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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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Wednesday, 19 October 11
ADARO ACQUIRES BUKIT ENIM ENERGI - INSIDER STORIES
Insider Stories reported that, Coal miner PT Adaro Energy Tbk, via its subsidiary dubbed PT Alam Tri Abadi, today revealed a 46% stake takeover of a ...
Tuesday, 18 October 11
INDONESIAN PRESIDENT APPOINTS JERO WACIK AS NEW MINISTER OF ENERGY & MINERAL RESOURCES
COALspot.com - Jero Wacik has been appointed as minister of energy and mineral resources of Indonesia replacing Darwin Saleh and Prof. Widjajono Par ...
Tuesday, 18 October 11
DELTA DUNIA MAKMUR HAS PRODUCED 3.0 MILLION TONS OF COAL LAST MONTH
COALspot.com - PT. Delta Dunia Makmur, wholly owned subsidiary, PT Bukit Makmur Mandiri Utama (BUMA), Delta Dunia Makmur has removed 1.4 million bcm ...
Monday, 17 October 11
KOWEPO TO BUY 260,000 MT BITUMINOUS COAL
COALspot.com - KOWEPO has issued a spot tender for 260,000MT of minimum 5,600kcal/kg NAR Bituminous Coal.
The tender document also mentioned tha ...
Monday, 17 October 11
CAPESIZE SHIPPING COSTS CLIMB TO 10-MONTH HIGH ON ORE IMPORTS
The cost to hire capesize vessels climbed to a 10-month high as rising imports of iron ore to China boosted demand for the ships.Monthly iron-ore sh ...
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- Asmin Koalindo Tuhup - Indonesia
- Heidelberg Cement - Germany
- Maheswari Brothers Coal Limited - India
- Jindal Steel & Power Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement PLC, Thailand
- Mjunction Services Limited - India
- Bhatia International Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- Dalmia Cement Bharat India
- Coal and Oil Company - UAE
- London Commodity Brokers - England
- Metalloyd Limited - United Kingdom
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- Toyota Tsusho Corporation, Japan
- Larsen & Toubro Limited - India
- Siam City Cement - Thailand
- Videocon Industries ltd - India
- Coalindo Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Meralco Power Generation, Philippines
- Therma Luzon, Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- Vizag Seaport Private Limited - India
- Latin American Coal - Colombia
- Trasteel International SA, Italy
- Borneo Indobara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sakthi Sugars Limited - India
- Lanco Infratech Ltd - India
- Sarangani Energy Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- Independent Power Producers Association of India
- Oldendorff Carriers - Singapore
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- Orica Mining Services - Indonesia
- Kumho Petrochemical, South Korea
- Indian Oil Corporation Limited
- Thai Mozambique Logistica
- Pendopo Energi Batubara - Indonesia
- South Luzon Thermal Energy Corporation
- Planning Commission, India
- Ministry of Transport, Egypt
- New Zealand Coal & Carbon
- Kideco Jaya Agung - Indonesia
- VISA Power Limited - India
- Mintek Dendrill Indonesia
- Bhushan Steel Limited - India
- Aboitiz Power Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Xindia Steels Limited - India
- The University of Queensland
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Link Ltd, New Zealand
- Tata Chemicals Ltd - India
- Mercator Lines Limited - India
- Meenaskhi Energy Private Limited - India
- Manunggal Multi Energi - Indonesia
- The Treasury - Australian Government
- Coastal Gujarat Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Mercuria Energy - Indonesia
- Central Electricity Authority - India
- Goldman Sachs - Singapore
- Gujarat Sidhee Cement - India
- Wilmar Investment Holdings
- Globalindo Alam Lestari - Indonesia
- Australian Coal Association
- Grasim Industreis Ltd - India
- Rio Tinto Coal - Australia
- Sical Logistics Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Bharathi Cement Corporation - India
- Indogreen Group - Indonesia
- Africa Commodities Group - South Africa
- GMR Energy Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Posco Energy - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Sree Jayajothi Cements Limited - India
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
- Makarim & Taira - Indonesia
- Sindya Power Generating Company Private Ltd
- PowerSource Philippines DevCo
- Alfred C Toepfer International GmbH - Germany
- Gujarat Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- SN Aboitiz Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Electricity Generating Authority of Thailand
- Uttam Galva Steels Limited - India
- Anglo American - United Kingdom
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Pipit Mutiara Jaya. PT, Indonesia
- Samtan Co., Ltd - South Korea
- Malabar Cements Ltd - India
- PTC India Limited - India
- GVK Power & Infra Limited - India
- Ministry of Mines - Canada
- AsiaOL BioFuels Corp., Philippines
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Renaissance Capital - South Africa
- Indika Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bangladesh Power Developement Board
- Attock Cement Pakistan Limited
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- White Energy Company Limited
- Sinarmas Energy and Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Formosa Plastics Group - Taiwan
- Carbofer General Trading SA - India
- Minerals Council of Australia
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- Essar Steel Hazira Ltd - India
- Bulk Trading Sa - Switzerland
- Standard Chartered Bank - UAE
- Jaiprakash Power Ventures ltd
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Chamber of Mines of South Africa
- Maharashtra Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- Parry Sugars Refinery, India
- Semirara Mining and Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- McConnell Dowell - Australia
- Vedanta Resources Plc - India
- Romanian Commodities Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- The State Trading Corporation of India Ltd
- Singapore Mercantile Exchange
- International Coal Ventures Pvt Ltd - India
- Georgia Ports Authority, United States
- Chettinad Cement Corporation Ltd - India
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Thiess Contractors Indonesia
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- Indian Energy Exchange, India
- Power Finance Corporation Ltd., India
- Miang Besar Coal Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Madhucon Powers Ltd - India
- Eastern Coal Council - USA
- Baramulti Group, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- ASAPP Information Group - India
- CNBM International Corporation - China
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
- European Bulk Services B.V. - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Star Paper Mills Limited - India
- Economic Council, Georgia
- Gujarat Mineral Development Corp Ltd - India
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- Edison Trading Spa - Italy
- Electricity Authority, New Zealand
- Bayan Resources Tbk. - Indonesia
- Deloitte Consulting - India
- Wood Mackenzie - Singapore
- Banpu Public Company Limited - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Port Waratah Coal Services - Australia
- Energy Development Corp, Philippines
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