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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, 29 December 11
NEW VESSELS DELIVERED ARE FLOODING THE OCEANS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
As expected 2011 has been the year that newbuilding deliveries peaked and kept "flooding" the market, thus supressing freight rates and er ...
Tuesday, 27 December 11
MINERS MAKE CASE FOR RESUMING CONTRACT NEGOTIATIONS - THE JAKARTA POST
The Jakarta Post reported that, problems with the renegotiation of mining contracts in the country are far from over, as agreements on several cruci ...
Tuesday, 27 December 11
COAL SHIPMENT OF TIANJIN PORT REACHED 6.72 MLN TONNES IN NOVEMBER - STEEL HOME / HELLENIC SHIPPING
Tianjin port shipped 6.72 million tonnes of coal in November, decreasing 600,000 tonnes versus 7.32 million tonnes in October, while up 21.09% or 1. ...
Tuesday, 27 December 11
NEW CLAUSE PUBLISHED FOR SLOW STEAMING - BIMCO
Many owners and operators faced with high bunker prices are considering implementing slow steaming regimes to save fuel and to assist with capacity ...
Monday, 26 December 11
NEW EXPORT TAX PLAN GREETED WITH PRAISE AND CRITICISM - THE JAKARTA POST
The Jakarta Post, one of the Indonesia's leading english news paper reported that, both praise and criticism showered the government’s plan t ...
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- Thiess Contractors Indonesia
- Ind-Barath Power Infra Limited - India
- Tata Chemicals Ltd - India
- Indika Energy - Indonesia
- Oldendorff Carriers - Singapore
- Minerals Council of Australia
- Pendopo Energi Batubara - Indonesia
- Renaissance Capital - South Africa
- Karbindo Abesyapradhi - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- SN Aboitiz Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Port Waratah Coal Services - Australia
- GVK Power & Infra Limited - India
- Ambuja Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Singapore Mercantile Exchange
- Jindal Steel & Power Ltd - India
- Binh Thuan Hamico - Vietnam
- The State Trading Corporation of India Ltd
- Riau Bara Harum - Indonesia
- Bhushan Steel Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- Videocon Industries ltd - India
- ASAPP Information Group - India
- Mercuria Energy - Indonesia
- Sakthi Sugars Limited - India
- Formosa Plastics Group - Taiwan
- Directorate Of Revenue Intelligence - India
- Vedanta Resources Plc - India
- Planning Commission, India
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Coal Council - USA
- Kalimantan Lumbung Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Toyota Tsusho Corporation, Japan
- Georgia Ports Authority, United States
- Australian Coal Association
- PNOC Exploration Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- GMR Energy Limited - India
- London Commodity Brokers - England
- VISA Power Limited - India
- Karaikal Port Pvt Ltd - India
- IEA Clean Coal Centre - UK
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- Orica Mining Services - Indonesia
- Edison Trading Spa - Italy
- PetroVietnam Power Coal Import and Supply Company
- Coal and Oil Company - UAE
- Mintek Dendrill Indonesia
- Thai Mozambique Logistica
- Sojitz Corporation - Japan
- Ceylon Electricity Board - Sri Lanka
- Latin American Coal - Colombia
- Meenaskhi Energy Private Limited - India
- ICICI Bank Limited - India
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Energy Development Corp, Philippines
- Makarim & Taira - Indonesia
- Heidelberg Cement - Germany
- Intertek Mineral Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Chamber of Mines of South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Essar Steel Hazira Ltd - India
- Borneo Indobara - Indonesia
- Central Java Power - Indonesia
- Central Electricity Authority - India
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- Bhatia International Limited - India
- The University of Queensland
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- Salva Resources Pvt Ltd - India
- Attock Cement Pakistan Limited
- Globalindo Alam Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Madhucon Powers Ltd - India
- Bukit Makmur.PT - Indonesia
- Petron Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Economic Council, Georgia
- Anglo American - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Altura Mining Limited, Indonesia
- India Bulls Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Ministry of Mines - Canada
- McConnell Dowell - Australia
- Cement Manufacturers Association - India
- Australian Commodity Traders Exchange
- Parliament of New Zealand
- Kumho Petrochemical, South Korea
- Parry Sugars Refinery, India
- Standard Chartered Bank - UAE
- Sinarmas Energy and Mining - Indonesia
- Agrawal Coal Company - India
- Global Green Power PLC Corporation, Philippines
- Indian Energy Exchange, India
- Miang Besar Coal Terminal - Indonesia
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- Gujarat Mineral Development Corp Ltd - India
- Sical Logistics Limited - India
- Indogreen Group - Indonesia
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- South Luzon Thermal Energy Corporation
- Timah Investasi Mineral - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- White Energy Company Limited
- Kideco Jaya Agung - Indonesia
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- Wilmar Investment Holdings
- TeaM Sual Corporation - Philippines
- Electricity Generating Authority of Thailand
- Chettinad Cement Corporation Ltd - India
- Global Coal Blending Company Limited - Australia
- Billiton Holdings Pty Ltd - Australia
- Baramulti Group, Indonesia
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Grasim Industreis Ltd - India
- The Treasury - Australian Government
- Malabar Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Dalmia Cement Bharat India
- Sree Jayajothi Cements Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- SMG Consultants - Indonesia
- Simpson Spence & Young - Indonesia
- Lanco Infratech Ltd - India
- Ministry of Finance - Indonesia
- Meralco Power Generation, Philippines
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
- PTC India Limited - India
- Rio Tinto Coal - Australia
- Global Business Power Corporation, Philippines
- Posco Energy - South Korea
- Mercator Lines Limited - India
- Interocean Group of Companies - India
- Mjunction Services Limited - India
- Coastal Gujarat Power Limited - India
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- Trasteel International SA, Italy
- Bukit Baiduri Energy - Indonesia
- Wood Mackenzie - Singapore
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- Aditya Birla Group - India
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Vizag Seaport Private Limited - India
- Metalloyd Limited - United Kingdom
- Medco Energi Mining Internasional
- Kohat Cement Company Ltd. - Pakistan
- MS Steel International - UAE
- CNBM International Corporation - China
- New Zealand Coal & Carbon
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- Price Waterhouse Coopers - Russia
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Bayan Resources Tbk. - Indonesia
- Jaiprakash Power Ventures ltd
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Goldman Sachs - Singapore
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Alfred C Toepfer International GmbH - Germany
- Neyveli Lignite Corporation Ltd, - India
- Jorong Barutama Greston.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Aboitiz Power Corporation - Philippines
- PowerSource Philippines DevCo
- Power Finance Corporation Ltd., India
- Uttam Galva Steels Limited - India
- Savvy Resources Ltd - HongKong
- Bangladesh Power Developement Board
- GN Power Mariveles Coal Plant, Philippines
- Tamil Nadu electricity Board
- Directorate General of MIneral and Coal - Indonesia
- Eastern Energy - Thailand
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Marubeni Corporation - India
- Siam City Cement - Thailand
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