Free Essay

India's Iron Ore

In:

Submitted By shubhra
Words 1339
Pages 6
INDIA’S IRON ORE
(Reuters) - India, in its crusade against illegal mining, has choked its iron ore output and exports so hard that many companies are giving up on the sector.
The mining and export bans in the key states of Goa and Karnataka have brought miners and other businesses to their knees, forced steelmakers to buy iron ore abroad and seen hundreds of thousands laid off.
Following is a timeline of key developments in India's iron ore sector since Karnataka introduced its shipments ban:
India’s iron ore exports are set to increase as Goa prepares to auction unsold stocks, following the easing of a ban on sales of the steel-making raw material.
“Bids will be invited for about 15 million metric tonnes of inventory that’ll be offered through online sales starting next month,” Goa’s mines director Prasanna Acharya said on Wednesday in a phone interview. “The buyers will be allowed to ship the ore overseas or sell locally,” he said.
India’s top court in November had allowed sales of mined ore in Goa, while continuing the ban on extraction because of environmental concerns. Goa was the nation’s biggest iron ore exporter before the ban was imposed in September 2012.
“Goa’s mines department has sought applications from prospective bidders and we hope to have the first auction early February,” Acharya said. “There’s no timeline for completing the sale of the entire quantity.”
The revival in Goa’s exports comes as iron ore shipments from India are poised to tumble for a fourth year to less than 10 million metric tonnes in the year ending March from 18 million tonnes a year earlier. Government curbs, mining bans and higher export taxes are prompting buyers to secure the raw material from other producers, Federation of Indian Mineral Industries’ secretary general R.K. Sharma said on 2 January.
Sesa Sterlite Ltd, which owns its biggest iron ore mine in Goa, and rival miners mainly export their low-grade produce to China as steel makers in India mostly lack the ability to process poor quality ore.
Sesa Sterlite rose as much as 2.3% to Rs.197 and traded at Rs.196.40 as of 2:27pm in Mumbai. The benchmark S&P BSE Sensex rose 1.1%.Bloomberg
Top trader MMTC's $80 million iron ore export terminal, ready since 2010, has never handled a cargo. Now the company wants to spend $16 million to convert the terminal to ship coal.

Bans on iron ore mining and exports in top producing states of Karnataka and Goa have choked the industry so hard that MMTC is one of many firms exiting. Even if efforts to fully lift the bans make it past the many bureaucratic and legal hurdles, iron ore miners do not expect complete resumption of production until late 2014.

The bans, put in place as the government tried to clamp down on illegal mining, have cut the iron ore exports by around 85 percent, or 100 million tonnes, over the past two years. They have also reduced foreign exchange earnings by more than $17 billion in the same period, according to the Federation of Indian Mineral Industries (FIMI).
The structural shift in India's iron ore industry could be a blessing for other suppliers, as demand growth from top market China slows and Australian miners Rio Tinto and BHP Billiton ramp up output. It will also make it harder for India to regain its spot as the world's No.3 exporter of the steelmaking raw material.

"It's pretty evident that there's lasting damage to the industry," said R. K. Bansal, a secretary general at FIMI. "But if the government of the day at the state and central level, as well as other authorities, stick their neck out and take decisions then this paralysis can go."

Mining in Goa was banned in September 2012, freezing shipments that reached about 50 million tonnes in the 2010-11 fiscal year. In neighbouring Karnataka, where the ban started in 2011, exports remain frozen even though it was lifted in April. In both states, the bulk of mining was done by private companies, which were accused of mining outside lease areas and in excess of set limits.

MMTC was banking on business from Karnataka when it invested along with partners Sical Logistics Ltd and L&T Infrastructure Development Projects in an iron ore terminal in Ennore Port in Tamil Nadu.

"We think that at least in the next five to six years there will be no exports of iron ore," said SM Babu, general manager at MMTC's Chennai office. Instead the joint venture company hopes to tap growing demand for coal-fired power plants in Tamil Nadu.

Only 16 out of 115 mines have resumed mining in Karnataka. For those keen on returning, the bureaucratic hurdles can be overwhelming.

"There are about 30 or 40 companies whose quantities are so low that they will never restart," said Basant Poddar, owner of Mineral Enterprises Ltd, which has four mining leases in Karnataka but none operating currently.

"For those willing, the issue is with forest clearances. The whole process goes through about 50 levels or officers for stage one clearance, and for stage two it's cut down to about 20."

On Monday, Vedanta Resources Plc, a London-based mining conglomerate controlled by Anil Agarwal, said its Sesa Sterlite unit had resumed operations in Karnataka after clearance from a court-appointed panel.

CHINA APPETITE WANING

Jiro Iokibe, analyst at Daiwa Securities in Tokyo, sees Indian iron ore exports of 15 million tonnes next year, rising to 20 million tonnes in 2015. This is well below the record of more than 117 million tonnes in 2009-2010.

Lower Indian supply has eased pressure on a market seen moving to surplus given expansion by low-cost producers such as Rio Tinto, BHP Billiton and Brazil's Vale while growth in Chinese demand eases.

India's exports to China reached just over 10 million tonnes in January-November, down 68 per cent from a year earlier.

"Definitely people are not depending now on Indian material," said a trader in Shanghai who is among a few left selling only Indian iron ore to Chinese mills. "Most traders have switched to mainstream cargoes from Australia and Brazil and cargoes from India are going at a discount of maybe up to $4 a tonne."

The central and state governments, which put in place the various bans under direction from a Supreme Court determined to clamp down on illegal mining, appear keen on getting the iron ore sector back on its feet.

"We have placed all the regulatory measures we have undertaken in front of the Supreme Court so that we can resume mining operations," Prasanna Acharya, mines director in Goa, said in November.

The court has set up a panel that will determine a limit on Goa's production. The panel is expected to submit an interim report by February 15, but Acharya has said he does not expect a resumption in mining before October at the earliest.

COLLATERAL DAMAGE

When the iron ore miners give up, so do businesses relying on the raw material.

Out of the 53 sponge iron making plants in Karnataka with annual production capacity of about 3 million tonnes, 19 have closed and 27 are operating at half their capacity due to a shortage of iron ore, said Deependra Kashiva, executive director of the Sponge Iron Manufacturers Association.

India is the world's top producer of sponge iron, an alternative steelmaking ingredient that is economically viable where natural gas is abundant and cheap.

At Sesa Sterlite's 7 million-tonnnes-per-year mine in Codli Village, about 50 kilometres east of Goa's capital Panaji, machinery operator Lakshdeep Asrekar is among a few who still report to work.

Asrekar is lucky because many have lost their jobs, with industry group FIMI estimating job cuts at 200,000 across Goa and Karnataka.

"We come and start our machinery and dumpers and keep them running for 15-20 minutes so that they are in working condition," said Asrekar.

Similar Documents

Premium Essay

Iron and S

...on Indian Iron and Steel Industry OVERVIEW 1.1 Background The Indian iron and steel industry is nearly a century old, with Tata Iron & Steel Co (Tata Steel) as the first integrated steel plant to be set up in 1907. It was the first core sector to be completely freed from the licensing regime (in 1990-91) and the pricing and distribution controls. The steel industry is expanding worldwide. For a number of years it has been benefiting from the exceptionally buoyant Asian economies (mainly India and China). The economic modernization processes in these countries are driving the sharp rise in demand for steel. The New Industrial policy adopted by the Government of India has opened up the iron and steel sector for private investment by removing it from the list of industries reserved for public sector and exempting it from compulsory licensing. Imports of foreign technology as well as foreign direct investment are freely permitted up to certain limits under an automatic route. This, along with the other initiatives taken by the Government has given a definite impetus for entry, participation and growth of the private sector in the steel industry. While the existing units are being modernized/expanded, a large number of new/greenfield steel plants have also come up in different parts of the country based on modern, cost effective, state of-the-art technologies. Soaring demand by sectors like infrastructure, real estate and automobiles, at home and abroad, has put India's steel industry...

Words: 6032 - Pages: 25

Premium Essay

Report

...AN FINAL REPORT ON SALES AND DISTRIBUTION CHANNELS AT STEEL AUTHORITY OF INDIA LIMITED SUBMITTED BY: R.N.MUKHERJEE (07BS3134) STEEL AUTHORITY OF INDIA LIMITED AN FINAL REPORT ON SALES AND DISTRIBUTION CHANNELS AT STEEL AUTHORITY OF INDIA LIMITED SUBMITTED BY: R.N.MUKHERJEE (07BS3134) A Report Submitted In Partial Fulfilment Of The Requirements Of MBA Program Of ICFAI BUSINESS SCHOOL, HYDERABAD DISTRIBUTION LIST: PROF. SUBHASIS RAY (FACULTY MEMBER-MARKETING, IBS Hyderabad) MR. TANMOY SEN (SR. MANAGER (Mrkt-MS), SAIL, KOLKATA) 2 ACKNOWLEDGEMENTS I express my gratitude to Mr. M.R.Rath, Sr. Manager (HRD), Steel Authority Of India Limited (Kolkata) for giving me an opportunity to work with SAIL and for extending support in the form of knowledge and guidance. I would also like to thank my company guide, Mr. Tanmoy Sen, Sr. Manager (Mrkt-MS Division), Steel Authority Of India Limited (Kolkata) as well as other employees of Steel Authority Of India Limited, Kolkata, namely, Mr.R.M.Suresh, Mr. Pankaj Singh, Mr.D.K.Sinha, Mr. N.M.Padhy, Mr. H.Hembram and Mr. M.R.Rath for being a constant source of encouragement as well as for providing guidance throughout the project. I also sincerely acknowledge the guidance and esteemed advice extended by Prof. Subhasis Ray, Faculty Member - Marketing Area, IBS (Hyderabad). Finally, I would like to thank all those people who in the course of my project have knowingly or unknowingly helped me, especially the channel members I...

Words: 2776 - Pages: 12

Free Essay

Baffin Lands Iron Ore

...Baffinland Iron Mines Corporation Prepared for: SHAWKAT KAMAL COURSE INSTRUCTOR PORTFOLIO MANAGEMENT AND INVESTMENT ANALYSIS (F605) Prepared by: Group 8 HASNAT AHSAN MOHAMMAD ZILLUR RAHMAN AFM RIASAT HOSSAIN MD. RAIHAN SHOUROV CHALAN KANTI ROY DAMIL ALAM PRAKASH 43 E-10 46 D-132 46 D-134 46 D-139 46 D-141 47 D-37 Concerns • • • • The Mary River Property Baffinland Iron Mines Corporation Nunavut Iron Ore Acquisition Inc Arcelormittal The Mary River Property • Located 3000 kilometers directly north of Toronto. • High grade iron ore deposit first discovered in the 1960s by Murray Watts and Ron Sheardown. • First exploratory work “indicated a resource of about 120 million tonnes grading approx. 68 percent iron. Problems of The Mary River Property • Is in Arctic Circle • There was permafrost on the ground, which may cause surface to become unstable • Was no infrastructure to speak of • Average temperature in winter was 28 C • Due to latitude and location, used to remain dark for many continuous months Baffinland Iron Mines Corporation • Incorporated in 1963 as Baffinland Iron Mines Limited. • McCloskey and McCreary acquired a significant share of Mary River Property in 2003 and then created Baffinland Iron Mines Corporation in 2004. • Both became chairman and ceo of Baffinland respectively. • Raised $14 million via a reverse takeover and conducted a preliminary study on Mary River • After exploration it was found that Mary River had significant and high...

Words: 1575 - Pages: 7

Premium Essay

Financial Analysis of Jsw and Sail

...Group Research Project Jindal Steel Works Ltd. & Steel Authority of India Ltd. Executive Summary This report provides an elaboration of the steel industry of India as well highlights the comparison parameters of the current and prospective profitability, liquidity and financial stability of two major players of the industry – Jindal Steel Works Ltd. and Steel Authority of India Ltd. The analysis of the players includes trend prevalent in the industry, horizontal and vertical analysis of the organizations as well as ratios such as Interest Coverage, Solvency, Profitability and Performance. Other calculations include Z-Score analysis, Financial Statements Case analysis and Total Assets and earnings per share to name a few. All calculations can be found in the attached excel files. Results of data analyzed show that SAIL has had a drastic downturn for the last five years whereas JSW has improved its value in the market by adoption of certain new technologies at timely intervals. The report finds the prospects of the companies in their respective current positions are not positive. The major areas of weakness require further investigation and remedial action by management. Some challenges that are being faced by the company as discovered during the Qualitative Analysis of the organizations are,   There have been multiple fluctuations in the market and the numerous possibilities of China's entrance into the exporting markets Thought the domestic demand...

Words: 9892 - Pages: 40

Premium Essay

Steel Industry

...steel industry is at the source of employment for more than 50 million people. World crude steel production has increased from 851 mega tonnes (Mt) in 2001 to 1,527 Mt in 2011. (It was 28.3 Mt in 1900).World average steel use per capita has steadily increased from 150 kg in 2001 to 215 kg in 2011. India, Brazil, South Korea and Turkey have all entered the top 10 steel producers list in the last 40 years. World Steel in Figures 2012 The World Steel Association (world steel) has published the 2012 edition of World Steel in Figures. World Steel in Figures provides essential facts and statistics about the global steel industry. The book contains comprehensive information on crude steel production, apparent steel use, pig iron production, steel trade, iron ore production and trade, and scrap trade. World Steel in Figures lists major steel-producing countries, top steel-producing companies, and top steel-consuming countries.   Table 1: Major steel-producing countries   | 2011 | 2010 | 1. | China | 683.9 Mt | China | 637.4 Mt | 2. | Japan | 107.6 Mt | Japan | 109.6 Mt | 3. | United States | 86.4 Mt | United States | 80.5 Mt | 4. | India | 71.3 Mt | India | 68.3 Mt | 5. | Russia | 68.9 Mt | Russia | 66.9 Mt |...

Words: 4861 - Pages: 20

Free Essay

Posco Project

...case. 1. What are the socio-economic and environmental costs of proposed POSCO Projects? Before proceeding to identify the socio-economic and environmental costs of proposed POSCO Projects lets quickly look into the broad aspects of the project first from the state’s, the company’s & the steel industry’s perspectives in general:  The Pohang Iron and Steel Company, or POSCO based in Pohang, South Korea, is the world's fourthlargest steel maker by market value and Asia’s most profitable steelmaker.  Korea is the world leader in shipbuilding & gradually becoming a leading automobile manufacturer in the world. Both these industries depend heavily on steel & this is where the role & importance of POSCO for supplying steel becomes paramount. POSCO has been seen as the bedrock of Korea's industrial development over the past 40 years.  The steel market, growing at an annual rate of more than 4%, just before the recent meltdown, had been witnessing a global boom since the beginning of this decade. This was what enticed POSCO to this eastern state to lead the revolution apart from the global race for cheap labour and raw materials (iron ore and coal).  National and multinational corporations have been making a beeline to resource-rich developing countries to set up...

Words: 3631 - Pages: 15

Free Essay

Metal Sector

...metals. Non-ferrous metals, which include aluminium, copper, zinc, lead, nickel and tin, are used to make alloys, castings, forgings, extrusions, wires, cables, pipes, etc., and find their application in a number of sectors such as agriculture, infrastructure facilities like power plants, automobiles, railways, telecommunications, building and construction and in engineering and chemical plants. There are significant reserves of non-ferrous metal ores in India. India is rich in bauxite (aluminium ore) and has grades of zinc, lead and copper reserves. Copper, lead and zinc are also imported as scrap or concentrates to be processed by secondary/custom smelters. Nickel and tin are also imported by India. Ferrous metals primarily consist of iron and different varieties of steel. Indian steel industry has shown strong performance in the recent past in terms of production, capacity utilisation, exports and consumption. India is now a major competitor among steel producers in the world. The sSteel industry contributes 1.3 per cent to India’s GDP and accounts for 10 per cent in Excise Duty collections. The industry provides employment to 0.4 million people directly and 0.6 million people indirectly. While this sector covers a large domain consisting of a variety of metals, this report focuses on four key metals...

Words: 4799 - Pages: 20

Free Essay

Mining in India

...indeed support coal, gold, silver, iron ore and steel mining, they did not look favorably upon mining other metals such as lead. They believed that India's development of metallurgy would lead to production of weapons for the "natives," a potential threat to British rule. The British implemented the Arms Act in 1878 to outlaw Indian ownership of firearms and limited Indians from mining and working metals that might "sustain it in future wars and rebellions." (14) Several mines were actually closed down under British rule. IV.4 Coal Mining Large-scale commercial coal mining in India began in 1774 under the East India Company in the Raniganj Coalfield along the Western bank of the Damodar River. The introduction of steam locomotives in 1853 made possible the effective transportation of coal from the mines to urban centers and ports (15). India's output of coal rose from 2,203 thousand metric tons in 1890 to 30,695 in 1947 (16). Coal mining proliferated during and after World War I; from 1920 to 1930, national coal output increased from 18,250 to 24,185 thousand metric tons (16a). However, coal mining declined during the early 1930s, when the output dropped by more than 4,000 thousand metric tons in just three years. The facts collaborate with other sources that claim Indian industries declined along with Britain's economic stagnation during the 1930s (17). IV.5 Iron Ore Mining India's output of iron ore increased significantly during...

Words: 422 - Pages: 2

Premium Essay

Market Structure of Steel Industry

...Model Suggestions Road Ahead Major Steel Producers Introduction India has acquired a central position on the global steel map with its giant steel mills, acquisition of global-scale capacities by players, continuous modernisation, and improvement in energy efficiency. Steel companies from across the world have shown interest in the Indian steel industry due to its phenomenal performance. In India, the steel industry plays a significant role in the economic growth. India is world's fourth largest crude steel producer in 2011-12 with 89 million tonnes (MT) as per provisional data and is expected to become the second largest producer of crude steel in the world by 2015-16. India is also the world's largest producer of sponge iron with a host of coal based units, located in its mineral-rich States. The major contribution of the steel industry focuses on strengthening the sectors, such as infrastructure, constructions, automobile, transportation, industrial applications etc. Tata Steel has been named among the world's most ethical companies by an American think tank, Ethisphere Institute. Ethical business...

Words: 4959 - Pages: 20

Free Essay

Mineral Based Industry

...Iron and steel, cement, aluminium, machine tools, petrochemicals producing industries are called mineral based industries. Mining is the extraction of valuable minerals or other geological materials from the earth, from an orebody, lode, vein, (coal) seam or reef, which forms the mineralized horizon and package of economic interest to the miner. To gain access to the mineralised package within the lease area (aka Mining Rights Lease) it is often necessary to mine through (to create access, shafts, addits, ramps) or remove to the side waste material which is not of immediate interest to the miner. The total movement of ore and waste, which also includes the removal of soil in some cases, is referred to as the mining process. Depending on the nature, attitude, and grade of the orebody, it is often the case that more waste than ore is mined during the course of the life of a mine. The waste removal and placement is a major cost to the mining operator and to facilitate detailed planning the detailed geological and mineralisation characterization of the waste material forms an essential part of the geological exploration programme. The science of extractive metallurgy is a specialized area in the science of metallurgy that studies the extraction of valuable metals from their ores, especially through chemical or mechanical means. Mineral processing (or mineral dressing) is a specialized area in the science of metallurgy that studies the mechanical means of crushing, grinding, and washing...

Words: 1056 - Pages: 5

Free Essay

Dry Bulk Shipping in 2015

...Maritime Economics (Assignment 2) Student: Student ID: Lai Wen Hao 195125 Unit Co-ordinator: Unit Code: Unit: Course: Dr Hong-Oanh Nguyen JNB328 Maritime Economics Bachelor of Business (Maritime and Logistics Management) Due Date: Word Count: 27 April 2015 1906 Maritime Economics ii Abstract The dry bulk shipping market is highly volatile and subject to many market influences. Operating in a market of perfect competition, individual suppliers and consumers have little control over the freight rates, and the market outcome. This paper examines the key issues affecting dry bulk shipping in 2015. It includes the shipping demand factors affecting the market and the market oversupply issue that was resultant of the dry bulk shipping market boom in 2013. Further on, the paper discusses the strategies that can be implemented by individual shipping companies to deal with the impending issues in 2015. This includes fleet size policies, operational policies, and employment strategies. Upon close examination, it is apparent that the strategies that have been discussed are not one-size-fits-all. The strategies employed by dry bulk shipping firms in 2015 are therefore intrinsically dependent on their financial capability, risk profile and appetite for profits. Lai Wen Hao Assignment 2 Maritime Economics iii Table of Contents Abstract __________________________________________________________________ ii Table of Contents ...

Words: 3039 - Pages: 13

Free Essay

Essay

...Bhubaneswar-751007 Ankita Crusher Pvt. Ltd. Works : Bayakamutia, Bayapandadhar Off : NH-6,Madhopur Square,Keonjhar Arien Minning & Trading Corporation Pvt Ltd. Off : Barbil,Keonjhar Arjun Ladha Location:Balagunda Off : Akash Bhawan,Near Barbil Basti,Barbil Arya Iron & Steel Co.Pvt Ltd. Fac : 107/1,108/1, Industrial Estate,Matkambeda,Barbil Off : Plot No. 507/653 Barbil Joda Highway Head Off : 51-53a,Mital Court,Nariman Point,Mumbai400021 B R M Mines & Minerals Works:at:Saralapentha, Po:Mahadeijoda Off : NH-6,Near Sahara India Office, Keonjhar Head Off : 2,NAC Guest House Market,Near Railway Station,Rourkela-769001 Balgopal Mineral Pvt. Ltd. Works: At-Jalahari,Jurudi Po: Jajang,Keonjhar Regd. Off:-At-Joda Banspani Road,Joda Contact Person Telephone No Ph : (0674)2546252 2. Ph : (06766)212078 Mail : ankitacrusher@yahoo.co.in Ph : (06766)256114 Fax : 251635 3. Ph : (06767)275236 4. Ph :(06767)277033 Mob :9437077033 Mail: global_bbl@yahoo.com Ph : (06767)260-500 Fax : 260400 Ph : (06767)275031 Fax : 277468 Ph : (022)40696000 Mail : mail@aryagroup.in Mail : aisco@aryagroup.in Mob :9734004708 Ph : (0661)2507742 Fax : 2510087 Mail:rkl_electro@sancharnet.in Mob : 9437058803 5. 6. 7. 8. 9. Banspani Iron Ltd. Works : At-Jaribahal Off :At/Po:Boneikala,Joda Beekay Steel & Power Ltd. Fac :Vil.:Uliburu,Po: Nalda Off : Station Road ,Near OMC,Barbil Regd. & Head Off : Lansdowne Towers,4th Floor,21-A,Sarat Bose Road, Kolkata-20 North Orissa Chamber of Commerce &...

Words: 2549 - Pages: 11

Free Essay

Nucor Corporation

...Nucor Corporation: Competing against Low-Cost Steel Imports Week 8 Assignment Bus 599 Nucor Corporation is today one of North America largest steel maker company. Although the company has a strong position in the steel market today, things have not always been as positive. According to Crafting & Executing Strategy, Nucor was first known as Nuclear Corporation of America, a company involved in the nuclear instrument and electronic business in 1950’s and early 1960’s. Facing bankruptcy, the company changed direction and decided to invest in the stable steel-joist business. The new name, Nucor Corporation, came along with the change in 1972 to break away from the nuclear image and embrace the new venture. This transformational change was due to the vision of new CEO and president, F. Kenneth Iverson. His strategic initiatives revealed to be a blessing as Nucor Corporation has been successfully growing since its creation. Discuss the trends in the steel industry and how it may impact Nucor’s strategy. The electric arc furnace technology was introduced in 1960. The “mini-mills” was limited when compared to integrated mills in the industry. In addition, the operating costs of companies are lower compared to integrated mills because they use electric arc furnaces that can produce various steel products to minimize production costs. (Thompson, Strickland, & Gamble, 2010). Nucor Corporation started using thin-slab casting during the 1980’s and it was their...

Words: 1512 - Pages: 7

Premium Essay

Environmental Pollution

...650 tonnes. During 2003-2004 the quantity of coal exported by CIL was 35,831 tonnes (Provisional). IMPORT OF COAL As per the present Import policy, coal can be freely imported (under Open General Licence) by the consumers themselves considering their needs and exercising their own commercial judgments. Coking coal is being imported by Steel Authority of India Limited (SAIL) and other Steel sector manufacturing mainly to bridge the gap between the requirement and indigenous availability and to improve the quality of overall blend for technological reasons. Coal based power plants, cement plants, captive power plants, sponge iron plants, industrial consumers and coal traders are importing non-coking coal on consideration of transport logistic and commercial prudence as well as against export entitlements. Coke is imported mainly by Pig-Iron manufacturers and Iron & Steel sector consumers using mini-blast furnace. Details of import of coal and products during the last five years(as reported by Coal Controller’s Organization) as under: (in million tonnes) Coal 1999-00 2000-01 2001-02 2002-03 2003-04 2004-2005* Coking Coal Non-coking Coal Coke Total Import 10.99 8.71 2.41 22.11 11.06 9.87...

Words: 417 - Pages: 2

Premium Essay

Ocean Carriers

...previous year plus new deliveries minus the scrappings and sinkings. Additionally, supply also rose by the size and efficiency of the new vessels. From Figure 1, we can see that $2 millions of deadweight tons will be scrapped which will lower the supply. However, at the same time we notice from Figure 2 that in 2001, 63 new vessels will be delivered. Thus, the supply of capesizes will increase in 2001. Demand for dry bulk capesizes is strongly determined by its basic industries, as 85% of the cargo contains iron ore and coal. In Figure 3, we can clearly see this correlation. The average daily hire rates move strongly in accordance to the number of iron ore vessel shipments. Average daily hire rates are also higher when the vessels are still young, and will decline the older the vessel becomes. A shift in focus markets for the supply of these commodities can also increase demand if the distance increases. Based on these trade patterns, Linn expects the demand for iron ore and coal to remain stagnant over the next two years. As supply increases in 2001 and demand remains relatively constant, daily spot rates...

Words: 633 - Pages: 3