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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, 28 November 11
CITING CONTRACTS, MINING FIRMS ARE NOT PAYING ROYALTIES UNDER LAW - THE JAKARTA POST
The Jakarta Post reported that, when the 2009 Law on Minerals and Coal was endorsed, hopes that Indonesia could maximize its revenue from the minera ...
Monday, 28 November 11
NEW ENVIRONMENTAL MARINE REGULATIONS TO IMPACT SHIPPING IN 2012 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
August of next year will see some major changes for marine navigation. It’s when the North American ECA will come into force, introducing a 1% ...
Sunday, 27 November 11
INDIA'S KPCL TO IMPORT 50 MMT OF COAL FOR 10 YEARS
COALspot.com - Karnataka Power Corporation Limited (KPCL) will buy 5 million metric tonnes of coal annually for 10 years starting from 2015.
In a ...
Saturday, 26 November 11
INDIAN PORTS ARE BECOME COAL STOCKPILES..!!
COALspot.com - The Indian coal stocks and power tariff situation is the hot topic among the world coal producers as well as Indian coal importers.&n ...
Saturday, 26 November 11
THE FREIGHT MARKETS EXPECTED TO BE STEADY NEXT WEEK - VISTAAR
COALspot.com - The market were down probably with the sentiments of global financial markets and all segments were down.
The BDI was up down by 4 ...
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- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Globalindo Alam Lestari - Indonesia
- GMR Energy Limited - India
- Manunggal Multi Energi - Indonesia
- Standard Chartered Bank - UAE
- Economic Council, Georgia
- Indogreen Group - Indonesia
- Karaikal Port Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- The University of Queensland
- Kartika Selabumi Mining - Indonesia
- Energy Development Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Sakthi Sugars Limited - India
- Australian Coal Association
- Indonesian Coal Mining Association
- Bahari Cakrawala Sebuku - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Tamil Nadu electricity Board
- Planning Commission, India
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- Xindia Steels Limited - India
- Goldman Sachs - Singapore
- Eastern Energy - Thailand
- Straits Asia Resources Limited - Singapore
- Meenaskhi Energy Private Limited - India
- London Commodity Brokers - England
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Jindal Steel & Power Ltd - India
- Semirara Mining and Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- GN Power Mariveles Coal Plant, Philippines
- Power Finance Corporation Ltd., India
- Commonwealth Bank - Australia
- Jorong Barutama Greston.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- South Luzon Thermal Energy Corporation
- Savvy Resources Ltd - HongKong
- Bhoruka Overseas - Indonesia
- Dalmia Cement Bharat India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Port Waratah Coal Services - Australia
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Altura Mining Limited, Indonesia
- Directorate Of Revenue Intelligence - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Samtan Co., Ltd - South Korea
- Thiess Contractors Indonesia
- European Bulk Services B.V. - Netherlands
- Petron Corporation, Philippines
- Indian Oil Corporation Limited
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- Alfred C Toepfer International GmbH - Germany
- PTC India Limited - India
- The State Trading Corporation of India Ltd
- Kideco Jaya Agung - Indonesia
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- Coalindo Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Anglo American - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Aditya Birla Group - India
- Intertek Mineral Services - Indonesia
- Parliament of New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Orica Australia Pty. Ltd.
- Marubeni Corporation - India
- Chettinad Cement Corporation Ltd - India
- Sindya Power Generating Company Private Ltd
- Wilmar Investment Holdings
- Miang Besar Coal Terminal - Indonesia
- Lanco Infratech Ltd - India
- CIMB Investment Bank - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Maharashtra Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Agrawal Coal Company - India
- SMG Consultants - Indonesia
- Metalloyd Limited - United Kingdom
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Thai Mozambique Logistica
- Georgia Ports Authority, United States
- Indo Tambangraya Megah - Indonesia
- Banpu Public Company Limited - Thailand
- Borneo Indobara - Indonesia
- Edison Trading Spa - Italy
- Global Green Power PLC Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- Orica Mining Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bhushan Steel Limited - India
- Toyota Tsusho Corporation, Japan
- GAC Shipping (India) Pvt Ltd
- OPG Power Generation Pvt Ltd - India
- Bhatia International Limited - India
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Transport, Egypt
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- Attock Cement Pakistan Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The Treasury - Australian Government
- Madhucon Powers Ltd - India
- Coal and Oil Company - UAE
- Meralco Power Generation, Philippines
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- Price Waterhouse Coopers - Russia
- Energy Link Ltd, New Zealand
- Star Paper Mills Limited - India
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- Global Business Power Corporation, Philippines
- White Energy Company Limited
- GVK Power & Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Larsen & Toubro Limited - India
- Gujarat Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Indika Energy - Indonesia
- Central Electricity Authority - India
- IEA Clean Coal Centre - UK
- India Bulls Power Limited - India
- VISA Power Limited - India
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vizag Seaport Private Limited - India
- SMC Global Power, Philippines
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- Bukit Asam (Persero) Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- CNBM International Corporation - China
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Mercator Lines Limited - India
- Coastal Gujarat Power Limited - India
- Ambuja Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Chamber of Mines of South Africa
- Latin American Coal - Colombia
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- Kaltim Prima Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Cement Manufacturers Association - India
- Ceylon Electricity Board - Sri Lanka
- Singapore Mercantile Exchange
- Gujarat Sidhee Cement - India
- Bharathi Cement Corporation - India
- Siam City Cement - Thailand
- Bukit Makmur.PT - Indonesia
- Indian Energy Exchange, India
- Neyveli Lignite Corporation Ltd, - India
- ASAPP Information Group - India
- PNOC Exploration Corporation - Philippines
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- Videocon Industries ltd - India
- Binh Thuan Hamico - Vietnam
- MS Steel International - UAE
- Kobexindo Tractors - Indoneisa
- Formosa Plastics Group - Taiwan
- San Jose City I Power Corp, Philippines
- Romanian Commodities Exchange
- Holcim Trading Pte Ltd - Singapore
- Sree Jayajothi Cements Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rio Tinto Coal - Australia
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- Australian Commodity Traders Exchange
- Jaiprakash Power Ventures ltd
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