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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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Thursday, 08 December 11
HAREDA KRIDA GETS CONTRACT FROM BAYAN - INSIDER STORIES
Insider Stories reported that, coal miner PT Bayan Resources Tbk (BYAN), through its subsidiary dubbed PT Gunungbayan Pratamacoal (GPB), has signed ...
Thursday, 08 December 11
CAPESIZES LIFT DRY BULK MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Capesize vessels yesterday helped lift the dry bulk market which had been falling since the start of the week on lower cargo demand. As a result the ...
Wednesday, 07 December 11
ABM INVESTAMA EYES RP6.3 TRIO REVENUE - INSIDER STORIES
Insider Stories reported that, an energy integrated company PT ABM Investama Tbk is eyeing a 1.5 folds increase in revenue this year from Rp4. ...
Tuesday, 06 December 11
DRY BULK MARKET ENDS RALLY, STARTS WEEK WITH FALL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
After a series of increases which saw the dry bulk market’s benchmark, the Baltic Dry Index (BDI) increasing close to 1,900 points and rates o ...
Monday, 05 December 11
THE DECEMBER HBA FELL 11% FROM ITS PEAK AT US$127.05 PER TON IN FEBRUARY 2011
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia has sets the December 2011 coal reference price at US$ 112.67 per ton US$ 3.98 ...
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- McConnell Dowell - Australia
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- Bharathi Cement Corporation - India
- SMG Consultants - Indonesia
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- Planning Commission, India
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- Trasteel International SA, Italy
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- Siam City Cement PLC, Thailand
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- Commonwealth Bank - Australia
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- OPG Power Generation Pvt Ltd - India
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- Chamber of Mines of South Africa
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- Grasim Industreis Ltd - India
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Antam Resourcindo - Indonesia
- Indo Tambangraya Megah - Indonesia
- Deloitte Consulting - India
- Kaltim Prima Coal - Indonesia
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- Coal and Oil Company - UAE
- Interocean Group of Companies - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Minerals Council of Australia
- Electricity Authority, New Zealand
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Barasentosa Lestari - Indonesia
- Star Paper Mills Limited - India
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- South Luzon Thermal Energy Corporation
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- PTC India Limited - India
- Bangladesh Power Developement Board
- Heidelberg Cement - Germany
- Indian Oil Corporation Limited
- Central Java Power - Indonesia
- Indonesian Coal Mining Association
- Global Coal Blending Company Limited - Australia
- PowerSource Philippines DevCo
- Makarim & Taira - Indonesia
- European Bulk Services B.V. - Netherlands
- Wilmar Investment Holdings
- Intertek Mineral Services - Indonesia
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
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- Lanco Infratech Ltd - India
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- Sojitz Corporation - Japan
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- International Coal Ventures Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
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- Parliament of New Zealand
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- Energy Link Ltd, New Zealand
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- Directorate General of MIneral and Coal - Indonesia
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- Anglo American - United Kingdom
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- TeaM Sual Corporation - Philippines
- CNBM International Corporation - China
- Medco Energi Mining Internasional
- Therma Luzon, Inc, Philippines
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mjunction Services Limited - India
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- New Zealand Coal & Carbon
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- Formosa Plastics Group - Taiwan
- Ministry of Transport, Egypt
- Indika Energy - Indonesia
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- Kepco SPC Power Corporation, Philippines
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- Rio Tinto Coal - Australia
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- Romanian Commodities Exchange
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- Semirara Mining and Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- Ministry of Finance - Indonesia
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- The University of Queensland
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- The State Trading Corporation of India Ltd
- Orica Mining Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Posco Energy - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Coal Council - USA
- CIMB Investment Bank - Malaysia
- The Treasury - Australian Government
- Rashtriya Ispat Nigam Limited - India
- Carbofer General Trading SA - India
- Cigading International Bulk Terminal - Indonesia
- Latin American Coal - Colombia
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- Eastern Energy - Thailand
- Power Finance Corporation Ltd., India
- Karaikal Port Pvt Ltd - India
- Petron Corporation, Philippines
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
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- Oldendorff Carriers - Singapore
- Billiton Holdings Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- Agrawal Coal Company - India
- Economic Council, Georgia
- Renaissance Capital - South Africa
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
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