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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, 18 November 11
MMTC SEEKS 1.365 MMT OF IMPORTED COAL
COALspot.com - India's MMTC, the largest trading company of India and a major trading company of Asia, has issued a term supply tender for 1.365Mt ...
Friday, 18 November 11
KPC, ARUTMIN OUTPUT REACHED 47.1 MIO TONS - INSIDER STORIES
PT Kaltim Prima Coal (KPC) and PT Arutmin Indonesia, reported 47.1 million tons of coal production in 9M 2011, according to Indiser Stories.
Insi ...
Friday, 18 November 11
THE ATLANTIC SUPRAMAX MARKET EXPERIENCED A STEADY AND FIRM TENDENCY
Handy
The Atlantic Supramax market experienced a steady and firm tendency this week. Especially the North Atlantic and Mediterranean position ...
Friday, 18 November 11
BERAU COAL 9M PROFIT SOARS 194.46% - INSIDER STORIES
Insider Stories reported that, PT Berau Coal Energy Tbk (BRAU), which is 84.7% owned by Bumi Plc, reported a 194.46% jump in net profit by end of Se ...
Thursday, 17 November 11
DRY BULK MARKET INCHES FORWARD AND INTO HIGHER GROUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market edged higher yesterday, on the back of stronger demand for Capesize vessels and general improvement of sentiment on most of the ...
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- Pipit Mutiara Jaya. PT, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Aboitiz Power Corporation - Philippines
- Carbofer General Trading SA - India
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Bhoruka Overseas - Indonesia
- ASAPP Information Group - India
- Meenaskhi Energy Private Limited - India
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Sindya Power Generating Company Private Ltd
- Timah Investasi Mineral - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Mintek Dendrill Indonesia
- Pendopo Energi Batubara - Indonesia
- Coalindo Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- Asmin Koalindo Tuhup - Indonesia
- Binh Thuan Hamico - Vietnam
- Chettinad Cement Corporation Ltd - India
- Indian Oil Corporation Limited
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Edison Trading Spa - Italy
- Interocean Group of Companies - India
- Ministry of Finance - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- New Zealand Coal & Carbon
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Salva Resources Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- MS Steel International - UAE
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wilmar Investment Holdings
- The University of Queensland
- Renaissance Capital - South Africa
- Samtan Co., Ltd - South Korea
- Tamil Nadu electricity Board
- Global Coal Blending Company Limited - Australia
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- Sakthi Sugars Limited - India
- Cigading International Bulk Terminal - Indonesia
- Indian Energy Exchange, India
- AsiaOL BioFuels Corp., Philippines
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- SMC Global Power, Philippines
- Latin American Coal - Colombia
- Uttam Galva Steels Limited - India
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Siam City Cement - Thailand
- Kaltim Prima Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- London Commodity Brokers - England
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- Vizag Seaport Private Limited - India
- VISA Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Intertek Mineral Services - Indonesia
- Lanco Infratech Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Krishnapatnam Port Company Ltd. - India
- Larsen & Toubro Limited - India
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Medco Energi Mining Internasional
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Kideco Jaya Agung - Indonesia
- Tata Chemicals Ltd - India
- PTC India Limited - India
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- Star Paper Mills Limited - India
- Sinarmas Energy and Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Meralco Power Generation, Philippines
- Global Green Power PLC Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Makarim & Taira - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- PowerSource Philippines DevCo
- Straits Asia Resources Limited - Singapore
- ICICI Bank Limited - India
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- Videocon Industries ltd - India
- Grasim Industreis Ltd - India
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Oldendorff Carriers - Singapore
- Singapore Mercantile Exchange
- Marubeni Corporation - India
- Agrawal Coal Company - India
- Petron Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- Coastal Gujarat Power Limited - India
- Simpson Spence & Young - Indonesia
- Indogreen Group - Indonesia
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- Bangladesh Power Developement Board
- Neyveli Lignite Corporation Ltd, - India
- Cement Manufacturers Association - India
- Electricity Authority, New Zealand
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- Mercator Lines Limited - India
- Energy Link Ltd, New Zealand
- Electricity Generating Authority of Thailand
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Kumho Petrochemical, South Korea
- Minerals Council of Australia
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- Trasteel International SA, Italy
- Parliament of New Zealand
- Bharathi Cement Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Sical Logistics Limited - India
- Holcim Trading Pte Ltd - Singapore
- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
- McConnell Dowell - Australia
- Directorate Of Revenue Intelligence - India
- Planning Commission, India
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- SMG Consultants - Indonesia
- Barasentosa Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- SN Aboitiz Power Inc, Philippines
- Independent Power Producers Association of India
- IHS Mccloskey Coal Group - USA
- Globalindo Alam Lestari - Indonesia
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Commonwealth Bank - Australia
- The State Trading Corporation of India Ltd
- Jaiprakash Power Ventures ltd
- Bhushan Steel Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bhatia International Limited - India
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- India Bulls Power Limited - India
- LBH Netherlands Bv - Netherlands
- Australian Commodity Traders Exchange
- CIMB Investment Bank - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Power Finance Corporation Ltd., India
- South Luzon Thermal Energy Corporation
- Vijayanagar Sugar Pvt Ltd - India
- Xindia Steels Limited - India
- Borneo Indobara - Indonesia
- Ambuja Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Kartika Selabumi Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Sidhee Cement - India
- Gujarat Mineral Development Corp Ltd - India
- Australian Coal Association
- Port Waratah Coal Services - Australia
- Standard Chartered Bank - UAE
- Goldman Sachs - Singapore
- Essar Steel Hazira Ltd - India
- White Energy Company Limited
- GMR Energy Limited - India
- Global Business Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Iligan Light & Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Mjunction Services Limited - India
- Indo Tambangraya Megah - Indonesia
- CNBM International Corporation - China
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- Indonesian Coal Mining Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
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