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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, 05 December 11
SGX LAUNCHED IHS MCCLOSKEY/XINHUA INFOLINK OTC CFR SOUTH CHINA COAL CONTRACT TODAY
COALspot.com - In order to meet the demand of the coal industry for an effective coal hedging tool with counterparty credit risk mitigation facility ...
Monday, 05 December 11
DRY BULK RATES LOOKING TO EXTEND GAINS THIS WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Capesize dry bulk carrier owners have had a great week, with rates rising for six straight sessions (including the end of the week before that). As ...
Sunday, 04 December 11
SUPRAMAX TRIPS VIA INDONESIA WERE REPORTED AROUND $ 7500 - 8000 PD
COALspot.com - The BDI and Cape index recovered this week. The BDI was up by 3.26 pct and Cape index saw a big jump and closed at 3409 points (up by ...
Saturday, 03 December 11
BORNEO TO SPEND US$600 MIO CAPEX - INSIDER STORIES
Insider Stories reported that, Coking coal miner PT Borneo Lumbung Energi & Metal Tbk (BORN) plans to spend US$600 million capital expenditure ( ...
Friday, 02 December 11
DRY BULK CARRIERS BACK IN THE SPOTLIGHT AS MARKET SPEEDS UP - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the tanker and container markets suffering dearly, it seems that the tide has once again turned in favor of the dry bulk carriers, despite over ...
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- Kumho Petrochemical, South Korea
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Marubeni Corporation - India
- The University of Queensland
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- PTC India Limited - India
- GVK Power & Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- Oldendorff Carriers - Singapore
- Barasentosa Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- Parry Sugars Refinery, India
- Baramulti Group, Indonesia
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- VISA Power Limited - India
- Bukit Baiduri Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- Directorate Of Revenue Intelligence - India
- Madhucon Powers Ltd - India
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
- AsiaOL BioFuels Corp., Philippines
- LBH Netherlands Bv - Netherlands
- Trasteel International SA, Italy
- The Treasury - Australian Government
- Rashtriya Ispat Nigam Limited - India
- Australian Commodity Traders Exchange
- Georgia Ports Authority, United States
- Commonwealth Bank - Australia
- Antam Resourcindo - Indonesia
- Mercuria Energy - Indonesia
- ICICI Bank Limited - India
- Price Waterhouse Coopers - Russia
- Tata Chemicals Ltd - India
- Globalindo Alam Lestari - Indonesia
- Coalindo Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cement Manufacturers Association - India
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Australian Coal Association
- Bhushan Steel Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Maharashtra Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Vedanta Resources Plc - India
- White Energy Company Limited
- MS Steel International - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ind-Barath Power Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- New Zealand Coal & Carbon
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Wilmar Investment Holdings
- Sindya Power Generating Company Private Ltd
- McConnell Dowell - Australia
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Romanian Commodities Exchange
- Mjunction Services Limited - India
- Ministry of Transport, Egypt
- Goldman Sachs - Singapore
- Indogreen Group - Indonesia
- Indo Tambangraya Megah - Indonesia
- Global Coal Blending Company Limited - Australia
- Siam City Cement PLC, Thailand
- Attock Cement Pakistan Limited
- Samtan Co., Ltd - South Korea
- Billiton Holdings Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Parliament of New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Intertek Mineral Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Dalmia Cement Bharat India
- Indian Oil Corporation Limited
- Deloitte Consulting - India
- Rio Tinto Coal - Australia
- Xindia Steels Limited - India
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- Uttam Galva Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- Mercator Lines Limited - India
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Central Java Power - Indonesia
- Merrill Lynch Commodities Europe
- London Commodity Brokers - England
- Eastern Coal Council - USA
- Economic Council, Georgia
- Ambuja Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Makarim & Taira - Indonesia
- Lanco Infratech Ltd - India
- Bharathi Cement Corporation - India
- Indika Energy - Indonesia
- Interocean Group of Companies - India
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Borneo Indobara - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Vizag Seaport Private Limited - India
- Central Electricity Authority - India
- Coal and Oil Company - UAE
- Meralco Power Generation, Philippines
- Latin American Coal - Colombia
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- SMC Global Power, Philippines
- Anglo American - United Kingdom
- European Bulk Services B.V. - Netherlands
- Bukit Makmur.PT - Indonesia
- Minerals Council of Australia
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- Coastal Gujarat Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Aditya Birla Group - India
- IEA Clean Coal Centre - UK
- Bhoruka Overseas - Indonesia
- Salva Resources Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Orica Australia Pty. Ltd.
- CNBM International Corporation - China
- Medco Energi Mining Internasional
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bahari Cakrawala Sebuku - Indonesia
- Jindal Steel & Power Ltd - India
- Carbofer General Trading SA - India
- Gujarat Mineral Development Corp Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Petron Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Formosa Plastics Group - Taiwan
- Kideco Jaya Agung - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- IHS Mccloskey Coal Group - USA
- Karaikal Port Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Pendopo Energi Batubara - Indonesia
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Mining Services - Indonesia
- Singapore Mercantile Exchange
- Essar Steel Hazira Ltd - India
- Power Finance Corporation Ltd., India
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Sical Logistics Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Mines - Canada
- Indian Energy Exchange, India
- Electricity Authority, New Zealand
- Planning Commission, India
- Krishnapatnam Port Company Ltd. - India
- Toyota Tsusho Corporation, Japan
- Kapuas Tunggal Persada - Indonesia
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- Jaiprakash Power Ventures ltd
- Altura Mining Limited, Indonesia
- Larsen & Toubro Limited - India
- Alfred C Toepfer International GmbH - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Thai Mozambique Logistica
- Vijayanagar Sugar Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- The State Trading Corporation of India Ltd
- Malabar Cements Ltd - India
- Grasim Industreis Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Thiess Contractors Indonesia
- Videocon Industries ltd - India
- Port Waratah Coal Services - Australia
- India Bulls Power Limited - India
- Gujarat Sidhee Cement - India
- Star Paper Mills Limited - India
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