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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, 19 December 11
PLN WILL NO LONGER BUY COAL FROM TRADERS
COALspot.com - Indonesia's state electricity company PT Perusahaan Listrik Negara will no longer allow traders to become their suppliers, said, its ...
Saturday, 17 December 11
THE FREIGHT MARKET SEEMS TO HAVE ALMOST BOTTOMED OUT AND MAY REMAIN STEADY AT THESE LEVELS CAPT REDDY
COALspot.com - The BDI and Cape index closed lower this week with BDI closing at 1,888 points (down by 1.76 pct) and Cape index at 3,572 points (dow ...
Friday, 16 December 11
DRY BULK MARKET LOSES TRACK ON CAPESIZE LOSSES, SHIP FINANCING REMAINS TROUBLESOME - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market didn’t manage to sustain earlier gains, losing track yesterday, on reduced Capesize demand and persisting troubles in smal ...
Thursday, 15 December 11
BERAU SEES INDIA AS POTENTIAL MARKET FOR LOW-CALORIE COAL - THE JAKARTA POST
The Jakarta Post reported that, Publicly listed coal mining company PT Berau Coal Energy (BRAU), the fifth largest coal producer in Indonesia, sees ...
Thursday, 15 December 11
PANAMAX HARDLY AFFECTED BY THE RECENT FIRMER TENDENCY FOR THE BIG SISTERS - FEARNBULK
Handy
The rates are more or less the same as last week. Continent/US Gulf fixing at tick below USD 10k and Gulf/Continent levels at USD 25k. Trips ...
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- Cigading International Bulk Terminal - Indonesia
- Eastern Energy - Thailand
- Simpson Spence & Young - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Oldendorff Carriers - Singapore
- Gujarat Sidhee Cement - India
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- India Bulls Power Limited - India
- Madhucon Powers Ltd - India
- Mintek Dendrill Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kumho Petrochemical, South Korea
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- Therma Luzon, Inc, Philippines
- Coal and Oil Company - UAE
- Baramulti Group, Indonesia
- Globalindo Alam Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Binh Thuan Hamico - Vietnam
- Cement Manufacturers Association - India
- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- Parry Sugars Refinery, India
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- Mjunction Services Limited - India
- Orica Australia Pty. Ltd.
- Romanian Commodities Exchange
- Timah Investasi Mineral - Indoneisa
- McConnell Dowell - Australia
- Australian Coal Association
- Essar Steel Hazira Ltd - India
- Thiess Contractors Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- International Coal Ventures Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- VISA Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- The University of Queensland
- Riau Bara Harum - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Standard Chartered Bank - UAE
- ICICI Bank Limited - India
- Ambuja Cements Ltd - India
- Port Waratah Coal Services - Australia
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- ASAPP Information Group - India
- Antam Resourcindo - Indonesia
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- SMC Global Power, Philippines
- White Energy Company Limited
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Vedanta Resources Plc - India
- Sinarmas Energy and Mining - Indonesia
- Bharathi Cement Corporation - India
- Coalindo Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Trasteel International SA, Italy
- London Commodity Brokers - England
- SN Aboitiz Power Inc, Philippines
- Indian Energy Exchange, India
- Mercuria Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Price Waterhouse Coopers - Russia
- Marubeni Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Electricity Generating Authority of Thailand
- Global Coal Blending Company Limited - Australia
- Chettinad Cement Corporation Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- IHS Mccloskey Coal Group - USA
- Straits Asia Resources Limited - Singapore
- Energy Link Ltd, New Zealand
- Lanco Infratech Ltd - India
- Sical Logistics Limited - India
- Coastal Gujarat Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
- Larsen & Toubro Limited - India
- Jorong Barutama Greston.PT - Indonesia
- IEA Clean Coal Centre - UK
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- Neyveli Lignite Corporation Ltd, - India
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- Petron Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Rashtriya Ispat Nigam Limited - India
- Altura Mining Limited, Indonesia
- Agrawal Coal Company - India
- Indika Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Interocean Group of Companies - India
- GVK Power & Infra Limited - India
- Savvy Resources Ltd - HongKong
- Indonesian Coal Mining Association
- The Treasury - Australian Government
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- The State Trading Corporation of India Ltd
- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Xindia Steels Limited - India
- PowerSource Philippines DevCo
- South Luzon Thermal Energy Corporation
- Gujarat Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Attock Cement Pakistan Limited
- Directorate Of Revenue Intelligence - India
- Bayan Resources Tbk. - Indonesia
- Tata Chemicals Ltd - India
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- Electricity Authority, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Commonwealth Bank - Australia
- Ind-Barath Power Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Singapore Mercantile Exchange
- Aditya Birla Group - India
- Metalloyd Limited - United Kingdom
- Sarangani Energy Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Sakthi Sugars Limited - India
- SMG Consultants - Indonesia
- Goldman Sachs - Singapore
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Independent Power Producers Association of India
- Edison Trading Spa - Italy
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- Economic Council, Georgia
- Siam City Cement - Thailand
- Samtan Co., Ltd - South Korea
- Grasim Industreis Ltd - India
- Eastern Coal Council - USA
- Petrochimia International Co. Ltd.- Taiwan
- Global Business Power Corporation, Philippines
- CNBM International Corporation - China
- Ministry of Transport, Egypt
- Renaissance Capital - South Africa
- Heidelberg Cement - Germany
- Borneo Indobara - Indonesia
- Salva Resources Pvt Ltd - India
- Georgia Ports Authority, United States
- Pendopo Energi Batubara - Indonesia
- Parliament of New Zealand
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Bulk Trading Sa - Switzerland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Medco Energi Mining Internasional
- OPG Power Generation Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhatia International Limited - India
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Kartika Selabumi Mining - Indonesia
- Bhushan Steel Limited - India
- Ceylon Electricity Board - Sri Lanka
- Makarim & Taira - Indonesia
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- Latin American Coal - Colombia
- Karbindo Abesyapradhi - Indoneisa
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- Iligan Light & Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chamber of Mines of South Africa
- Wilmar Investment Holdings
- Kohat Cement Company Ltd. - Pakistan
- Thai Mozambique Logistica
- Meralco Power Generation, Philippines
- Planning Commission, India
- Deloitte Consulting - India
- Barasentosa Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Mercator Lines Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement PLC, Thailand
- Posco Energy - South Korea
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