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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, 06 September 11
SEMEN GRESIK TO ACQUIRE COAL MINE FOR RP. 1 TRILLION
COALspot.com - PT Semen Gresik Tbk (SMGR) is planning to acquire a low calorific value coal concession (IUP). According to Semen Gresik, the coal mi ...
Tuesday, 06 September 11
DRY BULK MARKETS RALLY POWERS THROUGH TO NEW WEEK, BUT A CORRECTION COULD BE OVERDUE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market’s freights rates kept leaping forwards during the beginning of the week, with the industry’s benchmark, the Baltic D ...
Monday, 05 September 11
TNPL POSTPONES BID OPENING UNTIL 12 SEPTEMBER 2011
COALspot.com - TNPL has postponed submission of the offer until 12 September 2011 on request from the supplier, an Indian trader said.
Due to Ram ...
Monday, 05 September 11
INDONESIAN COAL BENCHMARK PRICE - ANALYSIS
Analyst : Sunil K Kumbhat
COALspot.com - As a part of the Government’s efforts to stop transfer pricing abuses which have resulted in the los ...
Saturday, 03 September 11
FEW SHIPS REPORTED FIXED FROM INDONESIA TO INDIA - VISTAAR
COALspot.com - The freight market continued the upward trend during last week with BDI up by about 13 pct closing at 1,740 points and cape index up ...
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- Eastern Energy - Thailand
- Marubeni Corporation - India
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Transport, Egypt
- Merrill Lynch Commodities Europe
- Central Java Power - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Ministry of Mines - Canada
- Indian Energy Exchange, India
- Petron Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- Larsen & Toubro Limited - India
- Goldman Sachs - Singapore
- Videocon Industries ltd - India
- Agrawal Coal Company - India
- Kepco SPC Power Corporation, Philippines
- Star Paper Mills Limited - India
- Independent Power Producers Association of India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wood Mackenzie - Singapore
- Sree Jayajothi Cements Limited - India
- OPG Power Generation Pvt Ltd - India
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- Jaiprakash Power Ventures ltd
- San Jose City I Power Corp, Philippines
- MS Steel International - UAE
- IEA Clean Coal Centre - UK
- Maharashtra Electricity Regulatory Commission - India
- The University of Queensland
- Coastal Gujarat Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Deloitte Consulting - India
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- Pendopo Energi Batubara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TNB Fuel Sdn Bhd - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- Sakthi Sugars Limited - India
- Barasentosa Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Planning Commission, India
- Billiton Holdings Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Tata Chemicals Ltd - India
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- VISA Power Limited - India
- Metalloyd Limited - United Kingdom
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- Central Electricity Authority - India
- Sinarmas Energy and Mining - Indonesia
- CNBM International Corporation - China
- Siam City Cement PLC, Thailand
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Energy Development Corp, Philippines
- Australian Coal Association
- Sindya Power Generating Company Private Ltd
- Binh Thuan Hamico - Vietnam
- SN Aboitiz Power Inc, Philippines
- PowerSource Philippines DevCo
- Indian Oil Corporation Limited
- Meenaskhi Energy Private Limited - India
- Siam City Cement - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Borneo Indobara - Indonesia
- Karaikal Port Pvt Ltd - India
- PTC India Limited - India
- Bhoruka Overseas - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Power Finance Corporation Ltd., India
- Global Business Power Corporation, Philippines
- Singapore Mercantile Exchange
- Kapuas Tunggal Persada - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Meralco Power Generation, Philippines
- India Bulls Power Limited - India
- Baramulti Group, Indonesia
- Electricity Generating Authority of Thailand
- GN Power Mariveles Coal Plant, Philippines
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Ind-Barath Power Infra Limited - India
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- Wilmar Investment Holdings
- Mercuria Energy - Indonesia
- GVK Power & Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Heidelberg Cement - Germany
- Manunggal Multi Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kideco Jaya Agung - Indonesia
- Tamil Nadu electricity Board
- International Coal Ventures Pvt Ltd - India
- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- Thiess Contractors Indonesia
- White Energy Company Limited
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- Global Green Power PLC Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- Chamber of Mines of South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Standard Chartered Bank - UAE
- PNOC Exploration Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Africa Commodities Group - South Africa
- Malabar Cements Ltd - India
- Electricity Authority, New Zealand
- London Commodity Brokers - England
- Ambuja Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Bharathi Cement Corporation - India
- Sojitz Corporation - Japan
- Mintek Dendrill Indonesia
- Coalindo Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cigading International Bulk Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Oldendorff Carriers - Singapore
- Straits Asia Resources Limited - Singapore
- GAC Shipping (India) Pvt Ltd
- Krishnapatnam Port Company Ltd. - India
- Antam Resourcindo - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Link Ltd, New Zealand
- Vedanta Resources Plc - India
- Toyota Tsusho Corporation, Japan
- Essar Steel Hazira Ltd - India
- Mercator Lines Limited - India
- Bulk Trading Sa - Switzerland
- The Treasury - Australian Government
- Indika Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- Edison Trading Spa - Italy
- Posco Energy - South Korea
- Global Coal Blending Company Limited - Australia
- Lanco Infratech Ltd - India
- Parliament of New Zealand
- Ceylon Electricity Board - Sri Lanka
- Minerals Council of Australia
- Altura Mining Limited, Indonesia
- Simpson Spence & Young - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- McConnell Dowell - Australia
- Vizag Seaport Private Limited - India
- CIMB Investment Bank - Malaysia
- Xindia Steels Limited - India
- ICICI Bank Limited - India
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- GMR Energy Limited - India
- Bangladesh Power Developement Board
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- New Zealand Coal & Carbon
- Bahari Cakrawala Sebuku - Indonesia
- Parry Sugars Refinery, India
- Semirara Mining Corp, Philippines
- Indogreen Group - Indonesia
- Globalindo Alam Lestari - Indonesia
- SMC Global Power, Philippines
- Renaissance Capital - South Africa
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- LBH Netherlands Bv - Netherlands
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