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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, 05 October 11
WITH CHINA ON HOLIDAY, DRY BULK MARKET REMAINS STAGNANT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has remained to healthy levels after last month’s rally, but with China going on holiday this week, things are looking sta ...
Tuesday, 04 October 11
INDONESIA RAISES COAL BENCHMARK (HBA) FOR FIRST TIME IN 4 MONTHS
COALspot.com - Indonesia raised the monthly reference price for sales in October by 2.56 percent, the first increase since June.
The Ministry of ...
Tuesday, 04 October 11
COAL MINING GROUP WANTS EXPORT TAX, NOT EXCISE - JG
One of the leading English news paper in Indonesia, The Jakarta Globe reported that, the government shall reimpose a duty on coal exports, classifyi ...
Sunday, 02 October 11
INDIAN COAL IMPORTS PICKED UP - CAPT. REDDY
COALspot.com - The BDI dropped by 1 pct and Cape index dropped by 6 pct closing at 1,899 points and 3,136 points respectively. However all other seg ...
Saturday, 01 October 11
2012 TO BE ANOTHER CHALLENGING YEAR - CEO, REMI MARITIME
Shipowners are facing another challenging year in 2012 said Mr. Leonidas Polemis CEO of Remi Maritime Corporation, urging caution towards operating ...
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- Leighton Contractors Pty Ltd - Australia
- Ministry of Mines - Canada
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Indika Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- VISA Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Globalindo Alam Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- Carbofer General Trading SA - India
- Directorate General of MIneral and Coal - Indonesia
- Thai Mozambique Logistica
- Riau Bara Harum - Indonesia
- Formosa Plastics Group - Taiwan
- Intertek Mineral Services - Indonesia
- Mercuria Energy - Indonesia
- MS Steel International - UAE
- Binh Thuan Hamico - Vietnam
- McConnell Dowell - Australia
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- Indo Tambangraya Megah - Indonesia
- Minerals Council of Australia
- Edison Trading Spa - Italy
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Madhucon Powers Ltd - India
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kobexindo Tractors - Indoneisa
- Uttam Galva Steels Limited - India
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- Sakthi Sugars Limited - India
- Chamber of Mines of South Africa
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- Trasteel International SA, Italy
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coastal Gujarat Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- Thiess Contractors Indonesia
- Semirara Mining Corp, Philippines
- The University of Queensland
- Interocean Group of Companies - India
- Kalimantan Lumbung Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Semirara Mining and Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Mercator Lines Limited - India
- Cement Manufacturers Association - India
- PowerSource Philippines DevCo
- Rio Tinto Coal - Australia
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Therma Luzon, Inc, Philippines
- SMC Global Power, Philippines
- Central Electricity Authority - India
- Coalindo Energy - Indonesia
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Economic Council, Georgia
- Siam City Cement - Thailand
- Lanco Infratech Ltd - India
- Maheswari Brothers Coal Limited - India
- Larsen & Toubro Limited - India
- Essar Steel Hazira Ltd - India
- The State Trading Corporation of India Ltd
- Sical Logistics Limited - India
- Indian Energy Exchange, India
- Price Waterhouse Coopers - Russia
- Ministry of Transport, Egypt
- Eastern Energy - Thailand
- Orica Australia Pty. Ltd.
- Aditya Birla Group - India
- Malabar Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- Latin American Coal - Colombia
- Petron Corporation, Philippines
- Vedanta Resources Plc - India
- Coal and Oil Company - UAE
- Bukit Baiduri Energy - Indonesia
- Bhatia International Limited - India
- White Energy Company Limited
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- Port Waratah Coal Services - Australia
- Jindal Steel & Power Ltd - India
- London Commodity Brokers - England
- Pendopo Energi Batubara - Indonesia
- Marubeni Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Meralco Power Generation, Philippines
- Orica Mining Services - Indonesia
- PTC India Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Vizag Seaport Private Limited - India
- Wilmar Investment Holdings
- Kepco SPC Power Corporation, Philippines
- Posco Energy - South Korea
- South Luzon Thermal Energy Corporation
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- Kumho Petrochemical, South Korea
- TeaM Sual Corporation - Philippines
- Sojitz Corporation - Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Borneo Indobara - Indonesia
- Iligan Light & Power Inc, Philippines
- Central Java Power - Indonesia
- India Bulls Power Limited - India
- Salva Resources Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Deloitte Consulting - India
- Electricity Authority, New Zealand
- Australian Coal Association
- Goldman Sachs - Singapore
- Aboitiz Power Corporation - Philippines
- Energy Link Ltd, New Zealand
- Oldendorff Carriers - Singapore
- Metalloyd Limited - United Kingdom
- Romanian Commodities Exchange
- Mintek Dendrill Indonesia
- OPG Power Generation Pvt Ltd - India
- Renaissance Capital - South Africa
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- Ind-Barath Power Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- SMG Consultants - Indonesia
- PNOC Exploration Corporation - Philippines
- Bharathi Cement Corporation - India
- Bhushan Steel Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Tata Chemicals Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wood Mackenzie - Singapore
- Indian Oil Corporation Limited
- Antam Resourcindo - Indonesia
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- Altura Mining Limited, Indonesia
- Commonwealth Bank - Australia
- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Attock Cement Pakistan Limited
- Asmin Koalindo Tuhup - Indonesia
- Billiton Holdings Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Medco Energi Mining Internasional
- Toyota Tsusho Corporation, Japan
- Mjunction Services Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- GMR Energy Limited - India
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- Videocon Industries ltd - India
- Manunggal Multi Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Banpu Public Company Limited - Thailand
- Sindya Power Generating Company Private Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Straits Asia Resources Limited - Singapore
- Kaltim Prima Coal - Indonesia
- San Jose City I Power Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- PetroVietnam Power Coal Import and Supply Company
- New Zealand Coal & Carbon
- Barasentosa Lestari - Indonesia
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- Planning Commission, India
- Chettinad Cement Corporation Ltd - India
- Tamil Nadu electricity Board
- Xindia Steels Limited - India
- Ministry of Finance - Indonesia
- Karaikal Port Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Agrawal Coal Company - India
- Maharashtra Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- Eastern Coal Council - USA
- Simpson Spence & Young - Indonesia
- Parliament of New Zealand
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