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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, 15 December 11
DRY BULK RATES TO REMAIN AT CURRENT LEVELS FOR THE MOST PART IN THE COMING MONTHS SAYS BIMCO - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In its latest research note, BIMCO said that the Capesize Time Charter Average will remain at USD 20,000-30,000 per day but the tonnage oversupply w ...
Wednesday, 14 December 11
MINER TOBA BARA SEJAHTRA PLANS IPO IN 1ST HALF OF 2012 - THE JAKARTA GLOBE
The Jakarta Globe reported that, Coal miner Toba Bara Sejahtra is aiming high next year, hoping to capitalize on renewed bullish sentiment in the lo ...
Wednesday, 14 December 11
TIMAH PLANS TO BOOST ITS COAL PRODUCTION TO TWO MILLION TONS PER ANNUM - SOURCES
COALspot.com - Timah plans to boost its coal production to two million tons per annum. The company also expects to acquire coal concession with mini ...
Wednesday, 14 December 11
BORNEO RESOURCE INVESTMENTS LTD. FINALIZES ACQUISITION OF INTEGRA PRIMA
COALspot.com - Borneo Resource Investments Ltd., announced that it has finalized the acquisition of an additional 1,300 hectare coal mining concessi ...
Tuesday, 13 December 11
BERAU COAL SCOUTS US$1.61 BIO SALES - INSIDER STORIES
Insider Stories reported that, coal mining company PT Berau Coal Energy Tbk (BRAU), that is 85% owned by London-listed company Bumi Plc, estimates a ...
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- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Coal Council - USA
- Parliament of New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Altura Mining Limited, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Price Waterhouse Coopers - Russia
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Sindya Power Generating Company Private Ltd
- Bhatia International Limited - India
- TeaM Sual Corporation - Philippines
- Carbofer General Trading SA - India
- IHS Mccloskey Coal Group - USA
- Ambuja Cements Ltd - India
- India Bulls Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Tata Chemicals Ltd - India
- Power Finance Corporation Ltd., India
- Bukit Asam (Persero) Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- PTC India Limited - India
- Binh Thuan Hamico - Vietnam
- Chamber of Mines of South Africa
- Larsen & Toubro Limited - India
- Petron Corporation, Philippines
- ICICI Bank Limited - India
- Orica Mining Services - Indonesia
- Baramulti Group, Indonesia
- Global Green Power PLC Corporation, Philippines
- Energy Development Corp, Philippines
- GVK Power & Infra Limited - India
- Wilmar Investment Holdings
- Maheswari Brothers Coal Limited - India
- Videocon Industries ltd - India
- Antam Resourcindo - Indonesia
- Electricity Generating Authority of Thailand
- Coalindo Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Barasentosa Lestari - Indonesia
- Edison Trading Spa - Italy
- Pendopo Energi Batubara - Indonesia
- Siam City Cement - Thailand
- Medco Energi Mining Internasional
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
- CNBM International Corporation - China
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kalimantan Lumbung Energi - Indonesia
- Mercator Lines Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- Central Java Power - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Vedanta Resources Plc - India
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Salva Resources Pvt Ltd - India
- Singapore Mercantile Exchange
- Planning Commission, India
- Latin American Coal - Colombia
- Bayan Resources Tbk. - Indonesia
- Bangladesh Power Developement Board
- Malabar Cements Ltd - India
- Meralco Power Generation, Philippines
- Straits Asia Resources Limited - Singapore
- Simpson Spence & Young - Indonesia
- South Luzon Thermal Energy Corporation
- Kohat Cement Company Ltd. - Pakistan
- MS Steel International - UAE
- Orica Australia Pty. Ltd.
- Uttam Galva Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Samtan Co., Ltd - South Korea
- Ministry of Transport, Egypt
- Anglo American - United Kingdom
- Eastern Energy - Thailand
- Alfred C Toepfer International GmbH - Germany
- Xindia Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Vizag Seaport Private Limited - India
- PNOC Exploration Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Australian Coal Association
- ASAPP Information Group - India
- Parry Sugars Refinery, India
- Intertek Mineral Services - Indonesia
- Energy Link Ltd, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Star Paper Mills Limited - India
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- Siam City Cement PLC, Thailand
- London Commodity Brokers - England
- IEA Clean Coal Centre - UK
- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
- Metalloyd Limited - United Kingdom
- Madhucon Powers Ltd - India
- Renaissance Capital - South Africa
- PowerSource Philippines DevCo
- Sree Jayajothi Cements Limited - India
- Essar Steel Hazira Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Georgia Ports Authority, United States
- Lanco Infratech Ltd - India
- Gujarat Sidhee Cement - India
- Holcim Trading Pte Ltd - Singapore
- Ministry of Finance - Indonesia
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Sakthi Sugars Limited - India
- Kobexindo Tractors - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Interocean Group of Companies - India
- Coastal Gujarat Power Limited - India
- Ind-Barath Power Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Grasim Industreis Ltd - India
- Riau Bara Harum - Indonesia
- Indogreen Group - Indonesia
- Heidelberg Cement - Germany
- Bulk Trading Sa - Switzerland
- Indian Oil Corporation Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Port Waratah Coal Services - Australia
- Bharathi Cement Corporation - India
- Rio Tinto Coal - Australia
- The Treasury - Australian Government
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- GMR Energy Limited - India
- Standard Chartered Bank - UAE
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Dalmia Cement Bharat India
- Bhushan Steel Limited - India
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- San Jose City I Power Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Oldendorff Carriers - Singapore
- Bukit Baiduri Energy - Indonesia
- Agrawal Coal Company - India
- Australian Commodity Traders Exchange
- International Coal Ventures Pvt Ltd - India
- The University of Queensland
- Merrill Lynch Commodities Europe
- Central Electricity Authority - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- Cement Manufacturers Association - India
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- Trasteel International SA, Italy
- White Energy Company Limited
- Semirara Mining and Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Banpu Public Company Limited - Thailand
- Miang Besar Coal Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Posco Energy - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Marubeni Corporation - India
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- Bukit Makmur.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- McConnell Dowell - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indonesian Coal Mining Association
- Formosa Plastics Group - Taiwan
- Attock Cement Pakistan Limited
- Thiess Contractors Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Timah Investasi Mineral - Indoneisa
- European Bulk Services B.V. - Netherlands
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Independent Power Producers Association of India
- Deloitte Consulting - India
- VISA Power Limited - India
- Sical Logistics Limited - India
- Borneo Indobara - Indonesia
- Economic Council, Georgia
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