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Friday, 23 September 11
RECORD RECYCLING ACTIVITY STIRS OPTIMISM IN DRY BULK SAYS BIMCOS ANALYSIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
 As expected at the start of the year, dry bulk ship owners were expected to flock scrapyards around the world, in order to take advantage of attractive scrap prices and help alleviate tonnage oversupply pressures, already in place since the last months of 2010. With 2011 also looking to be another record-breaking year in terms of new building deliveries, scrapping of older vessels was crucial to the industry’s recovery. Well, after nine months, it seems that these efforts have paid off, with the dry bulk market staging a superb comeback since late summer.
According to BIMCO’s latest analysis, in absolute numbers, 2011 is expected to become the new no1 in terms of dry bulk tonnage leaving the fleet to be recycled. “On On course for more than 20 million DWT to be demolished, with the potential of reaching 25 million if owners continue to be attracted by the relatively high demolition rates and freight rates fail to improve significantly through the remainder of the year.
Chief Shipping analyst at BIMCO, Peter Sand says: “The huge amount of tonnage leaving the fleet for recycling is very positive news for the dry bulk market. As 2011 is going to provide the largest inflow of new ships ever, this counterbalancing effort by ship owners is softening the current imbalance between supply and demand as fleet growth will be tempered”.
The previous demolition record was set in 1986 when 12.9 million DWT was demo-lished. At that time the dry bulk fleet was comprised of just 197.2 million DWT, bringing the annual demolition rate to 6.5%. Should 2011 bring around the same annual demolition rate relatively, 35 million DWT would have to be recycled.
The primary driver behind this development is the fact that earnings have been close to OPEX-levels for most of the year. Combined with a strong inflow of new tonnage this has led to a strong surge in demolitions of older tonnage” said Mr. Sand.
BIMCO’s analysis continues: “The fleet growth rate in the Capesize segment has so far been tempered by 4.4% due to demolition, with the potential of reaching as much as 6.6% for the full year. This offsets the fleet growth to a large extent, since the absence of any demolition activity during 2011 would have resulted in the Capesize fleet growing by astonishing 20%. Massive as this figure may sound, the Capesize fleet grew by 23% last year and 18.5% in 2009. If the full potential of demolition of the Capesize fleet in 2011 should materialize, that would equal another 4.6 million DWT to be demolished. In order words it would require the 28 remaining Capesize vessels that are built in 1985 or before to exit the fleet.
The demolition activity has primarily involved Capesize vessels. 55% of the recycled DWT in 2011 represented Capesize vessels. This compares to the previous 10 years average at just 27% of total dry bulk demolition. As the Capesize segment has already seen inflow of new tonnage in excess of 27 million DWT (153 vessels), the decision to take a vessel out of the commercial service is helping to cushion the impact from significant oversupply which has already left deep scars in terms of very poor earnings. Average spot earnings for a 10 years old Capesize vessel in 2011 have been just USD 8,296 per day. This is the poorest result on record. Last year such a vessel earned USD 30,587 per day on average.
This means that, if you have so far traded your Capesize vessel exclusively in the spot market during 2011, earnings would have covered only daily running costs, regardless of the composition of your Capesize fleet (new/old, debt-free/indebted). This may be one of the most important factors behind the booming demolition activity as massive inflow of new tonnage doesn’t encourage higher demolition activity alone.
Daily running cost on a Capesize vessel today is around USD 8,000 per day excluding capital costs and depreciations. If you include the above mentioned costs in the earnings-equation the picture looks quite different and it really spells out the chal-lenges facing owners. If your new built and externally financed Capesize is bought at top dollar at the peak of the market (USD 95 million) using 80% debt at 5% p.a. you will need just above USD 30,000 per day to break-even with the vessel on a stand-alone basis. At the other end of the scale the same calculation equals a break-even rate at USD 19,000 per day if you invest in a 5 year old second hand vessel today at USD 39 million.
Owners of “V Europe” have just sold the vessel for USD 10 million to be demolished at a Bangladeshi facility. The vessel that was beached on August 30 is amongst the latest in a very steady stream of dry bulkers to be withdrawn from service. The 1982-built, 139,496 DWT vessel is the 58th in the line of Capesize bulk carriers, under-scoring the strong flow of vessels satisfying a very solid demand for scrap metal in the demolition country.
The healthy demand for scrap steel is visible from the high ldt-prices offered. “V Europe” went to the breakers for USD 525 per ldt (Light Displacement Tonnage), building further on the continual rise in prices offered by cash buyers.
There are four major ship recycling markets, namely India, Bangladesh, China and Pakistan. In all terms India is by far the largest ship breaking nation and Alang the leading facility. So far this year, 283 vessels with a cargo capacity of 8.9 million DWT have been scrapped by Indian breakers. Bangladesh comes in second in terms of DWT - 7.4 million and China in terms of numbers – 107 vessels of various kinds. The typical demolished Capesize vessel is 27 years old on average with a cargo capacity of 160,125 DWT and built in Japan (51%) between 1977 and 1991” concluded BIMCO.
“At the current demolition pace, 4.7% of the dry bulk fleet will be demolished during 2011. But as the order book still holds 235 million DWT in prospect for future delivery equal to 40% of current active fleet, – recycling of over-aged tonnage must remain at high volume to bring optimism back and steer this dry bulk segment towards more sustainable freight levels and thus better earnings“, adds Peter Sand.
Sorce: Nikos Roussanoglou, Hellenic Shipping
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Thursday, 20 October 11
CAPESIZE - TUBARAO /QINGDAO BEING FIXED AT STRONG US$ 29.75 PMT
Handy
The Atlantic market is quite steady, and market seems to be around the same levels as last week. Fewer fixtures reported though. ...
Thursday, 20 October 11
BRACKEN INTERNATIONAL MINING LISTS ON FRANKFURT STOCK EXCHANGE
Press Release - Bracken International Mining (Code:1BM) listed on the Deutsche Börse’s Frankfurt Stock Exchange today at €1.00 with ...
Thursday, 20 October 11
CAPESIZES, SUPRAMAXES LEAD GAINS FOR DRY BULK MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Struggling to find additional support, but still managing to post gains, the dry bulk market has stabilized itself on higher levels again yesterday, ...
Wednesday, 19 October 11
METALLURGICAL COAL PRICES TO DROP BELOW US$240/TONNE - WOOD MACKENZIE
Wood Mackenzie Says Metallurgical Coal Prices to Drop Below US$240/tonne by Q4 2012 But Long-term Demand Fundamentals Remain Robust
Wood Mackenzi ...
Wednesday, 19 October 11
SUPRAMAX MARKET WAS VERY FIRM LAST WEEK - BRS
With all sectors contributing positively, the BDI ended the week at 2,173 points (+8.6%), its highest level so far in 2011. The BCI stood at 3,587 ( ...
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- Cigading International Bulk Terminal - Indonesia
- PowerSource Philippines DevCo
- Directorate Of Revenue Intelligence - India
- Anglo American - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- Bhatia International Limited - India
- Gujarat Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- Bukit Makmur.PT - Indonesia
- Edison Trading Spa - Italy
- Dalmia Cement Bharat India
- Iligan Light & Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Posco Energy - South Korea
- Georgia Ports Authority, United States
- Merrill Lynch Commodities Europe
- Sojitz Corporation - Japan
- Marubeni Corporation - India
- Aboitiz Power Corporation - Philippines
- Lanco Infratech Ltd - India
- Indian Oil Corporation Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tata Chemicals Ltd - India
- Karaikal Port Pvt Ltd - India
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Maharashtra Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- White Energy Company Limited
- Medco Energi Mining Internasional
- Petrochimia International Co. Ltd.- Taiwan
- SMG Consultants - Indonesia
- Chettinad Cement Corporation Ltd - India
- Carbofer General Trading SA - India
- Romanian Commodities Exchange
- European Bulk Services B.V. - Netherlands
- Chamber of Mines of South Africa
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- Electricity Generating Authority of Thailand
- Billiton Holdings Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Mintek Dendrill Indonesia
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Savvy Resources Ltd - HongKong
- Straits Asia Resources Limited - Singapore
- Ministry of Transport, Egypt
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coastal Gujarat Power Limited - India
- Aditya Birla Group - India
- Africa Commodities Group - South Africa
- Indian Energy Exchange, India
- Sakthi Sugars Limited - India
- Formosa Plastics Group - Taiwan
- Electricity Authority, New Zealand
- Bayan Resources Tbk. - Indonesia
- Ambuja Cements Ltd - India
- ICICI Bank Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Mercator Lines Limited - India
- Energy Link Ltd, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Global Coal Blending Company Limited - Australia
- Rashtriya Ispat Nigam Limited - India
- VISA Power Limited - India
- CIMB Investment Bank - Malaysia
- Price Waterhouse Coopers - Russia
- Makarim & Taira - Indonesia
- Thiess Contractors Indonesia
- Eastern Coal Council - USA
- Renaissance Capital - South Africa
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- Metalloyd Limited - United Kingdom
- Commonwealth Bank - Australia
- Siam City Cement - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Port Waratah Coal Services - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coal and Oil Company - UAE
- South Luzon Thermal Energy Corporation
- Kapuas Tunggal Persada - Indonesia
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- Holcim Trading Pte Ltd - Singapore
- Oldendorff Carriers - Singapore
- Mjunction Services Limited - India
- The University of Queensland
- Baramulti Group, Indonesia
- Videocon Industries ltd - India
- Ceylon Electricity Board - Sri Lanka
- Jindal Steel & Power Ltd - India
- GVK Power & Infra Limited - India
- Kumho Petrochemical, South Korea
- Salva Resources Pvt Ltd - India
- Australian Commodity Traders Exchange
- GN Power Mariveles Coal Plant, Philippines
- PTC India Limited - India
- Gujarat Mineral Development Corp Ltd - India
- London Commodity Brokers - England
- Semirara Mining Corp, Philippines
- Sindya Power Generating Company Private Ltd
- SN Aboitiz Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Borneo Indobara - Indonesia
- Meenaskhi Energy Private Limited - India
- Indonesian Coal Mining Association
- Parliament of New Zealand
- Timah Investasi Mineral - Indoneisa
- IEA Clean Coal Centre - UK
- Indika Energy - Indonesia
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- India Bulls Power Limited - India
- Sree Jayajothi Cements Limited - India
- Therma Luzon, Inc, Philippines
- MS Steel International - UAE
- Kohat Cement Company Ltd. - Pakistan
- Agrawal Coal Company - India
- Asmin Koalindo Tuhup - Indonesia
- Wood Mackenzie - Singapore
- GAC Shipping (India) Pvt Ltd
- Globalindo Alam Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Samtan Co., Ltd - South Korea
- Kartika Selabumi Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- New Zealand Coal & Carbon
- Bukit Asam (Persero) Tbk - Indonesia
- Madhucon Powers Ltd - India
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Kobexindo Tractors - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- Minerals Council of Australia
- Banpu Public Company Limited - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Meralco Power Generation, Philippines
- Planning Commission, India
- Vedanta Resources Plc - India
- ASAPP Information Group - India
- Uttam Galva Steels Limited - India
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Australian Coal Association
- Thai Mozambique Logistica
- TNB Fuel Sdn Bhd - Malaysia
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Manunggal Multi Energi - Indonesia
- The State Trading Corporation of India Ltd
- LBH Netherlands Bv - Netherlands
- Orica Australia Pty. Ltd.
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
- Independent Power Producers Association of India
- GMR Energy Limited - India
- Krishnapatnam Port Company Ltd. - India
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- The Treasury - Australian Government
- OPG Power Generation Pvt Ltd - India
- Star Paper Mills Limited - India
- AsiaOL BioFuels Corp., Philippines
- Central Electricity Authority - India
- TeaM Sual Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Petron Corporation, Philippines
- CNBM International Corporation - China
- Miang Besar Coal Terminal - Indonesia
- McConnell Dowell - Australia
- Barasentosa Lestari - Indonesia
- Orica Mining Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Heidelberg Cement - Germany
- Malabar Cements Ltd - India
- Gujarat Sidhee Cement - India
- Parry Sugars Refinery, India
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Business Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Intertek Mineral Services - Indonesia
- Kepco SPC Power Corporation, Philippines
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