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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, 04 September 20
IN A DEEPENING DEBT HOLE OF $34 BILLION, INDONESIA’S PLN MUST STOP DIGGING - IEEFA
The utility has added IDR100 trillion in debt annually for the last five years
Utilities globally started changing the way they do business ye ...
Friday, 04 September 20
KOMIPO INVITED BIDS FOR AUSTRALIAN MIN 5,700 NCV COAL FOR NOVEMBER
COALspot.com: Korea Midland Power Co. Ltd, has issued an International tender for 260,000 MT Min.5,700 kcal/kg NCV coal November, 2020 loading. Acc ...
Thursday, 03 September 20
BRINGING SERVICES OF FTCCI CLOSER TO THE EXPORTERS AT GMR AIR CARGO COMPLEX AT SHAMSHABAD
Press Release: “FTCCI Trade Facilitation Services at your doorstep now” says J.S. Chandrashekar, IRS., Principal Commissioner of Custom ...
Thursday, 03 September 20
CHINA'S BENCHMARK POWER COAL PRICE REMAINS FLAT - XINHUA
China’s benchmark power coal price remained flat during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Wednesday, 02 September 20
COAL PRODUCTION FALLS 7% IN APR-AUG; OFF TAKE DIPS 13.4% - FINANCIAL EXPRESS
In the month of August coal off take also increased 9.3% y-o-y to 44.34 MT as compared with 40.57 MT in the same period last year.
C ...
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- Gujarat Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Romanian Commodities Exchange
- Kideco Jaya Agung - Indonesia
- Toyota Tsusho Corporation, Japan
- Miang Besar Coal Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- Maheswari Brothers Coal Limited - India
- Pendopo Energi Batubara - Indonesia
- Sakthi Sugars Limited - India
- Semirara Mining and Power Corporation, Philippines
- Mercuria Energy - Indonesia
- TeaM Sual Corporation - Philippines
- PTC India Limited - India
- Ind-Barath Power Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- Bharathi Cement Corporation - India
- Edison Trading Spa - Italy
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- Antam Resourcindo - Indonesia
- Indian Energy Exchange, India
- Kaltim Prima Coal - Indonesia
- Oldendorff Carriers - Singapore
- Directorate Of Revenue Intelligence - India
- Economic Council, Georgia
- ICICI Bank Limited - India
- Port Waratah Coal Services - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- CNBM International Corporation - China
- GMR Energy Limited - India
- Meenaskhi Energy Private Limited - India
- Goldman Sachs - Singapore
- San Jose City I Power Corp, Philippines
- Renaissance Capital - South Africa
- Videocon Industries ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Petrochimia International Co. Ltd.- Taiwan
- Australian Commodity Traders Exchange
- Coal and Oil Company - UAE
- Mjunction Services Limited - India
- Bukit Makmur.PT - Indonesia
- Star Paper Mills Limited - India
- Grasim Industreis Ltd - India
- Bhatia International Limited - India
- Attock Cement Pakistan Limited
- Lanco Infratech Ltd - India
- Chamber of Mines of South Africa
- Thai Mozambique Logistica
- Sinarmas Energy and Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- Standard Chartered Bank - UAE
- Alfred C Toepfer International GmbH - Germany
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- The University of Queensland
- Anglo American - United Kingdom
- Gujarat Sidhee Cement - India
- Bhushan Steel Limited - India
- Global Coal Blending Company Limited - Australia
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- Central Electricity Authority - India
- Georgia Ports Authority, United States
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
- Energy Development Corp, Philippines
- Independent Power Producers Association of India
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- Ministry of Mines - Canada
- ASAPP Information Group - India
- Medco Energi Mining Internasional
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- Dalmia Cement Bharat India
- Ministry of Finance - Indonesia
- VISA Power Limited - India
- Indogreen Group - Indonesia
- Therma Luzon, Inc, Philippines
- Uttam Galva Steels Limited - India
- Rio Tinto Coal - Australia
- Iligan Light & Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Coal Council - USA
- Wood Mackenzie - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Larsen & Toubro Limited - India
- Mercator Lines Limited - India
- Electricity Generating Authority of Thailand
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- Meralco Power Generation, Philippines
- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- CIMB Investment Bank - Malaysia
- Vizag Seaport Private Limited - India
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Parry Sugars Refinery, India
- MS Steel International - UAE
- Central Java Power - Indonesia
- Sical Logistics Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- Marubeni Corporation - India
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- Xindia Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Global Green Power PLC Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Power Finance Corporation Ltd., India
- Bangladesh Power Developement Board
- Ministry of Transport, Egypt
- Maharashtra Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Makarim & Taira - Indonesia
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- Petron Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Kobexindo Tractors - Indoneisa
- Posco Energy - South Korea
- Jaiprakash Power Ventures ltd
- Energy Link Ltd, New Zealand
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- Sojitz Corporation - Japan
- Barasentosa Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Sree Jayajothi Cements Limited - India
- South Luzon Thermal Energy Corporation
- Indian Oil Corporation Limited
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Indika Energy - Indonesia
- SMG Consultants - Indonesia
- Globalindo Alam Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- IHS Mccloskey Coal Group - USA
- Intertek Mineral Services - Indonesia
- Savvy Resources Ltd - HongKong
- Riau Bara Harum - Indonesia
- Bhoruka Overseas - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- London Commodity Brokers - England
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Interocean Group of Companies - India
- White Energy Company Limited
- Aditya Birla Group - India
- Tata Chemicals Ltd - India
- Binh Thuan Hamico - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Planning Commission, India
- Wilmar Investment Holdings
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- Orica Mining Services - Indonesia
- Cement Manufacturers Association - India
- Manunggal Multi Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Price Waterhouse Coopers - Russia
- TNB Fuel Sdn Bhd - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- Minerals Council of Australia
- Baramulti Group, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- Cigading International Bulk Terminal - Indonesia
- Indonesian Coal Mining Association
- Carbofer General Trading SA - India
- Asmin Koalindo Tuhup - Indonesia
- Mintek Dendrill Indonesia
- Singapore Mercantile Exchange
- New Zealand Coal & Carbon
- Kalimantan Lumbung Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- GN Power Mariveles Coal Plant, Philippines
- Deloitte Consulting - India
- Krishnapatnam Port Company Ltd. - India
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