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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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Thursday, 17 November 11
KOMIPO INVITES BIDS FOR 500K MT OF COAL
COALspot.com - Korea Midland Power Co. Ltd.(KOMIPO) is inviting bids for the supply of 500,000 Metric Tons of minimum 5700 kcal/kg coal of NAR bases ...
Thursday, 17 November 11
INDONESIAN GOVERNMENT PLANS TO ISSUE MORATORIUM ON COAL MINING LICENSE
COALspot.com - Energy and mineral resources ministry is plans to issue a moratorium on the issuance of coal mining licenses, after the anti-graft co ...
Wednesday, 16 November 11
KRISHNAPATNAM PORT BECOMES DEEPEST DRAFT PORT IN INDIA
COALspot.com - Krishnapatnam Port in its quest to be the best port in India has increased its draft to 17.5 meters, according to E-Mail statement fr ...
Wednesday, 16 November 11
CHINA'S INDONESIA COAL IMPORTS RISE IN OCTOBER
COALspot.com: Indonesia, the world largest coal exporter, shipped 31,162,688 MT of coal in October 2011.
China was a largest importer of Indonesi ...
Wednesday, 16 November 11
TAX OFFICE VOWS TO CRACK DOWN ON COAL MINERS - JP
The Jakarta Post reported that, the Finance Ministry’s Directorate General of Taxation says that it will strengthen its supervision of coal mi ...
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- Kartika Selabumi Mining - Indonesia
- Singapore Mercantile Exchange
- Miang Besar Coal Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Malabar Cements Ltd - India
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Intertek Mineral Services - Indonesia
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Latin American Coal - Colombia
- Videocon Industries ltd - India
- Anglo American - United Kingdom
- Eastern Coal Council - USA
- Kaltim Prima Coal - Indonesia
- McConnell Dowell - Australia
- IEA Clean Coal Centre - UK
- Bhushan Steel Limited - India
- CNBM International Corporation - China
- Energy Development Corp, Philippines
- Economic Council, Georgia
- Directorate Of Revenue Intelligence - India
- Madhucon Powers Ltd - India
- Coal and Oil Company - UAE
- Asmin Koalindo Tuhup - Indonesia
- Agrawal Coal Company - India
- Coastal Gujarat Power Limited - India
- Borneo Indobara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Lanco Infratech Ltd - India
- Port Waratah Coal Services - Australia
- Tamil Nadu electricity Board
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- PowerSource Philippines DevCo
- Sojitz Corporation - Japan
- Parry Sugars Refinery, India
- Semirara Mining Corp, Philippines
- San Jose City I Power Corp, Philippines
- Attock Cement Pakistan Limited
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- Commonwealth Bank - Australia
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- SMC Global Power, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ambuja Cements Ltd - India
- White Energy Company Limited
- Vijayanagar Sugar Pvt Ltd - India
- London Commodity Brokers - England
- Bukit Asam (Persero) Tbk - Indonesia
- VISA Power Limited - India
- Standard Chartered Bank - UAE
- PNOC Exploration Corporation - Philippines
- Indika Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- Central Java Power - Indonesia
- Posco Energy - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Kumho Petrochemical, South Korea
- Karaikal Port Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Bukit Baiduri Energy - Indonesia
- New Zealand Coal & Carbon
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Energy - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Mining Services - Indonesia
- Formosa Plastics Group - Taiwan
- Billiton Holdings Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- Sree Jayajothi Cements Limited - India
- Global Green Power PLC Corporation, Philippines
- Medco Energi Mining Internasional
- Bhatia International Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Vedanta Resources Plc - India
- Leighton Contractors Pty Ltd - Australia
- Interocean Group of Companies - India
- Goldman Sachs - Singapore
- Gujarat Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Ceylon Electricity Board - Sri Lanka
- Maheswari Brothers Coal Limited - India
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Africa Commodities Group - South Africa
- Indogreen Group - Indonesia
- Sakthi Sugars Limited - India
- Orica Australia Pty. Ltd.
- Neyveli Lignite Corporation Ltd, - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- Mercator Lines Limited - India
- Metalloyd Limited - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Thai Mozambique Logistica
- AsiaOL BioFuels Corp., Philippines
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Parliament of New Zealand
- Iligan Light & Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Dalmia Cement Bharat India
- The State Trading Corporation of India Ltd
- Planning Commission, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Sidhee Cement - India
- Merrill Lynch Commodities Europe
- Wood Mackenzie - Singapore
- Petron Corporation, Philippines
- Minerals Council of Australia
- Chamber of Mines of South Africa
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Australian Commodity Traders Exchange
- Sinarmas Energy and Mining - Indonesia
- Romanian Commodities Exchange
- Toyota Tsusho Corporation, Japan
- Aboitiz Power Corporation - Philippines
- Ministry of Mines - Canada
- Chettinad Cement Corporation Ltd - India
- Sical Logistics Limited - India
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- Rio Tinto Coal - Australia
- Kalimantan Lumbung Energi - Indonesia
- Baramulti Group, Indonesia
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Energy Link Ltd, New Zealand
- GVK Power & Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Jindal Steel & Power Ltd - India
- Makarim & Taira - Indonesia
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Holcim Trading Pte Ltd - Singapore
- Banpu Public Company Limited - Thailand
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- Bukit Makmur.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- MS Steel International - UAE
- Indonesian Coal Mining Association
- Ind-Barath Power Infra Limited - India
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- TeaM Sual Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Heidelberg Cement - Germany
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Mjunction Services Limited - India
- Coalindo Energy - Indonesia
- Mintek Dendrill Indonesia
- Bangladesh Power Developement Board
- Karbindo Abesyapradhi - Indoneisa
- ICICI Bank Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- OPG Power Generation Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Vizag Seaport Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- The University of Queensland
- Kobexindo Tractors - Indoneisa
- Essar Steel Hazira Ltd - India
- SMG Consultants - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bhoruka Overseas - Indonesia
- Siam City Cement PLC, Thailand
- European Bulk Services B.V. - Netherlands
- Xindia Steels Limited - India
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Siam City Cement - Thailand
- Ministry of Transport, Egypt
- Grasim Industreis Ltd - India
- Indo Tambangraya Megah - Indonesia
- Electricity Authority, New Zealand
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- Electricity Generating Authority of Thailand
- Meralco Power Generation, Philippines
- Trasteel International SA, Italy
- CIMB Investment Bank - Malaysia
- GMR Energy Limited - India
- Uttam Galva Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- Riau Bara Harum - Indonesia
- Indian Oil Corporation Limited
- International Coal Ventures Pvt Ltd - India
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- Meenaskhi Energy Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
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