INSIDE DRY FREIGHT

COMPILED ON WEDNESDAY, MARCH 09, 2011

Index (Total Return) Close Change Pct. Change Port Congestion Avg. Day Weekly Change
Baltic Exch Dry 1382 0 0.0% Port Hedland Ore 5.5 -3
Baltic Capesize 1507 0 0.0% Newcastle Dyke Coal 12 5
Newcastle Kooragang Coal 13 6
Baltic Panamax 2015 0 0.0%
Brazil Tubarao 7.5 -2
Cash Prices
China Qingdao 3.5 -1
McCloskey AP14 120.95 0.25 0.2% India Paradip Ore 1.5 -8
McCloskey AP12 124 1.25 1.0% India Paradip Coal -0 -0
Coal Newcastle 130.3 0 0.0% Rich. Bay Coal 6 -0
(Source: Global Ports)

MARKET NEWS (Click on the headlines below to jump to the story)

FREIGHT CHART OF THE DAY (Click on the chart for full-size image)

 BALTIC INDEX RISES, S.AMERICA GRAINS EXPORTS

GROW
COAL
 XSTRATA TO LIFT ROLLESTON COAL MINE FORCE
MAJEURE PENDING RAIL REPAIRS
 PHILIPPINES PSALM SEEKING 80,000 T LOCAL
COAL
 PIRACY MAY CURB INDIA'S SAFRICA COAL
IMPORTS-ADANI
 EURO COAL-COAL DOWN WITH OIL, LOW CHINESE
DEMAND
 EPA TELLS OKLAHOMA UTILITIES TO CLEAN COAL
PLANTS
 S.AFRICA REPLACES FIRM RUNNING COAL EXPORT
SCHEME MARKETS
 VITOL AWARDED $70 MLN IN BHATIA COAL DRY BULK FREIGHT: The Baltic Exchange's main sea freight index,
DISPUTE which tracks rates to ship dry commodities, rose on Tuesday helped
 ASIA COAL-AUSTRALIA THERMAL COAL PRICES by firmer cargo demand especially for grains. The index rose 3.04
STEADY PENDING JAPAN CONTRACTS percent or 42 points to 1,424 points in an eighth straight rise.
 AUSTRALIA NEWCASTLE COAL EXPORTS DROP
DUE TO RAIL MAINTENANCE
IRON ORE: Spot iron ore prices extended losses on Tuesday, with
 AUSTRALIA'S QR NATIONAL TO RE-OPEN Chinese buyers still shunning the market waiting for further falls or
ROLLESTON COAL LINE a recovery in steel prices, but Indian futures rose ahead of higher
 INDIA'S VEDANTA SAYS IT NEEDS 1 MLN T COAL IN export taxes in April. Spot Indian ore with 63.5 percent iron content
2011 was quoted in China at $181-$183 a tonne, including freight, on
 PROGRESS ENERGY WORKING TO RESTART FLA. Tuesday, down from $182-$184 on Monday, said Chinese consul-
COAL UNITS tancy Mysteel.
IRON ORE
 INDIA'S GOA PORT FEB IRON ORE EXPORTS DOWN COAL: European coal prices eased slightly on Tuesday as Brent
4.2 PCT crude prices fell back below $115 per barrel, and because of the ab-
 EGYPT'S STEEL MAGNATE EZZ SAYS HOPES FOR sence of Chinese import orders, traders said. The API2 2012 futures
FAIR TRIAL coal contract was traded at $122.75 per tonne on Tuesday afternoon
 IRON ORE-SPOT PRICES IN CHINA EDGE LOWER, (GMT), down from $124 the previous day, and the API2 contract for
INDIA FUTURES RISE April delivery was down $1.5 per tonne to $122.50.
 CHINA DAILY CRUDE STEEL OUTPUT UP 5.5 PCT IN
LATE FEB GLOBAL MARKETS: Oil prices fell for a second day on Wednesday
as OPEC considered raising production, pushing up Asian stocks
 WUHAN STEEL EYES OVERSEAS PLANT, COAL although investors remained on edge because of the turmoil in the
RESOURCES
Middle East. "Oil has stopped rising for now, but it hasn't really
 STAINLESS STEEL PRODUCTION HITS NEW retreated to levels that allows aggressive buying in risky assets, so
RECORD- ISSF investors will still be jittery," said Hiroichi Nishi, general manager
 INDIA IRON ORE TRADES FLAT; CHINESE BUYING at Nikko Cordial Securities.
EYED
INSIDE DRY FREIGHT
BALTIC INDEX RISES, S.AMERICA GRAINS EX-
PORTS GROW
By Jonathan Saul
LONDON, March 8 (Reuters) - The Baltic Exchange's main
sea freight index, which tracks rates
Panamax market driving to ship dry commodities, rose on
gains
Tuesday helped by firmer cargo
Capesize activity picking demand especially for grains.
up
The index rose 3.04 percent or 42
points to 1,424 points in an eighth straight rise.
"The upward momentum has been in the panamax sector
driven by increased fixing activity ahead of the onset of the
main Latin American grains season," said Derek Langston, a
senior director at SSY Consultancy and Research.
"This has been supplemented by recovering volume of coal
from the East Coast of Australia as well as volume of coal
from the U.S."
Before the beginning of the move higher over a week ago, the
index -- which tracks the cost of shipping key commodities
such as iron ore, cement, grain, coal and fertiliser -- had
fallen for four previous sessions, and in February it reached
its lowest in two years.
Recent floods and cyclones in Australia have hit coal produc-
tion and many producers have declared force majeure at
their operations, which has hurt capesize activity.
"Chinese iron ore demand has been relatively weak as iron
ore and steel inventories remain near record levels, with con-
tinued overcapacity keeping capesize rates under pressure,"
Michael Webber, senior analyst with Wells Fargo Securities,
wrote in a note.
The Baltic's capesize index rose 5.84 percent, with average
daily earnings inching higher to $7,550 in a sixth day of light
gains. Capesizes typically haul 150,000 tonne cargoes such
as iron ore and coal.
"The capesize market has found some support on the physi-
cal in the last couple of days however at today's $7,550 per
day this is far below the levels we saw even just a couple of
months ago," SSY's Langston said.
The Baltic's panamax index rose 1.64 percent, with average
daily earnings rising to $16,435 in a seventh session of gains.
Panamax vessels usually transport 60,000-70,000 tonne
cargoes of coal or grains.
Adding to economic headwinds in western industrialised
countries, a major source of shipping demand, are inflation-
ary fears in China, which could potentially lead to further
interest rate rises and a pullback in demand for ore, deliver-
ing another setback for shippers.
China has reversed punitive reserve requirements imposed
on several banks after getting them to rein in their lending,
two sources said, an indication of success in a crucial part of
the government's campaign to control inflation.
While there are indications of some vessel cancellations and
delays, analysts expect deliveries to gather pace between
2011 and 2012.
SSY said 44 capesize vessels had been delivered so far this
year -- compared with 214 in 2010.
7 MARCH 2011
"The current new building deliveries, excluding scrapping,
suggest we are looking at a year of more than 90 million
deadweight tonnes (dwt) will be delivered into the fleet com-
pared with 78.5 million (dwt) in 2010," Langston said.
XSTRATA TO LIFT ROLLESTON COAL MINE
FORCE MAJEURE PENDING RAIL REPAIRS
PERTH, March 9 (Reuters) - Xstrata said on Wednesday it
expects to lift the force majeure that has been place on coal
exports from its Australian Rolleston coal mine since Decem-
ber when the rail line to the port was shut due to heavy rains
and flooding.
"We expect force majeure will be lifted, once we have confir-
mation the rail repairs have been completed to an accept-
able standard," spokesman James Rickards said in an email.
"It is expected that railings will be at restricted speeds for the
next days, and we should, if all proves to be working, be rail-
ing at normal rates early next week."
QR National said it had repaired the line to the Rolleston
mine on Tuesday.
PHILIPPINES PSALM SEEKING 80,000 T LOCAL
COAL
MANILA, March 9 (Reuters) - The Philippines' Power Sector
Assets and Liabilities Management Corp (PSALM) on
Wednesday issued a tender to buy 80,000 tonnes of local
blended coal, part of this year's requirements of its coal-fired
power plants.
The state-run agency, which is tasked with privatising assets
and managing debts of state-owned National Power Corp,
said bids must be submitted on or before March 28.
In a notice, PSALM said it had an approved budget of 499
million pesos ($11.5 million) for the contract to buy coal for its
Naga power plants in the central province of Cebu.
The agency did not receive any bids at a tender on Feb 21
seeking 85,000 tonnes of local blended coal, and also post-
poned a tender for 55,000 tonnes of imported steaming coal
to March 14.
PIRACY MAY CURB INDIA'S SAFRICA COAL IM-
PORTS-ADANI
By Jackie Cowhig
NEW DELHI, March 8 (Reuters) - The spiralling costs of pi-
racy on the Indian
New piracy premiums are $35,000- Ocean plus high
$70,000/T per voyage
coal prices are curb-
Diversions add up to 3 days sailing time to ing India's enthusi-
India asm for South Afri-
India looks harder at a variety of coal can coal, the chief
sources executive of Adani
Enterprises Coal &
Carbon Credit said.
India bought around 30 percent a month of South Africa's
coal exports in 2010, with the largest portion of over 9 million
tonnes taken in by Adani. Trading companies Adani and
Bhatia bring in 70 percent of India's coal imports.
2
INSIDE DRY FREIGHT
Adnani CEO Vinay Prakash said this week South Africa would
remain a key coal source but that Indian buyers were increas-
ingly weighing up the delivered costs of coal from all over the
world.
New, hefty piracy risk insurance premiums and the cost of
extra voyage days to avoid pirate hot spots are eroding Indian
importers' margins, he said, although varying freight rates
are also a major factor in deciding which coal to buy.
"It's a big headache really, not a small one. It's a real cost, an
impact on importers' margins. And the risk of losing a whole
cargo, the price in dollars per tonne CIF, is not small,"
Prakash said.
"Of course we are concerned about Somali pirates. It's a po-
tential loss of $130 a tonne CIF."
There are over 30 ships currently being held by Somali pi-
rates, who are constantly extending their reach deep into the
Indian Ocean by using mother ships, from which they attack
in smaller, high-speed crafts.
INSURANCE PREMIUMS
Some ship owners are reluctant to send vessels into the area
north of Mogadishu in Somalia or around the east coast of
Madagascar, while others insist on cutting across the Indian
Ocean to the southernmost tip of India and further diver-
sions.
"For the past three months ships have added an extra two-
and-a-half to three days for diversion, across the (Indian)
Ocean and then hugging the East Coast of India or staying
away from the West Coast as far as possible before landing,"
Prakash said.
"And then there is the per ship, per voyage piracy insurance
premium of $35,000 for handymaxes, $50,000 for pana-
maxes and $70,000 for capsize vessels," he said.
On top of that, if a ship is hijacked, there is a loss at current
prices of $130 a tonne CIF, the value of insured cargo," he
said. "If you lose a cargo, eventually the insurers will pay,
many months later, but your end-users won't pay you."
And that's without the cost of ransoming the crew, which has
been several million U.S. dollars at a time.
"We had one vessel hijacked and it took two months to get it
back," he said.
Adani has already cut its South African imports to around
600,000 tonnes in February from closer to a million on aver-
age a month due to piracy costs and uncompetitive prices, he
said. "We've not done any fresh South African deals for one
to two months, and I don't think other people have either."
EURO COAL-COAL DOWN WITH OIL, LOW CHI-
NESE DEMAND
LONDON, March 8 (Reuters) - European coal prices eased
slightly on Tuesday
API2 2012 eases to $122.75/tonne as Brent crude
Asian market awaits Japanese contracts prices fell back be-
Indian coal imports could surge in coming low $115 per barrel,
year and because of the
absence of Chinese
import orders, traders said.
7 MARCH 2011
The API2 2012 futures coal contract was traded at $122.75
per tonne on Tuesday afternoon (GMT), down from $124 the
previous day, and the API2 contract for April delivery was
down $1.5 per tonne to $122.50.
Traders said the downward move was a result of easing oil
prices and because activity in Asia's coal markets was low.
"After the gains the entire energy sector saw yesterday, and
the absence of any significant new developments from North
Africa, prices were bound to ease slightly today," one bank
analyst said.
Front-month Brent crude prices dropped to just over $113 per
barrel on Tuesday afternoon, down from $118.50 per barrel
the previous day.
Traders said the absence of the oil premium in the market
highlighted more fundamental issues that are currently af-
fecting coal prices.
"The market is currently still absorbing the export outages in
Australia, following the floods there earlier in the year, but
the near complete absence of Chinese buyers in the current
market is preventing prices from rising above this year's re-
cord of $125 a tonne," one coal trader said.
This bearish Chinese element in the coal market is also the
reason why European power revenue margins from coal gen-
eration are more stable, and at higher levels, than the
equivalent gas margins, which have plummeted as a result of
the link between oil and gas prices.
"With gas prices linked to surging oil, gas power generation
revenues are being squeezed during the political crisis in
Libya, and while coal power revenues are also low, they have
been spared the downturn seen in the gas power revenues,"
the analyst said.
German coal revenue margin (clean dark spreads) for power
generation for sale in 2012 has remained stable between 1.5
and 3.25 euros per megawatt-hour (MWh) since the begin-
ning of the year.
The equivalent gas revenue margin, or clean spark spread,
has dropped from -2.25 euros per MWh before the beginning
of political unrest in the Middle East and North Africa to
nearly -6 euros per MWh on Tuesday afternoon, their lowest
level since September 15, 2008, the day U.S. investment
bank Lehman Brothers filed for bankruptcy.
This meant that at current market prices, German coal power
generation was over 8.6 euros per MWh more profitable than
gas power generation.
ASIA
In Asia, coal trading activity was low as the market awaited
the settlement of the Japanese annual thermal coal contract.
Thermal coal on the globalCOAL Newcastle index for the
week to date was $130.75 per tonne on Monday, relatively
unchanged from $132 a week earlier and up slightly from
$129.48 on Friday.
Large Japanese utilities Tokyo Electric Power Co (TEPCO),
Tohoku Electric Power Co Inc and Chubu Electric , are nego-
tiating April-to-March fiscal year thermal contracts with
Xstrata , the world's largest exporter of thermal coal.
The contracts are generally around spot price levels, often
with a supply security premium.
3
INSIDE DRY FREIGHT 7 MARCH 2011

In India, the country's coal minister Sriprakash Jaiswal said Whiteford said AEP has had lots of experience installing
that India's coal imports could rise by 71 percent in the fiscal scrubbers at its eastern coal plants and estimated it could
year ending March 2012, fuelled by the rising gap between cost $700 million and take about five years to design, engi-
projected demand and domestic production. neer, permit and install new SO2 scrubbers on the two units
at its Northeastern plant.
The EPA however only gave the utilities three years to add
EPA TELLS OKLAHOMA UTILITIES TO CLEAN the scrubbers, switch to natural gas or use a combination of
COAL PLANTS these approaches.
By Scott DiSavino The EPA wants OG&E Corp to clean up the 477-megawatt
NEW YORK, March 8 (Reuters) - The U.S. Environmental Unit 4 the 517-MW and 5 at the Muskogee plant and the
Protection Agency (EPA) 522-MW Unit 1 and 524-MW Unit 2 at the Sooner plant.
OG&E and AEP have three years to
clean plants wants OG&E Corp and American Electric Power Co Inc is to clean up the 460-MW
American Electric Power Units 3 and 4 at its Northeastern plant.
Scrubbers could cost $700 million at Co Inc (AEP) to reduce
AEP plant The units provide enough low cost, baseload power for more
air pollution at three
Senator Inhofe criticizes EPA for over- coal-fired power plants than 2.3 million homes.
reach
in Oklahoma or convert AEP's Whiteford could not say whether AEP would install the
the facilities to natural gas. scrubbers. He said AEP's next move was to look at the EPA
The EPA acted because the state's plan did not adequately proposal and prepare for the public meeting on April 13 in
reduce sulfur dioxide (SO2) emissions enough to meet the Oklahoma City.
regional haze requirements under the Clean Air Act. Officials at OG&E were not immediately available.
AEP spokesman Stan Whiteford said, "We're disappointed SENATOR ATTACKS EPA PLAN
the federal EPA did not go along with the state implementa-
The EPA proposal brought immediate criticism from Senator
tion plan, which was carefully designed to provide flexibility
Jim Inhofe (R-Oklahoma), ranking member of the Senate
to develop reasonable and cost effective approaches that
Committee on Environment and Public Works.
meet the objectives of the environmental rules."

People ride their bicycles past abandoned buildings in front of a cooling tower at a coal-burning power station in central Beijing February 28, 2011. China faces acute environmental
and resource strains that threaten to choke growth unless the world's second-biggest economy cleans up, the nation's environment minister said in an unusually blunt warning. In an
essay published on Monday, Zhou Shengxian also said his agency wants to make assessing projected greenhouse gas emissions a part of evaluating proposed development projects
putting environmental worries at the heart of China's next phase of economic development and industrial growth -- a theme that will be in focus at the country's annual parliament
session starting on Saturday. REUTERS/David Gray (CHINA)
4
INSIDE DRY FREIGHT
"State officials...did the right thing...but that was too much
for the Obama EPA, which rejected the Oklahoma-led plan in
favor of their preferred scheme to put Washington bureau-
crats in charge and...make fossil-fuel-based electricity more
expensive for consumers," Inhofe said in a statement.
"Through my leadership position on the Senate Committee
on Environment and Public Works, I will do everything I can
to work with Oklahoma officials to protect consumers from
EPA's attack on affordable electricity," the senator said.
The EPA said it acted because Oklahoma's state implemen-
tation plan (SIP) did not adequately address Clean Air Act
requirements.
The Clean Air Act of 1990 requires states to control emissions
that cause air haze.
The EPA said all other sources of air pollution in Oklahoma
except the three coal plants would meet the level of control
needed to address the Clean Air Act requirements.
This was not the first time the EPA denied a state implemen-
tation plan.
In December, the EPA told PNM Resources Inc to clean up
its 1,643-MW San Juan coal plant in New Mexico.
S.AFRICA REPLACES FIRM RUNNING COAL
EXPORT SCHEME
JOHANNESBURG, March 8 (Reuters) - South Africa has re-
placed the company administering its Quattro coal exports
allocation scheme, saying a former employee of the firm was
suspected of major fraud, the department of mineral re-
sources said.
Quattro was set up to help small emerging, black-owned
mining companies to make use of the Richards Bay Coal Ter-
minal (RBCT), the country's chief outlet for exports of ther-
mal coal, where facilities were previously dominated by es-
tablished shareholder firms.
The administration of the scheme, under which 4 million ton-
nes a year of thermal coal is exported, was handled by Mhla-
tuze, a firm owned by the Quattro member companies.
Mhlatuze officials were not immediately available to com-
ment.
"We are in possession of documentation that clearly demon-
strates how a former employee of Mhlatuze defrauded the
organisations of huge sums of money," the department said
in a statement on a government website on Tuesday.
( http://www.info.gov.za/speech/DynamicAction?
pageid=461&sid=16835&tid=29623 )
"In order to prevent further misappropriation of Quattro
funds, the department has decided to remove the admini-
stration of Quattro from Mhlatuze to UBU Logistics," it said.
The statement said there were indications at least 5.5 million
rand ($796,300) had been fraudulently withdrawn from
Mhlatuze bank accounts and suspicions the amount may be
higher.
The department said it has asked all Quattro members to
reapply for their export allocations. The evaluation of the
applicants would be finalised before the end of March.
7 MARCH 2011
The reapplication process may open the door for some new
players to enter the coveted export market, where rewards
are higher than on the domestic market.
Total coal exports passing through RBCT are projected at
around 65 mln tonnes for 2011, according to exporters.
VITOL AWARDED $70 MLN IN BHATIA COAL
DISPUTE
NEW DELHI, March 8 (Reuters) - Vitol has been awarded $70
million after arbitration
Vitol wins coal dispute to settle a dispute over
Bhatia coal firm changes name to a cancelled coal con-
Bhatia Global tract but Bhatia is ap-
Bhatia says will appeal arbitration pealing against the de-
decision cision, a Bhatia spokes-
man said on Tuesday.
Earlier two sources close to Vitol said the award had gone in
Vitol's favour.
Indian trading company Bhatia cancelled a year's worth of
South African coal shipments sold to it by Vitol for delivery in
2009. "The arbitration was awarded for $70 million but we
are appealing against the decision - it was inappropriate,"
the Bhatia spokesman said.
Bhatia along with Adani Enterprises account for around 70
percent of India's coal imports.
Bhatia has imported coal from almost every trading company
and most South African and Indonesian producers during the
past several years because it is difficult for these suppliers to
do business directly with Indian end-users.
ASIA COAL-AUSTRALIA THERMAL COAL
PRICES STEADY PENDING JAPAN CONTRACTS
By Rebekah Kebede Australia's thermal coal prices, a bench-
mark for Asia, were steady last week in a quiet market as
most players waited on the sidelines for the settlement of the
Japanese annual thermal coal contract.
Thermal coal on the globalCOAL Newcastle index for the
week to date was $130.75 per tonne on Monday, relatively
unchanged from $132 a week earlier and up slightly from
$129.48 on Friday.
"It's hard to tell if there's any movement in the current period,
it's a little bit quiet, the price is quite stable," one Sydney-
based trader said.
Large Japanese utilities Tokyo Electric Power Co (TEPCO),
Tohoku Electric Power Co Inc and Chubu Electric , negotiate
April-to-March fiscal year thermal contracts with Xstrata ,
the world's largest exporter of thermal coal.
The contracts are generally around spot price levels, often
with a supply security premium.
"Overall, the market is still tight in the Pacific, so miners have
a strong negotiation position," one Singapore-based trader
said.
Trade sources said that bids and offers stood about $10
apart, with Xstrata said to be offering a price of $140 per
tonne and Japanese utilities countering with a $130 per
tonne bid.
5
INSIDE DRY FREIGHT 7 MARCH 2011

Although still far apart, the parties were closer than a few For more details on Newcastle port statistics, click on .
weeks ago when the offer was said to be at $145 per tonne,
ARRIVE IN
with utilities saying they would only be willing to pay $125 per SHIPPED MTH EST PORT IN WK QUEUE WAIT TIME
tonne. (mln T) (mln T) (ships) (ships) (days) WEEK TO
Chinese demand for imported coal continued to be thin, with 1.362 8.675 14 21 10.47 7-Mar
supplies in the world's number one producer and consumer
2.287 8.974 21 12 9.49 28-Feb
of coal outstripping demand. Chinese coal with a heating
value of 5,500 kcal/kg was flat at 770-780 ($117.19-$118.72). 2.099 9.5 19 17 8.32 21-Feb
As coal prices in Australia have risen, the arbitrage between 2.032 9.5 24 14 9.65 14-Feb
Chinese coal prices and Australian imports are at the widest 1.986 8.974 24 9 13.21 7-Feb
since September 2008. Indian buyers were back in the mar-
ket for Indonesian coal, traders said, with deals for 4,900 2.318 10.297 27 14 12.91 31-Jan
kcal/kg done for around $80 per tonne. 1.792 10.297 19 20 12.87 24-Jan
WEEK AHEAD 2.27 10.297 23 20 13.52 17-Jan
Xstrata will head to Japan next week to meet Japanese utili- 2.38 10.297 24 18 15.58 10-Jan
ties and all eyes will be on the annual contract talks, which 2.716 10.297 33 9 13.46 3-Jan
are often used as a benchmark for other deals.
2.117 8.26 26 22 12.59 27-Dec
The market will also continue to watch for increasing de-
mand from China and India. 2.281 10.448 24 16 14.36 20-Dec
2.354 10.448 26 16 14.56 13-Dec

AUSTRALIA NEWCASTLE COAL EXPORTS 2.068 10.448 29 14 12.32 6-Dec

DROP DUE TO RAIL MAINTENANCE
PERTH, March 8 (Reuters) - Coal shipments from Australia's
Newcastle port, which ships mostly thermal coal used in
power plants, dropped 40 percent last week due to sched-
uled maintenance on coal haulage lines as well as the im-
pact of wet weather on mines.
Exports from the eastern coast port were 1.362 million ton-
nes in the week to March 7, down from 2.287 million the pre-
vious week, Newcastle Port Corporation said on its website
on Tuesday.
Scheduled maintenance on the Australian Rail Track Corpo-
ration's lines, which transport coal from mines to the port,
was reducing volumes into the port in addition to some pro-
duction impacts from wet weather in the region, a Newcastle
Port Corporation spokesman said on Tuesday.
Newcastle ships out coal produced in Australia's eastern
state of New South Wales. The region's coal industry has
escaped the massive floods and production disruptions that
have hit its northern neighbors in Queensland, but wet
weather has hurt some operations.
Australia's thermal coal prices on the globalCOAL weekly
index, a benchmark for Asia, closed at $130.75 per tonne for
the week to date on Monday, relatively unchanged from $132
a week earlier.
The vessel queue at the port rose to 21 ships last week from
12, while the average waiting time for vessels at the port rose
by about one day to 10.47 days.
Fourteen ships were travelling to the port to load coal, down
from 21 last week, the port said.
In a separate report, the Hunter Valley Coal Chain Coordina-
tor (HVCCC), which helps coordinate coal exports, put the
number of vessels in the queue at the port at 32 by midnight
on Monday.
The HVCCC calculates the number of ships in the vessel
queue using a wider radius from the port than the Newcastle
Port Corporation.
AUSTRALIA'S QR NATIONAL TO RE-OPEN
ROLLESTON COAL LINE
SYDNEY, March 8 (Reuters) - Australian rail-freight company
QR National plans to re-open its Rolleston coal line in north-
ern Australia on Tuesday night, about 10 weeks after it was
closed due to flood damage.
The line services Xstrata's Rolleston coal mine, which had
declared force majeure in December on some coal deliveries
out of the mine due to the impact of the floods.
A force majeure is a legal let-out suspending sales obliga-
tions due to factors beyond a supplier's control.
An Xstrata spokesman was not immediately able to com-
ment on whether or not the company has lifted force majeure
on the mine's exports.
Rolleston produces about 8 million tonnes per year of ther-
mal coal used for power generation and Xstrata is the
world's largest exporter of thermal coal.
Benchmark prices for Australian thermal coal rose above
$140 a tonne earlier as supplies were crimped by floods at
several mines. Australia is the world's second-biggest ex-
porter of thermal coal.
INDIA'S VEDANTA SAYS IT NEEDS 1 MLN T
COAL IN 2011
NEW DELHI, March 8 (Reuters) - India's Vedanta Aluminium
needs to import around one
Vedanta seeks low c.v.
Indonesian coal million tonnes of thermal
coal in 2011 for its new inde-
Company looking at long-term pendent power plant in
offtake & mine purchases
Orissa, an official responsible
for coal buying said on Tues-
day.

6
INSIDE DRY FREIGHT
Speaking on the sidelines of the Coaltrans conference in New
Delhi, the official said that Vedanta's new 2,400 MW power
plant, which supplies power to its aluminium plant, is de-
signed to take a blend of imported and domestic coal.
"We've covered our needs for February to April but we are
looking for coal cargoes for the rest of the year," the official
said. "We can't use much South African coal because our
boilers are designed for low-grade domestic coal and without
very careful blending, it can cause problems," he said.
"Low calorific value Indonesian coal is ideal for us. We are
looking at spot purchases and long-term offtake agree-
ments."
Vedanta is also exploring the possibility of buying into coal
mines abroad to secure coal supply of imported material, he
said. "We've looked at various countries including Indonesia,
Mozambique and Mongolia," he said.
PROGRESS ENERGY WORKING TO RESTART
FLA. COAL UNITS
HOUSTON, March 7 (Reuters) - Progress Energy's Florida
utility will restart one of two damaged coal-fired units at its
Crystal River power plant later this month, a utility spokes-
woman said on Monday.
A large transformer fire in mid-January at the Crystal River
plant shut two of four coal units. The four coal units have a
combined capacity of about 2,267 megawatts, according to
the company's website.
While an investigation into the cause of the fire continues,
workers are expected to complete repairs to bring Crystal
River 1 back into service this month and Unit 2 in April, the
spokeswoman said. Units 4 and 5, were not damaged by the
fire and are operating, she said.
Crystal River 3, an 860-MW nuclear plant at the site, has
been in an extended outage since September 2009.
Work to repair the nuclear unit's damaged containment
building is set to be completed this month, with restart activ-
ity expected to begin in April.
The 3,151-MW Crystal River station, located in Red Level,
Florida, about 85 miles (140 km) north of Tampa.
INDIA'S GOA PORT FEB IRON ORE EXPORTS
DOWN 4.2 PCT
By Siddesh Mayenkar
MUMBAI, March 8 (Reuters) - Iron ore exports from India's
largest port of Mormugao fell
Exports a tad higher at 36.7 MT
from Apr'10 till date 4.2 percent in February from
a year earlier to 4.5 million
Sesa Goa's cargo of 80,000T to tonnes, as higher taxes and
be shipped in coming wks
an export ban from a south-
ern state looked set to weigh
further on shipments.
A Mormugao port official said exports from April 2010 till
date was at 36.7 million tonnes, a tad higher from the year-
ago shipments of 36.2 million tonnes, which included iron
ore from neighbouring Karnataka state before it imposed an
exports ban.
7 MARCH 2011
India hiked the export duty on iron ore to 20 percent on
lumps and fines from the earlier 15 percent and 5 percent
respectively in last month's federal budget.
Indian railways has also hiked its freights on iron ore meant
for exports twice within a month by 100 rupees ($2.2) to
1,600 rupees per tonne.
These moves are expected to dent shipments of the low
grade iron ore to China, that houses the world's largest steel
industry.
India's overall iron ore exports had showed a decline for a
seventh month in a row in January, the Federation of Indian
Mineral Industries (FIMI) said on March 1.
World supply of iron ore has been limited on an export ban in
the southern state of Karnataka, the second biggest produc-
ing Indian state. The ban is being appealed in India's top
court.
Traders are awaiting the hearing of the case, slated for April
4. The eastern state of Orissa and central Chhattisgarh state
have also called for banning exports.
An iron ore cargo of 80,000 tonnes belonging to exporter
Sesa Goa will be shipped in a couple of weeks to China, said
the official, who was not authorised to speak to the media.
EGYPT'S STEEL MAGNATE EZZ SAYS HOPES
FOR FAIR TRIAL
By Sherine El Madany
CAIRO, March 8 (Reuters) - Egyptian steel magnate Ahmed
Ezz, who was a top official in ousted president Hosni Muba-
rak's party and is now being investigated for graft, said on
Tuesday charges against him were unfounded and he hoped
for a fair trial.
Ezz, who quit the party during protests that erupted on Jan.
25, has been detained since Feb. 17 pending trial on suspi-
cion of wasting public funds.
"I refute all of the allegations brought against me, and I know
that a fair and proper legal process would prove my inno-
cence," Ezz said in a letter sent to media from prison, his first
comments after his detention pending trial.
He was charged with illegally taking control of state-owned
al-Dekheila Steel which then supplied Ezz Steel with steel at
reduced prices, causing al-Dekheila heavy losses.
Suspicions of official corruption helped fuel mass protests in
Egypt that led to the overthrow of Mubarak on Feb. 11.
Analysts and the Egyptian public see the charges against Ezz
as a concession to help quell unrest, as the new military rul-
ers seek to show they are tackling the corruption of the old
regime.
Ezz was among top targets of protesters driven by com-
plaints about poverty, corruption and political repression. His
resignation last month from the National Democratic Party
(NDP) was met with cheers.
In his letter, he praised the people's revolt and said he had no
regrets over things he did in public life.
"In this unprecedented time for the country, it is important to
remember what our youth are calling for: freedom, fairness
and democracy," Ezz wrote.
7
INSIDE DRY FREIGHT 7 MARCH 2011

He added he hoped that while Egypt sought a bright future, Markets may see some support after Australian miner Fortes-
he would not become a scapegoat for mistakes of executives cue Metals Group trimmed its March quarter production
or politicians close to Mubarak. guidance to a range of 8.5-9.0 million tonnes, down 0.5 mil-
"I truly hope I can at least depend on a full representation of lion tonnes, after heavy rains hit its mining operations in the
the facts, due legal process and a fair trial." Pilbara area of Western Australia.
"We have seen some slowing of shipments from the northern
Pilbara due to the wet (weather). It hasn't really shown up in
IRON ORE-SPOT PRICES IN CHINA EDGE China port stocks yet, but we could see some erosion from
LOWER, INDIA FUTURES RISE the current high levels," said a Sydney-based commodities
trader.
By Nick Trevethan
But the effect on prices may be limited, and Chinese buyers
SINGAPORE, March will be more concerned with weaker steel prices.
Spot prices, indexes fall as China buyers 8 (Reuters) - Spot
hang back iron ore prices ex- "A cyclone came through and has disrupted things, but that
Indian futures gain 0.4 percent ahead of tended losses on is fairly normal for the time of year. The weakness in iron ore
tax hike Tuesday, with Chi- is more to do with the pullback in steel prices. The mills are
Rising financing costs could liberate nese buyers still finding it hard to pass on higher cost," said ANZ's senior
China port stocks shunning the market commodity analyst Mark Pervan.
waiting for further He added that the market may see more iron ore liberated
falls or a recovery in steel prices, but Indian futures rose from stockpiles held in Chinese ports, offsetting any delays to
ahead of higher export taxes in April. deliveries from Australia.
Spot Indian ore with 63.5 percent iron content was quoted in '7 WILL BE THE NEW 9'
China at $181-$183 a tonne, including freight, on Tuesday,
down from $182-$184 on Monday, said Chinese consultancy "Traders had been happy to maintain high stocks because of
Mysteel. the cheap financing, Up until recently those have been quite
sticky, but the higher cost of borrowing in China could start to
But the 62 percent March iron ore futures contract on the squeeze the more leveraged stockist."
Indian Commodity Exchange rose 0.4 percent to 8,135 ru-
pees ($181) per tonne after ending flat the previous session. Port stocks in China are at around record highs above 80
million tonnes as Chinese consumers hold back from buying,
Market sources said March prices could be rising ahead of hoping prices would continue to fall and steel demand would
export tax increases from April 1, which for iron ore fines will pick up.
jump to 20 percent ad valorem from 5 percent currently.

A worker checks steel coils at a steel collection facility in Tokyo March 7, 2011. REUTERS/Toru Hanai
8
INSIDE DRY FREIGHT
The most active rebar contract for October delivery on the
Shanghai Futures Exchange fell to as low as 4,755 yuan per
tonne on Tuesday, its weakest since Dec. 1. It closed at 4,773
yuan, down 1.2 percent.
Worries about slowing Chinese growth rates have also rip-
pled through commodity markets, igniting fears that demand
growth from the world's top consumer of nearly all industrial
raw materials could slow.
In its next five-year plan, China said it would target 7 percent
growth. In the previous plan the target was 7.5 percent with
reported growth running around 10 percent in the past few
years.
"Based on that math, seven will be the new nine," said Per-
van, adding that the outlook for demand in the longer term
looked bright given China's focus on improved healthcare,
education and public housing, all of which were likely to
boost steel consumption.
Key iron ore indexes, which global miners use in setting quar-
terly contract prices, extended losses on Monday.
Platts 62 percent iron ore benchmark fell $1 to $177 a tonne.
It has lost 8.3 percent in the past 13 sessions since hitting a
record high of $193 in mid-February.
The Steel Index's 62 percent gauge slipped $3.80 to $172.80
and Metal Bulletin's index dropped $1.86 to $174.97.
CHINA DAILY CRUDE STEEL OUTPUT UP 5.5
PCT IN LATE FEB
BEIJING, March 8 (Reuters) - China's daily average crude
steel output over Feb. 21-28 reached 1.912 million tonnes, up
5.5 percent compared with the previous 10 days, data from
the China Iron and Steel Association showed on Tuesday.
Average daily output for the whole of the month stood at
1.823 million tonnes, up from 1.703 million tonnes in January,
CISA said.
On an annualised basis, that would amount to 665 million
tonnes, according to Reuters calculations -- in line with an
output forecast of 660 million tonnes made by the Ministry of
Industry and Information Technology last month.
Chinese output has been steadily increasing despite growing
uncertainty about the health of domestic demand.
Prices have dropped 8 percent since early February with trad-
ers staying on the sidelines and end-users already well-
stocked.
Steel inventories held by major enterprises reached 9.46 mil-
lion tonnes by the middle of February, up a quarter since the
end of January.
Analysts said much of the production increase in the first two
months of the year could be attributed to small private steel
mills, liberated after a late-2010 energy-saving campaign
forced many of them to shut down operations.
They predicted falling margins and consistently high raw
material prices could lead a decline in output going into
March and the second quarter.
Zhang Xiaogang, the head of Anshan Iron and Steel, told
reporters last weekend that overcapacity was eating into
margins and that restructuring the sector had never been
more crucial.
7 MARCH 2011
WUHAN STEEL EYES OVERSEAS PLANT, COAL
RESOURCES
By Ruby Lian and Tom Miles
BEIJING, March 7 (Reuters) - China's third-largest steel-
maker, Wuhan Iron
Wuhan Steel eyes Canada coking coal and Steel , is working
resources
on plans to build a
No plan to withdraw from Riversdale coal steel plant overseas,
project its president said on
Target to secure over 1 bln T of coking Monday.
coal resources
"We are in talks with
a company on plans
of setting up a steel plant overseas but can't disclose the
company's name," Deng Qilin told reporters on the sidelines
of China's annual parliament session. He said the company
had not yet signed an agreement yet, but was working on the
cooperation plan.
Deng said on Saturday that China, as the world's top iron ore
buyer, continues to have no say in setting global prices of the
key steelmaking raw material.
China, producing almost half of the world's steel output, will
suffer a shortage of iron ore supply over the next 10 years as
the country is still expanding its steel capacity, he said.
"China is expected to produce more crude steel this year, and
a surplus in iron ore supply is unlikely to be seen over the
next 10 years, let alone two or three years," Deng said.
Wuhan gets 80 percent of its iron ore from abroad. Facing
rising raw materials costs and a profit squeeze because of
surplus steel capacity within China over the last two years, it
has been eager to invest in mining foreign resources to
lessen its reliance on the big global suppliers.
China's government is encouraging big steelmakers to gain
more control over foreign iron ore and wants half of the for-
eign supplies to come from Chinese-invested mines by 2015.
Wuhan, China's No.3 after Hebei Iron and Steel and Shang-
hai's Baoshan Iron and Steel , aims to achieve an annual
steel capacity of 60 million tonnes by 2015, from 40 million
tonnes currently.
EYES COKING COAL
Wuhan Steel is also eyeing investment in coking coal, an-
other key steelmaking ingredient, in other countries to help
minimise production cost, after the company's profitability
ratio fell as low as 2.97 percent in 2010, half the Chinese in-
dustry average.
"We are also interested in investing in coking coal resources,
not only in iron ore," Deng said.
Wuhan Steel last year negotiated an $800 million agree-
ment with Riversdale Mining to get a 40 percent stake in its
Zambeze coal project in Mozambique. But the deal was sus-
pended in January after Rio Tinto made a $3.9 billion bid for
Riversdale.
Deng said Wuhan still wanted the deal to go ahead, whoever
ended up owning the African asset.
"We are still keeping a close eye on the project. We are not
intending to withdraw from the deal as both Riversdale or
Rio Tinto would be happy to see us involved as a consumer of
coking coal," Deng said.
9
INSIDE DRY FREIGHT
Wuhan Steel is also planning to expand investment in coking
coal in other countries including Canada, but warned that
investment in Australia, which is rich in coal resources, would
be hard.
Under its plan for the next five years, Wuhan Steel aims to
acheive self-sufficiency in iron ore and have more than 1 bil-
lion tonnes of coking coal resources overseas under its con-
trol, with an annual supply capacity of 30 million tonnes by
2015.
STAINLESS STEEL PRODUCTION HITS NEW
RECORD- ISSF
LONDON, March 7 (Reuters) - Global stainless steel produc-
tion hit a new record
Global production jumps 25 pct at 30.7 million ton-
Chinese output up 28 pct to 11.26 million nes in 2010 after
three years of de-
Production to grow further in 2011- ISSF cline, and China was
the major driving
force, the International Stainless Steel Forum (ISSF) said on
Monday.
Production rose about 25 percent from the previous year's
level mainly due to economic recovery, strong demand by
end users, re-stocking at service centres and fabricators and
the re-filling of the internal supply chain in stainless steel
mills, ISSF said in a statement.
For 2011 ISSF expects a further increase of global stainless
steel production based on strong end-user demand, but
some threats may arise from price bubbles in raw materials
and energy, it said.
China was the largest producing area and registered a 27.8
percent output increase to 11.26 million tonnes in 2010.
7 MARCH 2011
Other Asian countries produced 8.61 million tonnes, up 20.8
percent compared with 2009.
All Asian stainless steel producers now account for 65 per-
cent of the entire world's stainless steel production, ISSF
underlined. Western Europe and Africa together accounted
for 7.87 million tonnes in 2010, up 22.1 percent from the pre-
vious year.
Stainless steel production in the Americas was at 2.61 mil-
lion, or 34.4 percent up from 2009. Central and Eastern
Europe rose 43.6 percent in 2010 but from a very low base.
INDIA IRON ORE TRADES FLAT; CHINESE
BUYING EYED
MUMBAI, March 7 (Reuters) - India iron ore futures were flat
on Monday evening, though prices are expected to fall in the
near term as Chinese buyers stay on the sidelines awaiting
further decline, traders said.
At 6:27 p.m, the 62 percent March iron ore futures on the
Indian Commodity Exchange (ICEX) was trading 0.02 per-
cent higher at 8,098 rupees per tonne.
"Buyers don't seem to be concerned with duty hike, since
buying is weak they are not ready to accept any hike," said an
iron ore trader in the eastern Indian state of Orissa.
Falling steel prices, huge stockpiles of iron ore at Chinese
ports and tighter liquidity are keeping Chinese steel mills and
traders from snapping up ore. Indian ores have turned costly
after after the country announced plans to raise export taxes
and freight rates. The 200-member strong Federation of
Indian Mineral Industries (FIMI) will ask for a full rollback of
planned export duties on iron ore lumps and fines to pre-
budget levels on Monday, Secretary-General R.K. Sharma
said on Friday.
10
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