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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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Monday, 02 January 12
THE PROMISE OF INDIA: A BRIEF INTERRUPTION? - CLARKSONS / HELLENIC SHIPPING
Future growth in Indian seaborne coal imports has sometimes been considered as one of the largest potential upsides in the currently oversupplied dr ...
Sunday, 01 January 12
IS INDIA FOLLOWING INDONESIA TO STANDARDIZE COAL PRICES TO GET MAXIMUM BENEFITS?
COALspot.com - Coal India limited, an Indian state owned and world largest coal producer has introduced gross calorific value (GCV) based pricing me ...
Saturday, 31 December 11
GLOBALCOAL NEWC INDEX SURGED 2.32 PERCENT
COALspot.com - globalCOAL index in Newcastle Port, benchmark for Asian market, ended substantially higher, surged 2.32 percent to US$115.47 per ...
Saturday, 31 December 11
BORNEO LUMBUNG TO BUY BUMI STAKE, SWAP CEO - THE JAKARTA GLOBE
The Jakarta Globe, one of the leading english news paper in Indonesia reported yesterday, shareholders of Indonesian coking coal miner Borneo Lumbun ...
Friday, 30 December 11
CENTRAL GOVERNMENT SHOULD ISSUE PERMITS - THE JAKARTA POST
The Jakarta Post reported that, business associations from both the palm oil and mining sectors have suggested that the central government should re ...
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- Singapore Mercantile Exchange
- Bangladesh Power Developement Board
- Sical Logistics Limited - India
- Global Coal Blending Company Limited - Australia
- Goldman Sachs - Singapore
- Sinarmas Energy and Mining - Indonesia
- Altura Mining Limited, Indonesia
- IEA Clean Coal Centre - UK
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- GVK Power & Infra Limited - India
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Alfred C Toepfer International GmbH - Germany
- Mintek Dendrill Indonesia
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- Aboitiz Power Corporation - Philippines
- Ministry of Mines - Canada
- Sindya Power Generating Company Private Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Xindia Steels Limited - India
- White Energy Company Limited
- Chamber of Mines of South Africa
- Karaikal Port Pvt Ltd - India
- Coal and Oil Company - UAE
- Ceylon Electricity Board - Sri Lanka
- Merrill Lynch Commodities Europe
- Vedanta Resources Plc - India
- Malabar Cements Ltd - India
- Heidelberg Cement - Germany
- Meralco Power Generation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Finance - Indonesia
- Australian Commodity Traders Exchange
- European Bulk Services B.V. - Netherlands
- Tamil Nadu electricity Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- International Coal Ventures Pvt Ltd - India
- Mercator Lines Limited - India
- Cement Manufacturers Association - India
- Directorate General of MIneral and Coal - Indonesia
- Bhushan Steel Limited - India
- Essar Steel Hazira Ltd - India
- Thiess Contractors Indonesia
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- IHS Mccloskey Coal Group - USA
- Vizag Seaport Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Parry Sugars Refinery, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Metalloyd Limited - United Kingdom
- Toyota Tsusho Corporation, Japan
- GN Power Mariveles Coal Plant, Philippines
- Banpu Public Company Limited - Thailand
- Simpson Spence & Young - Indonesia
- ASAPP Information Group - India
- Indian Oil Corporation Limited
- London Commodity Brokers - England
- Gujarat Sidhee Cement - India
- ICICI Bank Limited - India
- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining Corp, Philippines
- Minerals Council of Australia
- Kobexindo Tractors - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Romanian Commodities Exchange
- Ind-Barath Power Infra Limited - India
- Electricity Generating Authority of Thailand
- GMR Energy Limited - India
- Holcim Trading Pte Ltd - Singapore
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- McConnell Dowell - Australia
- MS Steel International - UAE
- LBH Netherlands Bv - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Iligan Light & Power Inc, Philippines
- Star Paper Mills Limited - India
- Central Electricity Authority - India
- Wood Mackenzie - Singapore
- Madhucon Powers Ltd - India
- Ministry of Transport, Egypt
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- Samtan Co., Ltd - South Korea
- Kaltim Prima Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Jaiprakash Power Ventures ltd
- Indian Energy Exchange, India
- Interocean Group of Companies - India
- Leighton Contractors Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Bukit Makmur.PT - Indonesia
- Standard Chartered Bank - UAE
- The State Trading Corporation of India Ltd
- Riau Bara Harum - Indonesia
- Commonwealth Bank - Australia
- Baramulti Group, Indonesia
- Kumho Petrochemical, South Korea
- South Luzon Thermal Energy Corporation
- Bahari Cakrawala Sebuku - Indonesia
- Timah Investasi Mineral - Indoneisa
- CNBM International Corporation - China
- Larsen & Toubro Limited - India
- Binh Thuan Hamico - Vietnam
- Electricity Authority, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Marubeni Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- Manunggal Multi Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bhoruka Overseas - Indonesia
- Eastern Coal Council - USA
- Maheswari Brothers Coal Limited - India
- Bhatia International Limited - India
- Kartika Selabumi Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- PowerSource Philippines DevCo
- Bayan Resources Tbk. - Indonesia
- GAC Shipping (India) Pvt Ltd
- Videocon Industries ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- Salva Resources Pvt Ltd - India
- Renaissance Capital - South Africa
- Krishnapatnam Port Company Ltd. - India
- Therma Luzon, Inc, Philippines
- Borneo Indobara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- SMG Consultants - Indonesia
- Sojitz Corporation - Japan
- PTC India Limited - India
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- San Jose City I Power Corp, Philippines
- CIMB Investment Bank - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- Africa Commodities Group - South Africa
- Attock Cement Pakistan Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Mjunction Services Limited - India
- Economic Council, Georgia
- Makarim & Taira - Indonesia
- Lanco Infratech Ltd - India
- Orica Australia Pty. Ltd.
- New Zealand Coal & Carbon
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Global Business Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Thai Mozambique Logistica
- Neyveli Lignite Corporation Ltd, - India
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
- Siam City Cement - Thailand
- Grasim Industreis Ltd - India
- Indika Energy - Indonesia
- Oldendorff Carriers - Singapore
- Independent Power Producers Association of India
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Indogreen Group - Indonesia
- Barasentosa Lestari - Indonesia
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- Savvy Resources Ltd - HongKong
- Latin American Coal - Colombia
- Mercuria Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Carbofer General Trading SA - India
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement PLC, Thailand
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