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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, 23 August 11
PENRHYN COAL USING EVERGREEN ENERGYS COAL UPGRADING PROCESS
Evergreen Energy Inc has announced the successful testing results of the initial batches of Penrhyn coal using Evergreen Energy’s coal upgradi ...
Tuesday, 23 August 11
A SHARP INCREASE IN THE BDI - BRS
A sharp increase in the BDI this week, driven by the rise in Capesize rates. Overall the BDI was up 13.5% to 1,462 points on the back of a 20% surge ...
Monday, 22 August 11
INDONESIA TO BAN BELOW 5700 KCAL/KG COAL FOR EXPORT
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia is in the process of drafting a regulation which is requiring mine owners ...
Monday, 22 August 11
JATENERGY AGREED TO FORM JV WITH AN INDONESIAN COAL MINING COMPANY
COALspot.com - Australian’s listed company, Jatenergy Limited has entered conditional agreement to form joint venture with Indonesia’s c ...
Monday, 22 August 11
NTPC TO IMPORT 16 MILLION TON OF COAL TO BRIDGE THE GAP
COALspot.com - NTPC to import 16 million tons of imported coal, which is equivalent to 23-24 million tons of Indian coal to bridge the gap.
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- Sical Logistics Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Jorong Barutama Greston.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- International Coal Ventures Pvt Ltd - India
- GVK Power & Infra Limited - India
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- Leighton Contractors Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Independent Power Producers Association of India
- Oldendorff Carriers - Singapore
- GAC Shipping (India) Pvt Ltd
- Bulk Trading Sa - Switzerland
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- TeaM Sual Corporation - Philippines
- Banpu Public Company Limited - Thailand
- The University of Queensland
- Parliament of New Zealand
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- ICICI Bank Limited - India
- Kartika Selabumi Mining - Indonesia
- PTC India Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- London Commodity Brokers - England
- Sinarmas Energy and Mining - Indonesia
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- Coalindo Energy - Indonesia
- Minerals Council of Australia
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Mjunction Services Limited - India
- Energy Link Ltd, New Zealand
- PNOC Exploration Corporation - Philippines
- Malabar Cements Ltd - India
- Indonesian Coal Mining Association
- Ambuja Cements Ltd - India
- Riau Bara Harum - Indonesia
- Xindia Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Baramulti Group, Indonesia
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- Miang Besar Coal Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jindal Steel & Power Ltd - India
- Antam Resourcindo - Indonesia
- Bangladesh Power Developement Board
- Sojitz Corporation - Japan
- Meralco Power Generation, Philippines
- Salva Resources Pvt Ltd - India
- Heidelberg Cement - Germany
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TNB Fuel Sdn Bhd - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Sindya Power Generating Company Private Ltd
- Goldman Sachs - Singapore
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- CNBM International Corporation - China
- Mercator Lines Limited - India
- Semirara Mining and Power Corporation, Philippines
- Indian Oil Corporation Limited
- Makarim & Taira - Indonesia
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- Edison Trading Spa - Italy
- Petrochimia International Co. Ltd.- Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indogreen Group - Indonesia
- Vizag Seaport Private Limited - India
- Directorate Of Revenue Intelligence - India
- Kepco SPC Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- AsiaOL BioFuels Corp., Philippines
- Therma Luzon, Inc, Philippines
- Cement Manufacturers Association - India
- Rio Tinto Coal - Australia
- Larsen & Toubro Limited - India
- Siam City Cement PLC, Thailand
- Toyota Tsusho Corporation, Japan
- Billiton Holdings Pty Ltd - Australia
- Aditya Birla Group - India
- OPG Power Generation Pvt Ltd - India
- Standard Chartered Bank - UAE
- Maharashtra Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Electricity Authority, New Zealand
- Ind-Barath Power Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Electricity Authority - India
- Star Paper Mills Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Romanian Commodities Exchange
- Marubeni Corporation - India
- Aboitiz Power Corporation - Philippines
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Economic Council, Georgia
- Krishnapatnam Port Company Ltd. - India
- PowerSource Philippines DevCo
- SN Aboitiz Power Inc, Philippines
- Ministry of Transport, Egypt
- Cigading International Bulk Terminal - Indonesia
- GMR Energy Limited - India
- Kaltim Prima Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- Indian Energy Exchange, India
- Manunggal Multi Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Altura Mining Limited, Indonesia
- New Zealand Coal & Carbon
- Rashtriya Ispat Nigam Limited - India
- Global Green Power PLC Corporation, Philippines
- Vedanta Resources Plc - India
- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
- India Bulls Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Orica Mining Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Latin American Coal - Colombia
- IEA Clean Coal Centre - UK
- Planning Commission, India
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- SMG Consultants - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Essar Steel Hazira Ltd - India
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Tata Chemicals Ltd - India
- Electricity Generating Authority of Thailand
- Mintek Dendrill Indonesia
- Energy Development Corp, Philippines
- Madhucon Powers Ltd - India
- Sakthi Sugars Limited - India
- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
- Savvy Resources Ltd - HongKong
- Neyveli Lignite Corporation Ltd, - India
- White Energy Company Limited
- Intertek Mineral Services - Indonesia
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- Chamber of Mines of South Africa
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- Karaikal Port Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Mercuria Energy - Indonesia
- Deloitte Consulting - India
- Posco Energy - South Korea
- Price Waterhouse Coopers - Russia
- Australian Commodity Traders Exchange
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- MS Steel International - UAE
- Kobexindo Tractors - Indoneisa
- Bukit Baiduri Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Uttam Galva Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Formosa Plastics Group - Taiwan
- Siam City Cement - Thailand
- Ministry of Finance - Indonesia
- Jaiprakash Power Ventures ltd
- Petron Corporation, Philippines
- Wood Mackenzie - Singapore
- Australian Coal Association
- Thiess Contractors Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- Merrill Lynch Commodities Europe
- Interocean Group of Companies - India
- IHS Mccloskey Coal Group - USA
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
- Bukit Makmur.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Carbofer General Trading SA - India
- Trasteel International SA, Italy
- Parry Sugars Refinery, India
- Directorate General of MIneral and Coal - Indonesia
- Wilmar Investment Holdings
- Indo Tambangraya Megah - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bhushan Steel Limited - India
- Dalmia Cement Bharat India
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