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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, 08 December 11
HAREDA KRIDA GETS CONTRACT FROM BAYAN - INSIDER STORIES
Insider Stories reported that, coal miner PT Bayan Resources Tbk (BYAN), through its subsidiary dubbed PT Gunungbayan Pratamacoal (GPB), has signed ...
Thursday, 08 December 11
CAPESIZES LIFT DRY BULK MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Capesize vessels yesterday helped lift the dry bulk market which had been falling since the start of the week on lower cargo demand. As a result the ...
Wednesday, 07 December 11
ABM INVESTAMA EYES RP6.3 TRIO REVENUE - INSIDER STORIES
Insider Stories reported that, an energy integrated company PT ABM Investama Tbk is eyeing a 1.5 folds increase in revenue this year from Rp4. ...
Tuesday, 06 December 11
DRY BULK MARKET ENDS RALLY, STARTS WEEK WITH FALL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
After a series of increases which saw the dry bulk market’s benchmark, the Baltic Dry Index (BDI) increasing close to 1,900 points and rates o ...
Monday, 05 December 11
THE DECEMBER HBA FELL 11% FROM ITS PEAK AT US$127.05 PER TON IN FEBRUARY 2011
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia has sets the December 2011 coal reference price at US$ 112.67 per ton US$ 3.98 ...
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- Anglo American - United Kingdom
- Eastern Coal Council - USA
- Manunggal Multi Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Kideco Jaya Agung - Indonesia
- Minerals Council of Australia
- Ind-Barath Power Infra Limited - India
- Toyota Tsusho Corporation, Japan
- SMG Consultants - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IEA Clean Coal Centre - UK
- PetroVietnam Power Coal Import and Supply Company
- Thiess Contractors Indonesia
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- Global Business Power Corporation, Philippines
- Ministry of Transport, Egypt
- Maheswari Brothers Coal Limited - India
- Aditya Birla Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- Bukit Makmur.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tata Chemicals Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- Ministry of Finance - Indonesia
- GVK Power & Infra Limited - India
- Larsen & Toubro Limited - India
- Deloitte Consulting - India
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- San Jose City I Power Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- Trasteel International SA, Italy
- Sakthi Sugars Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Makarim & Taira - Indonesia
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- Meralco Power Generation, Philippines
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
- Coal and Oil Company - UAE
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- Mercuria Energy - Indonesia
- Australian Coal Association
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- Central Java Power - Indonesia
- Banpu Public Company Limited - Thailand
- PowerSource Philippines DevCo
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- Semirara Mining Corp, Philippines
- Therma Luzon, Inc, Philippines
- Mintek Dendrill Indonesia
- Coastal Gujarat Power Limited - India
- The Treasury - Australian Government
- Samtan Co., Ltd - South Korea
- Romanian Commodities Exchange
- Jaiprakash Power Ventures ltd
- Kepco SPC Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- Wood Mackenzie - Singapore
- McConnell Dowell - Australia
- CNBM International Corporation - China
- Madhucon Powers Ltd - India
- Agrawal Coal Company - India
- Sarangani Energy Corporation, Philippines
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- Bharathi Cement Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Riau Bara Harum - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Altura Mining Limited, Indonesia
- ICICI Bank Limited - India
- Bayan Resources Tbk. - Indonesia
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- Bulk Trading Sa - Switzerland
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- Thai Mozambique Logistica
- Straits Asia Resources Limited - Singapore
- Economic Council, Georgia
- TeaM Sual Corporation - Philippines
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- Australian Commodity Traders Exchange
- Orica Mining Services - Indonesia
- Vizag Seaport Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- Kartika Selabumi Mining - Indonesia
- Georgia Ports Authority, United States
- SMC Global Power, Philippines
- Merrill Lynch Commodities Europe
- Africa Commodities Group - South Africa
- Petron Corporation, Philippines
- Orica Australia Pty. Ltd.
- Bhatia International Limited - India
- Kobexindo Tractors - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- Ceylon Electricity Board - Sri Lanka
- Electricity Generating Authority of Thailand
- Directorate Of Revenue Intelligence - India
- Goldman Sachs - Singapore
- Coalindo Energy - Indonesia
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- Energy Development Corp, Philippines
- Wilmar Investment Holdings
- Karaikal Port Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- GMR Energy Limited - India
- Barasentosa Lestari - Indonesia
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Standard Chartered Bank - UAE
- Energy Link Ltd, New Zealand
- Sical Logistics Limited - India
- The University of Queensland
- Karbindo Abesyapradhi - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Gujarat Mineral Development Corp Ltd - India
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- GAC Shipping (India) Pvt Ltd
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- Power Finance Corporation Ltd., India
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Energy - Thailand
- Edison Trading Spa - Italy
- Leighton Contractors Pty Ltd - Australia
- Posco Energy - South Korea
- Xindia Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Vedanta Resources Plc - India
- Borneo Indobara - Indonesia
- Interocean Group of Companies - India
- Attock Cement Pakistan Limited
- Chettinad Cement Corporation Ltd - India
- Billiton Holdings Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
- Commonwealth Bank - Australia
- Parliament of New Zealand
- VISA Power Limited - India
- Iligan Light & Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- International Coal Ventures Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Globalindo Alam Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bhushan Steel Limited - India
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- ASAPP Information Group - India
- Rashtriya Ispat Nigam Limited - India
- The State Trading Corporation of India Ltd
- Star Paper Mills Limited - India
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Metalloyd Limited - United Kingdom
- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- Bahari Cakrawala Sebuku - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Planning Commission, India
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- Indian Energy Exchange, India
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