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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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- Metalloyd Limited - United Kingdom
- Timah Investasi Mineral - Indoneisa
- India Bulls Power Limited - India
- Barasentosa Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Uttam Galva Steels Limited - India
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Heidelberg Cement - Germany
- Posco Energy - South Korea
- Straits Asia Resources Limited - Singapore
- Orica Mining Services - Indonesia
- McConnell Dowell - Australia
- SMC Global Power, Philippines
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement - Thailand
- Videocon Industries ltd - India
- Ministry of Finance - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- PTC India Limited - India
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- Bhatia International Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- SMG Consultants - Indonesia
- Siam City Cement PLC, Thailand
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PowerSource Philippines DevCo
- Thiess Contractors Indonesia
- Global Green Power PLC Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Renaissance Capital - South Africa
- IEA Clean Coal Centre - UK
- Kohat Cement Company Ltd. - Pakistan
- GAC Shipping (India) Pvt Ltd
- Wood Mackenzie - Singapore
- TeaM Sual Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Therma Luzon, Inc, Philippines
- Edison Trading Spa - Italy
- Interocean Group of Companies - India
- Electricity Generating Authority of Thailand
- Alfred C Toepfer International GmbH - Germany
- Sarangani Energy Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Makarim & Taira - Indonesia
- Deloitte Consulting - India
- Jindal Steel & Power Ltd - India
- Toyota Tsusho Corporation, Japan
- European Bulk Services B.V. - Netherlands
- Georgia Ports Authority, United States
- Bharathi Cement Corporation - India
- Eastern Coal Council - USA
- Orica Australia Pty. Ltd.
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
- Samtan Co., Ltd - South Korea
- Intertek Mineral Services - Indonesia
- Parliament of New Zealand
- Mintek Dendrill Indonesia
- Mercator Lines Limited - India
- Aditya Birla Group - India
- Gujarat Sidhee Cement - India
- Sindya Power Generating Company Private Ltd
- MS Steel International - UAE
- New Zealand Coal & Carbon
- Kobexindo Tractors - Indoneisa
- Antam Resourcindo - Indonesia
- Miang Besar Coal Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Latin American Coal - Colombia
- Sojitz Corporation - Japan
- Planning Commission, India
- Indian Energy Exchange, India
- IHS Mccloskey Coal Group - USA
- Merrill Lynch Commodities Europe
- Central Java Power - Indonesia
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Sakthi Sugars Limited - India
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- Kapuas Tunggal Persada - Indonesia
- Coalindo Energy - Indonesia
- Sical Logistics Limited - India
- Kideco Jaya Agung - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Business Power Corporation, Philippines
- Star Paper Mills Limited - India
- Ministry of Mines - Canada
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- Directorate Of Revenue Intelligence - India
- Xindia Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Salva Resources Pvt Ltd - India
- CNBM International Corporation - China
- Kumho Petrochemical, South Korea
- Banpu Public Company Limited - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- Goldman Sachs - Singapore
- Essar Steel Hazira Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bank of Tokyo Mitsubishi UFJ Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- GN Power Mariveles Coal Plant, Philippines
- Port Waratah Coal Services - Australia
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Vizag Seaport Private Limited - India
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- Bhushan Steel Limited - India
- The University of Queensland
- Africa Commodities Group - South Africa
- Globalindo Alam Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Pendopo Energi Batubara - Indonesia
- International Coal Ventures Pvt Ltd - India
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Commodity Traders Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Singapore Mercantile Exchange
- CIMB Investment Bank - Malaysia
- Bukit Baiduri Energy - Indonesia
- Coal and Oil Company - UAE
- White Energy Company Limited
- Trasteel International SA, Italy
- Rashtriya Ispat Nigam Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Coastal Gujarat Power Limited - India
- Larsen & Toubro Limited - India
- Mjunction Services Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Cement Manufacturers Association - India
- Ambuja Cements Ltd - India
- Indonesian Coal Mining Association
- Bhoruka Overseas - Indonesia
- Formosa Plastics Group - Taiwan
- Malabar Cements Ltd - India
- The Treasury - Australian Government
- Rio Tinto Coal - Australia
- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
- Anglo American - United Kingdom
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- Karbindo Abesyapradhi - Indoneisa
- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- Riau Bara Harum - Indonesia
- Marubeni Corporation - India
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- Bangladesh Power Developement Board
- Minerals Council of Australia
- Indogreen Group - Indonesia
- Wilmar Investment Holdings
- Madhucon Powers Ltd - India
- Carbofer General Trading SA - India
- Medco Energi Mining Internasional
- Baramulti Group, Indonesia
- Commonwealth Bank - Australia
- Indika Energy - Indonesia
- Tata Chemicals Ltd - India
- Savvy Resources Ltd - HongKong
- Attock Cement Pakistan Limited
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- The State Trading Corporation of India Ltd
- GMR Energy Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Tamil Nadu electricity Board
- San Jose City I Power Corp, Philippines
- Parry Sugars Refinery, India
- Jorong Barutama Greston.PT - Indonesia
- VISA Power Limited - India
- ASAPP Information Group - India
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