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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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Thursday, 05 January 12
DRY BULK MARKET TAKES A PLUNGE OF LOW ACTIVITY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
As was widely expected the first days of the new year are characterized by significantly low chartering across the board of the dry bulk market, pus ...
Wednesday, 04 January 12
NEWBUILDING ORDERS PICKED UP IN 2011, BUT 2012 EXPECTED TO BE A DIFFERENT STORY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the BDI (Baltic Dry Index) starting the year on a sour note, losing 114 points and ending yesterday’s session, the first of the new year, ...
Wednesday, 04 January 12
MAHAGENCO TO IMPORT LOW MOISTURE COAL
COALspot.com - Maharashtra State Power Generation Co. Ltd. is the state power generation utility owned by Government of Maharashtra, intends to proc ...
Tuesday, 03 January 12
INDONESIA COAL REFERENCE PRICE FELL AGAIN
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia has sets the January 2012 coal reference price at US$ 109.29 per ton or US$ 3.3 ...
Tuesday, 03 January 12
WHICH WAY WILL THE DRY BULK MARKET HEAD ON FIRST WEEK OF THE YEAR? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Dry bulk ship owners will be wondering which way will the BDI (Baltic Dry Index), the industry’s benchmark, will head during the first days of ...
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- Uttam Galva Steels Limited - India
- Economic Council, Georgia
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- Indika Energy - Indonesia
- Vedanta Resources Plc - India
- Pipit Mutiara Jaya. PT, Indonesia
- Edison Trading Spa - Italy
- Central Electricity Authority - India
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- Manunggal Multi Energi - Indonesia
- Kumho Petrochemical, South Korea
- Madhucon Powers Ltd - India
- Indogreen Group - Indonesia
- Videocon Industries ltd - India
- Krishnapatnam Port Company Ltd. - India
- TeaM Sual Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Siam City Cement PLC, Thailand
- Oldendorff Carriers - Singapore
- Meralco Power Generation, Philippines
- Marubeni Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Vizag Seaport Private Limited - India
- Baramulti Group, Indonesia
- Bhushan Steel Limited - India
- Wood Mackenzie - Singapore
- Commonwealth Bank - Australia
- SMC Global Power, Philippines
- Heidelberg Cement - Germany
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Thai Mozambique Logistica
- GVK Power & Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Straits Asia Resources Limited - Singapore
- San Jose City I Power Corp, Philippines
- Ministry of Finance - Indonesia
- SMG Consultants - Indonesia
- The State Trading Corporation of India Ltd
- Price Waterhouse Coopers - Russia
- Orica Mining Services - Indonesia
- IHS Mccloskey Coal Group - USA
- Coal and Oil Company - UAE
- Posco Energy - South Korea
- Parry Sugars Refinery, India
- Petron Corporation, Philippines
- Anglo American - United Kingdom
- CNBM International Corporation - China
- Gujarat Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Attock Cement Pakistan Limited
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- Globalindo Alam Lestari - Indonesia
- Coalindo Energy - Indonesia
- Electricity Authority, New Zealand
- Larsen & Toubro Limited - India
- Mjunction Services Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tamil Nadu electricity Board
- Carbofer General Trading SA - India
- Binh Thuan Hamico - Vietnam
- Pendopo Energi Batubara - Indonesia
- Altura Mining Limited, Indonesia
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- Gujarat Sidhee Cement - India
- GMR Energy Limited - India
- Rio Tinto Coal - Australia
- Deloitte Consulting - India
- Intertek Mineral Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- The Treasury - Australian Government
- European Bulk Services B.V. - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- Latin American Coal - Colombia
- ASAPP Information Group - India
- Bangladesh Power Developement Board
- Antam Resourcindo - Indonesia
- Makarim & Taira - Indonesia
- Chettinad Cement Corporation Ltd - India
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- Chamber of Mines of South Africa
- Tata Chemicals Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- Singapore Mercantile Exchange
- Meenaskhi Energy Private Limited - India
- Energy Link Ltd, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Mercuria Energy - Indonesia
- Semirara Mining Corp, Philippines
- VISA Power Limited - India
- Cement Manufacturers Association - India
- Central Java Power - Indonesia
- Essar Steel Hazira Ltd - India
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- AsiaOL BioFuels Corp., Philippines
- Toyota Tsusho Corporation, Japan
- Indian Energy Exchange, India
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- International Coal Ventures Pvt Ltd - India
- Ministry of Transport, Egypt
- South Luzon Thermal Energy Corporation
- CIMB Investment Bank - Malaysia
- Australian Commodity Traders Exchange
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- OPG Power Generation Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Siam City Cement - Thailand
- Sojitz Corporation - Japan
- Georgia Ports Authority, United States
- Riau Bara Harum - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Power Finance Corporation Ltd., India
- Bukit Asam (Persero) Tbk - Indonesia
- Parliament of New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Business Power Corporation, Philippines
- Planning Commission, India
- Minerals Council of Australia
- Indonesian Coal Mining Association
- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
- Ind-Barath Power Infra Limited - India
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thiess Contractors Indonesia
- Kepco SPC Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- The University of Queensland
- Leighton Contractors Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Jindal Steel & Power Ltd - India
- Goldman Sachs - Singapore
- Samtan Co., Ltd - South Korea
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- PNOC Exploration Corporation - Philippines
- Wilmar Investment Holdings
- Bhatia International Limited - India
- Indo Tambangraya Megah - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Australian Coal Association
- Formosa Plastics Group - Taiwan
- Simpson Spence & Young - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Aditya Birla Group - India
- Karbindo Abesyapradhi - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- India Bulls Power Limited - India
- Therma Luzon, Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- SN Aboitiz Power Inc, Philippines
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- Bukit Makmur.PT - Indonesia
- IEA Clean Coal Centre - UK
- Merrill Lynch Commodities Europe
- Mercator Lines Limited - India
- London Commodity Brokers - England
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Asmin Koalindo Tuhup - Indonesia
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- Timah Investasi Mineral - Indoneisa
- LBH Netherlands Bv - Netherlands
- Sical Logistics Limited - India
- Dalmia Cement Bharat India
- Sakthi Sugars Limited - India
- Kobexindo Tractors - Indoneisa
- Medco Energi Mining Internasional
- Electricity Generating Authority of Thailand
- Borneo Indobara - Indonesia
- Sarangani Energy Corporation, Philippines
- Jaiprakash Power Ventures ltd
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- PTC India Limited - India
- Xindia Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bharathi Cement Corporation - India
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