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