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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, 28 September 11
ATLAS RESOURCES TO SELL 25% STAKE IN IPO - INSIDER STORIES
Insider Stories reported that, coal producer PT Atlas Resources Tbk, that is controlled by Indonesian businessman Andre Abdi, plans to sell 783.33 m ...
Tuesday, 27 September 11
A STRONG REBOUND FOR THE CAPE MARKET - BRS
A strong rebound for the Cape market, as cargoes continued to flow into the market and tonnage remained tight in the Atlantic, according to Barry Ro ...
Tuesday, 27 September 11
INTRACO SEALS US$25.3 MIO ORDER - INSIDER STORIES
Insider Stories reported that, Heavy equipment distributor PT Intraco Penta Tbk (INTA) obtained a US$25.3 million order on hand of heavy equipments ...
Sunday, 25 September 11
THE CHARTER RATES FOR INDONESIA TO INDIA WAS FIRM - VISTAAR
COALspot.com - The freight market moved up sharply with the cape Index up by 11 pct pushing the BDI by almost 6 pct and closing at 1,920 point ...
Saturday, 24 September 11
GOVT PLANS TO RENEGOTIATE ALL CONTRACTS INCLUDING FREEPORT - JP
The Jakarta Post reported that, the Energy and Mineral Resources Ministry has confirmed plans to renegotiate all mining contracts including those wi ...
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- Alfred C Toepfer International GmbH - Germany
- International Coal Ventures Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Sojitz Corporation - Japan
- Bayan Resources Tbk. - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Australian Commodity Traders Exchange
- Kobexindo Tractors - Indoneisa
- Mercator Lines Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Vedanta Resources Plc - India
- Singapore Mercantile Exchange
- Indo Tambangraya Megah - Indonesia
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- Indika Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Lanco Infratech Ltd - India
- Maheswari Brothers Coal Limited - India
- Sinarmas Energy and Mining - Indonesia
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- Mintek Dendrill Indonesia
- SMC Global Power, Philippines
- Malabar Cements Ltd - India
- CIMB Investment Bank - Malaysia
- European Bulk Services B.V. - Netherlands
- Deloitte Consulting - India
- AsiaOL BioFuels Corp., Philippines
- Meralco Power Generation, Philippines
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- IHS Mccloskey Coal Group - USA
- Ministry of Finance - Indonesia
- Sarangani Energy Corporation, Philippines
- Indian Energy Exchange, India
- Petron Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- The University of Queensland
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Agrawal Coal Company - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- Bhatia International Limited - India
- Independent Power Producers Association of India
- Port Waratah Coal Services - Australia
- Cigading International Bulk Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- Africa Commodities Group - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Ind-Barath Power Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- IEA Clean Coal Centre - UK
- Romanian Commodities Exchange
- Posco Energy - South Korea
- Rio Tinto Coal - Australia
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- Minerals Council of Australia
- Rashtriya Ispat Nigam Limited - India
- MS Steel International - UAE
- McConnell Dowell - Australia
- Straits Asia Resources Limited - Singapore
- Altura Mining Limited, Indonesia
- Semirara Mining Corp, Philippines
- Bhoruka Overseas - Indonesia
- Wood Mackenzie - Singapore
- Energy Development Corp, Philippines
- Economic Council, Georgia
- Aditya Birla Group - India
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Directorate Of Revenue Intelligence - India
- Global Coal Blending Company Limited - Australia
- Latin American Coal - Colombia
- Ministry of Transport, Egypt
- Borneo Indobara - Indonesia
- South Luzon Thermal Energy Corporation
- Metalloyd Limited - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Ambuja Cements Ltd - India
- Grasim Industreis Ltd - India
- Larsen & Toubro Limited - India
- Gujarat Mineral Development Corp Ltd - India
- GAC Shipping (India) Pvt Ltd
- Samtan Co., Ltd - South Korea
- San Jose City I Power Corp, Philippines
- Indogreen Group - Indonesia
- Thiess Contractors Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- PTC India Limited - India
- Trasteel International SA, Italy
- Kapuas Tunggal Persada - Indonesia
- Marubeni Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Parliament of New Zealand
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CNBM International Corporation - China
- Kohat Cement Company Ltd. - Pakistan
- GVK Power & Infra Limited - India
- Indian Oil Corporation Limited
- Bukit Baiduri Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- Standard Chartered Bank - UAE
- Therma Luzon, Inc, Philippines
- Parry Sugars Refinery, India
- Xindia Steels Limited - India
- Power Finance Corporation Ltd., India
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Energy Link Ltd, New Zealand
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- ICICI Bank Limited - India
- ASAPP Information Group - India
- Simpson Spence & Young - Indonesia
- Baramulti Group, Indonesia
- Meenaskhi Energy Private Limited - India
- Videocon Industries ltd - India
- Leighton Contractors Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Thai Mozambique Logistica
- Asmin Koalindo Tuhup - Indonesia
- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- Coal and Oil Company - UAE
- Semirara Mining and Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Krishnapatnam Port Company Ltd. - India
- Chettinad Cement Corporation Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- TeaM Sual Corporation - Philippines
- Coalindo Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Planning Commission, India
- Mjunction Services Limited - India
- Dalmia Cement Bharat India
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Carbofer General Trading SA - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- Star Paper Mills Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Iligan Light & Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Australian Coal Association
- Eastern Energy - Thailand
- PNOC Exploration Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- Price Waterhouse Coopers - Russia
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- Manunggal Multi Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Intertek Mineral Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Kartika Selabumi Mining - Indonesia
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Siam City Cement PLC, Thailand
- Neyveli Lignite Corporation Ltd, - India
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- VISA Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Commonwealth Bank - Australia
- Cement Manufacturers Association - India
- Interocean Group of Companies - India
- Banpu Public Company Limited - Thailand
- White Energy Company Limited
- Sical Logistics Limited - India
- Kepco SPC Power Corporation, Philippines
- Wilmar Investment Holdings
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Mining Services - Indonesia
- Merrill Lynch Commodities Europe
- Toyota Tsusho Corporation, Japan
- Bhushan Steel Limited - India
- PowerSource Philippines DevCo
- Bukit Makmur.PT - Indonesia
- Oldendorff Carriers - Singapore
- Sindya Power Generating Company Private Ltd
- Ministry of Mines - Canada
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