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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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Friday, 08 February 13
NORTH P&I CLUB WARNS OF LIQUEFACTION RISK FOR BAUXITE CARGOES
The ‘A’ rated 170 million GT North P&I club has warned shipowners carrying bauxite aluminium ore cargoes that they have the potentia ...
Thursday, 07 February 13
CHINA NDRC APPROVED 10 BILLION YUAN POWER GENERATION PROJECTS
NDRC of China currently announced that some of power grid and power station in Jiangxu, Sichuan and Anhui Province would be newly constructed or ext ...
Thursday, 07 February 13
CAPESIZE : MORE ACTIVE WEEK IN THE PACIFIC - FEARNLEYS AS
Handy
The Atlantic market remained stable with no significant movement in rates. Rates from USG to FEast were around USD 18k and Black Sea to Feast ...
Thursday, 07 February 13
WEAK STEEL MARKET MEANS IRON ORE RALLY LIKELY TO END SOON - FITCH
The sharp rebound in iron ore prices over the last couple of months will hurt margins at non-integrated steel producers in the first quarter of 2013 ...
Tuesday, 05 February 13
THE SHIPPING SECTOR IS " NAVIGATING IN STORMY WATERS" - PWC
The vulnerabilities of the global economy have been exposed and have more than played their part in making 2011 one of the worst years of shipping i ...
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- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Central Java Power - Indonesia
- Mintek Dendrill Indonesia
- The Treasury - Australian Government
- Coalindo Energy - Indonesia
- SMG Consultants - Indonesia
- Bayan Resources Tbk. - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Rio Tinto Coal - Australia
- ICICI Bank Limited - India
- Malabar Cements Ltd - India
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- Wood Mackenzie - Singapore
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Billiton Holdings Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Posco Energy - South Korea
- AsiaOL BioFuels Corp., Philippines
- Bhoruka Overseas - Indonesia
- Chettinad Cement Corporation Ltd - India
- Wilmar Investment Holdings
- Heidelberg Cement - Germany
- South Luzon Thermal Energy Corporation
- Ambuja Cements Ltd - India
- CNBM International Corporation - China
- Grasim Industreis Ltd - India
- Tata Chemicals Ltd - India
- White Energy Company Limited
- Sakthi Sugars Limited - India
- Orica Mining Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Trasteel International SA, Italy
- Attock Cement Pakistan Limited
- Thai Mozambique Logistica
- Star Paper Mills Limited - India
- Bhatia International Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Kepco SPC Power Corporation, Philippines
- GMR Energy Limited - India
- Kideco Jaya Agung - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- GVK Power & Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Videocon Industries ltd - India
- Africa Commodities Group - South Africa
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- Formosa Plastics Group - Taiwan
- Iligan Light & Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Larsen & Toubro Limited - India
- Krishnapatnam Port Company Ltd. - India
- Kobexindo Tractors - Indoneisa
- Ministry of Mines - Canada
- Toyota Tsusho Corporation, Japan
- VISA Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Energy Exchange, India
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- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Directorate Of Revenue Intelligence - India
- Riau Bara Harum - Indonesia
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- Power Finance Corporation Ltd., India
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- Parry Sugars Refinery, India
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
- Central Electricity Authority - India
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Commonwealth Bank - Australia
- Simpson Spence & Young - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- PTC India Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Australian Commodity Traders Exchange
- Renaissance Capital - South Africa
- European Bulk Services B.V. - Netherlands
- Economic Council, Georgia
- TNB Fuel Sdn Bhd - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- Bangladesh Power Developement Board
- Eastern Coal Council - USA
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Medco Energi Mining Internasional
- Orica Australia Pty. Ltd.
- Energy Link Ltd, New Zealand
- Baramulti Group, Indonesia
- Maheswari Brothers Coal Limited - India
- Coastal Gujarat Power Limited - India
- MS Steel International - UAE
- Indonesian Coal Mining Association
- Planning Commission, India
- Siam City Cement - Thailand
- Rashtriya Ispat Nigam Limited - India
- Pendopo Energi Batubara - Indonesia
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- Chamber of Mines of South Africa
- Samtan Co., Ltd - South Korea
- Sindya Power Generating Company Private Ltd
- Madhucon Powers Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- McConnell Dowell - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Coal Association
- Electricity Generating Authority of Thailand
- Essar Steel Hazira Ltd - India
- Binh Thuan Hamico - Vietnam
- Barasentosa Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Xindia Steels Limited - India
- Therma Luzon, Inc, Philippines
- Standard Chartered Bank - UAE
- Eastern Energy - Thailand
- IEA Clean Coal Centre - UK
- Vizag Seaport Private Limited - India
- Merrill Lynch Commodities Europe
- LBH Netherlands Bv - Netherlands
- Georgia Ports Authority, United States
- Anglo American - United Kingdom
- The University of Queensland
- Parliament of New Zealand
- Siam City Cement PLC, Thailand
- Kalimantan Lumbung Energi - Indonesia
- Sojitz Corporation - Japan
- Bulk Trading Sa - Switzerland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Dalmia Cement Bharat India
- Cement Manufacturers Association - India
- Mjunction Services Limited - India
- Leighton Contractors Pty Ltd - Australia
- Petron Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Ministry of Finance - Indonesia
- Tamil Nadu electricity Board
- Uttam Galva Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Altura Mining Limited, Indonesia
- Mercator Lines Limited - India
- Ministry of Transport, Egypt
- Gujarat Sidhee Cement - India
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Singapore Mercantile Exchange
- Global Business Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- CIMB Investment Bank - Malaysia
- Meralco Power Generation, Philippines
- Bhushan Steel Limited - India
- Timah Investasi Mineral - Indoneisa
- Straits Asia Resources Limited - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- PNOC Exploration Corporation - Philippines
- Deloitte Consulting - India
- Semirara Mining and Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- The State Trading Corporation of India Ltd
- GAC Shipping (India) Pvt Ltd
- Marubeni Corporation - India
- Makarim & Taira - Indonesia
- London Commodity Brokers - England
- Vedanta Resources Plc - India
- Ind-Barath Power Infra Limited - India
- Indian Oil Corporation Limited
- Agrawal Coal Company - India
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- Interocean Group of Companies - India
- Kapuas Tunggal Persada - Indonesia
- Electricity Authority, New Zealand
- Semirara Mining Corp, Philippines
- Romanian Commodities Exchange
- Jindal Steel & Power Ltd - India
- Sinarmas Energy and Mining - Indonesia
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