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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, 01 December 11
DRY BULK MARKET RISES TO NEW HEIGHTS ON RENEWED DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept on rising this week, with the industry’s benchmark, the Baltic Dry Index (BDI) climbing to 1,846 points on Wednes ...
Tuesday, 29 November 11
SOUTH AFRICAN COAL INTO CHINA, THE ACTIVITY WAS SLOW - BRS
Capesize
The Capesize market in Atlantic stayed pretty firm last week with transatlantic rounds being fixed in the high twenties. Sentiment was les ...
Tuesday, 29 November 11
GOLDEN GATE BRIDGE OF INDONESIA COLLAPSED AT KUKAR, EAST KALIMANTAN
COALspot.com - A suspension bridge in Indonesia’s east Kalimantan province over the Mahakam river collapsed on Saturday, killing at least elev ...
Tuesday, 29 November 11
BUKIT ASAM SCOUTS RP3 TRILLION PROFIT - INSIDER STORIES
The state-controlled coal miner PT Bukit Asam Tbk (PTBA) expects to post a Rp3 trillion net income this year, reaching its target which is 50% above ...
Tuesday, 29 November 11
DRY BULK MARKET BEGINS WEEK ON HIGHER NOTE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Contrary to what had been the case during the past few weeks, this one began on a high note for the dry bulk market, with the Capesize sector pullin ...
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- OPG Power Generation Pvt Ltd - India
- Kumho Petrochemical, South Korea
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- Rio Tinto Coal - Australia
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- MS Steel International - UAE
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- McConnell Dowell - Australia
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- Indian Oil Corporation Limited
- Parliament of New Zealand
- Merrill Lynch Commodities Europe
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- Offshore Bulk Terminal Pte Ltd, Singapore
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- Medco Energi Mining Internasional
- Trasteel International SA, Italy
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- Romanian Commodities Exchange
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- Coalindo Energy - Indonesia
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- Krishnapatnam Port Company Ltd. - India
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- London Commodity Brokers - England
- GN Power Mariveles Coal Plant, Philippines
- GMR Energy Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Marubeni Corporation - India
- Australian Coal Association
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- Thai Mozambique Logistica
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
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- Antam Resourcindo - Indonesia
- Coastal Gujarat Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Kartika Selabumi Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Intertek Mineral Services - Indonesia
- Electricity Authority, New Zealand
- Sindya Power Generating Company Private Ltd
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- Simpson Spence & Young - Indonesia
- GAC Shipping (India) Pvt Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Uttam Galva Steels Limited - India
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- Ministry of Mines - Canada
- Malabar Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Barasentosa Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Savvy Resources Ltd - HongKong
- IHS Mccloskey Coal Group - USA
- Jaiprakash Power Ventures ltd
- Indonesian Coal Mining Association
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- Salva Resources Pvt Ltd - India
- Mintek Dendrill Indonesia
- The Treasury - Australian Government
- Globalindo Alam Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Gujarat Mineral Development Corp Ltd - India
- Wilmar Investment Holdings
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indogreen Group - Indonesia
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- Mercuria Energy - Indonesia
- Deloitte Consulting - India
- Maharashtra Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- Grasim Industreis Ltd - India
- Siam City Cement PLC, Thailand
- Borneo Indobara - Indonesia
- Madhucon Powers Ltd - India
- Heidelberg Cement - Germany
- Karaikal Port Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Posco Energy - South Korea
- Bhatia International Limited - India
- Manunggal Multi Energi - Indonesia
- Minerals Council of Australia
- Semirara Mining Corp, Philippines
- ASAPP Information Group - India
- Ambuja Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sojitz Corporation - Japan
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- White Energy Company Limited
- Eastern Coal Council - USA
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- Electricity Generating Authority of Thailand
- Neyveli Lignite Corporation Ltd, - India
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
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- Dalmia Cement Bharat India
- Bukit Makmur.PT - Indonesia
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Renaissance Capital - South Africa
- Carbofer General Trading SA - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bulk Trading Sa - Switzerland
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Finance - Indonesia
- Sakthi Sugars Limited - India
- Billiton Holdings Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Global Green Power PLC Corporation, Philippines
- Gujarat Sidhee Cement - India
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- Vizag Seaport Private Limited - India
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- Energy Development Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wood Mackenzie - Singapore
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- Xindia Steels Limited - India
- San Jose City I Power Corp, Philippines
- Tamil Nadu electricity Board
- Ind-Barath Power Infra Limited - India
- Ministry of Transport, Egypt
- Baramulti Group, Indonesia
- Directorate Of Revenue Intelligence - India
- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
- Australian Commodity Traders Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Videocon Industries ltd - India
- TeaM Sual Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Commonwealth Bank - Australia
- Oldendorff Carriers - Singapore
- The University of Queensland
- Central Electricity Authority - India
- Mjunction Services Limited - India
- Sinarmas Energy and Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Singapore Mercantile Exchange
- Independent Power Producers Association of India
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- Siam City Cement - Thailand
- CIMB Investment Bank - Malaysia
- Iligan Light & Power Inc, Philippines
- Makarim & Taira - Indonesia
- Power Finance Corporation Ltd., India
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- Economic Council, Georgia
- Bharathi Cement Corporation - India
- Indika Energy - Indonesia
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- Anglo American - United Kingdom
- Bangladesh Power Developement Board
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