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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, 02 August 11
INDONESIA BECOMES SECOND LARGEST COKING COAL EXPORTER
COALspot.com - Indonesia, the largest thermal coal exporter in the world now becomes second biggest coking coal exporter to Japan. Indonesian’ ...
Tuesday, 02 August 11
5TH ASIA PACIFIC COAL TRADING & INVESTMENT OUTLOOK TO PRESENT LATEST TRENDS
Press Release - Global commodities prices have been staying high since the beginning of 2011, resulting in the “TENSION” in various coun ...
Tuesday, 02 August 11
REALM RESOURCES TO ACQUIRE A 75% INTEREST IN THE KATINGAN RIA COAL PROJECT
COALspot.com - Scoping study at the Katingan Ria Coal Project, Central Kalimantan demonstrates positive technical and financial potential for the pr ...
Tuesday, 02 August 11
COAL INDIA TO INVEST IN GOLDEN ENERGY MINES
COALspot.com - Golden Energy Mines, part of PT Dian Swastatika Sentosa Tbk’s, is still negotiating with several strategic investors to o ...
Sunday, 31 July 11
CAPES ARE TRADING BELOW $ 9500 PER DAY - VISTAAR
COALspot.com - The BDI further softened by 4.46 pct and closed at 1264 points which touched below 1300 points after long time. The Cape and Panamax ...
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- Borneo Indobara - Indonesia
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- CIMB Investment Bank - Malaysia
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- Metalloyd Limited - United Kingdom
- Ministry of Transport, Egypt
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- Goldman Sachs - Singapore
- Australian Coal Association
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- Edison Trading Spa - Italy
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- Singapore Mercantile Exchange
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- Australian Commodity Traders Exchange
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- Standard Chartered Bank - UAE
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- Merrill Lynch Commodities Europe
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- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- Electricity Authority, New Zealand
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- Directorate Of Revenue Intelligence - India
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- Africa Commodities Group - South Africa
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- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- SMC Global Power, Philippines
- London Commodity Brokers - England
- Jorong Barutama Greston.PT - Indonesia
- Eastern Coal Council - USA
- Coal and Oil Company - UAE
- Indian Oil Corporation Limited
- Meenaskhi Energy Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- PTC India Limited - India
- VISA Power Limited - India
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
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- Global Business Power Corporation, Philippines
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- Kideco Jaya Agung - Indonesia
- GMR Energy Limited - India
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- India Bulls Power Limited - India
- Petron Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Electricity Generating Authority of Thailand
- European Bulk Services B.V. - Netherlands
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meralco Power Generation, Philippines
- Gujarat Mineral Development Corp Ltd - India
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- Planning Commission, India
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- Thiess Contractors Indonesia
- SMG Consultants - Indonesia
- Mintek Dendrill Indonesia
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- Global Coal Blending Company Limited - Australia
- Latin American Coal - Colombia
- Indo Tambangraya Megah - Indonesia
- Jaiprakash Power Ventures ltd
- Formosa Plastics Group - Taiwan
- Intertek Mineral Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhatia International Limited - India
- Aboitiz Power Corporation - Philippines
- White Energy Company Limited
- Indogreen Group - Indonesia
- Orica Mining Services - Indonesia
- Essar Steel Hazira Ltd - India
- Makarim & Taira - Indonesia
- Central Electricity Authority - India
- Heidelberg Cement - Germany
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- Energy Link Ltd, New Zealand
- Coalindo Energy - Indonesia
- Wilmar Investment Holdings
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- Price Waterhouse Coopers - Russia
- The University of Queensland
- Xindia Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
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- Medco Energi Mining Internasional
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- Bukit Asam (Persero) Tbk - Indonesia
- Tamil Nadu electricity Board
- New Zealand Coal & Carbon
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- Bharathi Cement Corporation - India
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Parliament of New Zealand
- Power Finance Corporation Ltd., India
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
- Videocon Industries ltd - India
- Bhoruka Overseas - Indonesia
- Jindal Steel & Power Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Binh Thuan Hamico - Vietnam
- Deloitte Consulting - India
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- Toyota Tsusho Corporation, Japan
- Mjunction Services Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Semirara Mining and Power Corporation, Philippines
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- Directorate General of MIneral and Coal - Indonesia
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- Indian Energy Exchange, India
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