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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, 25 December 11
THERMAL COAL PRICES GAINED UP TO 4.32 PERCENT
COALspot.com - globalCOAL index gained 4.32 percent to US$106.36 per ton in RBCT, benchmark for South Asia and West Europe markets, for the week end ...
Saturday, 24 December 11
CHINAS LEVEL OF GROWTH TO DETERMINE COURSE OF DRY BULK MARKET IN 2012 SAYS SHIPBROKER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In its latest report, shipbroker Intermodal attempted to find a silver lining in the tough year that was 2011, as well as what one could expect from ...
Friday, 23 December 11
SPOT PACIFIC CAPESIZE VESSELS HAVE COMMANDED HIGH PREMIUMS - FEARNLEYS
Handy
Rates in the Atlantic kept stable from last week, with a touch of negativity closer to the end. Less spot cargoes seen, and owners are ...
Friday, 23 December 11
CONTENTIOUS ISSUES IN CONTRACT RENEGOTIATION - THE JAKARTA POST
The government has been renegotiating mining contracts, especially those 30-40 years old, with almost all mining companies, including PT Freeport In ...
Friday, 23 December 11
LANCO JOINS HANDS WITH BUKIT ASAM FOR INDONESIAN POWER PROJECT
COALspot.com - PT Tambang Batubara Bukit Asam, Indonesia's state owned coal miner and Indian based Lanco Infratech Ltd plans to build steam power p ...
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- Wilmar Investment Holdings
- Altura Mining Limited, Indonesia
- Mercuria Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- Global Green Power PLC Corporation, Philippines
- Mercator Lines Limited - India
- Anglo American - United Kingdom
- Indika Energy - Indonesia
- White Energy Company Limited
- Central Electricity Authority - India
- Bukit Makmur.PT - Indonesia
- Gujarat Sidhee Cement - India
- Barasentosa Lestari - Indonesia
- Indonesian Coal Mining Association
- Attock Cement Pakistan Limited
- Leighton Contractors Pty Ltd - Australia
- Cement Manufacturers Association - India
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- CIMB Investment Bank - Malaysia
- South Luzon Thermal Energy Corporation
- Parliament of New Zealand
- Dalmia Cement Bharat India
- SMC Global Power, Philippines
- Siam City Cement PLC, Thailand
- Port Waratah Coal Services - Australia
- Karaikal Port Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Sree Jayajothi Cements Limited - India
- Siam City Cement - Thailand
- Malabar Cements Ltd - India
- Price Waterhouse Coopers - Russia
- IHS Mccloskey Coal Group - USA
- Orica Mining Services - Indonesia
- Bulk Trading Sa - Switzerland
- Tamil Nadu electricity Board
- Latin American Coal - Colombia
- Global Business Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- VISA Power Limited - India
- Power Finance Corporation Ltd., India
- Chamber of Mines of South Africa
- Timah Investasi Mineral - Indoneisa
- Eastern Energy - Thailand
- Interocean Group of Companies - India
- Sindya Power Generating Company Private Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bharathi Cement Corporation - India
- Posco Energy - South Korea
- Deloitte Consulting - India
- Baramulti Group, Indonesia
- Manunggal Multi Energi - Indonesia
- Meralco Power Generation, Philippines
- Simpson Spence & Young - Indonesia
- Pendopo Energi Batubara - Indonesia
- Indo Tambangraya Megah - Indonesia
- San Jose City I Power Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Sakthi Sugars Limited - India
- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- Sojitz Corporation - Japan
- PetroVietnam Power Coal Import and Supply Company
- Bukit Asam (Persero) Tbk - Indonesia
- Star Paper Mills Limited - India
- CNBM International Corporation - China
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Transport, Egypt
- Indian Energy Exchange, India
- London Commodity Brokers - England
- Goldman Sachs - Singapore
- Madhucon Powers Ltd - India
- LBH Netherlands Bv - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Medco Energi Mining Internasional
- Electricity Generating Authority of Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Riau Bara Harum - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Iligan Light & Power Inc, Philippines
- PTC India Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Heidelberg Cement - Germany
- Coal and Oil Company - UAE
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Kumho Petrochemical, South Korea
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Bayan Resources Tbk. - Indonesia
- Global Coal Blending Company Limited - Australia
- European Bulk Services B.V. - Netherlands
- Mintek Dendrill Indonesia
- Ministry of Mines - Canada
- Petron Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Videocon Industries ltd - India
- Kepco SPC Power Corporation, Philippines
- India Bulls Power Limited - India
- MS Steel International - UAE
- Trasteel International SA, Italy
- Semirara Mining Corp, Philippines
- Energy Development Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Xindia Steels Limited - India
- Minerals Council of Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Antam Resourcindo - Indonesia
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- Grasim Industreis Ltd - India
- Electricity Authority, New Zealand
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Kobexindo Tractors - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Therma Luzon, Inc, Philippines
- Orica Australia Pty. Ltd.
- Ambuja Cements Ltd - India
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Intertek Mineral Services - Indonesia
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- The State Trading Corporation of India Ltd
- Meenaskhi Energy Private Limited - India
- Metalloyd Limited - United Kingdom
- The University of Queensland
- Oldendorff Carriers - Singapore
- IEA Clean Coal Centre - UK
- SN Aboitiz Power Inc, Philippines
- Tata Chemicals Ltd - India
- Lanco Infratech Ltd - India
- ICICI Bank Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Sical Logistics Limited - India
- Aboitiz Power Corporation - Philippines
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- Coalindo Energy - Indonesia
- Thai Mozambique Logistica
- Miang Besar Coal Terminal - Indonesia
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
- Economic Council, Georgia
- ASAPP Information Group - India
- Essar Steel Hazira Ltd - India
- Australian Commodity Traders Exchange
- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- Thiess Contractors Indonesia
- Parry Sugars Refinery, India
- Asmin Koalindo Tuhup - Indonesia
- Bangladesh Power Developement Board
- Neyveli Lignite Corporation Ltd, - India
- Pipit Mutiara Jaya. PT, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bahari Cakrawala Sebuku - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- Australian Coal Association
- Marubeni Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Agrawal Coal Company - India
- Globalindo Alam Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Alfred C Toepfer International GmbH - Germany
- Carbofer General Trading SA - India
- Singapore Mercantile Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Gujarat Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- GN Power Mariveles Coal Plant, Philippines
- Romanian Commodities Exchange
- Borneo Indobara - Indonesia
- Merrill Lynch Commodities Europe
- The Treasury - Australian Government
- Bhoruka Overseas - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Formosa Plastics Group - Taiwan
- Krishnapatnam Port Company Ltd. - India
- AsiaOL BioFuels Corp., Philippines
- Mjunction Services Limited - India
- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
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