No 2

18 to 24 August, 2011

BMTI Short Sea Report

FOR BMTI-SUBSCRIBER . Baltic Sea Markets Mostly Stagnant with Minor Increases in Fertilizer Transits North European markets refuse to be revived now at the end of summer and the middle of holiday season with most movements in rates and cargoes stuck in a holding pattern. A revival in grain cargoes, long rumoured, has so far failed to transpire, however grain via Black Sea and Med has grown rather boisterous in recent weeks, even drawing down several open ships in the Baltic Sea waters and, in this respect, going to firm up rates despite a general lack of activity. Operating costs have eased slightly, luckily for owners, due to declines in bunker prices, though this has had thus far little noticeable impact on rates. Fertilizers are one cargo that have seen a slight uptick in demand with rates hitting upwards of EUR 20/mt for 3,000mt cargoes shipped from Baltic States to ARA.
19 18 17 16 /mt 15 14 13 12 Week 33 37 41 45 49 Baltic Westward [2010-11]

9 13 17 21 25 29 33

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

Black Sea Stays Busy Though Open Tonnage Neutralizing Rate Hikes Cargo demand has been holding to a fairly high level upper hand in negotiations. All told, however, avails in the Black Sea, which is heartening area owners are being drawn down slowly along several trade and providing more business than has been seen in routes and if persistent cargo succeeds in pulling many months thanks to parallel demand for steels, excess tonnage off the market, we could see rates aluminium, coal and especially increases in grain de- rising again within a week or two. Now, a 3,000mt mand from Russia's newly opened grain terminals. steel cargo for Odessa/Piraeus can get a steady US$ Demand for small shipments of scrap is also on the 24/mt, coal of 5,000mt settles at US$ 17-18/mt for rise via Black Sea as well as the Med. Rates, on the Tuapse/Marmara, 2,000mt of scrap 90' can get unother hand, have stayed essentially unchanged, changed US$ 27 for Poti/Marmara and 5,000mt of despite the uplift in demand, as open tonnage is still grain is stable at US$ 50/mt for Odessa/Tunis. exceeding overall cargo, giving charterers still a slight Caspian Sea Freights Supported by Acute Shortage of Open Vessels A rather serious shortage of open tonnage in the Caspian Sea basin has helped light a small fire under spot rate levels with cargoes increasing slightly in the past week, enough so that owners with the option can usually extract slightly higher than last (upwards of US$ 0.5-1.0/mt) if they are well-positioned. Indeed, demand for shipments of steel products, grain and timber has only increased slightly over the past week. As such, we are already seeing upgrades of nearly US$ 1/mt week-on-week with a 3,000mt rebar cargo from Astrakhan able to fetch US$ 20/mt to Anzali, whereas the same trip would go for something closer to US$ 18-19/mt just two weeks ago. The same sort of rate hike has been seen on this route for grain cargoes. Steel products in the 3-5,000mt range are going for US$ 16/mt now on the same route, up from US$ 15/mt just a week ago.

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BMTI SHORT SEA REPORT

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Mediterranean Overview Market Update from an Area Ship Broker Libya: Some shipments of Grains appear to be quoted out of Black Sea to Libya however rates being indicated by charterers appear to be on the very low side. Some sugar was also being quoted from Algeria into Libya however most movements into Libya continue to be handled via Tunisia. Tunisia: Gabes is now operating normally since 12 August having been plagued by strikes over the past few weeks. Sfax presently has 14 ships under cargo operation and five waiting to berth. Cargo volumes appear to be slightly improving as strikes stop. Egypt: Several lots of steel into Marmara, North Spain and Spanish Med are being offered on and off market. The market seems subdued as a result of Ramadan fasting. Freights remain unchanged. Greece: With 15 August a major holiday in Greece, activity this week has been very slow with some fresh cargoes appearing on and off market on Tuesday. Some vessels appear open on prompt basis. Turkish Med: Steel continue to be quoted regularly out of Turkish Med in sizes of 1/2/4/6,000 mt for various destinations within med, North Spain, East Med and Black Sea. Freight remains stable. Summary: With most of Europe on holiday Monday and with Ramadan in progress most of the med market opened up in hibernation. On Tuesday as more brokers, charterers and owners started to look at emails, activity picked up at a slightly better pace with some fresh cargoes appearing. Several coaster owners have put tonnage on short term COA(s) in the Black Sea at an early stage whilst the cargoes are there to be had. But it remains to be seen how the shift of tonnage from the med into the Black Sea will weigh on the Mediterranean Sea market with a sizeable amount of tonnage in lay-up, arrested or scrapped. The market remains very volatile and it is Adriatic Market: Cargoes requoted from previous weeks are appearing on the market with fewer and fewer takersas such most of the Adriatic sector was on holiday on Monday with some leftover cargoes from the previous week re-emerging on the scene. No ships have been found spot in the region. West Coast Italy: Several vessels appear spot at WC Italy and vicinity. With Monday a holiday in Italy this was anticipated. Tuesday opened with several cargoes having being re-quoted from previous week. South Spain-Spanish Med: With Spain also on holiday on Monday the market opened on Tuesday with no fresh cargoes with the exceptions of some cargoes from the week before being re-quoted this week. Some vessels have been seen spot in the area French Med: Not much fresh activity to report on Monday as a result of the holiday Tuesday and Wednesday the market opened with several cargoes being re-quoted from previous week and with some signs of charterers improving on freights just slightly in order to try and attract owners' interest.

anyone's guess what to expect in the near term. Coaster owners now seem to be fighting for better freight with charterers in most occasions entertaining owners' figures when the need arises. Otherwise charterers are holding off as long as they can before committing to any particular vessel unless the freight is justified. This has been on going for several weeks now. So one might ask what's new. Well, the fact remains that owners are now reluctant to take just any positioning cargo into the Black Sea or ballast tonnage realizing that freights in the Black Sea region are not yet at the levels they should be.

Dry Bulk Commodity News On-port coal stocks are at their highest level of the yearincluding a high of 3.1 Mt at the Emo coal terminalas rising freight costs have delayed inland transhipment via the Rhine River. Prices are steady. European coal prices stabilized with adequate supply from Russia as October thermal fell US$ 1/mt on Friday to US$ 125/mt, unchanged in the week. European demand is set to remain stable, though Germany may increase imports in the near term. Boding well for European steelmaking this year (and general resource demand), German crude steel production rose by 6.6% year-on-year in July to 3.7Mt, albeit just slightly below June's output. Year-to-date German steel production rose a modest 3% to 27 Mt. Global crop worries saw wheat futures rise around the world, including US prices hitting two-month highs and a 1% jump in the European benchmark, the Paris November contract, to over EUR 200/mt.

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BMTI SHORT SEA REPORT

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Russian grain exports have been growing since the export ban was lifted last month. Most volumes are from 2010 strategic reserves and, thus, are selling for BMTI Sale and Purchase ReportWeek 34 Some interesting deals have taken place over the last week, predominantly in the Panamax and Handysize sizes with secondhand prices generally heading further south. Five-year-old Capesizes are now going for below US$ 39m, same age of Panamax is selling at around US$ 28m and the Handysizes are dipping well below US$ 26m. With these price levels for modern vessels at the moment, older tonnage that needs more bunker is nearly falling out of the game. Demolition activity is being affected by the volatility of the international financial markets with a general

lower prices. Analysts expect that as soon as these supplies run out, prices for Russian grain will rise such that US grain exports will be again competitive. expectation of prices to fall further in the near term. Thus, hesitation characterizes the current situation. Prices from the Indian subcontinent hover between US$ 500-520/ldt with Chinese buyers still maintaining the gap of US$ 50. With the end of monsoon and Ramadan a possible resurgence of activity may come in September to revive business again to the end of the year, as overcapacity may encourage scrapping. Uncertainty over Bangladesh's role in the recycling business following 12 October, however, will probably have some negative impact.

S&P general cargo

"Medousa" | 15,794dwt | blt81 | Brazil | | 4x10t crns | B&W | SS due Aug-15 sold to Syrian byrs | USD 2.6 mio "Atlant Regine" | 7,380dwt | blt96 | Germany | 461 TEU | 2x250t crns | MAN | "Atlant Svenja" | 7,713dwt | blt96 | Germany | 461 TEU | 2x250t crns | MAN | sold en bloc to undiscl. byrs on private terms | "Nordertor" | 5,449dwt | blt98 | China | 511 TEU | 2x40t crns | MAN | sold to European byrs | USD 4.5 mio
Forthcoming Holidays Date Country 24 Aug 2011 Pakistan; Ukraine 25 Aug 2011 Ste/Languedoc-Roussillon (France); Heraklion/Crete (Greece); Uruguay 26 Aug 2011 Bangladesh; Ivory Coast; Namibia; Bilbao/Basque Country (Spain) 27 Aug 2011 Maceio/Alagoas (Brazil); Republic of Guinea 28 Aug 2011 Bangladesh; Georgia; Almeria/Andalucia; Aviles/Asturias (Spain) 2011 by BMTI gmbh, All Rights Reserved. http://twitter.com/bmti_daily BMTI Bunker Report Week 34 Oil prices were pushing higher on NYMEX on Tuesday morning with light, sweet crude for October delivery showing US$ 85.68 per barrel while Brent crude for October was trading around US$ 108.46 per barrel at the same time. Newly released positive economic data were causing some optimism. Among them was a slight improvement in China's HSBC Purchasing Managers' Index to 49.8 from 49.3 in July and the eurozone composite PMI holding steady at 51.1 despite ongoing financial turbulence. Bunker prices are rising in Antwerp especially for middle distillate product. Tight avails for high sulphur product are reported for Rotterdam with some barge congestion, but stocks are expected to recover soon. Las Palmas is also announcing higher prices with earliest delivery dates possible from 28 August onwards. Moderate buying interest is said to prevail in Piraeus with good supply and barging situation.

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bunker price info

Herewith some representative fuel oil prices in US currency / delivered

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

IFO 380 Actuals Previous 550 (555) 646 (648) 630 (642) 618 (620) 668 (670) 648 (645) 631 (635) 623 (625) 660 (662) 610 (619)

IFO 180 Actuals Previous 560 (570) 670 (673) 655 (675) 644 (647) 702 (705) 676 (675) 653 (658) 654 (655) 682 (685) 637 (647)

MGO Actuals Previous 860 (870) 970 (961) 975 (975) 935 (925) 969 (960) 982 (990) 952 (952) 938 (945) 989 (980) 915 (931)

Availability Fair Fair Fair Tight Fair Fair Tight Fair Fair Tight

prices ex wharf | 2delivered

BMTI forex crossrates

USD/EURO 0.69 GBP 0.60 JPY 76.56 CHF 0.79 DKK 5.15 SEK 6.29 NOK 5.40

Baltic Indices
Actuals DRY (BDI): HANDYSIZE (BHSI): 18 to 24 August, 2011 1,565 657 Previous (1,344) (643) % +16% + 221 + 2% + 14 Trend Min/Maxlast 12 mos 1,043 2,995 634 1,085 Min/Max-Volatility
( % from Act. )

1,952 125% 451 69%

All BEX data are published with one business day delay.

BMTI Short Sea Freight Rates

WC Norway | 1 DK | aggregates | 11,000mt | 5 Ilyichevsk | Marghera | pig iron | 10,000mt | $24 WC Norway | Muuga | aggregates | 8,000mt | 7 ARA | USG | general | 6,000mt | 36 Black Sea | Marmara | general | 5,000mt | 13 Yeisk | Trabzon | coal | 5,000mt | $27 ARA | West Med | general | 4,500mt | 18 Azov | Nemrut | coal | 4,000mt | $35 Rotterdam | Span. Med | fertilizers | 3,800mt | 20 SPB | ARA | scrap 60' | 3,000mt | 16 Samsun | Rostov | clinker | 3,000mt | $14 N. France | 1 Tunisia | grain | 3,000mt | $36 Izmir | Alexandria | steels | 3,000mt | $27 Mariupol | Marmara | grain | 3,000mt | $44 Astrakhan | Anzali | billets | 3,000mt | $19 Itea | Porto Vesme | bauxite | 2,000mt | $17 Constanta | Nemrut | scrap '70 | 2,000mt | 31 Vlissingen | WC Nor | corn gluten meal | 1,650mt | 15
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Essentials and Background BMTI Short Sea Report

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