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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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Sunday, 28 August 11
FREIGHT MARKET COULD BE FIRM NEXT MONTH - VISTAAR
COALspot.com - The freight market continued the upward trend first half of the week . However, towards the end of the week lost momentum and the BDI ...
Saturday, 27 August 11
JAPANESE BULK CARRIER SETS RECORD ON NORTHERN SEA ROUTE - BARENTS OBSERVER
The Northern Sea Route will see its third record in less than a month when the largest ever bulk carrier to take the route leaves Murmansk next week ...
Saturday, 27 August 11
RBCT-INDIA ROUNDS FIXED AT AROUND US$ 12K - FEARNBULK
Handy
Stable but very positional markets across all segments in the Atlantic: the gap between owners and charterers rate ideas is building up as o ...
Friday, 26 August 11
TUAH TURANGGA AGUNG ACQUIRES AN ADDITIONAL 40% SHARES IN BARA PRIMA AGUNG
COALspot.com - PT Tuah Turangga Agung, a subsidiary of PT United Tractors Tbk, has signed an acquisition agreement to acquire 40% of PT Bara Prima A ...
Friday, 26 August 11
INTRACO EYES US$200 MIO COAL TAKEOVER - INSIDER STORIES
Heavy equipment distributor PT Intraco Penta Tbk, that was founded by Halex Halim, is scouting a coal acquisition with the valuation above US$200 mi ...
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- Edison Trading Spa - Italy
- Pendopo Energi Batubara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Marubeni Corporation - India
- Indika Energy - Indonesia
- PowerSource Philippines DevCo
- Formosa Plastics Group - Taiwan
- The University of Queensland
- Uttam Galva Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Heidelberg Cement - Germany
- Timah Investasi Mineral - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- GAC Shipping (India) Pvt Ltd
- Aditya Birla Group - India
- Bayan Resources Tbk. - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kaltim Prima Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Mines - Canada
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- Kumho Petrochemical, South Korea
- Gujarat Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Georgia Ports Authority, United States
- SMC Global Power, Philippines
- Kalimantan Lumbung Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- London Commodity Brokers - England
- SN Aboitiz Power Inc, Philippines
- Mintek Dendrill Indonesia
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Thiess Contractors Indonesia
- Wilmar Investment Holdings
- Toyota Tsusho Corporation, Japan
- Jindal Steel & Power Ltd - India
- Banpu Public Company Limited - Thailand
- Straits Asia Resources Limited - Singapore
- Australian Coal Association
- Bukit Asam (Persero) Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- India Bulls Power Limited - India
- Simpson Spence & Young - Indonesia
- Grasim Industreis Ltd - India
- ICICI Bank Limited - India
- Aboitiz Power Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Makarim & Taira - Indonesia
- Petron Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Electricity Authority, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Port Waratah Coal Services - Australia
- Salva Resources Pvt Ltd - India
- Standard Chartered Bank - UAE
- The State Trading Corporation of India Ltd
- Chamber of Mines of South Africa
- CNBM International Corporation - China
- Eastern Coal Council - USA
- Tamil Nadu electricity Board
- IEA Clean Coal Centre - UK
- Orica Australia Pty. Ltd.
- Coastal Gujarat Power Limited - India
- Vizag Seaport Private Limited - India
- Bukit Makmur.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Vedanta Resources Plc - India
- Krishnapatnam Port Company Ltd. - India
- McConnell Dowell - Australia
- Economic Council, Georgia
- Cigading International Bulk Terminal - Indonesia
- Deloitte Consulting - India
- Electricity Generating Authority of Thailand
- Global Green Power PLC Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- LBH Netherlands Bv - Netherlands
- Ind-Barath Power Infra Limited - India
- Riau Bara Harum - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indian Energy Exchange, India
- Neyveli Lignite Corporation Ltd, - India
- Indian Oil Corporation Limited
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Larsen & Toubro Limited - India
- Planning Commission, India
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- Samtan Co., Ltd - South Korea
- Chettinad Cement Corporation Ltd - India
- Metalloyd Limited - United Kingdom
- CIMB Investment Bank - Malaysia
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- Independent Power Producers Association of India
- Bhatia International Limited - India
- Indo Tambangraya Megah - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Mercator Lines Limited - India
- Minerals Council of Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- Intertek Mineral Services - Indonesia
- Latin American Coal - Colombia
- Borneo Indobara - Indonesia
- Semirara Mining Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Baramulti Group, Indonesia
- Central Electricity Authority - India
- Coal and Oil Company - UAE
- Parliament of New Zealand
- Eastern Energy - Thailand
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Ambuja Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Power Finance Corporation Ltd., India
- White Energy Company Limited
- Semirara Mining and Power Corporation, Philippines
- Bhushan Steel Limited - India
- Goldman Sachs - Singapore
- Star Paper Mills Limited - India
- Cement Manufacturers Association - India
- GMR Energy Limited - India
- Globalindo Alam Lestari - Indonesia
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Singapore Mercantile Exchange
- Sindya Power Generating Company Private Ltd
- Sojitz Corporation - Japan
- Leighton Contractors Pty Ltd - Australia
- Medco Energi Mining Internasional
- Billiton Holdings Pty Ltd - Australia
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Central Java Power - Indonesia
- Karaikal Port Pvt Ltd - India
- Ministry of Finance - Indonesia
- Energy Link Ltd, New Zealand
- Sarangani Energy Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Barasentosa Lestari - Indonesia
- Thai Mozambique Logistica
- Mjunction Services Limited - India
- Renaissance Capital - South Africa
- Binh Thuan Hamico - Vietnam
- Romanian Commodities Exchange
- Sree Jayajothi Cements Limited - India
- Essar Steel Hazira Ltd - India
- Attock Cement Pakistan Limited
- International Coal Ventures Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Bulk Trading Sa - Switzerland
- Antam Resourcindo - Indonesia
- Posco Energy - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- Anglo American - United Kingdom
- Global Coal Blending Company Limited - Australia
- MS Steel International - UAE
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Dalmia Cement Bharat India
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Wood Mackenzie - Singapore
- New Zealand Coal & Carbon
- Bangladesh Power Developement Board
- Therma Luzon, Inc, Philippines
- Rio Tinto Coal - Australia
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- Agrawal Coal Company - India
- Indonesian Coal Mining Association
- Trasteel International SA, Italy
- Bukit Baiduri Energy - Indonesia
- The Treasury - Australian Government
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Meralco Power Generation, Philippines
- Kepco SPC Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Madhucon Powers Ltd - India
- VISA Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Parry Sugars Refinery, India
- Altura Mining Limited, Indonesia
- Xindia Steels Limited - India
- Oldendorff Carriers - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
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