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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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Saturday, 07 July 12
EXCESS SUPPLY & WEAK DEMAND KEEP COAL PRICES LOW
COALspot.com - SGX AsiaClear OTC Coal Swaps for August and Q4 deliveries slipped slightly this week. SGX’s Indonesian sub-bituminous coal swap ...
Saturday, 07 July 12
BALTIC INDEX UP ON STRONG CAPE, PANAMAX RATES - VISTAAR
COALspot.com - This week all the segments were firmed up with BDI up by 15.23 pct (up by 153 points) closing at 1,157 points.
The cape index also ...
Saturday, 07 July 12
DRY BULK MARKET NOT ABLE TO FIND SOLID GROUND SAY EXPERTS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the second half of each, traditionally looking the most active one, especially in terms of newbuildings being delivered, it's highly unlikely ...
Thursday, 05 July 12
GOVT GETS READY FOR $1.8B SUIT - THE JAKARTA POST
The Jakarta Post, one of the leading Indonesian English new papers reported that, several ministries and the Attorney General’s Office held a ...
Thursday, 05 July 12
DRY BULK MARKET MOVES FURTHER UP THE HILL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept its growth momentum by the middle of the week, as the BDI (Baltic Dry Index) rose by an additional 40 points to 1,103 p ...
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- Mercuria Energy - Indonesia
- Chamber of Mines of South Africa
- PowerSource Philippines DevCo
- Sojitz Corporation - Japan
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
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- Bulk Trading Sa - Switzerland
- Sical Logistics Limited - India
- Economic Council, Georgia
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- Sinarmas Energy and Mining - Indonesia
- Gujarat Sidhee Cement - India
- Savvy Resources Ltd - HongKong
- Intertek Mineral Services - Indonesia
- Ambuja Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
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- Renaissance Capital - South Africa
- Indonesian Coal Mining Association
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- Goldman Sachs - Singapore
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- India Bulls Power Limited - India
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- White Energy Company Limited
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parliament of New Zealand
- European Bulk Services B.V. - Netherlands
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- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- Eastern Energy - Thailand
- LBH Netherlands Bv - Netherlands
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- Chettinad Cement Corporation Ltd - India
- Trasteel International SA, Italy
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- Medco Energi Mining Internasional
- Tamil Nadu electricity Board
- Heidelberg Cement - Germany
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- Wood Mackenzie - Singapore
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- Indian Energy Exchange, India
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- Sarangani Energy Corporation, Philippines
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- Standard Chartered Bank - UAE
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- Africa Commodities Group - South Africa
- Romanian Commodities Exchange
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
- International Coal Ventures Pvt Ltd - India
- Indika Energy - Indonesia
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- Metalloyd Limited - United Kingdom
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- Australian Commodity Traders Exchange
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- Karaikal Port Pvt Ltd - India
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- Global Green Power PLC Corporation, Philippines
- SMC Global Power, Philippines
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- GN Power Mariveles Coal Plant, Philippines
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- Coalindo Energy - Indonesia
- Agrawal Coal Company - India
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- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- Star Paper Mills Limited - India
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- Electricity Generating Authority of Thailand
- Ministry of Transport, Egypt
- Edison Trading Spa - Italy
- VISA Power Limited - India
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- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
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- Kohat Cement Company Ltd. - Pakistan
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- Wilmar Investment Holdings
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- Bangladesh Power Developement Board
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
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- Eastern Coal Council - USA
- Petron Corporation, Philippines
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- ASAPP Information Group - India
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Minerals Council of Australia
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- Price Waterhouse Coopers - Russia
- Cement Manufacturers Association - India
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- CIMB Investment Bank - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Posco Energy - South Korea
- IHS Mccloskey Coal Group - USA
- Global Business Power Corporation, Philippines
- Vedanta Resources Plc - India
- Aditya Birla Group - India
- Gujarat Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Maheswari Brothers Coal Limited - India
- Rio Tinto Coal - Australia
- Kartika Selabumi Mining - Indonesia
- The University of Queensland
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- Electricity Authority, New Zealand
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- McConnell Dowell - Australia
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- Australian Coal Association
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- Orica Mining Services - Indonesia
- Central Electricity Authority - India
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- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Oldendorff Carriers - Singapore
- Ministry of Mines - Canada
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- Bhoruka Overseas - Indonesia
- Timah Investasi Mineral - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bharathi Cement Corporation - India
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- Semirara Mining Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- PTC India Limited - India
- Bhatia International Limited - India
- Samtan Co., Ltd - South Korea
- Directorate Of Revenue Intelligence - India
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Altura Mining Limited, Indonesia
- Indian Oil Corporation Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- San Jose City I Power Corp, Philippines
- Thai Mozambique Logistica
- Ministry of Finance - Indonesia
- SMG Consultants - Indonesia
- Mintek Dendrill Indonesia
- Malabar Cements Ltd - India
- IEA Clean Coal Centre - UK
- Formosa Plastics Group - Taiwan
- Meralco Power Generation, Philippines
- Kideco Jaya Agung - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Central Java Power - Indonesia
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- Karbindo Abesyapradhi - Indoneisa
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- Merrill Lynch Commodities Europe
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- Planning Commission, India
- Tata Chemicals Ltd - India
- Sakthi Sugars Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Carbofer General Trading SA - India
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
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