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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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Tuesday, 25 August 20
INDIA'S IMPORTS FALL AS LOCKDOWNS IMPACT THE POWER AND INDUSTRIAL SECTORS - REPORT
India is the world’s second largest thermal coal consumer and importer, importing an estimated 211 million tonnes of thermal coal in 2019.&nb ...
Monday, 24 August 20
A COMBINATION OF DEVELOPMENTS DROVE THE FALLOFF COAL PRICES - CHIEF ECONOMIST’ OFFICE, AUSTRALIA
China, rising domestic production combined with subdued power demand;
India, a lockdown coupled with government directives that fav ...
Monday, 24 August 20
AUSTRALIA'S THERMAL COAL EXPORTS ARE FORECAST TO DROP FROM AN ESTIMATED $20 BILLION IN 2019-20 TO $16 BILLION IN 2020-21: REPORT
Thermal coal spot prices have fallen sharply as the impact of COVID-19 drives a contraction in seaborne trade for only the second time this century ...
Saturday, 22 August 20
REPORT SEES INDIA’S RELIANCE ON THERMAL POWER DROPPING TO 50% IN 2021, 43% IN 2026 - ET ENERGY | IEEFA
India’s dependence on thermal power will reduce to 50 per cent by 2021-22 and 43 per cent by 2026-27 on the back of renewable energy (RE) cap ...
Friday, 21 August 20
323 MILLION ELECTRIC VEHICLES WILL BE ON THE ROADS BY 2040 - WOOD MACKENZIE
Electric vehicle (EV) sales are expected to reach 45 million units per year by 2040, with a total global EV stock of 323 million, according to new ...
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- Agrawal Coal Company - India
- Sical Logistics Limited - India
- Aditya Birla Group - India
- Gujarat Sidhee Cement - India
- Coalindo Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Kartika Selabumi Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- Ministry of Finance - Indonesia
- Baramulti Group, Indonesia
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Siam City Cement - Thailand
- Indika Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- PTC India Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Transport, Egypt
- Wilmar Investment Holdings
- Essar Steel Hazira Ltd - India
- Goldman Sachs - Singapore
- Bulk Trading Sa - Switzerland
- Standard Chartered Bank - UAE
- Alfred C Toepfer International GmbH - Germany
- San Jose City I Power Corp, Philippines
- Sakthi Sugars Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Maharashtra Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Jorong Barutama Greston.PT - Indonesia
- Salva Resources Pvt Ltd - India
- Grasim Industreis Ltd - India
- Marubeni Corporation - India
- Global Green Power PLC Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Independent Power Producers Association of India
- Bayan Resources Tbk. - Indonesia
- Coastal Gujarat Power Limited - India
- SMC Global Power, Philippines
- McConnell Dowell - Australia
- London Commodity Brokers - England
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- Chamber of Mines of South Africa
- Uttam Galva Steels Limited - India
- Indian Oil Corporation Limited
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Kideco Jaya Agung - Indonesia
- Star Paper Mills Limited - India
- Romanian Commodities Exchange
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- The Treasury - Australian Government
- Tata Chemicals Ltd - India
- Heidelberg Cement - Germany
- Jaiprakash Power Ventures ltd
- Port Waratah Coal Services - Australia
- Malabar Cements Ltd - India
- Vizag Seaport Private Limited - India
- Karaikal Port Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Barasentosa Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- The University of Queensland
- Georgia Ports Authority, United States
- Siam City Cement PLC, Thailand
- Directorate Of Revenue Intelligence - India
- Australian Commodity Traders Exchange
- Indo Tambangraya Megah - Indonesia
- Rio Tinto Coal - Australia
- Cement Manufacturers Association - India
- Indonesian Coal Mining Association
- IEA Clean Coal Centre - UK
- CIMB Investment Bank - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- Oldendorff Carriers - Singapore
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- Chettinad Cement Corporation Ltd - India
- Sojitz Corporation - Japan
- Kalimantan Lumbung Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Formosa Plastics Group - Taiwan
- CNBM International Corporation - China
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- New Zealand Coal & Carbon
- Tamil Nadu electricity Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- Central Electricity Authority - India
- Parliament of New Zealand
- Larsen & Toubro Limited - India
- Australian Coal Association
- Pendopo Energi Batubara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Mercator Lines Limited - India
- Thiess Contractors Indonesia
- Timah Investasi Mineral - Indoneisa
- Xindia Steels Limited - India
- Orica Mining Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Coal and Oil Company - UAE
- India Bulls Power Limited - India
- Sree Jayajothi Cements Limited - India
- Energy Link Ltd, New Zealand
- GMR Energy Limited - India
- Banpu Public Company Limited - Thailand
- Eastern Coal Council - USA
- Jindal Steel & Power Ltd - India
- Ambuja Cements Ltd - India
- Mjunction Services Limited - India
- Renaissance Capital - South Africa
- Orica Australia Pty. Ltd.
- Neyveli Lignite Corporation Ltd, - India
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- Global Business Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Indogreen Group - Indonesia
- White Energy Company Limited
- Kapuas Tunggal Persada - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Edison Trading Spa - Italy
- Lanco Infratech Ltd - India
- Energy Development Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Videocon Industries ltd - India
- Bhatia International Limited - India
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- Ceylon Electricity Board - Sri Lanka
- IHS Mccloskey Coal Group - USA
- Thai Mozambique Logistica
- Vedanta Resources Plc - India
- Binh Thuan Hamico - Vietnam
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- Altura Mining Limited, Indonesia
- The State Trading Corporation of India Ltd
- PowerSource Philippines DevCo
- Antam Resourcindo - Indonesia
- SMG Consultants - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kepco SPC Power Corporation, Philippines
- Mintek Dendrill Indonesia
- GAC Shipping (India) Pvt Ltd
- ICICI Bank Limited - India
- Cigading International Bulk Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Aboitiz Power Corporation - Philippines
- Indian Energy Exchange, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Bharathi Cement Corporation - India
- Dalmia Cement Bharat India
- Latin American Coal - Colombia
- Deloitte Consulting - India
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- European Bulk Services B.V. - Netherlands
- Price Waterhouse Coopers - Russia
- Mercuria Energy - Indonesia
- Electricity Authority, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- Eastern Energy - Thailand
- Rashtriya Ispat Nigam Limited - India
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- Minerals Council of Australia
- Samtan Co., Ltd - South Korea
- Semirara Mining and Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Madhucon Powers Ltd - India
- Commonwealth Bank - Australia
- Medco Energi Mining Internasional
- Pipit Mutiara Jaya. PT, Indonesia
- Posco Energy - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Attock Cement Pakistan Limited
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