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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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Monday, 06 August 12
3RD ANNUAL INDONESIA POWER
Press Release - 3rd Annual Indonesia Power is Indonesia’s premier power event, where commercial opportunities and new projects are identified. ...
Monday, 06 August 12
COAL EXPORTS COULD ADD $2B TO $6B ANNUALLY TO U.S. ECONOMY - HELLENIC SHIPPING
Business groups backing Pacific Northwest coal export proposals on Thursday lauded a new report that claims increased U.S. coal exports could bring ...
Sunday, 05 August 12
SUB-BIT INDONESIA COAL SWAPS ARE WAY UP
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for September 2012 delivery gain 1.36 percent on Friday (3 August 2012) closing W-o-W but gained& ...
Sunday, 05 August 12
INDONESIA'S ADARO TRIMS PRODUCTION FORECAST, CITES BAD ECONOMY - THE JAKARTA GLOBE
The Jakarta globe reported that, Adaro Energy, the country’s second-largest coal producer, has cut its annual production forecast to between ...
Sunday, 05 August 12
DRY BULK FREIGHT MARKET TO STAY WEAK NEXT COUPLE OF WEEKS - VISTAAR
COALspot.com - The freight market continued to soften further in all segments.
The BDI was down by 8.68 pct closing at 852 points. The cape index ...
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- Vedanta Resources Plc - India
- SN Aboitiz Power Inc, Philippines
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- Georgia Ports Authority, United States
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- Straits Asia Resources Limited - Singapore
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- Planning Commission, India
- Heidelberg Cement - Germany
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- Madhucon Powers Ltd - India
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- Attock Cement Pakistan Limited
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- Wilmar Investment Holdings
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- Miang Besar Coal Terminal - Indonesia
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- Malabar Cements Ltd - India
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- Siam City Cement PLC, Thailand
- Tamil Nadu electricity Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wood Mackenzie - Singapore
- Mercuria Energy - Indonesia
- The Treasury - Australian Government
- Agrawal Coal Company - India
- CIMB Investment Bank - Malaysia
- Goldman Sachs - Singapore
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- Lanco Infratech Ltd - India
- Central Electricity Authority - India
- Rashtriya Ispat Nigam Limited - India
- Power Finance Corporation Ltd., India
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- Bulk Trading Sa - Switzerland
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- IEA Clean Coal Centre - UK
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- Bukit Baiduri Energy - Indonesia
- Minerals Council of Australia
- Toyota Tsusho Corporation, Japan
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- Coal and Oil Company - UAE
- Banpu Public Company Limited - Thailand
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- Formosa Plastics Group - Taiwan
- GVK Power & Infra Limited - India
- San Jose City I Power Corp, Philippines
- SMC Global Power, Philippines
- Gujarat Electricity Regulatory Commission - India
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- Singapore Mercantile Exchange
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- PowerSource Philippines DevCo
- Global Business Power Corporation, Philippines
- New Zealand Coal & Carbon
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- Ministry of Finance - Indonesia
- White Energy Company Limited
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- Indian Oil Corporation Limited
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- Independent Power Producers Association of India
- Australian Coal Association
- Petron Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- South Luzon Thermal Energy Corporation
- Ceylon Electricity Board - Sri Lanka
- Indika Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Karaikal Port Pvt Ltd - India
- CNBM International Corporation - China
- Mintek Dendrill Indonesia
- Sree Jayajothi Cements Limited - India
- Energy Link Ltd, New Zealand
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- Globalindo Alam Lestari - Indonesia
- London Commodity Brokers - England
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Directorate Of Revenue Intelligence - India
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Parliament of New Zealand
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- ICICI Bank Limited - India
- Carbofer General Trading SA - India
- Sojitz Corporation - Japan
- Maheswari Brothers Coal Limited - India
- Intertek Mineral Services - Indonesia
- Chamber of Mines of South Africa
- GN Power Mariveles Coal Plant, Philippines
- PTC India Limited - India
- Meenaskhi Energy Private Limited - India
- Orica Australia Pty. Ltd.
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- Directorate General of MIneral and Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Savvy Resources Ltd - HongKong
- Bhatia International Limited - India
- Trasteel International SA, Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Economic Council, Georgia
- International Coal Ventures Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Barasentosa Lestari - Indonesia
- Xindia Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- GMR Energy Limited - India
- Mjunction Services Limited - India
- Siam City Cement - Thailand
- Ministry of Mines - Canada
- Antam Resourcindo - Indonesia
- Indian Energy Exchange, India
- Neyveli Lignite Corporation Ltd, - India
- Altura Mining Limited, Indonesia
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- Orica Mining Services - Indonesia
- Renaissance Capital - South Africa
- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
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