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