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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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Tuesday, 13 December 11
CAPESIZES AND PANAMAXES LEAD DRY BULK MARKET HIGHER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market inched closer to the 2,000 mark on Monday, with Panamaxes rebounding firmly and leading the gains. As a result, the industry&rsq ...
Sunday, 11 December 11
THE PANAMAX INDEX ENDED ON POSITIVE DIRECTION - VISTAAR
COALspot.com - The BDI and Cape index continued the upward trend this week also with BDI up by 3.00 pct closing at 1,922 points and Cape index up by ...
Saturday, 10 December 11
MAHAKAM RIVER RESUMES COAL TRANSPORTATION
COALspot.com - East Kalimantan local government has resumed limited coal barging through Mahakam River after two weeks of suspension following the c ...
Friday, 09 December 11
DRY BULK MARKET REBOUNDS ON HEALTHIER DEMAND OUTLOOK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market edged forward yesterday, at the highest rate of the past couple of weeks, as a result of stonger iron ore demand, backed by lowe ...
Thursday, 08 December 11
INDIA MAY SEE 41% ANNUAL GROWTH OF ITS COAL DEMAND DURING THE NEXT 5 YEARS - ICAP SHIPPING
India’s Ministry of Coal expects that India’s coal demand may face an annual 41% rise during the next 5 years, while its coal deficit is ...
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- Kartika Selabumi Mining - Indonesia
- Indonesian Coal Mining Association
- Bayan Resources Tbk. - Indonesia
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- IEA Clean Coal Centre - UK
- Wood Mackenzie - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Coal and Oil Company - UAE
- Interocean Group of Companies - India
- TeaM Sual Corporation - Philippines
- PTC India Limited - India
- Ministry of Transport, Egypt
- Baramulti Group, Indonesia
- Xindia Steels Limited - India
- Sojitz Corporation - Japan
- Sical Logistics Limited - India
- Power Finance Corporation Ltd., India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Malabar Cements Ltd - India
- Petron Corporation, Philippines
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- Agrawal Coal Company - India
- Aboitiz Power Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- Eastern Coal Council - USA
- Iligan Light & Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Krishnapatnam Port Company Ltd. - India
- Medco Energi Mining Internasional
- Rio Tinto Coal - Australia
- Riau Bara Harum - Indonesia
- Directorate Of Revenue Intelligence - India
- Eastern Energy - Thailand
- Kobexindo Tractors - Indoneisa
- Samtan Co., Ltd - South Korea
- Leighton Contractors Pty Ltd - Australia
- Australian Coal Association
- Banpu Public Company Limited - Thailand
- Bhushan Steel Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Cement Manufacturers Association - India
- Mintek Dendrill Indonesia
- Bukit Makmur.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Ind-Barath Power Infra Limited - India
- SMG Consultants - Indonesia
- Thai Mozambique Logistica
- Coalindo Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Indogreen Group - Indonesia
- Vizag Seaport Private Limited - India
- Price Waterhouse Coopers - Russia
- Chamber of Mines of South Africa
- PetroVietnam Power Coal Import and Supply Company
- Mercator Lines Limited - India
- Bulk Trading Sa - Switzerland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ceylon Electricity Board - Sri Lanka
- GMR Energy Limited - India
- Borneo Indobara - Indonesia
- Ministry of Finance - Indonesia
- Metalloyd Limited - United Kingdom
- India Bulls Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Bangladesh Power Developement Board
- Bharathi Cement Corporation - India
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- SN Aboitiz Power Inc, Philippines
- VISA Power Limited - India
- New Zealand Coal & Carbon
- Timah Investasi Mineral - Indoneisa
- Carbofer General Trading SA - India
- Energy Link Ltd, New Zealand
- Edison Trading Spa - Italy
- South Luzon Thermal Energy Corporation
- Orica Mining Services - Indonesia
- Port Waratah Coal Services - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Coastal Gujarat Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- White Energy Company Limited
- European Bulk Services B.V. - Netherlands
- Antam Resourcindo - Indonesia
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- Sakthi Sugars Limited - India
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- Karaikal Port Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Chettinad Cement Corporation Ltd - India
- Star Paper Mills Limited - India
- Meralco Power Generation, Philippines
- Videocon Industries ltd - India
- Heidelberg Cement - Germany
- Straits Asia Resources Limited - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Maharashtra Electricity Regulatory Commission - India
- AsiaOL BioFuels Corp., Philippines
- Kapuas Tunggal Persada - Indonesia
- Goldman Sachs - Singapore
- Essar Steel Hazira Ltd - India
- Central Electricity Authority - India
- Economic Council, Georgia
- Madhucon Powers Ltd - India
- Indika Energy - Indonesia
- Georgia Ports Authority, United States
- Sinarmas Energy and Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Globalindo Alam Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Sarangani Energy Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Lanco Infratech Ltd - India
- ASAPP Information Group - India
- Kideco Jaya Agung - Indonesia
- Wilmar Investment Holdings
- Grasim Industreis Ltd - India
- Simpson Spence & Young - Indonesia
- Makarim & Taira - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- Tamil Nadu electricity Board
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- The State Trading Corporation of India Ltd
- Larsen & Toubro Limited - India
- Indian Energy Exchange, India
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Mines - Canada
- Altura Mining Limited, Indonesia
- Latin American Coal - Colombia
- Standard Chartered Bank - UAE
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Pendopo Energi Batubara - Indonesia
- Africa Commodities Group - South Africa
- Singapore Mercantile Exchange
- The Treasury - Australian Government
- Maheswari Brothers Coal Limited - India
- Electricity Authority, New Zealand
- Global Coal Blending Company Limited - Australia
- Electricity Generating Authority of Thailand
- Holcim Trading Pte Ltd - Singapore
- Meenaskhi Energy Private Limited - India
- CNBM International Corporation - China
- Deloitte Consulting - India
- Vedanta Resources Plc - India
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- Minerals Council of Australia
- Parry Sugars Refinery, India
- ICICI Bank Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Uttam Galva Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- Commonwealth Bank - Australia
- Siam City Cement PLC, Thailand
- Kumho Petrochemical, South Korea
- Oldendorff Carriers - Singapore
- Kohat Cement Company Ltd. - Pakistan
- PowerSource Philippines DevCo
- Independent Power Producers Association of India
- Attock Cement Pakistan Limited
- Aditya Birla Group - India
- Mercuria Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Siam City Cement - Thailand
- Karbindo Abesyapradhi - Indoneisa
- London Commodity Brokers - England
- Energy Development Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Manunggal Multi Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- PNOC Exploration Corporation - Philippines
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