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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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Saturday, 15 October 11
BUNKER PRICES AND DEMANDS PUSHED FREIGHT RATES UP - VISTAAR
COALspot.com - The market continued to be firm with all segments moving up with biggest gain in Handy size segment up by 15 pct. The BDI was u ...
Saturday, 15 October 11
BENGAL COAL IMPORT TEST - THE TELEGRAPH
The Telegraph reported that, the power position in Bengal improved today but alarm bells are ringing over imported coal stocks that are running out ...
Friday, 14 October 11
CAPE DERIVATIVES MARKET HAS NOT REFLECTED OWNERS EXPECTATIONS' - FEARNBULK
Handy
The Atlantic market continued its upward trend, with fresh cargo entering the market. Skaw Passero to US Gulf climbed US$ 1500 from la ...
Friday, 14 October 11
ADARO BUYS SERVO MEDA FOR RP200 BIO - INSIDER STORIES
Insider Stories reported that, PT Adaro Energy Tbk (ADRO) announced that its subsidiary PT Alam Tri Abadi (ATI), acquired 35% stake in PT Serv ...
Thursday, 13 October 11
DRY BULK MARKETS RALLY CONTINUES, BUT ANALYSTS WARN IT WILL BE SHORTLIVED - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market continued its push forward yesterday, for yet another session, as the BDI (Baltic Dry Index), the industry’s benchmark edg ...
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- Siam City Cement PLC, Thailand
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- Interocean Group of Companies - India
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Xindia Steels Limited - India
- Semirara Mining Corp, Philippines
- Coastal Gujarat Power Limited - India
- Central Electricity Authority - India
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- Manunggal Multi Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Videocon Industries ltd - India
- Bhoruka Overseas - Indonesia
- Straits Asia Resources Limited - Singapore
- Globalindo Alam Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Metalloyd Limited - United Kingdom
- Maheswari Brothers Coal Limited - India
- Mintek Dendrill Indonesia
- IEA Clean Coal Centre - UK
- Alfred C Toepfer International GmbH - Germany
- Sojitz Corporation - Japan
- Kaltim Prima Coal - Indonesia
- Makarim & Taira - Indonesia
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- Siam City Cement - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Eastern Energy - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Port Waratah Coal Services - Australia
- Meenaskhi Energy Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- Tata Chemicals Ltd - India
- Essar Steel Hazira Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Lanco Infratech Ltd - India
- Indian Oil Corporation Limited
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Africa Commodities Group - South Africa
- Thai Mozambique Logistica
- Jaiprakash Power Ventures ltd
- GAC Shipping (India) Pvt Ltd
- Posco Energy - South Korea
- Therma Luzon, Inc, Philippines
- Electricity Generating Authority of Thailand
- Singapore Mercantile Exchange
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- Karbindo Abesyapradhi - Indoneisa
- Bulk Trading Sa - Switzerland
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Independent Power Producers Association of India
- Economic Council, Georgia
- Orica Mining Services - Indonesia
- Samtan Co., Ltd - South Korea
- Malabar Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Indian Energy Exchange, India
- Ceylon Electricity Board - Sri Lanka
- PetroVietnam Power Coal Import and Supply Company
- Chettinad Cement Corporation Ltd - India
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- Meralco Power Generation, Philippines
- Aboitiz Power Corporation - Philippines
- ICICI Bank Limited - India
- Parry Sugars Refinery, India
- Romanian Commodities Exchange
- South Luzon Thermal Energy Corporation
- India Bulls Power Limited - India
- Coalindo Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Bangladesh Power Developement Board
- Barasentosa Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Star Paper Mills Limited - India
- McConnell Dowell - Australia
- Sree Jayajothi Cements Limited - India
- MS Steel International - UAE
- Petron Corporation, Philippines
- Rio Tinto Coal - Australia
- Global Green Power PLC Corporation, Philippines
- GMR Energy Limited - India
- Intertek Mineral Services - Indonesia
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- PowerSource Philippines DevCo
- Carbofer General Trading SA - India
- VISA Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Mines - Canada
- Baramulti Group, Indonesia
- Riau Bara Harum - Indonesia
- Energy Development Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Kideco Jaya Agung - Indonesia
- Gujarat Sidhee Cement - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Minerals Council of Australia
- White Energy Company Limited
- PTC India Limited - India
- Aditya Birla Group - India
- Australian Coal Association
- Directorate Of Revenue Intelligence - India
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- CIMB Investment Bank - Malaysia
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- PNOC Exploration Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sical Logistics Limited - India
- SMC Global Power, Philippines
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Coal Council - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- Anglo American - United Kingdom
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Thiess Contractors Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- Wilmar Investment Holdings
- OPG Power Generation Pvt Ltd - India
- Attock Cement Pakistan Limited
- Mercator Lines Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Energy Link Ltd, New Zealand
- San Jose City I Power Corp, Philippines
- The University of Queensland
- Mjunction Services Limited - India
- Larsen & Toubro Limited - India
- Medco Energi Mining Internasional
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- Deloitte Consulting - India
- Savvy Resources Ltd - HongKong
- Antam Resourcindo - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Chamber of Mines of South Africa
- Directorate General of MIneral and Coal - Indonesia
- Kumho Petrochemical, South Korea
- Formosa Plastics Group - Taiwan
- Goldman Sachs - Singapore
- Latin American Coal - Colombia
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- The Treasury - Australian Government
- Neyveli Lignite Corporation Ltd, - India
- ASAPP Information Group - India
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- Salva Resources Pvt Ltd - India
- Tamil Nadu electricity Board
- GVK Power & Infra Limited - India
- Indika Energy - Indonesia
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- SN Aboitiz Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Altura Mining Limited, Indonesia
- Power Finance Corporation Ltd., India
- Ministry of Finance - Indonesia
- Heidelberg Cement - Germany
- Gujarat Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Planning Commission, India
- Toyota Tsusho Corporation, Japan
- Global Coal Blending Company Limited - Australia
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Australia Pty. Ltd.
- Grasim Industreis Ltd - India
- Price Waterhouse Coopers - Russia
- Vijayanagar Sugar Pvt Ltd - India
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