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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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Friday, 25 November 11
DISPUTE BETWEEN GIANT MINING FIRMS ENDS IN LAHAT - THE JAKARTA POST
The Jakarta Post reported that, prolonged dispute taking place in the South Sumatra regency of Lahat and involving two giant mining companies PT Buk ...
Friday, 25 November 11
DRY BULK MARKET LOSING STEAM, FAST - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
It’s been a week of falls for the dry bulk market this one, leaving ship owners with a sour taste in their mouths, as evidence of a recovery i ...
Thursday, 24 November 11
INDONESIA/INDIA SPMX TC AROUND $ 7/8K AND AROUND $ 12/13.00 PMTS ON VOYAGE BASIS - FEARNLEYS
Handy
Last week ended on a positive note in the Atlantic however the activity levels are somewhat reduced. Owners are asking in excess of USD ...
Thursday, 24 November 11
DRY BULK MARKET KEEPS LOSING STEAM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market was lower once again on Wednesday, with the industry’s benchmark, the Baltic Dry Index (BDI) ending the session down by 1. ...
Tuesday, 22 November 11
NTPC TO BUY 2 MMT OF IMPORTED COAL FOR ITS FOUR PLANTS
COALspot.com - NTPC Limited, incorporated in 1975 as a public sector company wholly owned by Government of India, the largest thermal power generati ...
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- Eastern Coal Council - USA
- Bayan Resources Tbk. - Indonesia
- Grasim Industreis Ltd - India
- Vedanta Resources Plc - India
- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- Indo Tambangraya Megah - Indonesia
- GVK Power & Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Tamil Nadu electricity Board
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- Global Green Power PLC Corporation, Philippines
- Australian Commodity Traders Exchange
- European Bulk Services B.V. - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- New Zealand Coal & Carbon
- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- Port Waratah Coal Services - Australia
- Semirara Mining and Power Corporation, Philippines
- Baramulti Group, Indonesia
- IEA Clean Coal Centre - UK
- Barasentosa Lestari - Indonesia
- Georgia Ports Authority, United States
- Attock Cement Pakistan Limited
- MS Steel International - UAE
- Bulk Trading Sa - Switzerland
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- Pipit Mutiara Jaya. PT, Indonesia
- Romanian Commodities Exchange
- Riau Bara Harum - Indonesia
- Indogreen Group - Indonesia
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Aboitiz Power Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Toyota Tsusho Corporation, Japan
- Sindya Power Generating Company Private Ltd
- Sarangani Energy Corporation, Philippines
- Mintek Dendrill Indonesia
- Energy Development Corp, Philippines
- Planning Commission, India
- Siam City Cement - Thailand
- LBH Netherlands Bv - Netherlands
- Interocean Group of Companies - India
- Anglo American - United Kingdom
- Kobexindo Tractors - Indoneisa
- Maheswari Brothers Coal Limited - India
- Electricity Authority, New Zealand
- Minerals Council of Australia
- Oldendorff Carriers - Singapore
- Wilmar Investment Holdings
- Bhatia International Limited - India
- OPG Power Generation Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- ASAPP Information Group - India
- Lanco Infratech Ltd - India
- Semirara Mining Corp, Philippines
- Ministry of Transport, Egypt
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Ministry of Mines - Canada
- Sree Jayajothi Cements Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Petron Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- International Coal Ventures Pvt Ltd - India
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- Kaltim Prima Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Simpson Spence & Young - Indonesia
- Manunggal Multi Energi - Indonesia
- The State Trading Corporation of India Ltd
- Carbofer General Trading SA - India
- Petrochimia International Co. Ltd.- Taiwan
- London Commodity Brokers - England
- Videocon Industries ltd - India
- Indian Oil Corporation Limited
- Sical Logistics Limited - India
- Mercuria Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Wood Mackenzie - Singapore
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercator Lines Limited - India
- South Luzon Thermal Energy Corporation
- Heidelberg Cement - Germany
- Economic Council, Georgia
- Global Business Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Parliament of New Zealand
- Miang Besar Coal Terminal - Indonesia
- Edison Trading Spa - Italy
- PowerSource Philippines DevCo
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- Gujarat Sidhee Cement - India
- Kartika Selabumi Mining - Indonesia
- PTC India Limited - India
- Orica Australia Pty. Ltd.
- CNBM International Corporation - China
- Jindal Steel & Power Ltd - India
- Straits Asia Resources Limited - Singapore
- Bukit Makmur.PT - Indonesia
- Metalloyd Limited - United Kingdom
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Kepco SPC Power Corporation, Philippines
- Parry Sugars Refinery, India
- Aditya Birla Group - India
- Kohat Cement Company Ltd. - Pakistan
- CIMB Investment Bank - Malaysia
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Singapore Mercantile Exchange
- Xindia Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- SMG Consultants - Indonesia
- Samtan Co., Ltd - South Korea
- Iligan Light & Power Inc, Philippines
- Indika Energy - Indonesia
- Orica Mining Services - Indonesia
- Thiess Contractors Indonesia
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Cement Manufacturers Association - India
- Borneo Indobara - Indonesia
- Star Paper Mills Limited - India
- The Treasury - Australian Government
- Coal and Oil Company - UAE
- India Bulls Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Alfred C Toepfer International GmbH - Germany
- Makarim & Taira - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bharathi Cement Corporation - India
- Altura Mining Limited, Indonesia
- Energy Link Ltd, New Zealand
- Power Finance Corporation Ltd., India
- Central Electricity Authority - India
- Bukit Baiduri Energy - Indonesia
- White Energy Company Limited
- Global Coal Blending Company Limited - Australia
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- Merrill Lynch Commodities Europe
- Deloitte Consulting - India
- Jaiprakash Power Ventures ltd
- GMR Energy Limited - India
- Malabar Cements Ltd - India
- Australian Coal Association
- Therma Luzon, Inc, Philippines
- Sakthi Sugars Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Trasteel International SA, Italy
- Leighton Contractors Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- VISA Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- Meenaskhi Energy Private Limited - India
- Banpu Public Company Limited - Thailand
- Rio Tinto Coal - Australia
- Africa Commodities Group - South Africa
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- SN Aboitiz Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Central Java Power - Indonesia
- Tata Chemicals Ltd - India
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Ambuja Cements Ltd - India
- Bhushan Steel Limited - India
- Standard Chartered Bank - UAE
- Eastern Energy - Thailand
- The University of Queensland
- San Jose City I Power Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coalindo Energy - Indonesia
- Renaissance Capital - South Africa
- Meralco Power Generation, Philippines
- Kumho Petrochemical, South Korea
- Vizag Seaport Private Limited - India
- Sojitz Corporation - Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- Chamber of Mines of South Africa
- Krishnapatnam Port Company Ltd. - India
- Kapuas Tunggal Persada - Indonesia
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
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