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Friday, 23 September 11
RECORD RECYCLING ACTIVITY STIRS OPTIMISM IN DRY BULK SAYS BIMCOS ANALYSIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
 As expected at the start of the year, dry bulk ship owners were expected to flock scrapyards around the world, in order to take advantage of attractive scrap prices and help alleviate tonnage oversupply pressures, already in place since the last months of 2010. With 2011 also looking to be another record-breaking year in terms of new building deliveries, scrapping of older vessels was crucial to the industry’s recovery. Well, after nine months, it seems that these efforts have paid off, with the dry bulk market staging a superb comeback since late summer.
According to BIMCO’s latest analysis, in absolute numbers, 2011 is expected to become the new no1 in terms of dry bulk tonnage leaving the fleet to be recycled. “On On course for more than 20 million DWT to be demolished, with the potential of reaching 25 million if owners continue to be attracted by the relatively high demolition rates and freight rates fail to improve significantly through the remainder of the year.
Chief Shipping analyst at BIMCO, Peter Sand says: “The huge amount of tonnage leaving the fleet for recycling is very positive news for the dry bulk market. As 2011 is going to provide the largest inflow of new ships ever, this counterbalancing effort by ship owners is softening the current imbalance between supply and demand as fleet growth will be tempered”.
The previous demolition record was set in 1986 when 12.9 million DWT was demo-lished. At that time the dry bulk fleet was comprised of just 197.2 million DWT, bringing the annual demolition rate to 6.5%. Should 2011 bring around the same annual demolition rate relatively, 35 million DWT would have to be recycled.
The primary driver behind this development is the fact that earnings have been close to OPEX-levels for most of the year. Combined with a strong inflow of new tonnage this has led to a strong surge in demolitions of older tonnage” said Mr. Sand.
BIMCO’s analysis continues: “The fleet growth rate in the Capesize segment has so far been tempered by 4.4% due to demolition, with the potential of reaching as much as 6.6% for the full year. This offsets the fleet growth to a large extent, since the absence of any demolition activity during 2011 would have resulted in the Capesize fleet growing by astonishing 20%. Massive as this figure may sound, the Capesize fleet grew by 23% last year and 18.5% in 2009. If the full potential of demolition of the Capesize fleet in 2011 should materialize, that would equal another 4.6 million DWT to be demolished. In order words it would require the 28 remaining Capesize vessels that are built in 1985 or before to exit the fleet.
The demolition activity has primarily involved Capesize vessels. 55% of the recycled DWT in 2011 represented Capesize vessels. This compares to the previous 10 years average at just 27% of total dry bulk demolition. As the Capesize segment has already seen inflow of new tonnage in excess of 27 million DWT (153 vessels), the decision to take a vessel out of the commercial service is helping to cushion the impact from significant oversupply which has already left deep scars in terms of very poor earnings. Average spot earnings for a 10 years old Capesize vessel in 2011 have been just USD 8,296 per day. This is the poorest result on record. Last year such a vessel earned USD 30,587 per day on average.
This means that, if you have so far traded your Capesize vessel exclusively in the spot market during 2011, earnings would have covered only daily running costs, regardless of the composition of your Capesize fleet (new/old, debt-free/indebted). This may be one of the most important factors behind the booming demolition activity as massive inflow of new tonnage doesn’t encourage higher demolition activity alone.
Daily running cost on a Capesize vessel today is around USD 8,000 per day excluding capital costs and depreciations. If you include the above mentioned costs in the earnings-equation the picture looks quite different and it really spells out the chal-lenges facing owners. If your new built and externally financed Capesize is bought at top dollar at the peak of the market (USD 95 million) using 80% debt at 5% p.a. you will need just above USD 30,000 per day to break-even with the vessel on a stand-alone basis. At the other end of the scale the same calculation equals a break-even rate at USD 19,000 per day if you invest in a 5 year old second hand vessel today at USD 39 million.
Owners of “V Europe” have just sold the vessel for USD 10 million to be demolished at a Bangladeshi facility. The vessel that was beached on August 30 is amongst the latest in a very steady stream of dry bulkers to be withdrawn from service. The 1982-built, 139,496 DWT vessel is the 58th in the line of Capesize bulk carriers, under-scoring the strong flow of vessels satisfying a very solid demand for scrap metal in the demolition country.
The healthy demand for scrap steel is visible from the high ldt-prices offered. “V Europe” went to the breakers for USD 525 per ldt (Light Displacement Tonnage), building further on the continual rise in prices offered by cash buyers.
There are four major ship recycling markets, namely India, Bangladesh, China and Pakistan. In all terms India is by far the largest ship breaking nation and Alang the leading facility. So far this year, 283 vessels with a cargo capacity of 8.9 million DWT have been scrapped by Indian breakers. Bangladesh comes in second in terms of DWT - 7.4 million and China in terms of numbers – 107 vessels of various kinds. The typical demolished Capesize vessel is 27 years old on average with a cargo capacity of 160,125 DWT and built in Japan (51%) between 1977 and 1991” concluded BIMCO.
“At the current demolition pace, 4.7% of the dry bulk fleet will be demolished during 2011. But as the order book still holds 235 million DWT in prospect for future delivery equal to 40% of current active fleet, – recycling of over-aged tonnage must remain at high volume to bring optimism back and steer this dry bulk segment towards more sustainable freight levels and thus better earnings“, adds Peter Sand.
Sorce: Nikos Roussanoglou, Hellenic Shipping
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Monday, 28 September 20
NEW LNG PROJECTS - ALL DRESSED UP AND NO PLACE TO GO - WOOD MACKENZIE
It was meant to be another boom year. After a record 70 mmtpa of new LNG capacity was sanctioned in 2019, at least as much capacity was lined up fo ...
Thursday, 24 September 20
SUPRAMAX: INDO TO INDIA FIXING AROUND US$13,000 - FEARNLEYS
Cape
Over the last week the iron ore segment from Brazil to China has picked up, and we see freight rates up USD 2 (12%) week on week Fearnleys ...
Thursday, 24 September 20
KOREA MIDLAND POWER TO BUY 1.92 MILLION TONS OF 4,300-4,700 NCV COAL FOR THREE YEARS
COALspot.com: Korea Midland Power Co. Ltd, has issued an International tender for 640,000 MT 4,300-4,700 kcal/kg NCV coal per year.
...
Wednesday, 23 September 20
VIETNAM'S NEW POWER DEVELOPMENT PLAN MUST OPTIMIZE RENEWABLES AND AVOID FOSSIL FUEL LOCK-IN: IEEFA
EVN’s financial constraints leaves the utility with little room for error
Implementing Vietnam’s soon-to-be-launched next Power De ...
Wednesday, 23 September 20
MARKET INSIGHT - INTERMODAL
Undoubtedly, this year (ongoing) will never be forgotten because in a matter of months it has managed to severely affect and shape our day to day p ...
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- Renaissance Capital - South Africa
- Sarangani Energy Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Trasteel International SA, Italy
- Price Waterhouse Coopers - Russia
- Petron Corporation, Philippines
- Heidelberg Cement - Germany
- Star Paper Mills Limited - India
- Goldman Sachs - Singapore
- Miang Besar Coal Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- SMC Global Power, Philippines
- Eastern Energy - Thailand
- Parliament of New Zealand
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- Parry Sugars Refinery, India
- European Bulk Services B.V. - Netherlands
- Tamil Nadu electricity Board
- Carbofer General Trading SA - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhushan Steel Limited - India
- Commonwealth Bank - Australia
- SN Aboitiz Power Inc, Philippines
- Indian Oil Corporation Limited
- Krishnapatnam Port Company Ltd. - India
- Sinarmas Energy and Mining - Indonesia
- Mercator Lines Limited - India
- Antam Resourcindo - Indonesia
- Orica Australia Pty. Ltd.
- Metalloyd Limited - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- Malabar Cements Ltd - India
- Ministry of Finance - Indonesia
- Bukit Baiduri Energy - Indonesia
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- London Commodity Brokers - England
- Indonesian Coal Mining Association
- Global Coal Blending Company Limited - Australia
- The Treasury - Australian Government
- Thiess Contractors Indonesia
- Semirara Mining and Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Kideco Jaya Agung - Indonesia
- Kepco SPC Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- Sojitz Corporation - Japan
- Sree Jayajothi Cements Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Cement Manufacturers Association - India
- Petrochimia International Co. Ltd.- Taiwan
- Borneo Indobara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- Attock Cement Pakistan Limited
- Karaikal Port Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Bharathi Cement Corporation - India
- Eastern Coal Council - USA
- Kalimantan Lumbung Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- GAC Shipping (India) Pvt Ltd
- CIMB Investment Bank - Malaysia
- GMR Energy Limited - India
- Alfred C Toepfer International GmbH - Germany
- Kohat Cement Company Ltd. - Pakistan
- Baramulti Group, Indonesia
- Riau Bara Harum - Indonesia
- Economic Council, Georgia
- McConnell Dowell - Australia
- Kobexindo Tractors - Indoneisa
- Wood Mackenzie - Singapore
- Anglo American - United Kingdom
- GVK Power & Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
- Maheswari Brothers Coal Limited - India
- Toyota Tsusho Corporation, Japan
- Power Finance Corporation Ltd., India
- Mintek Dendrill Indonesia
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- Latin American Coal - Colombia
- LBH Netherlands Bv - Netherlands
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- Bhatia International Limited - India
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Timah Investasi Mineral - Indoneisa
- Essar Steel Hazira Ltd - India
- Coal and Oil Company - UAE
- Pendopo Energi Batubara - Indonesia
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Romanian Commodities Exchange
- PNOC Exploration Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- Videocon Industries ltd - India
- Deloitte Consulting - India
- Ministry of Transport, Egypt
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- Gujarat Sidhee Cement - India
- Jorong Barutama Greston.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Wilmar Investment Holdings
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- PowerSource Philippines DevCo
- Asia Pacific Energy Resources Ventures Inc, Philippines
- India Bulls Power Limited - India
- Planning Commission, India
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Thai Mozambique Logistica
- Edison Trading Spa - Italy
- Electricity Authority, New Zealand
- OPG Power Generation Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Iligan Light & Power Inc, Philippines
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Vedanta Resources Plc - India
- Minerals Council of Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercuria Energy - Indonesia
- Standard Chartered Bank - UAE
- Directorate Of Revenue Intelligence - India
- Madhucon Powers Ltd - India
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- PTC India Limited - India
- Oldendorff Carriers - Singapore
- MS Steel International - UAE
- IHS Mccloskey Coal Group - USA
- Orica Mining Services - Indonesia
- Agrawal Coal Company - India
- SMG Consultants - Indonesia
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Central Java Power - Indonesia
- Bangladesh Power Developement Board
- Lanco Infratech Ltd - India
- Indogreen Group - Indonesia
- The State Trading Corporation of India Ltd
- Ambuja Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- CNBM International Corporation - China
- TNB Fuel Sdn Bhd - Malaysia
- Aditya Birla Group - India
- Global Business Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- Independent Power Producers Association of India
- Indika Energy - Indonesia
- Rio Tinto Coal - Australia
- Central Electricity Authority - India
- Singapore Mercantile Exchange
- Binh Thuan Hamico - Vietnam
- International Coal Ventures Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- Samtan Co., Ltd - South Korea
- Banpu Public Company Limited - Thailand
- Simpson Spence & Young - Indonesia
- Straits Asia Resources Limited - Singapore
- San Jose City I Power Corp, Philippines
- Sical Logistics Limited - India
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bayan Resources Tbk. - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
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