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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, 23 September 11
ICMA TO BUILD UPGRADE FACILITIES TO ANTICIPATE BAN ON LOW-GRADE COAL EXPORT BY 2014
COALspot.com - January to August of this year, Indonesia’s coal production had already reached 235 million tons. Earlier estimates had targete ...
Friday, 23 September 11
UT TO PRODUCE 7 MMT OF COAL BY 2012
PT United Tractors Tbk is targeting a 7 million tons of coal production next year, a 55.55% increase from 4.5 millions targeted this year, said Pres ...
Friday, 23 September 11
PANAMAX EXPERIENCED A SOFTENING IN RATES - FEARNLEYS AS
Handy
Still a good boost of fresh cargoes entering the market. Vessels in Black Sea with GOA clearance and Baltic positions are fetching tick abov ...
Wednesday, 21 September 11
INDIA'S COAL IMPORTS FROM INDONESIA FALL, CHINA BUYS MORE
COALspot.com - Indian coal imports from Indonesia fall to below 6 million tons in August, and this fall was continuing last few months. Ho ...
Wednesday, 21 September 11
2ND ANNUAL SHALE GAS SUMMIT
2nd Annual Shale Gas Summit 31 October – 3 November 2011 JW Marriott Hotel, Hong Kong
According to a recent EI ...
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- Neyveli Lignite Corporation Ltd, - India
- Asmin Koalindo Tuhup - Indonesia
- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- Parry Sugars Refinery, India
- Antam Resourcindo - Indonesia
- Indogreen Group - Indonesia
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- Indonesian Coal Mining Association
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- Gujarat Mineral Development Corp Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Deloitte Consulting - India
- Kepco SPC Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Trasteel International SA, Italy
- Chamber of Mines of South Africa
- Standard Chartered Bank - UAE
- Global Green Power PLC Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Riau Bara Harum - Indonesia
- Kobexindo Tractors - Indoneisa
- McConnell Dowell - Australia
- Eastern Energy - Thailand
- Romanian Commodities Exchange
- Manunggal Multi Energi - Indonesia
- Bhushan Steel Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Mjunction Services Limited - India
- Ambuja Cements Ltd - India
- India Bulls Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- SMG Consultants - Indonesia
- Xindia Steels Limited - India
- South Luzon Thermal Energy Corporation
- Leighton Contractors Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Price Waterhouse Coopers - Russia
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- Borneo Indobara - Indonesia
- Simpson Spence & Young - Indonesia
- Ind-Barath Power Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- Renaissance Capital - South Africa
- Global Coal Blending Company Limited - Australia
- PNOC Exploration Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Cement Manufacturers Association - India
- Agrawal Coal Company - India
- Indian Energy Exchange, India
- Planning Commission, India
- SMC Global Power, Philippines
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- Timah Investasi Mineral - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Sical Logistics Limited - India
- Bharathi Cement Corporation - India
- Sojitz Corporation - Japan
- GMR Energy Limited - India
- Krishnapatnam Port Company Ltd. - India
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- Kumho Petrochemical, South Korea
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- MS Steel International - UAE
- Ministry of Mines - Canada
- VISA Power Limited - India
- Electricity Generating Authority of Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Australian Commodity Traders Exchange
- Sindya Power Generating Company Private Ltd
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
- Parliament of New Zealand
- White Energy Company Limited
- GN Power Mariveles Coal Plant, Philippines
- CNBM International Corporation - China
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- Dalmia Cement Bharat India
- Australian Coal Association
- Economic Council, Georgia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- Mercator Lines Limited - India
- Essar Steel Hazira Ltd - India
- Attock Cement Pakistan Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- PTC India Limited - India
- Indika Energy - Indonesia
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- ASAPP Information Group - India
- Vedanta Resources Plc - India
- Makarim & Taira - Indonesia
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- Semirara Mining Corp, Philippines
- Larsen & Toubro Limited - India
- Uttam Galva Steels Limited - India
- Indian Oil Corporation Limited
- Metalloyd Limited - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wilmar Investment Holdings
- Medco Energi Mining Internasional
- Iligan Light & Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Star Paper Mills Limited - India
- Energy Development Corp, Philippines
- Wood Mackenzie - Singapore
- Lanco Infratech Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- Jaiprakash Power Ventures ltd
- Carbofer General Trading SA - India
- Indo Tambangraya Megah - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Mercuria Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- San Jose City I Power Corp, Philippines
- TeaM Sual Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Bhatia International Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meralco Power Generation, Philippines
- Ministry of Finance - Indonesia
- Kaltim Prima Coal - Indonesia
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- LBH Netherlands Bv - Netherlands
- Intertek Mineral Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Oldendorff Carriers - Singapore
- GAC Shipping (India) Pvt Ltd
- Posco Energy - South Korea
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
- Siam City Cement PLC, Thailand
- Malabar Cements Ltd - India
- Central Electricity Authority - India
- Siam City Cement - Thailand
- Energy Link Ltd, New Zealand
- Electricity Authority, New Zealand
- Merrill Lynch Commodities Europe
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Maheswari Brothers Coal Limited - India
- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Business Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Power Finance Corporation Ltd., India
- Directorate General of MIneral and Coal - Indonesia
- The University of Queensland
- Barasentosa Lestari - Indonesia
- Sakthi Sugars Limited - India
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
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