Commodity Corner

Views on commodities and energy

from Krishna Das:

ANALYSIS-Small ships to unlock rate boon for bulk owners

By Krishna N Das and Jonathan Saul

BANGALORE/LONDON, Feb 8 (Reuters) - Dry cargo shippers with smaller vessels are shifting to more-risk, more-reward spot markets, eyeing rising demand for sugar and grains -- commodities well suited to versatile supramax and handysize ships.

Ship owners generally prefer long-term charters in a weak market. The Baltic Dry Index <.BADI> o-year lows in recent weeks but confidence has been rocked by South Korean dry bulk group Korea Line Corp <005880.KS> filing for bankruptcy protection, highlighting the risk of charter-party defaults.

"Concerns now persist industry-wide, as speculation grows as to whether faults," Deutsche Bank analyst Justin Yagerman said.

"Continued charterer defaults could bring into question many companies' above-market charters." Flooding in Australia, the world's biggest coal exporter, and weather-srupted coal shipments and dented sentiment for capesize vessels -- the giants of seaborne trade routes, typically hauling 150,000 tonne cargoes such as iron ore and coal.

Environmental groups call “clean” coal a fairy tale

Photo

USA-COAL/MONTANAWhat do Bigfoot, a mermaid, an alien from outer space, and clean coal all have in common?
    None of them exist, according to several environmental groups.
    Organizations such as the League of Conservation Voters, Natural Resources Defense Council and the National Wildlife Federation have launched a multi-million dollar media onslaught aimed at knocking down claims that power can be generated from coal now in an environmentally safe manner.                                                                                                                                                      The so called “reality” campaign features a television commercial with a man touting “clean coal technology” in a barren field and print ads with fictional creatures holding lumps of coal. The message of the ads is “In reality, there’s no such thing as clean coal.”
    How to handle America’s abundant coal supply is likely to remain a contentious issue as U.S. President-elect Barack Obama’s incoming administration tackles climate change and reducing greenhouse gas emissions.
    Coal-fired power plants generate about half of U.S. electricity supplies, and account for about 40 percent of U.S. greenhouse gas emissions — the biggest single industrial source.
    Obama has expressed support for the development of technology that would allow coal-burning power plants to trap and store carbon dioxide rather than releasing it into the atmosphere. Such technology is commercially untested and currently economically nonviable.
    Coal industry trade groups, such as the American Coalition for Clean Coal Electricity, say that they are committed to carbon reduction strategies and coal power is necessary to provide Americans with affordable electricity.
    Until the carbon capture and storage technology is developed, however, environmentalists behind the Reality Coalition say on their website “coal will remain a major contributor to the climate crisis.”

–Ayesha Rascoe