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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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Sunday, 30 August 20
PANAMAX - THIS WEEK THE DEMAND HAS PICKED UP, BUT THE TONNAGE LIST IS INCREASING DAY BY DAY - FEARNLEYS
Cape Size
More or less flat from previous week, with cape rates moving from US$ 19,500 to 18,900 on average. West Australia however being more ...
Saturday, 29 August 20
COAL INDIA'S FUEL SUPPLY TO POWER SECTOR DROPS ABOUT 20% IN APR-JUL: PTI
State-owned Coal India”s fuel supply to the power sector registered a decline of 19.5 per cent to 126.30 million tonnes (MT) in the April-Jul ...
Saturday, 29 August 20
SOUTH KOREAN BROKERAGE FIRM KOREA INVESTMENT & SECURITIES TO STOP ALL COAL BUSINESS - KOREA HERALD
South Korean brokerage firm Korea Investment & Securities has decided to stop its investments in coal, in line with the Moon Jae-in administrat ...
Thursday, 27 August 20
KOREAN GENCOS INVITED BIDS FOR TOTAL 985,000 TONS OF BITUMINOUS COAL FOR NOVEMBER 2020 LOADING
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) on behalf of EWP, KOSPO, KOSEP and KOWEPO has issued an international tender for total 985,000 ...
Thursday, 27 August 20
SOUTHEAST ASIAN NATIONS SET REGION-WIDE RENEWABLE ENERGY GOAL OF 23 PERCENT BY 2025 - ASEAN POST
The Association of Southeast Asian Nations (ASEAN) has set an ambitious target of securing 23 percent of its primary energy from renewable so ...
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- Thiess Contractors Indonesia
- AsiaOL BioFuels Corp., Philippines
- Star Paper Mills Limited - India
- Global Coal Blending Company Limited - Australia
- Straits Asia Resources Limited - Singapore
- Bhushan Steel Limited - India
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Antam Resourcindo - Indonesia
- Maheswari Brothers Coal Limited - India
- Africa Commodities Group - South Africa
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- Tamil Nadu electricity Board
- Meralco Power Generation, Philippines
- Indian Energy Exchange, India
- Leighton Contractors Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Marubeni Corporation - India
- Borneo Indobara - Indonesia
- Kumho Petrochemical, South Korea
- Videocon Industries ltd - India
- Trasteel International SA, Italy
- Intertek Mineral Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Riau Bara Harum - Indonesia
- San Jose City I Power Corp, Philippines
- Thai Mozambique Logistica
- Indonesian Coal Mining Association
- White Energy Company Limited
- Madhucon Powers Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Bayan Resources Tbk. - Indonesia
- Sojitz Corporation - Japan
- Kapuas Tunggal Persada - Indonesia
- Mercator Lines Limited - India
- Coalindo Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- Vedanta Resources Plc - India
- Savvy Resources Ltd - HongKong
- Siam City Cement PLC, Thailand
- Oldendorff Carriers - Singapore
- Bharathi Cement Corporation - India
- Price Waterhouse Coopers - Russia
- New Zealand Coal & Carbon
- Mercuria Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Singapore Mercantile Exchange
- Grasim Industreis Ltd - India
- IHS Mccloskey Coal Group - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- Anglo American - United Kingdom
- Ind-Barath Power Infra Limited - India
- Formosa Plastics Group - Taiwan
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Coal and Oil Company - UAE
- Kepco SPC Power Corporation, Philippines
- Edison Trading Spa - Italy
- Cement Manufacturers Association - India
- The University of Queensland
- Kideco Jaya Agung - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Ministry of Finance - Indonesia
- Bangladesh Power Developement Board
- Rio Tinto Coal - Australia
- Neyveli Lignite Corporation Ltd, - India
- Petron Corporation, Philippines
- Wood Mackenzie - Singapore
- Bhoruka Overseas - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement - Thailand
- Binh Thuan Hamico - Vietnam
- Sical Logistics Limited - India
- PNOC Exploration Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- ICICI Bank Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Iligan Light & Power Inc, Philippines
- Central Electricity Authority - India
- Deloitte Consulting - India
- TeaM Sual Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- Parliament of New Zealand
- Bulk Trading Sa - Switzerland
- Ministry of Transport, Egypt
- Planning Commission, India
- Directorate General of MIneral and Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- Mjunction Services Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Power Finance Corporation Ltd., India
- PetroVietnam Power Coal Import and Supply Company
- Malabar Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- GMR Energy Limited - India
- Krishnapatnam Port Company Ltd. - India
- Jorong Barutama Greston.PT - Indonesia
- Medco Energi Mining Internasional
- Georgia Ports Authority, United States
- Global Business Power Corporation, Philippines
- McConnell Dowell - Australia
- Kobexindo Tractors - Indoneisa
- MS Steel International - UAE
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- European Bulk Services B.V. - Netherlands
- Sakthi Sugars Limited - India
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Minerals Council of Australia
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TNB Fuel Sdn Bhd - Malaysia
- Tata Chemicals Ltd - India
- Vizag Seaport Private Limited - India
- London Commodity Brokers - England
- Posco Energy - South Korea
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- Commonwealth Bank - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- Ministry of Mines - Canada
- SMG Consultants - Indonesia
- Coastal Gujarat Power Limited - India
- PowerSource Philippines DevCo
- Standard Chartered Bank - UAE
- Semirara Mining and Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- Sarangani Energy Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Goldman Sachs - Singapore
- Billiton Holdings Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Larsen & Toubro Limited - India
- Heidelberg Cement - Germany
- Latin American Coal - Colombia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Karbindo Abesyapradhi - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Australian Coal Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Interocean Group of Companies - India
- GVK Power & Infra Limited - India
- Aditya Birla Group - India
- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Orica Australia Pty. Ltd.
- Ambuja Cements Ltd - India
- Attock Cement Pakistan Limited
- Gujarat Mineral Development Corp Ltd - India
- Timah Investasi Mineral - Indoneisa
- Makarim & Taira - Indonesia
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- Gujarat Sidhee Cement - India
- Barasentosa Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Offshore Bulk Terminal Pte Ltd, Singapore
- Metalloyd Limited - United Kingdom
- VISA Power Limited - India
- Chamber of Mines of South Africa
- Alfred C Toepfer International GmbH - Germany
- Mintek Dendrill Indonesia
- Independent Power Producers Association of India
- International Coal Ventures Pvt Ltd - India
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