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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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Tuesday, 22 November 11
ABM INVESTAMA SETS IPO AT RP 3,750
Insider Stories reported that, Integrated energy company PT ABM Investama Tbk has determined the IPO price at Rp3,750 (approximately US$ 0.415) per ...
Tuesday, 22 November 11
A SURPRISINGLY STRONG WEEK FOR THE CAPES - BRS
Positive gains for most of the segments this week, the exception being the Handysizes. Overall the BDI ended the week at 1,895 points (+3.3% week-on ...
Tuesday, 22 November 11
APPETITE FOR DRY BULK VESSELS SLOWS DOWN AT THE START OF THE WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market was down at the beginning of the week, as demand for Capesize vessels was particularly low. The industry’s benchmark, the ...
Monday, 21 November 11
CAPESIZES DRIVE MARKET LOWER, ANALYSTS DIVIDED ON DRY BULK OUTLOOK IN THE LONG RUN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market ended the week on a sour note, with the industry’s benchmark heading downwards to 1,895 points, which represented a slight ...
Sunday, 20 November 11
THE FREIGHT MARKETS EXPECTED TO BE FIRM NEXT WEEK - VISTAAR
COALspot.com - The market continued to move up with all sectors gaining except for handy size.
The BDI was up by 3.26 pct and closed at 1895 poin ...
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- Star Paper Mills Limited - India
- Africa Commodities Group - South Africa
- Indonesian Coal Mining Association
- Heidelberg Cement - Germany
- Maheswari Brothers Coal Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Barasentosa Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Xindia Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Thai Mozambique Logistica
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dalmia Cement Bharat India
- Directorate General of MIneral and Coal - Indonesia
- Latin American Coal - Colombia
- Aboitiz Power Corporation - Philippines
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- Electricity Generating Authority of Thailand
- Iligan Light & Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Altura Mining Limited, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Lanco Infratech Ltd - India
- Uttam Galva Steels Limited - India
- Carbofer General Trading SA - India
- CIMB Investment Bank - Malaysia
- LBH Netherlands Bv - Netherlands
- Bangladesh Power Developement Board
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining and Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Deloitte Consulting - India
- Sakthi Sugars Limited - India
- Port Waratah Coal Services - Australia
- Makarim & Taira - Indonesia
- Electricity Authority, New Zealand
- Jaiprakash Power Ventures ltd
- Holcim Trading Pte Ltd - Singapore
- Madhucon Powers Ltd - India
- Orica Mining Services - Indonesia
- Banpu Public Company Limited - Thailand
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- Siam City Cement - Thailand
- Indian Oil Corporation Limited
- GVK Power & Infra Limited - India
- ASAPP Information Group - India
- Miang Besar Coal Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Pendopo Energi Batubara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kalimantan Lumbung Energi - Indonesia
- ICICI Bank Limited - India
- Bulk Trading Sa - Switzerland
- Sarangani Energy Corporation, Philippines
- CNBM International Corporation - China
- Global Coal Blending Company Limited - Australia
- Power Finance Corporation Ltd., India
- Economic Council, Georgia
- Energy Development Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- Wood Mackenzie - Singapore
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- Ministry of Mines - Canada
- Bahari Cakrawala Sebuku - Indonesia
- The University of Queensland
- Ceylon Electricity Board - Sri Lanka
- Chettinad Cement Corporation Ltd - India
- MS Steel International - UAE
- Siam City Cement PLC, Thailand
- IEA Clean Coal Centre - UK
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Therma Luzon, Inc, Philippines
- PTC India Limited - India
- Romanian Commodities Exchange
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petrochimia International Co. Ltd.- Taiwan
- International Coal Ventures Pvt Ltd - India
- Interocean Group of Companies - India
- Central Electricity Authority - India
- Simpson Spence & Young - Indonesia
- Ambuja Cements Ltd - India
- Aditya Birla Group - India
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- Commonwealth Bank - Australia
- Krishnapatnam Port Company Ltd. - India
- Bayan Resources Tbk. - Indonesia
- Indogreen Group - Indonesia
- Indo Tambangraya Megah - Indonesia
- Baramulti Group, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Edison Trading Spa - Italy
- Formosa Plastics Group - Taiwan
- Minerals Council of Australia
- Gujarat Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Trasteel International SA, Italy
- Manunggal Multi Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Singapore Mercantile Exchange
- Sindya Power Generating Company Private Ltd
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Orica Australia Pty. Ltd.
- Kepco SPC Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- Billiton Holdings Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Australian Coal Association
- Leighton Contractors Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Parry Sugars Refinery, India
- Anglo American - United Kingdom
- Attock Cement Pakistan Limited
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Kumho Petrochemical, South Korea
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- San Jose City I Power Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Sinarmas Energy and Mining - Indonesia
- Planning Commission, India
- Agrawal Coal Company - India
- Tamil Nadu electricity Board
- Semirara Mining Corp, Philippines
- Larsen & Toubro Limited - India
- London Commodity Brokers - England
- GAC Shipping (India) Pvt Ltd
- Bukit Makmur.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- Tata Chemicals Ltd - India
- PNOC Exploration Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Parliament of New Zealand
- Standard Chartered Bank - UAE
- Meralco Power Generation, Philippines
- The Treasury - Australian Government
- Kaltim Prima Coal - Indonesia
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Mercator Lines Limited - India
- Central Java Power - Indonesia
- SMC Global Power, Philippines
- Renaissance Capital - South Africa
- Bukit Baiduri Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Essar Steel Hazira Ltd - India
- Indian Energy Exchange, India
- South Luzon Thermal Energy Corporation
- Straits Asia Resources Limited - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Transport, Egypt
- Coalindo Energy - Indonesia
- Ministry of Finance - Indonesia
- Cement Manufacturers Association - India
- Independent Power Producers Association of India
- Kapuas Tunggal Persada - Indonesia
- Australian Commodity Traders Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Thiess Contractors Indonesia
- Bhushan Steel Limited - India
- Alfred C Toepfer International GmbH - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- Petron Corporation, Philippines
- Eastern Coal Council - USA
- Bhatia International Limited - India
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Malabar Cements Ltd - India
- Antam Resourcindo - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Chamber of Mines of South Africa
- AsiaOL BioFuels Corp., Philippines
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- India Bulls Power Limited - India
- White Energy Company Limited
- Indika Energy - Indonesia
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