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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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Thursday, 10 September 20
U.S. COAL PRODUCTION IN 2020 TO BE 511 MMST, 28 PER CENT LOWER THAN IN 2019 - EIA
EIA expects total U.S. coal production in 2020 to be 511 million short tons (MMst), 194 MMst (28%) lower than in 2019. Mitigation efforts related t ...
Thursday, 10 September 20
DRY BULK SHIPPING: CHINA'S DEMAND KEEPING THE DRY BULK MARKET GOING - PETER SAND | BIMCO
Overview
An impressive recovery in Chinese dry bulk imports has protected the industry from the effects of falling demand in the rest of the wo ...
Thursday, 10 September 20
TANKER SHIPPING: FREIGHT RATES BACK AT LOSS-MAKING LEVELS AFTER 12 VERY PROFITABLE MONTHS - BIMCO
Overview
A stunningly strong 12 months for the tanker shipping industry is now being replaced by lower freight rates, as lower oil product ...
Thursday, 10 September 20
INDIA'S COAL IMPORTS STUMBLE IN AUGUST, RAISING RISK OF SLOW RECOVERY - REFINITIV | BANCHERO COSTA
After posting a mild recovery in July, India's coal imports have stumbled in August as the South Asian nation battles to restart it ...
Thursday, 10 September 20
THE FIRST 8 MONTHS OF 2020, INDONESIA EXPORTED 217.4 MLN TONNES OF COAL BASED ON REFINITIV - BANCHERO COSTA
The coal market has been hit by a weaker global economy as a result of COVID-19 pandemic and falling industrial electricity demand ...
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- Grasim Industreis Ltd - India
- Medco Energi Mining Internasional
- Global Coal Blending Company Limited - Australia
- Aboitiz Power Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Marubeni Corporation - India
- Electricity Authority, New Zealand
- Oldendorff Carriers - Singapore
- Sakthi Sugars Limited - India
- IHS Mccloskey Coal Group - USA
- Alfred C Toepfer International GmbH - Germany
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Romanian Commodities Exchange
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- Essar Steel Hazira Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
- Ministry of Transport, Egypt
- Kumho Petrochemical, South Korea
- Interocean Group of Companies - India
- IEA Clean Coal Centre - UK
- Bukit Makmur.PT - Indonesia
- Singapore Mercantile Exchange
- Vedanta Resources Plc - India
- Vizag Seaport Private Limited - India
- Georgia Ports Authority, United States
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- Borneo Indobara - Indonesia
- Standard Chartered Bank - UAE
- Coal and Oil Company - UAE
- Ministry of Finance - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- Gujarat Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Samtan Co., Ltd - South Korea
- Makarim & Taira - Indonesia
- Minerals Council of Australia
- London Commodity Brokers - England
- Semirara Mining and Power Corporation, Philippines
- Sical Logistics Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Independent Power Producers Association of India
- Simpson Spence & Young - Indonesia
- CNBM International Corporation - China
- Uttam Galva Steels Limited - India
- Formosa Plastics Group - Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- Mercuria Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Madhucon Powers Ltd - India
- Xindia Steels Limited - India
- Eastern Coal Council - USA
- Gujarat Mineral Development Corp Ltd - India
- Tata Chemicals Ltd - India
- LBH Netherlands Bv - Netherlands
- Intertek Mineral Services - Indonesia
- Coastal Gujarat Power Limited - India
- Jindal Steel & Power Ltd - India
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement - Thailand
- Commonwealth Bank - Australia
- White Energy Company Limited
- Sindya Power Generating Company Private Ltd
- Meenaskhi Energy Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Iligan Light & Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Baramulti Group, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Ind-Barath Power Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Port Waratah Coal Services - Australia
- PNOC Exploration Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- ASAPP Information Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Lanco Infratech Ltd - India
- Semirara Mining Corp, Philippines
- Thiess Contractors Indonesia
- Directorate Of Revenue Intelligence - India
- GN Power Mariveles Coal Plant, Philippines
- Bharathi Cement Corporation - India
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- McConnell Dowell - Australia
- Renaissance Capital - South Africa
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Bangladesh Power Developement Board
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Merrill Lynch Commodities Europe
- International Coal Ventures Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- Indika Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Malabar Cements Ltd - India
- SMC Global Power, Philippines
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- Gujarat Sidhee Cement - India
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- Sree Jayajothi Cements Limited - India
- CIMB Investment Bank - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Energy - Thailand
- Riau Bara Harum - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mjunction Services Limited - India
- AsiaOL BioFuels Corp., Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Economic Council, Georgia
- Dalmia Cement Bharat India
- Rashtriya Ispat Nigam Limited - India
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- Bhoruka Overseas - Indonesia
- Tamil Nadu electricity Board
- Power Finance Corporation Ltd., India
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- Carbofer General Trading SA - India
- Anglo American - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Mercator Lines Limited - India
- Deloitte Consulting - India
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- Aditya Birla Group - India
- Timah Investasi Mineral - Indoneisa
- Central Java Power - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Cement Manufacturers Association - India
- Indian Oil Corporation Limited
- Chamber of Mines of South Africa
- The University of Queensland
- Bayan Resources Tbk. - Indonesia
- TeaM Sual Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The Treasury - Australian Government
- Wilmar Investment Holdings
- PTC India Limited - India
- Bulk Trading Sa - Switzerland
- Bhatia International Limited - India
- India Bulls Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- Altura Mining Limited, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Petron Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Kaltim Prima Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Mintek Dendrill Indonesia
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- Maheswari Brothers Coal Limited - India
- Central Electricity Authority - India
- MS Steel International - UAE
- Edison Trading Spa - Italy
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- Banpu Public Company Limited - Thailand
- Meralco Power Generation, Philippines
- GMR Energy Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Goldman Sachs - Singapore
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- Karbindo Abesyapradhi - Indoneisa
- Sarangani Energy Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- VISA Power Limited - India
- Star Paper Mills Limited - India
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- Latin American Coal - Colombia
- Trasteel International SA, Italy
- Australian Coal Association
- Posco Energy - South Korea
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Coalindo Energy - Indonesia
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