No 18

08 to 14 December, 2011

BMTI Short Sea Report

FOR BMTI-SUBSCRIBER . Baltic Sea Urgency to Fix Balanced by Slightly Weaker Cargo Demand Worsening weather conditions in northern Europe have accelerated the urgency with which charterers are trying to fix their cargoes before 2012 and the oncoming holiday period. This urgency is leading some charterers to accept slightly higher freights, though for the most part freights are trading flat-to19 18 17 16 /mt 15 14 13 12 Week 49 1 5 9 13 17 21 25 29 33 37 41 45 49 Baltic Westward [2010-11]

down with cargo activity looking more sluggish from early December. Coal is moving but mostly on contract basis rather than spot. Grain is moving, but at a slower pace, which is pressuring grain rates. A 3,000mt grain cargo from Hull to WC Ireland can achieve EUR 18/mt, which is around EUR 1/mt lower than last week. Grain of 3,000mt for Hamburg/Finland is trading at EUR 16/mt, also down EUR 1/mt from a week ago. Steels and fertilizer cargoes are also steady from eastern Baltic terminals. The first ice has formed in the northern innermost archipelagos of the Bay of Bothnia during the second half of the last week, according to Baltic Sea Ice Services. Ice formation continued over the weekend, but so far ice cover is limited to the inner areas of the northern archipelagos in the Bay of Bothnia. On the Swedish coast of the Sea of Bothnia, however, the ngermanlv is covered by new ice north of the Sand Bridge. The Gulf of Finland remains ice free.

This tracks average freight rates for a general short sea cargo of 3,000mt shipped from the Baltic States to the ARA region.
.

Further Upgrades for Black Sea Freights as Open Tonnage Tightens Bullish trends continue to prevail for transport of major in-demand cargoes such as grains, steels and minerals (as well as scrap) across the Black Sea as well as farther afield. As such, freights have gained upwards of US$ 2/mt over the week in some cases, or US$ 1/mt in others. Coal freights are seen equally ascendant with 5,000mt of coal able to achieve freight of US$ 24/mt for Kerch/Iskenderun, which is about US$ 2-3/mt higher than similar cargoes were getting for the run last week. Charterers are finding themselves swamped with requirements to fulfil before the year ends and owners are more than happy to press for premiums while charterers are proving more flexible to accept. A shortage of suitable tonnage is also helping elevate freight levels. Steels of 5,000mt for Odessa/Alexandria are fixing at US$ 32/mt, about US$ 1/mt higher than last
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week. Grain cargoes are also demanding upgrades with 3,000mt wheat quoted for Varna/Marmara at US$ 36/mt, which is US$ 1.5/mt up on last week.
30 28 26 24 USD/mt 22 20 18 16 Week 1 5 9 13 17 21 25 29 33 37 41 45 49 Black Sea Southward [2011]

Freight for a general 3-5,000mt cargo from Azov Sea to Marmara.

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Caspian Sea Freights Ascendant on Last Minute Cargo Fixing A flurry of fixing amid limited tonnage has unsurprisingly spurred significantly higher freights in the Caspian over the past ten or so days since the start of December, continuing a steady upward trend in freights that has been in force since October. Timber, grain and steel products (among other cargoes) are being fixed rather energetically before the onset of the year-end holidays and increasingly difficult weather in the Volga and Russian inland waterways at large. Urgency to conclude last-minute cargoes is especially high at Astrakhan where slabs of 3,000mt to Anzali are achieving US$ 32/mt or higher, which is some US$ 3/mt higher than the start of December. Steel cargoes of 3,000mt for Aktau/Anzali are fixing at US$ 23/mt, or US$ 2/mt higher than late November. Positive trends prevail and owners are putting up resistance, if possible, in hopes of getting even better freights in the days ahead with charterers more than willing to accept higher freights. Grain demand is steady with freights for Makhachkala/ Anzali flat at US$ 33.5/mt for 3,000mt cargoes.

Mediterranean Overview Market Update from an Area Ship Broker Libya: Cargo volumes into Libya remain strong with for either smaller or larger size vessels in hopes of volumes increasing. LISCO strike has been resolved. finding tonnage at the desired freight levela gamble that nowadays seems to depend on urgency. Tunisia: The strike at Gabes continues without resolution, now 22 days (no activity). All other ports are Turkish Med: Cargoes of steels and bagged cement working normally with low traffic, no congestion. quoted from the week before have been seen requoted yet again last week, a sign that charterers are Egypt: Several fresh steel cargoes appeared on the not facing up to market levels with owners opting to market early last week but after careful investigation ballast out of the region and into the Black Sea, Egypt the cargoes were not (yet) firm and as such charterers or Greece. are only fishing for freights before they finalize sales. Adriatic market: Continued strength in steel, tim ber and grain cargoes with a lack of suitable tonnage 46 Black Sea - N. Africa [2011] is driving freights upward with charterers competing 44 for the limited supply of modern tonnage available.
42 40 USD/mt 38 36 34 32 Week 1 5 9 13 17 21 25 29 33 37 41 45 49

WC Italy: Marble and Steel shipments remain on the cargo menu for those less likely owners who would prefer to avoid calling French Med or South Spain. Freight remain stable and most cargoes being quoted are in the size of 2-4,000mt. Some agriproducts are also apparent moving in larger lots. South Spain-Spanish Med: Again last week we saw a strong supply of steels supplemented by increased volumes of palletized generals for multiple destinations in the Med and Continent. Owners of tonnage between 2-5,000 dwt should have no problem filtering through and finding a decent paying cargo. French Med: Steels and agri-products in the sizes of 3-5,000 dwt continue to appear daily fresh out for multiple destinations within the Med.

This tracks average freight rates for a general short sea cargo of 3-5,000mt shipped from Black Sea to North Africa.

Greece: Growing volumes of aluminium, steels, wheat, marble, cotton seed and bauxite cargoes have been noticed quoted on the market last week for multiple destinations which include the Marmara, Adriatic Sea, Central Med, East Med, Black Sea and Continent. Some charterers are re-quoting cargoes Summary: The Mediterranean freight market last week remains promising, but more coaster tonnage is seen quoted open primarily from North European owners hoping to catch that long hall cargo that will cover them over the holidays. As we approach the holidays we expect activity to gradually start a pro cess of slowing down leading up to Christmas week. With an Iranian embargo on oil talked about openly

this may fuel a jump in oil prices resulting in a likely further spike in freights amongst other things. The Turkish Med and Egypt continue to see impro ved cargo volumes for certain sizes, though most owners are opting to ballast toward Black Sea or Greece in hopes of obtaining better freights as cargoes are being quoted in abundance. The S. SpainFrench Med-WC Italy-Adriatic area continues to

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provide a healthy supply of cargoes and lack of vessels for cargoes ranging in size between 25,000mt. Owners with tonnage in that size should not have a problem covering their positions. Freight levels continue to rise and the outlook remains good. Some positive news last week came from across the Atlantic as the US announced it had created jobs; unemployment figures are now well below 9%. As for the EU, however, unemployment is set to rise in coming monthsin Greece alone 160,000 civil service workers will be out of work in moves to contain the budget deficit. And how about this: Hungary just passed a law making homelessness illegal. The new law is aimed at stopping homeless people from Dry Bulk Commodity News European demand for coal remains low with futures seen easing by US$ 1/mt WoW to US$ 112/mt for Q1-2012. But with Amsterdam stocks running low demand may resume last week, analysts say. Wheat prices are flat but with a greater downside as Paris wheat stays unchanged at EUR 175.5/mt. The USDA announced forecasts of a record world wheat of 689 Mt, upgrading previous estimates by 5.7 Mt. As was expected, Russia had a bumper grain crop in 2011 with total volume of the harvest amounting to 92 Mt, far up from the 61 Mt registered last year. The announcement was made this week by Pavel Skurikhin of the National Union of Grain Producers. France, one of the world's major grain producers, is holding its own against highly competitive prices being offered by Black Sea producers Russia, Ukraine and Kazakhstan. Egypt, the world's biggest wheat importer, just purchased 60,000mt of French wheat, its first purchase of French wheat since June. State buyer, Gasc, said Argentina was offering the cheapest wheat at US$ 226/mt, but said French wheat

sleeping on the street. The capital of Budapest has 10,000 documented homeless sleeping on the street whilst only 6,000 beds to put them. The outrageous and inhuman law is meant to deter homeless from sleeping on the street by first warning the offender and if the offence is repeated issuing a fine of 600 euro. If not paid the result will be imprisonment. Many of us wonder if it wouldn't be better for the Hungarian police to just take the homeless directly to jail where they can at least get a bed and a warm plate of food. As for collecting 600 euro from a homeless man or woman, it will be interesting to see. Perhaps they plan on confiscating the cardboard boxes they are living on/in. It makes one wonder what the Hungarian government is thinking. was proving highly competitive against Argentina, Russia and Ukraine with its offer of US$ 240/mt. Gasc also bought 60,000mt of Russian wheat at US$ 244/mt in the tender. French wheat futures for March are currently flat at EUR 176.5/mt in Paris.
Grain Freight Rates 2011
65.00 60.00 55.00

USD/mt

50.00 45.00 40.00 35.00 30.00 25.00 20.00 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49

Week
USG/EU Ukraine/Morocco USG/Japan Ukraine/Italy Brazil/EU N.France/Egypt

The Baltic fertilizer trade is holding firm. Merktrade sold 20,000mt of prilled Phosagro urea loading from the Baltic to Gubretas for Iskenderun at US$ 370/mt CFR, just over last-done prices of US$ 368/mt CFR.

China Coastal & Far East Handy Bulk Report Pacific and Indian Ocean freights have continued Coal freights are also facing increased pressure on the their decline and there's no sign of any respite. Chinese coastal shipping markets (see trend below). Today, there are just too many ships and slowing China Coastal Bulker Freight Index 2011 Chinese demand has exacerbated the problem. This 1900 market demise is now affecting all sizes and there's 1700 even talk of lay-up, although we haven't seen it take place yet. Pundits talk of possibly better prospects 1500 after the Chinese Lunar New Year but not only is 1300 that some time off, there's little evidence as yet to indicate why any upward change should occur then. 1100 A 42,000 dwt vessel has been bid US$ 4,000 daily 900 for a local employment of about 25 days with delivery in China. Coastal shipping freights via 700 China are still declining with considerable discounts 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 week-on-week as grain freights fall the sharpest. metal ore coal grain Week
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Investment Review More Companies looking to Restructure Credit Obligations Derivatives were trading all over the map last week, though Handysize FFAs were drifting with January contracts shedding more than US$ 1,000 in the week to close at US$ 8,500. Capes remained buoyant, though, with Q1 up US$ 1,000 to US$ 17,000. There was no dominant trend for bulker stocks last week, but the general malaise on world stock markets set most of the listed shipping companies on a BMTI Sale and Purchase Report Week 50 S&P values remain on their sliding path with older vessels reported as sold on levels just above scrapping prices. Around 10% of the current bulker fleet is said to be worth just around scrap value with the Handysizes taking the major part. With shipping companies suffering from declining business, more vessels are being offered, putting even more pressure on values. Another problem is repayment of term loans granted coming due while necessary refinancing possibilities are becoming ever scarcer. A fiveyear-old Cape is now quoted at about US$ 36.2m. Handysizes of this age are below US$ 25m. Fiveyear-old Panamaxes are getting merely US$ 26.2m. sideways path. Navios Maritime [NM], however, was one positive outlier, gaining 10% WoW to US$ 3.8. The world's second biggest Supramax owner, Eagle Bulk Shipping Inc. [EGLE], is said to be undertaking restructuring talks with Jeffries Group Inc. As many shipping companies, earnings have declined at Eagle Bulk since 2008, which is making it challenging for the company to meet its current loan obligations. Demolition markets see increasing activity with prices heading towards the mid US$ 450/ldt on the Indian sub-Continent and some US$ 50 less for Chinese breakers as the low freight rates and overcapacity of tonnage sailing around is adding pressure on owners to intensify scrapping. Some premiums are being paid for ladies carrying some extras. Bangladeshi yards are anxiously awaiting this week's hearing at the high court in expectation of a timeline to be implemented for reopening, subject to compliance with improved safety standards.

S&P general cargo

"Blue Sky" | 17,825dwt | blt85 | Japan | 4x20t derricks | B&W | sold to undiscl. byrs | USD 3 mio "CB Confidence" | 16,248dwt | blt86 | Spain | 519 TEU | 4x12.5t crns | B&W | sold to Syrian byrs | USD 3.25 mio

forthcoming holidays Date 14 Dec 2011 15 Dec 2011 16 Dec 2011 17 Dec 2011 18 Dec 2011 Country no holidays no holidays Bahrain; Bangladesh; South Africa Bahrain; Kalamata / Peloponnes (Greece) Puerto Bolivar / El Oro (Ecuador); Latvia; Qatar

2011 by BMTI gmbh for . All rights reserved.

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BMTI Bunker Report Week 50 WTI benchmark of light, sweet crude is US$ 99.92 per barrel on the NYMEX as of Tuesday morning while Brent crude stands at US$ 108.69 a barrel at the same time on London's ICE futures exchange. Due to hopes of stronger consumer spending in the USA and growing tensions on Iran with eventual problems in the Strait of Hormuz, oil prices were heading north this week. But at the same time the

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International Energy Agency (IEA) downsized its estimates of global oil demand on Tuesday for 2011 to 89m barrel per day and for 2012 to 90.3m barrel a day, both numbers 200,000 barrel less than published in last month's forecast. Mid-term forecasts are reshaped as well, showing scepticism about the handling and outcome of the European crisis and its global impact on oil demand. Despite lowering estimates, Saudi Arabia has been steadily increasing its output of crude in November of more than 10m barrels a day talking of 'all over demand' increase.

Some market players in Rotterdam report being fully booked during this week. One supplier in Gibraltar has advised tight availability of IFO 180 and strong demand currently. Average demand is reported for the port of Piraeus. Tight supply and availability is prevailing at the moment in Novorossiysk. According to local sources earliest deliveries are possible in Fujairah from 16-17 December onwards.

bunker price info

Herewith some representative fuel oil prices in US currency / delivered
IFO 380 Actuals Previous 415 (455) 661 (676) 625 (645) 613 (632) 618 (637) 629 (651) 625 (648) 619 (639) 645 (661) 617 (621) IFO 180 Actuals Previous 435 (465) 691 (701) 658 (675) 640 (652) 649 (661) 680 (691) 650 (675) 651 (674) 673 (685) 646 (655) MGO Actuals Previous 910 (930) 953 (980) 962 (995) 928 (955) 955 (982) 989 (1007) 950 (983) 940 (975) 999 (1011) 968 (955) Availability Fair Fair Fair Fair Fair Fair Fair Tight Fair Tight

ST. PETERSBURG GDANSK GOTHENBURG ROTTERDAM IMMINGHAM GIBRALTAR 2 MALTA PIRAEUS 1 ISTANBUL NOVOROSSIYSK 2
1

prices ex wharf | 2delivered

BMTI forex crossrates

USD/EURO 0.75 GBP 0.64 JPY 77.82 CHF 0.93 DKK 5.61 SEK 6.83 NOK 5.81

Baltic Indices
for . Actuals DRY (BDI): HANDYSIZE (BHSI): 08 to 14 December, 2011 1,922 597 Previous (1,848) (617) % + 4% - 3% + 74 - 20 Trend Min/Maxlast 12 mos 1,043 2,173 597 839 Min/Max-Volatility
( % from Act. )

1,130 59% 242 41%

BMTI Short Sea Freight Rates

Odessa | Adriatic | grain | 5,000mt | $36.5 Odessa | Marmara | grain | 5,000mt | $28.0 Upper Baltic | S. Spain | general | 5,000mt | 36.5 Nemrut | Tartus | cement | 5,000mt | $19.0 ARA | ECUK | general | 4,500mt | 11.5
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Kaliningrad | Vlissingen | coke | 4,000mt | 20.0 Braila | Mersin | maize | 4,000mt | $43.0 Nikolayev | Marmara | maize | 4,000mt | $30.0 SCUK | East Med | general | 3,500mt | 37.5 French Bay | Morocco | general | 3,500mt | 21.5
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1 Tunisia | Marmara | DAP | 3,500mt | $20.0 Tallinn | ARA | steels | 3,000mt | 18.0 Black Sea | Adriatic Sea | general | 3,000mt | 28.5 SPB | W.Sweden | fertilizers | 3,000mt | 17.5

Marmara | Alexandria | cement | 3,000mt | $19.5 Illyichevsk | Nemrut | ferroalloys | 3,000mt | $33.5 Varna | Marmara | wheat | 3,000mt | $35.5 Poti | Samsun | scrap '90 | 2,500mt | $31.0

this report is distributed for the primary use of the BMTI subscriber . and must not be redistributed by any means unless a specific agreement in writing with BMTI gmbh has been achieved. in case of breach of the subscription contract, the BMTI subscribers may be subject of a contractual penalty of us$ 10,000 sued by BMTI as compensation. all reported details are believed to be correct but without guarantee ! all BEX data are published with one business day delay.

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