Public Service Announcement for UK Treasury, BERR, Bank of England, Foreign and Commonwealth Office , FSA , MEPC etc., etc., URGENT
This is highly specialised secret information about the prospects for coal / iron / freight rates from Brazil / Australia which may have an impact on future industrial / energy costs for the whole of the UK.
The sources are very difficult to find and require very skilled operators to develop economic espionage networks (pic Lord Patel discussing price of conch shells used as currency by primitive Pacific islanders - newspapers, TV news, speaking to folks involved with iron ore / coal imports, heavy users of same etc., people in bus queues, ..... (BTW Aluminium - the principal component of which is electrical energy, has also hit all time highs ever, of US$ 3,100- US$ 3,200 per metric tonne for Primary Aluminium 3mo Official Confirmed)
Platts are reporting some remarkable figures on bulk cargo mineral freight rates some of which are at historical highs and are expected to go higher as winter approaches.
Capesize ships from Brazil to China and/or Southeast Asia iron ore is being fixed at the US $88.00-88.50/mt level for 160,000 mt cargoes (up from mid June US$82/mt) although they have dropped from May all time highs of US $108.50/mt but are still at historically high levels.
For example South Korea's Posco fixing a 170,000 mt iron ore cargo from Ponta da Madeira to Kwangyang on an August 1-15 loading window at $88.50/mt on a Transfield ship that has yet to be nominated.
These rates apply to SE Asian destinations other than the China mainland especially South Korea, as Chinese charterers have cut back spot buying and rely on longer term iron ore contracts for 2008/2009. Chronic port congestion at the main discharge terminals and a need reduce stockpiles to more manageable levels after the plant shutdowns to ensure clean air for the peking Olympics has slowed spot buying.
Western Australia to China freight rates have fallen dramatically by some 50% since mid-May, when the market peaked at around $48/mt - related essentially to the consequences of flooding in the fields. (see Friday, February 08, 2008 Floods wreak havoc in Queensland coalfields - global coal prices shift up a gear )
On Monday, BHP Billiton fixed a 170,000 mt cargo from Port Hedland to Qingdao at $27/mt for a late July-early August loading window on the 2006-built, Mineral Shikoku (206,312 dwt). The same charterer also reportedly fixed a 160,000 mt cargo from Port Hedland to Qingdao for a July 25-30 loading window at $28/mt on the 1995-built Bet Scouter (173,149 dwt). It is of interst to note here that BHP Billiton have closed a deal with South Korean steel giant Posco for a price of US$300 (A$325) a tonne for coking coal in 2008-09, up from US$97 in 2007-08.
"Coal prices rose throughout the year to record highs. The price of annual coal delivered to European ports, commencing January 2009, rose from US$72/tonne at the start of April 2007 to US$124/tonne as at 31 March 2008. (British Energy Half year results to 31/3/08 Page 12 )
Longer shippping times from Brazil are affecting prices as Iron ore , loading in Western Australia can be in China in two weeks, once the ship leaves its loading port .
Australian suppliers are expecting Iron ore prices to rise 70-85% this year and thermal coal for power stations is expected to more than double from its existing level of US$56 a tonne.
The impact of the coking and thermal coal price rises alone would boost Australia's annual 2008-09 export revenue by $35 billion to $56billion.
PS : If you don't work for UK Treasury, BERR, Bank of England, Foreign and Commonwealth Office , FSA , MEPC etc ., but know someone who does .. pass it on.
Tricky work being an economic spy .. salt water plays havoc with yer Gucci loafers.