tightness in global iron ore supplies.

That this looming temporary shortfall, rather than any lull in demand, was behind a forecast fall in monthly.

The Brazilian miner has chartered just four bulk carriers since mid July, after taking 44 in the second quarter of 2009, now it has shifted from fob to CIF sales.

However, after spending USD 160 million in nine months to acquire a fleet of a dozen secondhand capsize vessels, Vale no longer needs to use the spot market.

Global Distribution of Iron Ore Production

Page (31)



Focus on six global leading dry bulk carriers Including:

DryShips,

Diana Shipping,

Excel Maritime,

Navios Maritime,

Genco Shipping,

Eagle Bulk.

The End of Summary Report

General Manager

Mr. Medhat Saad Eldin

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ECSEI Dry Bulk Shipping Industry Report 2009

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