No 3

25 to 31 August, 2011

BMTI Short Sea Report

FOR BMTI-SUBSCRIBER . Baltic Freights Steady With Movements Limited to Ferts & Aggregates Freights remained remarkably stable this week even with most large-scale cargo movements limited to
20 19 18 17 /mt 16 15 14 13 12 Week 34 38 42 46 50 2 6 10 14 18 22 26 30 34 Baltic Westward [2010-11]

This graph tracks average freight rates for a general short sea cargo of 3.000 mt shipped from the Baltic States to the ARA region

steels from the eastern Baltic and fertilizers from the Baltic States. General activity levels in the Baltic Sea General trade volumes in and via the Black Sea have maintained their positive growth and all manner of cargo and trade route seem to be providing ample employment for open vessels. Steady grain demand from the FSU states is keeping rates buoyant. Grain cargoes of 3,000mt from Rostov to Alex have been quoted for mid/high-US$ 60s/mt. In fact, we have seen a growing trend of open vessels in the Baltic and even North Sea ballasting southward to the Black Sea in search of viable employment. Nonetheless, spot market freight levels are, on average, not significantly changed from last week with ships coming in from nearby water keeping the supply side expansive enough that demand has so far not outstripped it. Another push, like even higher grain demand ex-Russia/Ukraine or resurgence in the Baltic, would assist further rate hikes, but for now it

and North Sea, however, have improved slightly in the past week, albeit not enough to make a major dent in the market. Normal movements of aggregates are also registered via Norway and Sweden, but the ratio of open vessels to cargo orders continues to put the market advantage to charterers. This is why the stability of rates is noteworthy, traders tell BMTI, despite the fact that in many cases owners are simply not accepting rates any lower than current levels as they would be falling below break-even costs to cover even operating costs. Fertilizers are making a decent showing from Latvia, Lithuania and Russia with 5,000mt of potash Ventspils/ECUK able to achieve EUR 13/mt and 3,000mt of fertilizers for Klaipeda/SCUK able to get EUR 14/mt. BMTI hears more frequently rumours of grains coming on in September and an expected resumption in enquiry with holidays coming to an end in early September.

Black Sea Business at High level, Rates Largely Unchanged Over Week seems the market is content to move sideways. Especially active are grain, coal, fertilizers and scrap.
31 29 27 USD /mt 25 23 21 19 17 Week 1 Black Sea Southward 2011

13

17

21

25

29

33

This graph tracks avg. freight rates for a general short sea cargo of 3-5,000mt shipped from the Azov to the Marmara region.

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Coal trades at unchanged rates from the Azov to Turkish ports at rates of US$ 34, 33 and 31/mt seen for Nemrut, Trabzon and Marmara, respectively. The

scrap market has become more active this week with scrap cargoes of 3,000mt for Rostov/Nemrut doing US$ 2/mt higher than last week at US$ 49-51/mt.

Mediterranean Overview Market update from an area ship broker Libya: With rebels having entered Tripoli and cele- ber dates in 2-5,000 dwt sizes. Freights unchanged. brating in Green Square on Monday it is now only a matter of time before the Gaddafi regime is com- Turkish Med: Following in the footsteps of Egypt pletely out of power. Ship insurers in London report slower than expected activity is seen out of Turkish that Libya will remain on the high risk list until a Med as most charterers appear to be quoting orders period of calm can be established. Concerns are that primarily for very late August dates or early Seponce the Gaddafi family is out rebel factions will tember. Freights remain unchanged. No spot tonturn against each other in a power struggle, which is nage can be seen quoted in the area of 2-5,000 dwt. possible considering the recent murder of the rebel Adriatic Market: On Monday and Tuesday fresh healed commander. Shares of major oil firms doing cargoes continued to be quoted on the market for 2business in Libya showed strong gains on Monday. 3-4-5-6000 dwt vessels. Cargo volumes appear to Internet access is now up and running again in Libya. be surpassing the supply of suitable vessels conTunisia: Cargo volumes have shown an impressive improvement over the past week with several fresh cargoes for various destinations within the Med. The 2-3-4-5,000mt sizes can be seen quoted by brokers operating in the region. Freight remains stable. No spot tonnage can be seen in the area 2-5,000 dwt. Egypt: Fewer cargoes than expected have been seen quoted out of Egypt this week as Ramadan comes slowly to a close. No spot tonnage can be seen as quoted in the region for the 2-5,000 dwt size class. Greece: As the holidays start winding down in the middle of next week several cargoes of wheat, SBM, palletized timber and Steels can be seen quoted in the early part of the week for prompt positions. With most factories closed or just getting started charterers are given the opportunity test freights to see if they can obtain better than last done levels. With the Black Sea very buoyant that is very unlikely as owners can be seen ballasting away quite frequently. No vessel can be seen spot in the area and most owners quoting prompt tonnage for Septem Summary: As the Libyan conflict slowly comes to a close it is only a matter of time before the new regime starts the process of rebuilding. Already, major players specialized in Libya have started to get ready for the days to come with major oil companies in the forefront. We anticipate that this will help boost freights in the coming months as charterers compete for an already small fleet of operating coasters within the Med. The market has maintained better-than-expected freight levels for this time of year under very volatile market conditions as a direct result of the very thin supply of suitable vessels, yet freights continue to be poor with remaining owners now more selective than ever before, especially with respect to those with whom they are doing business. sidering that many cargoes are being quoted on the market without any takers especially for difficult destinations such as Algeria due to Ramadan. West Coast Italy: Some fresh cargoes have appeared this week for cargo sizes of 2-4,000mt, including marble and marble chips as well as one steel cargo. Freight rates remain unchanged. This week no spot tonnage can be seen in the area from 2-5,000 dwt. South Spain-Spanish Med: In the early part of this week fresh orders of steels appeared on the market from the Spanish Mediterranean, mainly in the 22,500mt size range for destination within the Med and Sea of Marmara. Some fresh cargoes have also been quoted out of South Spain in the 2-5,000 dwt size but primarily for destinations outside the Med with some cargoes being requoted from last week without any takers. Freights remain unchanged. French Med: Activity remains very sluggish with few fresh Grain cargoes on the market early on this week cargoes quoted last week appear to be covered. As Ramadan comes to close we anticipate that Tunisia, Egypt, Algeria, Morocco, and Turkey will show the expected seasonal upturn in cargo volumes. It remains however to be seen how the short supply of available tonnage will reflect on freights. France, Italy, South Spain and Greece should start showing improvements in cargo volumes as is seasonally expected by the end of next week and the Adriatic is already showing a very healthy supply of cargoes as factories slowly get up and running. As volatility remains high for the near term, owners will continue to navigate their vessels in deep fog for the next several quarters with some signs of improvement but a very unstable and financially dangerous environment. This is sentiment that is being

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shared by most charterers who are having a hell of a time finding suitable coaster ships to cover requirements in some cases. The supply and demand factor seems to not to be working as charterers continue to Grain shipments have been limited across the North Sea and Baltic Sea markets, which is in keeping with the generally sluggish pace of the holiday season and an already dampened market, although hopes are seen increasing, traders tell BMTI, of a return in grain demand by the end of the month. Much more active, however, has been the Mediterranean grain trade with demand notably heightened for French grain shipments in smaller 3-5,000mt cargoes. As such prevailing freight rates have climbed by as much as Dry Bulk Commodity News One positive signal for world trade (and indeed dry bulk transport) is the firming in steel prices. Prices have climbed to a two-month high of US$ 710/mt on the WSD SteelBenchmarker, +US$ 100/mt YoY. Construction was a major driver of Germany's economic growth and dry bulk use in the first half of the year. Construction of residential buildings rose 29% year-on-year, 9% for non-residential buildings, 41% for factory buildings and 26% for office buildings. Critically low water levels on the Rhine river have yet to effect thermal coal prices, says Hans Gunnar

be unable to accept any major freight improvement ideas with shipowners offering freights on a considerable amount of cargoes before finding that one cargo that will make the numbers work. US$ 1/mt in the past week as they have across much of the Med. From North France, grain is going in parcels of 3,000mt to Morocco, Tunisia and Egypt at rates of US$ 29/mt, US$ 37/mt and US$ 43/mt, respectively. All these freight levels are upwards of US$ 0.5-1.0/mt higher on average than similar cargoes quoted this time last week. Traders are sceptical, however, if the rally will continue, suggesting freights will likely start to level off again this week.

Grain Shipments Stronger via Mediterranean, Still Slow via Baltic

Nvik of Nena, however a persistent slowdown in supply against currently higher demand to German power plants could turn into problem by September. Formerly optimistic forecasts about Russia's grain harvest (including some predicting 95 Mt this year from 61 Mt last year) were pared back last week with several analysts downgrading projections. SovEcon of Moscow cut its forecast to 87-88 Mt from a prior range of 87-90 Mt. The winter wheat crop has fallen to 2.5mt/ha from the Russian average of 2.8mt/ha.

BMTI Sale and Purchase ReportSecondhand Bulk Carrier Activity, 2011 Year to Date In many ways, secondhand activity has matched that of last year's so far in 2011. Sales peaked in the summer months of April, May and June with this year's peak in May at US$ 2.1m and last year's peak in June with US$ 2.8m. About US$ 11.7m has been spent on secondhand ships so far this year, shortly past the half-way point, compared to US$ 23.2m for the entirety of last year. But with US$ 0.99m in S&P sales in July this marks the first sub-US$ 1m month since 2009, suggesting that enthusiasm for acquiring secondhand is waning. Prices have fallen sharply in parallel with lower demand (see above). Prices for a five-year-old Cape have dropped to high US$ 30s million from low US$ 50s m at the start of the year. The dry bulk sector specifically has seen a downturn in investment this year in secondhand sales: year-todate US$ 4.3m has been spent on secondhand bulk carriers with 14.6m dwt. This is compared to about US$ 10.6m spent for all of last year with 31.1m dwt. That is, annualized, a monthly average of US$ 0.54m this year compared to US$ 0.88 last year. So far this year 337 bulk carriers were sold secondhand (about as many that had been sold last year already by July) including 23 Capes, 43 Panamaxes, 77 Handymaxes, 139 Handysizes and 55 Minibulk vessels. Percentage wise this is 7% Cape, 13% Panamax, 23% Handymax, 41% Handysize and 16% Minibulk vessels. By nationality in the year to date, 20% of bulker buyers were Chinese while 15% were Greek nationals.

S&P general cargo

"Eaststar" | 8,865dwt | blt97 | Romania | sold to undiscl. byrs | USD 3.6 mio "Balsa 57" | 6,830dwt | blt97 | Japan | | 2x15t Cranes | B&W | sold to Turkish byrs | USD 3.5 mio

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forthcoming holidays Date 31 Aug 2011 1 Sep 2011 Country End of Ramadan (Muslim) in 49 localities, Albania; Malaysia; Trinidad and Tobago End of Ramadan (Muslim) in 17 localities, Eritrea; Georgia; Kakinada, Visakhapatnam / Andhra Pradesh; Mormugao Goa / Goa; Jamnagar / Gujarat; Karwar, Mangalore, New Mangalore / Karnataka; Jawaharlal Nehru / Maharashtra (India); Libya Lobito / Benguela (Angola); Iraq; Jordan; Libya; Mauritius; Qatar; Republic of Yemen; Saudi Arabia; Ceuta (Spain); Sudan; Vietnam Jordan; Qatar; Qatar; Republic of Yemen; Saudi Arabia Saudi Arabia

2 Sep 2011 3 Sep 2011 4 Sep 2011

2011 by BMTI gmbh for . All rights reserved. http://twitter.com/bmti_daily BMTI Bunker Report Week 35 On Tuesday morning crude for October delivery showed at US$ 88.05 per barrel on the NYMEX, while Brent crude for October settlement was traded at US$ 113.20 a barrel on the London-based ICE futures exchange. Although the expected recovery in Libya and growing demand in emerging markets are positive signs, weakness in US economic numbers as the world's biggest oil consumer, weighs on prices. Good availability for all grades is reported for Klaipeda. Tight avails for low sulphur is reported for Port Flushing by most of the players. Also there are tight avails for prompt dates reported for Gibraltar with earliest deliveries possible from 6 September onwards. Some suppliers in Piraeus aren't quoting as barge congestion is inhibiting prompt dates.

bunker price info

Herewith some representative fuel oil prices in US currency / delivered
IFO 380 Actuals Previous 550 (550) 683 (646) 655 (630) 642 (618) 692 (668) 662 (648) 650 (631) 642 (623) 680 (660) 632 (610) IFO 180 Actuals Previous 560 (560) 690 (670) 685 (655) 664 (644) 722 (702) 690 (676) 680 (653) 674 (654) 710 (682) 660 (637) MGO Actuals Previous 860 (860) 1000 (970) 997 (975) 965 (935) 999 (969) 1010 (982) 979 (952) 970 (938) 1004 (989) 963 (915) Availability Fair Fair Fair Tight Fair Fair Tight Fair Tight 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 0.69 GBP 0.61 JPY 76.72 CHF 0.81 DKK 5.17 SEK 6.35 NOK 5.38

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Baltic Indices
Actuals DRY (BDI): HANDYSIZE (BHSI): 25 to 31 August, 2011 1,537 671 Previous (1,565) (657) % - 2% + 2% - 28 + 14 Trend Min/Maxlast 12 mos 1,043 2,995 634 1,085 Min/Max-Volatility
( % from Act. )

1,952 127% 451 67%

BMTI Short Sea Freight Rates

WC Norway | Klaipeda | aggregates | 7,700mt | 6 Vyborg | N. Spain | fertilizers | 5,000mt | 22 Rotterdam | Inner Baltic | SBM | 5,000mt | 11 North France | East Med | grain | 5,000mt | 27 Izmir | Alexandria | slabs | 5,000mt | $27 Rostov | Marmara | scrap 58' | 4,000mt | $48 ARA | East Med | general | 3,500mt | 26 Aegean | West Med | general | 3,500mt | 16 ECUK | North Spain | general | 3,500mt | 11 ARA | St. Malo | fertilizers | 3,500mt | 11 Astrakhan | Anzali | sodium | 3,000mt | $24 Yuzhny | 1 Syria | fertilizers | 3,000mt | $31 WC Norw | Bremerhaven | aggregates | 3,000mt | 6 ARA | SCUK | general | 3,000mt | 9 Marmara | Alexandria | cement | 3,000mt | $17 SPB | ARA | billet | 3,000mt | 15 Lower Baltic | WCUK | general | 3,000mt | 21 Bartin | Novorossiysk | cement | 2,000mt | $12

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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Essentials and Background BMTI Short Sea Report

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