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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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Monday, 22 August 11
MACRO ECONOMICS - PETER SAND BIMCO / HELLENIC SHIPPING
The US is jeopardising the global recovery as job creation remains top challenge across the board.
Global economy: While growth in most emerging ...
Sunday, 21 August 11
SUPRAMAX AVAILABILITY WAS TIGHT DUE TO UPCOMING RAMADAN HOLIDAYS
COALspot.com - The financial markets have been in turmoil with all major stock exchanges down and uncertainty prevails. However the shipping market ...
Sunday, 21 August 11
TUAH TURANGGA ACQUIRES DUTA NURCAHYA
Coal miner PT Tuah Turangga Agung, a wholly owned subsidiary of PT United Tractors Tbk (UNTR) via PT Pamapersada Nusantara), has agreed to acquire 6 ...
Friday, 19 August 11
INDIAS CICTL HAS ACHIEVED ONE MILLION TONS OF DISCHARGE
COALspot.com - Chettinad International Coal Terminal (CICTL) in Ennore port, a state of the art mechanized coal terminal, which was inaugurated on 28t ...
Friday, 19 August 11
AUSTRALIAS' ATH TO ACQUIRE 60% OF APUAH COAL MINE IN INDONESIA
COALspot.com - Australian listed company, Atech Holdings Limited (ATH) has entered into a conditional binding term sheet to acquire 60 percent stake ...
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- Africa Commodities Group - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- PTC India Limited - India
- Independent Power Producers Association of India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- Semirara Mining Corp, Philippines
- Madhucon Powers Ltd - India
- Merrill Lynch Commodities Europe
- Heidelberg Cement - Germany
- Posco Energy - South Korea
- Parliament of New Zealand
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Bangladesh Power Developement Board
- Carbofer General Trading SA - India
- Samtan Co., Ltd - South Korea
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- Edison Trading Spa - Italy
- Planning Commission, India
- TNB Fuel Sdn Bhd - Malaysia
- Savvy Resources Ltd - HongKong
- Bukit Makmur.PT - Indonesia
- San Jose City I Power Corp, Philippines
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- Wilmar Investment Holdings
- Ministry of Finance - Indonesia
- Miang Besar Coal Terminal - Indonesia
- GVK Power & Infra Limited - India
- Antam Resourcindo - Indonesia
- Tamil Nadu electricity Board
- Bukit Baiduri Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Uttam Galva Steels Limited - India
- Oldendorff Carriers - Singapore
- Binh Thuan Hamico - Vietnam
- Price Waterhouse Coopers - Russia
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- Bhatia International Limited - India
- Standard Chartered Bank - UAE
- Altura Mining Limited, Indonesia
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- ASAPP Information Group - India
- Karaikal Port Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- GN Power Mariveles Coal Plant, Philippines
- Directorate Of Revenue Intelligence - India
- TeaM Sual Corporation - Philippines
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- Australian Coal Association
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- MS Steel International - UAE
- VISA Power Limited - India
- Wood Mackenzie - Singapore
- Bayan Resources Tbk. - Indonesia
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- Neyveli Lignite Corporation Ltd, - India
- The University of Queensland
- Siam City Cement - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Georgia Ports Authority, United States
- Directorate General of MIneral and Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Bharathi Cement Corporation - India
- Kepco SPC Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- Energy Link Ltd, New Zealand
- Baramulti Group, Indonesia
- IEA Clean Coal Centre - UK
- Alfred C Toepfer International GmbH - Germany
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Mercator Lines Limited - India
- Aboitiz Power Corporation - Philippines
- Ambuja Cements Ltd - India
- Renaissance Capital - South Africa
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- Indo Tambangraya Megah - Indonesia
- Kartika Selabumi Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Indian Energy Exchange, India
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- Borneo Indobara - Indonesia
- Australian Commodity Traders Exchange
- White Energy Company Limited
- Central Electricity Authority - India
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Videocon Industries ltd - India
- Electricity Generating Authority of Thailand
- Aditya Birla Group - India
- Sree Jayajothi Cements Limited - India
- London Commodity Brokers - England
- Kapuas Tunggal Persada - Indonesia
- Parry Sugars Refinery, India
- AsiaOL BioFuels Corp., Philippines
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Deloitte Consulting - India
- Marubeni Corporation - India
- GMR Energy Limited - India
- Energy Development Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Attock Cement Pakistan Limited
- Romanian Commodities Exchange
- SMC Global Power, Philippines
- Globalindo Alam Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- Maheswari Brothers Coal Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Singapore Mercantile Exchange
- Mintek Dendrill Indonesia
- Iligan Light & Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Karbindo Abesyapradhi - Indoneisa
- Port Waratah Coal Services - Australia
- OPG Power Generation Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercuria Energy - Indonesia
- Sojitz Corporation - Japan
- Kalimantan Lumbung Energi - Indonesia
- Electricity Authority, New Zealand
- PNOC Exploration Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Global Green Power PLC Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Larsen & Toubro Limited - India
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Therma Luzon, Inc, Philippines
- ICICI Bank Limited - India
- The State Trading Corporation of India Ltd
- Coastal Gujarat Power Limited - India
- Manunggal Multi Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Formosa Plastics Group - Taiwan
- Kumho Petrochemical, South Korea
- Orica Australia Pty. Ltd.
- Barasentosa Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Chettinad Cement Corporation Ltd - India
- Eastern Coal Council - USA
- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
- Vedanta Resources Plc - India
- Bhoruka Overseas - Indonesia
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
- Gujarat Sidhee Cement - India
- Mjunction Services Limited - India
- Coal and Oil Company - UAE
- Trasteel International SA, Italy
- Billiton Holdings Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Minerals Council of Australia
- Eastern Energy - Thailand
- Toyota Tsusho Corporation, Japan
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- Coalindo Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Economic Council, Georgia
- Sical Logistics Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Tata Chemicals Ltd - India
- Vizag Seaport Private Limited - India
- PowerSource Philippines DevCo
- McConnell Dowell - Australia
- Holcim Trading Pte Ltd - Singapore
- Star Paper Mills Limited - India
- Meralco Power Generation, Philippines
- Sakthi Sugars Limited - India
- Siam City Cement PLC, Thailand
- New Zealand Coal & Carbon
- Thiess Contractors Indonesia
- Goldman Sachs - Singapore
- Jindal Steel & Power Ltd - India
- Central Java Power - Indonesia
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