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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, 12 October 11
INDONESIAS COAL RUSH - JOSEPH KIRSCHKE
COALspot.com - Last winter, the Chinese government mobilized thousands of soldiers and reservists of the People’s Liberation Army to the port ...
Wednesday, 12 October 11
CAPESIZE - A SURPRISE JUMP IN RATES - BRS
There was a surge across all sizes last week, resulting in the BDI gaining 101 points to end the week at 2,000 points (+5.3%). The BCI reached 3,218 ...
Wednesday, 12 October 11
CAPESIZE FREIGHT RATES BOUND TO RETREAT FROM 2011 HIGHS ON THE BACK OF TONNAGE OVERSUPPLY SAYS BIMCO
According to Nikos Roussanoglou, Hellenic Shipping, with the BDI (Baltic Dry Index) breaking yet another 2011 high yesterday and ending the se ...
Tuesday, 11 October 11
GLENCORE, SUITOR FOR BUMI PLC? - INSIDER STORIES
Insider Stories reported that, the largest commodities trader in the world, Glencore International Plc, is considering an opportunity to acquire a m ...
Tuesday, 11 October 11
RENUKA COALINDO BUYS JAMBI COAL
PT Renuka Coalindo Tbk, formerly PT Allbond Makmur Usaha Tbk plans to acquire PT Jambi Prima Coal holder of mining concession in Pauh, Sa ...
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- Vedanta Resources Plc - India
- Interocean Group of Companies - India
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- Commonwealth Bank - Australia
- Bharathi Cement Corporation - India
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Meralco Power Generation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Straits Asia Resources Limited - Singapore
- Maharashtra Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Bangladesh Power Developement Board
- Chamber of Mines of South Africa
- Neyveli Lignite Corporation Ltd, - India
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- Gujarat Mineral Development Corp Ltd - India
- Bhoruka Overseas - Indonesia
- Indonesian Coal Mining Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- ASAPP Information Group - India
- Borneo Indobara - Indonesia
- Edison Trading Spa - Italy
- Petron Corporation, Philippines
- Africa Commodities Group - South Africa
- Star Paper Mills Limited - India
- Krishnapatnam Port Company Ltd. - India
- OPG Power Generation Pvt Ltd - India
- SMC Global Power, Philippines
- Mercuria Energy - Indonesia
- Dalmia Cement Bharat India
- IHS Mccloskey Coal Group - USA
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- Sojitz Corporation - Japan
- Marubeni Corporation - India
- The Treasury - Australian Government
- Meenaskhi Energy Private Limited - India
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- The State Trading Corporation of India Ltd
- Romanian Commodities Exchange
- Planning Commission, India
- Georgia Ports Authority, United States
- Kumho Petrochemical, South Korea
- Global Business Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Metalloyd Limited - United Kingdom
- Cement Manufacturers Association - India
- GMR Energy Limited - India
- Renaissance Capital - South Africa
- Aboitiz Power Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kobexindo Tractors - Indoneisa
- Ind-Barath Power Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Goldman Sachs - Singapore
- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Orica Mining Services - Indonesia
- Aditya Birla Group - India
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- Central Java Power - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Malabar Cements Ltd - India
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parry Sugars Refinery, India
- Ambuja Cements Ltd - India
- Mjunction Services Limited - India
- Merrill Lynch Commodities Europe
- European Bulk Services B.V. - Netherlands
- Thiess Contractors Indonesia
- Timah Investasi Mineral - Indoneisa
- VISA Power Limited - India
- Thai Mozambique Logistica
- Tamil Nadu electricity Board
- PetroVietnam Power Coal Import and Supply Company
- Jaiprakash Power Ventures ltd
- Kohat Cement Company Ltd. - Pakistan
- The University of Queensland
- Siam City Cement PLC, Thailand
- Central Electricity Authority - India
- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- Videocon Industries ltd - India
- Siam City Cement - Thailand
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- San Jose City I Power Corp, Philippines
- CNBM International Corporation - China
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- Coal and Oil Company - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- Singapore Mercantile Exchange
- Sical Logistics Limited - India
- Eastern Energy - Thailand
- GN Power Mariveles Coal Plant, Philippines
- TeaM Sual Corporation - Philippines
- IEA Clean Coal Centre - UK
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- Electricity Authority, New Zealand
- White Energy Company Limited
- Larsen & Toubro Limited - India
- Kaltim Prima Coal - Indonesia
- Australian Coal Association
- Gujarat Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- Bhatia International Limited - India
- Vizag Seaport Private Limited - India
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- LBH Netherlands Bv - Netherlands
- Iligan Light & Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Makarim & Taira - Indonesia
- Chettinad Cement Corporation Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Carbofer General Trading SA - India
- Baramulti Group, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Ministry of Finance - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Economic Council, Georgia
- Parliament of New Zealand
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- Wood Mackenzie - Singapore
- Karaikal Port Pvt Ltd - India
- Agrawal Coal Company - India
- International Coal Ventures Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Sree Jayajothi Cements Limited - India
- Indika Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Altura Mining Limited, Indonesia
- Lanco Infratech Ltd - India
- Billiton Holdings Pty Ltd - Australia
- PTC India Limited - India
- India Bulls Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Mercator Lines Limited - India
- SMG Consultants - Indonesia
- Samtan Co., Ltd - South Korea
- Anglo American - United Kingdom
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- Madhucon Powers Ltd - India
- Power Finance Corporation Ltd., India
- Intertek Mineral Services - Indonesia
- GVK Power & Infra Limited - India
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Ministry of Mines - Canada
- Barasentosa Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Directorate Of Revenue Intelligence - India
- Bukit Asam (Persero) Tbk - Indonesia
- Xindia Steels Limited - India
- Trasteel International SA, Italy
- Indogreen Group - Indonesia
- Indian Oil Corporation Limited
- Kalimantan Lumbung Energi - Indonesia
- McConnell Dowell - Australia
- Sarangani Energy Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coastal Gujarat Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Medco Energi Mining Internasional
- Gujarat Sidhee Cement - India
- ICICI Bank Limited - India
- Energy Development Corp, Philippines
- Latin American Coal - Colombia
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
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