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Monday, 12 December 11
DRY BULK MARKET LOOKING FOR BALANCE AS WE ENTER 2012 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
 During the past few months, freight rates for dry bulk carriers, especially Capesizes have increased significantly, providing ship owners with a much needed boost. Still, the oversupply haven't been solved overnight. This will take a few more years to happen, provided that newbuilding orders remain at modest levels and scrapping of older ones doesn't seize.In an interview with Hellenic Shipping News Worldwide, BIMCO's
Chief Shipping Analyst, Peter Sand said that for the coming couple of months, BIMCO holds the view that the Capesize Time Charter Average will remain at USD 20,000-30,000 per day. but the tonnage oversupply will eventually hit back. "Meanwhile, we reiterate our forecast on the Panamax and Supramax freight rates that are likely to stay put in the USD 13,000-17,000 per day interval. Handysize rates are expected to gain traction and return to the USD 9,000-13,000 per day interval" said Sand.He went to add that 2012 is likely to become as challenging as 2011. The pressure from the supply-side is set to ease a bit and drift down to around 11-12% but unfortunately the demand-side also looks set to end on the softer side of 2011.
Looking back in 2011, how would you describe this year in terms of dry bulk freight rates and the general movement of the industry’s benchmark, the BDI (Baltic Dry Index)?
Following the positive surprise that the industry experienced during 2010, 2011 have been very different. The combination of several demand-side disruptions and a freak wave of new built tonnage entering the fleet, has made the BDI drop by a significant 44% y-o-y. The fact that the amount of tonnage that went to the breakers was double-up on our initial forecast helped a lot, but cannot prevent the overall fleet to grow by 14%.
The year has been full of surprises. I’ll guess only very few had foreseen the main events of 2011 before they actually happened. The “Arab spring”, the massive flooding in Australia and South Africa and the triple disaster in Japan all events that was affecting dry bulk as well as wet bulk to a large extent. The Capesize segment was mostly hurt. During the first half of year, average time charter earnings of USD 8,500 per day only just covered OPEX for most vessels, leaving nothing to pay financial costs. But after a bit of a summer lull for Capesizes, freight rates really took off in August when China resumed massive buying of iron ore at a time when tonnage was tight in Atlantic basin. Congestion in both exporting and importing ports went up and lifted rates to year-high level where they are still hovering. The fact that the freight rate today is close to USD 30,000 per day is a positive surprise too – framing a year full of surprises and ending it on a happy note.
How is the current balance between demand and supply being shapen up?
The winter market is providing some support to the markets – and when you look at rates for Panamax and Handymax at USD 15,000 per day it actually not that bad when you look at it from a historical perspective. Trouble is of course that the fleet that ploughs the seas today is purchased at relatively higher prices than ever before – requiring higher rates to break even – when taking account of financing costs on top of ordinary OPEX.
For the coming couple of months, BIMCO holds the view that the Capesize Time Charter Average will remain at USD 20,000-30,000 per day but the tonnage oversupply will eventually hit back. Meanwhile, we reiterate our forecast on the Panamax and Supramax freight rates that are likely to stay put in the USD 13,000-17,000 per day interval. Handysize rates are expected to gain traction and return to the USD 9,000-13,000 per day interval.
Despite struggling rates for the most part of the year, 2011 also saw a lot of newbuilding orders for dry bulk carriers. Which factors triggered this development?
From a fundamental point of view – the amount of tonnage that has been ordered during 2011 is sustainable; if you look at 2011 in solitude. Tonnage equivalent to 4% of the active fleet is a more or less what is required to renew a fleet that has a lifetime of 25 years. Moreover it is actually the lowest level of new orders placed since 2002, surpassing even 2009 where 35.6 million DWT was ordered. However, the problem is that 2010-2013 are all years of massive inflow of new tonnage. In order to get the balance back we should have a couple of years with deliveries below the sustainable trend to let demand catch up and balance the market once again.
It seems that 2011 was a record year for demolition activity of older vessels. Would things be a lot worse, shouldn’t those vessels had been sold for scrap?
The amount of demolished tonnage during 2011 has been a much welcomed wonder. And it has certainly provided some relief to the markets, mostly in the larger segments and specifically amongst Capesizes. The pressure on these big ships in particular has been eased by this. A few numbers illustrates this very clearly. The number of Capesize scrapped during 2011 (approx. 68) is equal to the number of Capesize vessels being scrapped during the preceding ten years! In the case that no Capesizes had been recycled the segment would have grown by more than 20% - matching the level of 2009 and 2010. But the demolition activity has cut growth by some 5%.
Do you expect a similar record of demolitions in 2012 as well, or is this dependant upon market swings?
Since freight rates took off in the Capesize segment by mid-August, only few vessels have been sold for recycling. The correlation between freight rates and the amount of recycled tonnage is quite strong right now. BIMCO do not foresee the record from this year to be duplicated in 2012. Our forecast for 2012 is that 10 million DWT is going to leave the fleet by demolition. But the estimate contains a pure upside potential, if rates are facing heat to the tune of first-half of 2011.
Going forward into 2012, do you expect newbuilding deliveries to outpace demand again, or will things slow down versus 2011?
In BIMCO we foresee that 2012 is likely to become as challenging as 2011. The pressure from the supply-side is set to ease a bit and drift down to around 11-12% but unfortunately the demand-side also looks set to end on the softer side of 2011. This leave the present fundamental imbalance between supply and demand more or less all-square – but as the global economy is still in a very fragile condition that now also means that China is slowing down, most risk are probably to be found on the downside.
Which will be the average rates for dry bulk ship types in 2012, according to your view and why?
We see 2012 is likely to become another 2011 on average. As China and India is going to grow a tad slower in the coming year this is like to limit the upside risk to our scenario. The global economic situation must be resolved before demand can surprise on the upside to a large extent. The yards will probably set 80 million DWT of to sea during the year – but handling the supply side remains an internal job. Use a variety of tools from the toolbox: slow steam, postpone/delay delivery, sign only new orders to a very limited extent, focus on customers and work closely together with all your stakeholders.
Source: Nikos Roussanoglou, Hellenic Shipping
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Sunday, 08 January 12
THARPAK CONSORTIUM FORMED TO DEVELOP MEGA ENERGY COMPLEX IN SINDH PROVINCE, PAKISTAN
Press Release: On January 5th, TharPak, LLC met with officials of the Embassy of Pakistan in Washington DC to introduce and announce the formation o ...
Saturday, 07 January 12
COAL MARKETS SEE FALLING SPOT PRICES
COALspot.com – World’s thermal coal spot prices have slipped this week..
globalCOAL index in Newcastle Port, benchmark for Asian mark ...
Friday, 06 January 12
COAL INDIA LINKED COAL PRICES WITH INTERNATIONAL COAL PRICES
COALspot.com - Consumers of indigenous coal in India to pay International prices in the future. Coal India has recently moved from UHV pricing mecha ...
Friday, 06 January 12
CLARIDEN GLOBAL BRINGS YOU INDONESIA MINING 2012
Capitalizing Business & Investment Opportunities in an Uncertain Market.Press Release - Clariden Global brings you Indonesia Mining 2012, the dedi ...
Friday, 06 January 12
THE PANAMAX MARKET EXPERIENCED A SLOW START TO 2012 - FEARNLEYS AS
Handy
As usual after a holiday owners and charterers both try to get a feel of the market. An Armada of Supras were talking to ballast towards USG, ...
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- Kaltim Prima Coal - Indonesia
- CNBM International Corporation - China
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
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- Africa Commodities Group - South Africa
- Global Business Power Corporation, Philippines
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- Wilmar Investment Holdings
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- Georgia Ports Authority, United States
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- Latin American Coal - Colombia
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- Independent Power Producers Association of India
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- Semirara Mining Corp, Philippines
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- Mercator Lines Limited - India
- Edison Trading Spa - Italy
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- Indogreen Group - Indonesia
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- Power Finance Corporation Ltd., India
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- Petrochimia International Co. Ltd.- Taiwan
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- Interocean Group of Companies - India
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- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
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- Metalloyd Limited - United Kingdom
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- SMC Global Power, Philippines
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- Eastern Coal Council - USA
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- Coastal Gujarat Power Limited - India
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- Mercuria Energy - Indonesia
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- LBH Netherlands Bv - Netherlands
- Tata Chemicals Ltd - India
- Larsen & Toubro Limited - India
- Indian Energy Exchange, India
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- Baramulti Group, Indonesia
- Bukit Baiduri Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- ICICI Bank Limited - India
- Economic Council, Georgia
- Carbofer General Trading SA - India
- ASAPP Information Group - India
- Uttam Galva Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- Thiess Contractors Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- Therma Luzon, Inc, Philippines
- Singapore Mercantile Exchange
- Global Green Power PLC Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Indo Tambangraya Megah - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
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- PNOC Exploration Corporation - Philippines
- Parry Sugars Refinery, India
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- Mjunction Services Limited - India
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- Trasteel International SA, Italy
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- Maheswari Brothers Coal Limited - India
- TeaM Sual Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Petron Corporation, Philippines
- Vedanta Resources Plc - India
- Directorate Of Revenue Intelligence - India
- IEA Clean Coal Centre - UK
- Attock Cement Pakistan Limited
- Central Java Power - Indonesia
- Renaissance Capital - South Africa
- Chamber of Mines of South Africa
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- Thai Mozambique Logistica
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Commonwealth Bank - Australia
- MS Steel International - UAE
- White Energy Company Limited
- Karaikal Port Pvt Ltd - India
- Minerals Council of Australia
- Kobexindo Tractors - Indoneisa
- Oldendorff Carriers - Singapore
- Manunggal Multi Energi - Indonesia
- Sical Logistics Limited - India
- Kepco SPC Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- Price Waterhouse Coopers - Russia
- Leighton Contractors Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- Romanian Commodities Exchange
- The University of Queensland
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Marubeni Corporation - India
- Sakthi Sugars Limited - India
- Formosa Plastics Group - Taiwan
- Altura Mining Limited, Indonesia
- Straits Asia Resources Limited - Singapore
- Samtan Co., Ltd - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Billiton Holdings Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Eastern Energy - Thailand
- Chettinad Cement Corporation Ltd - India
- Madhucon Powers Ltd - India
- Deloitte Consulting - India
- SN Aboitiz Power Inc, Philippines
- Lanco Infratech Ltd - India
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Port Waratah Coal Services - Australia
- The Treasury - Australian Government
- Central Electricity Authority - India
- PTC India Limited - India
- Rio Tinto Coal - Australia
- Ministry of Finance - Indonesia
- Bukit Makmur.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Antam Resourcindo - Indonesia
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Borneo Indobara - Indonesia
- McConnell Dowell - Australia
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Dalmia Cement Bharat India
- Bulk Trading Sa - Switzerland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coalindo Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Alfred C Toepfer International GmbH - Germany
- Global Coal Blending Company Limited - Australia
- GAC Shipping (India) Pvt Ltd
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Mintek Dendrill Indonesia
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Planning Commission, India
- Ambuja Cements Ltd - India
- Heidelberg Cement - Germany
- Jaiprakash Power Ventures ltd
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- Xindia Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
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