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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, 06 October 11
REALM SECURES 51% OF KATINGAN RIA COAL PROJECT IN CENTRAL KALIMANTAN
•Realm secures 51% of PT Katingan Ria Thermal Coal Project in Central Kalimantan
•Realm takes ownership of Kalres Limited
•Acquisit ...
Thursday, 06 October 11
SOUTH EAST ASIAS AGGRESSIVE POWER DEMAND GROWTH WILL REQUIRE INVESTMENT OF US$125 BN BY 2020 - WOOD MACKENZIE
COALspot.com - Wood Mackenzie says that South East Asia’s demand growth for new power generation is so aggressive that new power generation in ...
Thursday, 06 October 11
CHINESE DEMAND FOR COAL IMPORTS TO MODERATE IN 2012 - MISWIN MAHESH
COALspot.com - We expect Chinese demand growth for imported steam coal to moderate over the next year. Steam coal imports into China will modera ...
Wednesday, 05 October 11
MINISTRY STICKING TO RAW COMMODITY EXPORT BAN DESPITE INDUSTRY FEARS - JG
The Jakarta Globe, the one of the leading English news paper in Indonesia, reported that, the details of a controversial new regulation that would b ...
Wednesday, 05 October 11
ATLANTIC AND PACIFIC BASINS BECAME TIGHTER FOR PANAMAX LAST WEEK - BRS
A slump for both the Capes and Panamaxes sent the BDI down 1% this week, falling to 1,899 points.
The Capes saw the greatest movement, sliding - ...
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- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thiess Contractors Indonesia
- Asmin Koalindo Tuhup - Indonesia
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Leighton Contractors Pty Ltd - Australia
- Latin American Coal - Colombia
- Toyota Tsusho Corporation, Japan
- PetroVietnam Power Coal Import and Supply Company
- Kapuas Tunggal Persada - Indonesia
- Altura Mining Limited, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Marubeni Corporation - India
- Sojitz Corporation - Japan
- London Commodity Brokers - England
- Jaiprakash Power Ventures ltd
- Savvy Resources Ltd - HongKong
- Australian Coal Association
- San Jose City I Power Corp, Philippines
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhoruka Overseas - Indonesia
- Grasim Industreis Ltd - India
- Essar Steel Hazira Ltd - India
- Mercator Lines Limited - India
- Sinarmas Energy and Mining - Indonesia
- Oldendorff Carriers - Singapore
- GVK Power & Infra Limited - India
- IEA Clean Coal Centre - UK
- Electricity Authority, New Zealand
- Therma Luzon, Inc, Philippines
- Xindia Steels Limited - India
- Planning Commission, India
- Central Java Power - Indonesia
- Lanco Infratech Ltd - India
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Sarangani Energy Corporation, Philippines
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- Georgia Ports Authority, United States
- Star Paper Mills Limited - India
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Singapore Mercantile Exchange
- Ministry of Finance - Indonesia
- Central Electricity Authority - India
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bharathi Cement Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Merrill Lynch Commodities Europe
- Bukit Baiduri Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bangladesh Power Developement Board
- Chettinad Cement Corporation Ltd - India
- Antam Resourcindo - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Meralco Power Generation, Philippines
- Binh Thuan Hamico - Vietnam
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Karbindo Abesyapradhi - Indoneisa
- Mjunction Services Limited - India
- Malabar Cements Ltd - India
- MS Steel International - UAE
- Coalindo Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Australian Commodity Traders Exchange
- Indo Tambangraya Megah - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- ASAPP Information Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Gujarat Sidhee Cement - India
- Bayan Resources Tbk. - Indonesia
- Tata Chemicals Ltd - India
- Renaissance Capital - South Africa
- Indika Energy - Indonesia
- Wilmar Investment Holdings
- Thai Mozambique Logistica
- GMR Energy Limited - India
- Trasteel International SA, Italy
- OPG Power Generation Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Globalindo Alam Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- VISA Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Minerals Council of Australia
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- Heidelberg Cement - Germany
- Jorong Barutama Greston.PT - Indonesia
- Standard Chartered Bank - UAE
- IHS Mccloskey Coal Group - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sical Logistics Limited - India
- McConnell Dowell - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Aditya Birla Group - India
- Vedanta Resources Plc - India
- Kartika Selabumi Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Parry Sugars Refinery, India
- Tamil Nadu electricity Board
- Kaltim Prima Coal - Indonesia
- Power Finance Corporation Ltd., India
- SMC Global Power, Philippines
- Straits Asia Resources Limited - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Medco Energi Mining Internasional
- Energy Link Ltd, New Zealand
- Romanian Commodities Exchange
- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- PTC India Limited - India
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
- The State Trading Corporation of India Ltd
- Mintek Dendrill Indonesia
- Eastern Coal Council - USA
- Global Business Power Corporation, Philippines
- White Energy Company Limited
- Edison Trading Spa - Italy
- The University of Queensland
- SMG Consultants - Indonesia
- Africa Commodities Group - South Africa
- Indogreen Group - Indonesia
- Bulk Trading Sa - Switzerland
- Dalmia Cement Bharat India
- Karaikal Port Pvt Ltd - India
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Global Coal Blending Company Limited - Australia
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- Carbofer General Trading SA - India
- TeaM Sual Corporation - Philippines
- Ministry of Transport, Egypt
- Makarim & Taira - Indonesia
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- Cigading International Bulk Terminal - Indonesia
- Bhushan Steel Limited - India
- Kobexindo Tractors - Indoneisa
- Wood Mackenzie - Singapore
- Krishnapatnam Port Company Ltd. - India
- Agrawal Coal Company - India
- Anglo American - United Kingdom
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vizag Seaport Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Videocon Industries ltd - India
- Banpu Public Company Limited - Thailand
- SN Aboitiz Power Inc, Philippines
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Posco Energy - South Korea
- Meenaskhi Energy Private Limited - India
- Deloitte Consulting - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Parliament of New Zealand
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Jindal Steel & Power Ltd - India
- Sindya Power Generating Company Private Ltd
- Goldman Sachs - Singapore
- Coastal Gujarat Power Limited - India
- CIMB Investment Bank - Malaysia
- Mercuria Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- Borneo Indobara - Indonesia
- Ministry of Mines - Canada
- Gujarat Mineral Development Corp Ltd - India
- Bhatia International Limited - India
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Uttam Galva Steels Limited - India
- Metalloyd Limited - United Kingdom
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