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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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Saturday, 03 September 11
TNPL TO BUY 240K MT OF NON-COKING COAL
COALspot.com - Tamil Nadu Newsprint and Papers Limited (TNPL), is seeking to procure 240,000 MT +/- 5 percent of non-coking imported coal with ...
Friday, 02 September 11
CAPESIZE DEMAND LIFTS DRY BULK MARKET ONCE AGAIN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In what proves to be the best week of the year for Capesize owners, strong demand has helped propel the dry bulk market to new highs yesterday. The ...
Thursday, 01 September 11
EWP TO BUY 195KT OF VIETNAM COAL
COALspot.com - Korea Midland Power (KOMIPO) has issued an International open bidding for 490kt of sub bituminous coal, according to a bid invitation ...
Thursday, 01 September 11
DRY BULK MARKET TAKES GREAT LEAP FORWARD - NIKOS ROUSSANOGLOU
In what turned out to be a rather hopeful ending of the month, the last day of August saw the dry bulk market’s benchmark, the BDI (Baltic Dry ...
Tuesday, 30 August 11
FAUJI CEMENT CONSUMED MORE THAN 1 MILLION TONS OF LOCAL COAL
Cooper Minerals Inc.based in Vancouver, BC, Canada, is a junior exploration company engaged in the acquisition, exploration and development of miner ...
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- Indian Energy Exchange, India
- Sarangani Energy Corporation, Philippines
- Mintek Dendrill Indonesia
- IHS Mccloskey Coal Group - USA
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- ICICI Bank Limited - India
- Deloitte Consulting - India
- Edison Trading Spa - Italy
- VISA Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Manunggal Multi Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Meenaskhi Energy Private Limited - India
- Posco Energy - South Korea
- Altura Mining Limited, Indonesia
- Siam City Cement PLC, Thailand
- PowerSource Philippines DevCo
- Uttam Galva Steels Limited - India
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- CNBM International Corporation - China
- Carbofer General Trading SA - India
- Medco Energi Mining Internasional
- Bulk Trading Sa - Switzerland
- Ambuja Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Rio Tinto Coal - Australia
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- New Zealand Coal & Carbon
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Baramulti Group, Indonesia
- Oldendorff Carriers - Singapore
- Bayan Resources Tbk. - Indonesia
- IEA Clean Coal Centre - UK
- Port Waratah Coal Services - Australia
- ASAPP Information Group - India
- Coastal Gujarat Power Limited - India
- Orica Australia Pty. Ltd.
- Wood Mackenzie - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Therma Luzon, Inc, Philippines
- Kobexindo Tractors - Indoneisa
- PTC India Limited - India
- SMC Global Power, Philippines
- Banpu Public Company Limited - Thailand
- Bharathi Cement Corporation - India
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- Gujarat Sidhee Cement - India
- Kalimantan Lumbung Energi - Indonesia
- Standard Chartered Bank - UAE
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Ministry of Transport, Egypt
- Bhoruka Overseas - Indonesia
- GVK Power & Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Sical Logistics Limited - India
- Chettinad Cement Corporation Ltd - India
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Chamber of Mines of South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Coal and Oil Company - UAE
- Power Finance Corporation Ltd., India
- Heidelberg Cement - Germany
- Semirara Mining and Power Corporation, Philippines
- Sojitz Corporation - Japan
- Neyveli Lignite Corporation Ltd, - India
- Grasim Industreis Ltd - India
- Alfred C Toepfer International GmbH - Germany
- GMR Energy Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kepco SPC Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Kapuas Tunggal Persada - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- Borneo Indobara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- Indo Tambangraya Megah - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Parry Sugars Refinery, India
- SN Aboitiz Power Inc, Philippines
- Agrawal Coal Company - India
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Mining Services - Indonesia
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Bangladesh Power Developement Board
- Directorate General of MIneral and Coal - Indonesia
- Thiess Contractors Indonesia
- Bukit Baiduri Energy - Indonesia
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Trasteel International SA, Italy
- Independent Power Producers Association of India
- GAC Shipping (India) Pvt Ltd
- Romanian Commodities Exchange
- Asmin Koalindo Tuhup - Indonesia
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- Commonwealth Bank - Australia
- Renaissance Capital - South Africa
- Coalindo Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- Bhatia International Limited - India
- Vedanta Resources Plc - India
- Minerals Council of Australia
- McConnell Dowell - Australia
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Electricity Authority, New Zealand
- Kaltim Prima Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- Madhucon Powers Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- Ministry of Mines - Canada
- Wilmar Investment Holdings
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- Merrill Lynch Commodities Europe
- Samtan Co., Ltd - South Korea
- Attock Cement Pakistan Limited
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Africa Commodities Group - South Africa
- Cement Manufacturers Association - India
- Aditya Birla Group - India
- Bhushan Steel Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Globalindo Alam Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- European Bulk Services B.V. - Netherlands
- Sakthi Sugars Limited - India
- Energy Development Corp, Philippines
- Price Waterhouse Coopers - Russia
- Karbindo Abesyapradhi - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Videocon Industries ltd - India
- Toyota Tsusho Corporation, Japan
- Binh Thuan Hamico - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Ind-Barath Power Infra Limited - India
- Barasentosa Lestari - Indonesia
- Xindia Steels Limited - India
- CIMB Investment Bank - Malaysia
- Latin American Coal - Colombia
- Mjunction Services Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Antam Resourcindo - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kideco Jaya Agung - Indonesia
- Meralco Power Generation, Philippines
- Simpson Spence & Young - Indonesia
- Australian Coal Association
- Mercuria Energy - Indonesia
- Mercator Lines Limited - India
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Australian Commodity Traders Exchange
- Planning Commission, India
- Vizag Seaport Private Limited - India
- Interocean Group of Companies - India
- Eastern Energy - Thailand
- Ministry of Finance - Indonesia
- Malabar Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Savvy Resources Ltd - HongKong
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- MS Steel International - UAE
- India Bulls Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Indogreen Group - Indonesia
- Jaiprakash Power Ventures ltd
- OPG Power Generation Pvt Ltd - India
- Indika Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Billiton Holdings Pty Ltd - Australia
- The Treasury - Australian Government
- South Luzon Thermal Energy Corporation
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Karaikal Port Pvt Ltd - India
- Anglo American - United Kingdom
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