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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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Tuesday, 13 September 11
CAPITAL COSTS OF INDIAN COAL MINING PROJECT - AN ANALYST VIEW
By Mr Dipesh Dipu, Director - Consulting (Mining), Deloitte Touche Tohmatsu India Private Limited
The coal mining sector that has been opened par ...
Tuesday, 13 September 11
INDONESIAS COAL SECTOR EYES 2012 BOOM - JG
The Jakarta Globe, Indonesian English language News paper reported that, Coal production is set to surge next year as coal miners bolster their busi ...
Tuesday, 13 September 11
DRY BULK RALLY MAINTAINS MOMENTUM AT START OF THE WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market kept its upward momentum at the start of the week, as the industry’s benchmark, the Baltic Dry Index (BDI) was up by 2.07% ...
Monday, 12 September 11
INDONESIAN GOVERNMENT HAS ALLOCATED MORE COAL FOR 2012
COALspot.com - Indonesian government has increased the domestic market obligation allocation to 82.07 million tons of coal for 2012, which is 4 perc ...
Saturday, 10 September 11
THE FREIGHT MARKET LIKELY TO BE FIRM NEXT WEEK - CAPT. REDDY
COALspot.com - The freight market continued the upward trend during last week with BDI crossing 1,800 points and closing at 1,838 points up by 5.63 ...
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Port Waratah Coal Services - Australia
- Aditya Birla Group - India
- Semirara Mining Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Altura Mining Limited, Indonesia
- Australian Coal Association
- PTC India Limited - India
- Madhucon Powers Ltd - India
- Indika Energy - Indonesia
- Electricity Authority, New Zealand
- SMG Consultants - Indonesia
- Orica Mining Services - Indonesia
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chettinad Cement Corporation Ltd - India
- Parry Sugars Refinery, India
- Borneo Indobara - Indonesia
- Australian Commodity Traders Exchange
- Africa Commodities Group - South Africa
- Coalindo Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Economic Council, Georgia
- Sical Logistics Limited - India
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- Riau Bara Harum - Indonesia
- PNOC Exploration Corporation - Philippines
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Romanian Commodities Exchange
- Mjunction Services Limited - India
- Singapore Mercantile Exchange
- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Australia Pty. Ltd.
- Kumho Petrochemical, South Korea
- Makarim & Taira - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- Metalloyd Limited - United Kingdom
- Jindal Steel & Power Ltd - India
- Energy Development Corp, Philippines
- Minerals Council of Australia
- Siam City Cement PLC, Thailand
- Banpu Public Company Limited - Thailand
- Toyota Tsusho Corporation, Japan
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- MS Steel International - UAE
- TeaM Sual Corporation - Philippines
- Global Business Power Corporation, Philippines
- Trasteel International SA, Italy
- Ceylon Electricity Board - Sri Lanka
- Cement Manufacturers Association - India
- VISA Power Limited - India
- Tata Chemicals Ltd - India
- Edison Trading Spa - Italy
- Parliament of New Zealand
- Grasim Industreis Ltd - India
- Antam Resourcindo - Indonesia
- IEA Clean Coal Centre - UK
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Maheswari Brothers Coal Limited - India
- Ambuja Cements Ltd - India
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- GVK Power & Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Kapuas Tunggal Persada - Indonesia
- Mintek Dendrill Indonesia
- Kobexindo Tractors - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- OPG Power Generation Pvt Ltd - India
- Baramulti Group, Indonesia
- SN Aboitiz Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Medco Energi Mining Internasional
- Ind-Barath Power Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Coastal Gujarat Power Limited - India
- Ministry of Finance - Indonesia
- London Commodity Brokers - England
- The University of Queensland
- McConnell Dowell - Australia
- San Jose City I Power Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Interocean Group of Companies - India
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Globalindo Alam Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Intertek Mineral Services - Indonesia
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Planning Commission, India
- Indo Tambangraya Megah - Indonesia
- Karaikal Port Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Eastern Coal Council - USA
- GN Power Mariveles Coal Plant, Philippines
- Standard Chartered Bank - UAE
- Billiton Holdings Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- Global Green Power PLC Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Eastern Energy - Thailand
- Petron Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- Tamil Nadu electricity Board
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- Bangladesh Power Developement Board
- Barasentosa Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Larsen & Toubro Limited - India
- GMR Energy Limited - India
- The State Trading Corporation of India Ltd
- Siam City Cement - Thailand
- Mercator Lines Limited - India
- Rio Tinto Coal - Australia
- Meenaskhi Energy Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Wood Mackenzie - Singapore
- Essar Steel Hazira Ltd - India
- Heidelberg Cement - Germany
- Kohat Cement Company Ltd. - Pakistan
- GAC Shipping (India) Pvt Ltd
- ASAPP Information Group - India
- Samtan Co., Ltd - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- Indian Oil Corporation Limited
- Uttam Galva Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Central Electricity Authority - India
- Vijayanagar Sugar Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Latin American Coal - Colombia
- Coal and Oil Company - UAE
- The Treasury - Australian Government
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- Renaissance Capital - South Africa
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- India Bulls Power Limited - India
- Commonwealth Bank - Australia
- Indian Energy Exchange, India
- Salva Resources Pvt Ltd - India
- Xindia Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Sidhee Cement - India
- Wilmar Investment Holdings
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Thai Mozambique Logistica
- Power Finance Corporation Ltd., India
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Carbofer General Trading SA - India
- Bukit Makmur.PT - Indonesia
- ICICI Bank Limited - India
- Merrill Lynch Commodities Europe
- Iligan Light & Power Inc, Philippines
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
- Global Coal Blending Company Limited - Australia
- Manunggal Multi Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Goldman Sachs - Singapore
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Sindya Power Generating Company Private Ltd
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Independent Power Producers Association of India
- Mercuria Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bhatia International Limited - India
- Anglo American - United Kingdom
- Lanco Infratech Ltd - India
- Central Java Power - Indonesia
- Dalmia Cement Bharat India
- Bhushan Steel Limited - India
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