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