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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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Friday, 30 September 11
MINING BILL CLEARED, FIRMS TO SHARE 26% PROFITS WITH LOCALS - NDTV
NDTV reported that, The Union Cabinet cleared the draft mining bill aimed at regulating mining activities Friday. The bill proposes a profit-sharing ...
Friday, 30 September 11
INDIAN IRON ORE MARKET GETTING ACTIVE - FEARNLEYS AS
Handy
The Atlantic market continued its strong trend with fresh cargoes entering the market. Vessels open US Gulf fixed tick above US$ 27k back to t ...
Friday, 30 September 11
KRISHNAPATNAM PORT WINS GLOBAL PORT & COAL PORT OF THE YEAR AWARDS
COALspot.com - Krishnapatnam Port, a dynamic new generation world class port located in the East Coast of India has been adjudged the winner in the ...
Thursday, 29 September 11
INDONESIA'S MINERS FACE AN UNCERTAIN FUTURE - RUPERT WALKER
An evolving regulatory framework for the country's minerals industry could threaten its profitability and stifle investment.
The five-year surge ...
Thursday, 29 September 11
DRY BULK MARKET FALLS MID-WEEK, FURTHER DROP EXPECTED NEXT WEEK ON CHINA HOLIDAYS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market, as reflected by the Baltic Dry Index (BDI) retreated by 0.36% yesterday reaching 1,920 points, with the Capesize segment suffer ...
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- Bharathi Cement Corporation - India
- Iligan Light & Power Inc, Philippines
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- Latin American Coal - Colombia
- Ministry of Finance - Indonesia
- Electricity Generating Authority of Thailand
- Anglo American - United Kingdom
- Cement Manufacturers Association - India
- Carbofer General Trading SA - India
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
- CNBM International Corporation - China
- Eastern Energy - Thailand
- Central Electricity Authority - India
- Parliament of New Zealand
- Thai Mozambique Logistica
- San Jose City I Power Corp, Philippines
- MS Steel International - UAE
- Timah Investasi Mineral - Indoneisa
- Antam Resourcindo - Indonesia
- The State Trading Corporation of India Ltd
- Sree Jayajothi Cements Limited - India
- Interocean Group of Companies - India
- Ministry of Transport, Egypt
- Kobexindo Tractors - Indoneisa
- VISA Power Limited - India
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- Maharashtra Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Coastal Gujarat Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Gujarat Sidhee Cement - India
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- Jaiprakash Power Ventures ltd
- SMC Global Power, Philippines
- Makarim & Taira - Indonesia
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- GVK Power & Infra Limited - India
- Samtan Co., Ltd - South Korea
- Mintek Dendrill Indonesia
- Neyveli Lignite Corporation Ltd, - India
- IEA Clean Coal Centre - UK
- Renaissance Capital - South Africa
- Sical Logistics Limited - India
- Kaltim Prima Coal - Indonesia
- Rio Tinto Coal - Australia
- Edison Trading Spa - Italy
- Savvy Resources Ltd - HongKong
- Kapuas Tunggal Persada - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- White Energy Company Limited
- Sakthi Sugars Limited - India
- Bhoruka Overseas - Indonesia
- SMG Consultants - Indonesia
- Trasteel International SA, Italy
- Deloitte Consulting - India
- Sojitz Corporation - Japan
- Semirara Mining Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Straits Asia Resources Limited - Singapore
- European Bulk Services B.V. - Netherlands
- Videocon Industries ltd - India
- Ind-Barath Power Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Mercuria Energy - Indonesia
- Bangladesh Power Developement Board
- Indian Oil Corporation Limited
- Coal and Oil Company - UAE
- Toyota Tsusho Corporation, Japan
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- Xindia Steels Limited - India
- Simpson Spence & Young - Indonesia
- Meenaskhi Energy Private Limited - India
- Meralco Power Generation, Philippines
- Intertek Mineral Services - Indonesia
- Ministry of Mines - Canada
- Planning Commission, India
- Orica Mining Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Directorate General of MIneral and Coal - Indonesia
- ICICI Bank Limited - India
- IHS Mccloskey Coal Group - USA
- Wilmar Investment Holdings
- Vizag Seaport Private Limited - India
- Lanco Infratech Ltd - India
- India Bulls Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- Star Paper Mills Limited - India
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Petron Corporation, Philippines
- GMR Energy Limited - India
- Heidelberg Cement - Germany
- TeaM Sual Corporation - Philippines
- Electricity Authority, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Africa Commodities Group - South Africa
- Gujarat Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- Australian Coal Association
- Cigading International Bulk Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Binh Thuan Hamico - Vietnam
- Global Coal Blending Company Limited - Australia
- Price Waterhouse Coopers - Russia
- Georgia Ports Authority, United States
- Karaikal Port Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Pipit Mutiara Jaya. PT, Indonesia
- International Coal Ventures Pvt Ltd - India
- Mjunction Services Limited - India
- Banpu Public Company Limited - Thailand
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Aditya Birla Group - India
- Ambuja Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rashtriya Ispat Nigam Limited - India
- Indika Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- Coalindo Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Port Waratah Coal Services - Australia
- Standard Chartered Bank - UAE
- Formosa Plastics Group - Taiwan
- Uttam Galva Steels Limited - India
- Minerals Council of Australia
- Maheswari Brothers Coal Limited - India
- Therma Luzon, Inc, Philippines
- Essar Steel Hazira Ltd - India
- Indian Energy Exchange, India
- Energy Development Corp, Philippines
- Singapore Mercantile Exchange
- Salva Resources Pvt Ltd - India
- London Commodity Brokers - England
- Madhucon Powers Ltd - India
- Billiton Holdings Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Oldendorff Carriers - Singapore
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- Borneo Indobara - Indonesia
- Economic Council, Georgia
- PetroVietnam Power Coal Import and Supply Company
- Indonesian Coal Mining Association
- CIMB Investment Bank - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Holcim Trading Pte Ltd - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Malabar Cements Ltd - India
- PTC India Limited - India
- Kepco SPC Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- Australian Commodity Traders Exchange
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- Larsen & Toubro Limited - India
- Attock Cement Pakistan Limited
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bhatia International Limited - India
- Energy Link Ltd, New Zealand
- Thiess Contractors Indonesia
- McConnell Dowell - Australia
- Orica Australia Pty. Ltd.
- Indogreen Group - Indonesia
- Vedanta Resources Plc - India
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- ASAPP Information Group - India
- Kartika Selabumi Mining - Indonesia
- Altura Mining Limited, Indonesia
- Medco Energi Mining Internasional
- Bhushan Steel Limited - India
- Marubeni Corporation - India
- Tamil Nadu electricity Board
- Siam City Cement - Thailand
- Ceylon Electricity Board - Sri Lanka
- Jorong Barutama Greston.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- Bayan Resources Tbk. - Indonesia
- Grasim Industreis Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Merrill Lynch Commodities Europe
- Kalimantan Lumbung Energi - Indonesia
- Baramulti Group, Indonesia
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