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Monday, 09 January 12
2012: WHAT WILL IT BRING FOR THE DRY BULK MARKET? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
 A further increase in dry bulk demand could be the remedy for most of the industry's oversupply issues, together of course with the high level of scrapping activity, as observed during the course of 2011. According to the latest BIMCO report on 2012, a large part of this increase in demand could come from India and its coal needs. The report said that "the year 2011 had barely started before a series of unforeseen events took place across the globe. Most of them affected dry bulk shipping negatively and the large Capesize vessels were particularly under pressure. Amongst the events were the flooding in Australia and South Africa, the triple disaster in Japan and the “Arab Spring” that also affected the supply of oil into Europe.
Half a year down the road, during which many Capesize vessels had earned less than any other dry bulk vessel size, the unexpected happened again. Strong demand for iron ore and coal from China and the recovering Japan, sourced from Brazil and Australia, ignited freight rates for Capesize vessels. A tight tonnage situation in the Atlantic basin combined with increased congestion in loading and discharging ports pushed average rates above USD 30,000 per day.
A far cry from the peaks of the super cycle, but surely an indication of the peak levels we have in sight for the near- to mid-term future as the supply side remains a considerable burden for the industry. The demand side is set to be relatively stable in 2012 although it’s likely to grow somewhat slower than in 2011 – at least in volume terms. Overall iron ore demand is likely to slow. Still, a lower world market price as compared to the domestic costs of mining it within China holds the key to provide positive demand shocks for this valuable steel ingredient. Growing demand for thermal coal from large Asian consumers is said to be a steady demand driver" said BIMCO.
In a separate research report on the outlook of the dry bulk industry, DVB Bank said that the current dry bulk fleet now stands at 8,877 vessels (585.1mio dwt). The average age of the fleet is about 12 years and 59.1% of the fleet is less than 10 years of age. In addition, the average age of vessels less than 10 years old is merely 2.8 years – a very young fleet. Similarly, the orderbook stands at 2,371 vessels (196.3mio dwt) which equates to 33.6% of the current fleet. In dwt terms, large Capes constitute the largest portion of the current fleet while Panamax size vessels have the largest Orderbook. ULBC size range is expanding substantially. So far, three of the 34 Vale ULBCs of 400K+ dwt have delivered.DVB Bank said in its analysis that if the remaining 31 vessels actually deliver, this will have a huge negative impact on all large Cape asset values as well as T/C rates and impact earnings of other Sub-Sectors as well.
Looking at deliveries, a total of 366 vessels of 28.3 million dwt are still headed towards delivery, according to figures up to November of 2011. These vessels represent 14.4% of the orderbook. Given that for the most part these weren't expected to be delivered within 2011, the researcher said that they will be rolled over to 2012. So, it draws the conclusion that "even Even with 40% delays due to slippage, postponement and cancellation, we are poised to cross the 100mio dwt mark this year. In 2012, some 1,431 vessels (121.6mio dwt) are scheduled for delivery, which is about 62% of the current orderbook" said DVB Bank.
In total the dry bulk cargo demand is forecast to rise to approximatly 3.7 billion tons this year. But, as DVB states, the level of the orderbook is too much for it to be absorbed without problems and downward pressure both on ship values and freight rates. "Although scrapping picked up in 2011 to 21.4mio dwt (334 vessels) as of November, this figure is merely 3.5% of the existing fleet" said DVB Bank. It concluded that the vessels which were ordered at the peak of the market back in 2007-2008 should add to distressed asset sales, as their owners won't be able to repay them without huge losses. In essence, the researcher said that the current slowdown will see many ship owners out of the market and bankrupt, due to cash flow problems, as at the moment, they don't have the necessary cash reserves to survive the downturn, like they did back in 2008.
BIMCO's advice towards dry bulk ship owners they should expect the unexpected, as has been the lesson learned. "Maybe even India will begin to influence the market as a significant importer. This would fulfil the prophecy and release a vast potential that has been simmering for a very long time and provide a much-needed second major demand driver. Supplementing China as the dominant factor in the market would create a more sustainable freight market going forward. However, this will not happen in just one year; moreover it appears destined to remain a long and dusty road for several years to come. An optimist would surely name India as the best thing that could happen to the dry bulk shipping industry. In the meantime volatile iron ore exports and strong demand for thermal coal is likely to characterise India’s contribution to the dry bulk markets" concluded the organization.
Source: Nikos Roussanoglou, Hellenic Shipping
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Tuesday, 27 September 11
A STRONG REBOUND FOR THE CAPE MARKET - BRS
A strong rebound for the Cape market, as cargoes continued to flow into the market and tonnage remained tight in the Atlantic, according to Barry Ro ...
Tuesday, 27 September 11
INTRACO SEALS US$25.3 MIO ORDER - INSIDER STORIES
Insider Stories reported that, Heavy equipment distributor PT Intraco Penta Tbk (INTA) obtained a US$25.3 million order on hand of heavy equipments ...
Sunday, 25 September 11
THE CHARTER RATES FOR INDONESIA TO INDIA WAS FIRM - VISTAAR
COALspot.com - The freight market moved up sharply with the cape Index up by 11 pct pushing the BDI by almost 6 pct and closing at 1,920 point ...
Saturday, 24 September 11
GOVT PLANS TO RENEGOTIATE ALL CONTRACTS INCLUDING FREEPORT - JP
The Jakarta Post reported that, the Energy and Mineral Resources Ministry has confirmed plans to renegotiate all mining contracts including those wi ...
Friday, 23 September 11
ICMA TO BUILD UPGRADE FACILITIES TO ANTICIPATE BAN ON LOW-GRADE COAL EXPORT BY 2014
COALspot.com - January to August of this year, Indonesia’s coal production had already reached 235 million tons. Earlier estimates had targete ...
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- Alfred C Toepfer International GmbH - Germany
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- Romanian Commodities Exchange
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- Indian Oil Corporation Limited
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- Power Finance Corporation Ltd., India
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- MS Steel International - UAE
- The State Trading Corporation of India Ltd
- Aditya Birla Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Business Power Corporation, Philippines
- Port Waratah Coal Services - Australia
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- Ministry of Mines - Canada
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- Wilmar Investment Holdings
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- Maheswari Brothers Coal Limited - India
- European Bulk Services B.V. - Netherlands
- Larsen & Toubro Limited - India
- Metalloyd Limited - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- AsiaOL BioFuels Corp., Philippines
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- Bulk Trading Sa - Switzerland
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- Samtan Co., Ltd - South Korea
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- McConnell Dowell - Australia
- IEA Clean Coal Centre - UK
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- Electricity Generating Authority of Thailand
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- Coal and Oil Company - UAE
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- PetroVietnam Power Coal Import and Supply Company
- Economic Council, Georgia
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- Energy Link Ltd, New Zealand
- Bhoruka Overseas - Indonesia
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- Bahari Cakrawala Sebuku - Indonesia
- New Zealand Coal & Carbon
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- Anglo American - United Kingdom
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- Orica Australia Pty. Ltd.
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- Kartika Selabumi Mining - Indonesia
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Parliament of New Zealand
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- Attock Cement Pakistan Limited
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- Parry Sugars Refinery, India
- Bukit Makmur.PT - Indonesia
- Semirara Mining Corp, Philippines
- Dalmia Cement Bharat India
- Global Coal Blending Company Limited - Australia
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- Mintek Dendrill Indonesia
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- White Energy Company Limited
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- Goldman Sachs - Singapore
- South Luzon Thermal Energy Corporation
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- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
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- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Meralco Power Generation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Indian Energy Exchange, India
- International Coal Ventures Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Rio Tinto Coal - Australia
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- Coastal Gujarat Power Limited - India
- Bharathi Cement Corporation - India
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
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- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
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- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
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- Australian Coal Association
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- Heidelberg Cement - Germany
- Planning Commission, India
- GAC Shipping (India) Pvt Ltd
- Siam City Cement PLC, Thailand
- GVK Power & Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- London Commodity Brokers - England
- Xindia Steels Limited - India
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