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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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Friday, 18 September 20
INDIA'S COAL-FIRED POWER OUTPUT PICKS UP AS INDUSTRIAL USE RISES - REUTERS
India’s coal-fired electricity generation rose 9.4% in the first half of September, provisional government data showed, as demand from indust ...
Friday, 18 September 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Thursday, 17 September 20
LAST HOPES FOR DEMAND GROWTH SET TO DISAPPOINT THERMAL COAL EXPORTERS - IEEFA
Asian thermal coal exporters are fighting an uphill battle even in new markets
The world’s largest thermal coal exporter is eyeing new m ...
Wednesday, 16 September 20
MARKET INSIGHT - INTERMODAL
Another active week in terms of SnP has concluded in the dry bulk market with a diversified array of transactions recorded. Despite the correction ...
Friday, 11 September 20
IMO 2020: A REVIEW OF THE TRANSITION TO VLSFOS - GARD
KNOWLEDGE TO ELEVATE
Many predictions were made in the run up to the imposition of the MARPOL 2020 sulphur cap, none of which was that the tra ...
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- Energy Development Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Thai Mozambique Logistica
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- The University of Queensland
- Oldendorff Carriers - Singapore
- Planning Commission, India
- Indian Oil Corporation Limited
- IEA Clean Coal Centre - UK
- Chettinad Cement Corporation Ltd - India
- Marubeni Corporation - India
- The Treasury - Australian Government
- Jaiprakash Power Ventures ltd
- Bharathi Cement Corporation - India
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- Maheswari Brothers Coal Limited - India
- Karaikal Port Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- ICICI Bank Limited - India
- Attock Cement Pakistan Limited
- Kepco SPC Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Barasentosa Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- Directorate Of Revenue Intelligence - India
- Cement Manufacturers Association - India
- Goldman Sachs - Singapore
- Grasim Industreis Ltd - India
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
- Intertek Mineral Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Eastern Energy - Thailand
- Orica Mining Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- Ministry of Finance - Indonesia
- Mercuria Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Merrill Lynch Commodities Europe
- Xindia Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- Metalloyd Limited - United Kingdom
- Indian Energy Exchange, India
- OPG Power Generation Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- CIMB Investment Bank - Malaysia
- Electricity Authority, New Zealand
- Binh Thuan Hamico - Vietnam
- Mercator Lines Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Maharashtra Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Gujarat Sidhee Cement - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vijayanagar Sugar Pvt Ltd - India
- PowerSource Philippines DevCo
- Simpson Spence & Young - Indonesia
- Global Business Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Indika Energy - Indonesia
- GVK Power & Infra Limited - India
- Rio Tinto Coal - Australia
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Anglo American - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Makarim & Taira - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Ambuja Cements Ltd - India
- Electricity Generating Authority of Thailand
- Kumho Petrochemical, South Korea
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- Videocon Industries ltd - India
- VISA Power Limited - India
- Medco Energi Mining Internasional
- Manunggal Multi Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Agrawal Coal Company - India
- New Zealand Coal & Carbon
- Asmin Koalindo Tuhup - Indonesia
- Altura Mining Limited, Indonesia
- SMG Consultants - Indonesia
- Carbofer General Trading SA - India
- Trasteel International SA, Italy
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- South Luzon Thermal Energy Corporation
- Miang Besar Coal Terminal - Indonesia
- Coalindo Energy - Indonesia
- Essar Steel Hazira Ltd - India
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Wilmar Investment Holdings
- Heidelberg Cement - Germany
- Mjunction Services Limited - India
- Ministry of Mines - Canada
- Malabar Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Straits Asia Resources Limited - Singapore
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Sakthi Sugars Limited - India
- Kaltim Prima Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Minerals Council of Australia
- Tata Chemicals Ltd - India
- Vedanta Resources Plc - India
- Bhatia International Limited - India
- Krishnapatnam Port Company Ltd. - India
- Commonwealth Bank - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMC Global Power, Philippines
- Jindal Steel & Power Ltd - India
- MS Steel International - UAE
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- TeaM Sual Corporation - Philippines
- Eastern Coal Council - USA
- Romanian Commodities Exchange
- GAC Shipping (India) Pvt Ltd
- PNOC Exploration Corporation - Philippines
- PTC India Limited - India
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- Borneo Indobara - Indonesia
- Tamil Nadu electricity Board
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Indonesian Coal Mining Association
- Sree Jayajothi Cements Limited - India
- Timah Investasi Mineral - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- IHS Mccloskey Coal Group - USA
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- Ceylon Electricity Board - Sri Lanka
- CNBM International Corporation - China
- Australian Coal Association
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- Sical Logistics Limited - India
- Central Electricity Authority - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- Therma Luzon, Inc, Philippines
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- Mintek Dendrill Indonesia
- International Coal Ventures Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Bhushan Steel Limited - India
- Coal and Oil Company - UAE
- Port Waratah Coal Services - Australia
- Power Finance Corporation Ltd., India
- Deloitte Consulting - India
- Ministry of Transport, Egypt
- Toyota Tsusho Corporation, Japan
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Banpu Public Company Limited - Thailand
- GN Power Mariveles Coal Plant, Philippines
- GMR Energy Limited - India
- Kobexindo Tractors - Indoneisa
- Riau Bara Harum - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- White Energy Company Limited
- Jorong Barutama Greston.PT - Indonesia
- Posco Energy - South Korea
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- Meralco Power Generation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sarangani Energy Corporation, Philippines
- Madhucon Powers Ltd - India
- Indogreen Group - Indonesia
- Economic Council, Georgia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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