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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, 23 September 11
ICMA TO BUILD UPGRADE FACILITIES TO ANTICIPATE BAN ON LOW-GRADE COAL EXPORT BY 2014
COALspot.com - January to August of this year, Indonesia’s coal production had already reached 235 million tons. Earlier estimates had targete ...
Friday, 23 September 11
UT TO PRODUCE 7 MMT OF COAL BY 2012
PT United Tractors Tbk is targeting a 7 million tons of coal production next year, a 55.55% increase from 4.5 millions targeted this year, said Pres ...
Friday, 23 September 11
PANAMAX EXPERIENCED A SOFTENING IN RATES - FEARNLEYS AS
Handy
Still a good boost of fresh cargoes entering the market. Vessels in Black Sea with GOA clearance and Baltic positions are fetching tick abov ...
Wednesday, 21 September 11
INDIA'S COAL IMPORTS FROM INDONESIA FALL, CHINA BUYS MORE
COALspot.com - Indian coal imports from Indonesia fall to below 6 million tons in August, and this fall was continuing last few months. Ho ...
Wednesday, 21 September 11
2ND ANNUAL SHALE GAS SUMMIT
2nd Annual Shale Gas Summit 31 October – 3 November 2011 JW Marriott Hotel, Hong Kong
According to a recent EI ...
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- PetroVietnam Power Coal Import and Supply Company
- Cement Manufacturers Association - India
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- Tata Chemicals Ltd - India
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Meralco Power Generation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Carbofer General Trading SA - India
- Latin American Coal - Colombia
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- LBH Netherlands Bv - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
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- Thiess Contractors Indonesia
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- Uttam Galva Steels Limited - India
- San Jose City I Power Corp, Philippines
- Interocean Group of Companies - India
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- Eastern Coal Council - USA
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- Central Java Power - Indonesia
- Vedanta Resources Plc - India
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- Renaissance Capital - South Africa
- Wood Mackenzie - Singapore
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
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- Gujarat Mineral Development Corp Ltd - India
- Coastal Gujarat Power Limited - India
- Dalmia Cement Bharat India
- Borneo Indobara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Electricity Authority, New Zealand
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
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- International Coal Ventures Pvt Ltd - India
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- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Samtan Co., Ltd - South Korea
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- Anglo American - United Kingdom
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- Antam Resourcindo - Indonesia
- Australian Commodity Traders Exchange
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- Alfred C Toepfer International GmbH - Germany
- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- Trasteel International SA, Italy
- Australian Coal Association
- Mintek Dendrill Indonesia
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- Billiton Holdings Pty Ltd - Australia
- Independent Power Producers Association of India
- Ministry of Transport, Egypt
- Posco Energy - South Korea
- Orica Mining Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- European Bulk Services B.V. - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement - Thailand
- Videocon Industries ltd - India
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Bulk Trading Sa - Switzerland
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- IEA Clean Coal Centre - UK
- Directorate General of MIneral and Coal - Indonesia
- Tamil Nadu electricity Board
- Malabar Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Baramulti Group, Indonesia
- Planning Commission, India
- Binh Thuan Hamico - Vietnam
- Bayan Resources Tbk. - Indonesia
- Altura Mining Limited, Indonesia
- PNOC Exploration Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- The University of Queensland
- SMG Consultants - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Larsen & Toubro Limited - India
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- Star Paper Mills Limited - India
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Directorate Of Revenue Intelligence - India
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
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- Sical Logistics Limited - India
- Semirara Mining and Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Metalloyd Limited - United Kingdom
- Indian Oil Corporation Limited
- Africa Commodities Group - South Africa
- Vizag Seaport Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- Sakthi Sugars Limited - India
- Gujarat Sidhee Cement - India
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- Sojitz Corporation - Japan
- Iligan Light & Power Inc, Philippines
- Attock Cement Pakistan Limited
- Asmin Koalindo Tuhup - Indonesia
- Simpson Spence & Young - Indonesia
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- Intertek Mineral Services - Indonesia
- Salva Resources Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Mercator Lines Limited - India
- GAC Shipping (India) Pvt Ltd
- Standard Chartered Bank - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GVK Power & Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PTC India Limited - India
- Miang Besar Coal Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Jaiprakash Power Ventures ltd
- ICICI Bank Limited - India
- Timah Investasi Mineral - Indoneisa
- Minerals Council of Australia
- Barasentosa Lestari - Indonesia
- India Bulls Power Limited - India
- Meenaskhi Energy Private Limited - India
- McConnell Dowell - Australia
- VISA Power Limited - India
- IHS Mccloskey Coal Group - USA
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Bhushan Steel Limited - India
- Makarim & Taira - Indonesia
- Mercuria Energy - Indonesia
- Kumho Petrochemical, South Korea
- Marubeni Corporation - India
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- London Commodity Brokers - England
- SMC Global Power, Philippines
- Port Waratah Coal Services - Australia
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Chamber of Mines of South Africa
- Orica Australia Pty. Ltd.
- Indian Energy Exchange, India
- Petron Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Kartika Selabumi Mining - Indonesia
- Semirara Mining Corp, Philippines
- Heidelberg Cement - Germany
- The Treasury - Australian Government
- Siam City Cement PLC, Thailand
- Kohat Cement Company Ltd. - Pakistan
- Medco Energi Mining Internasional
- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- Therma Luzon, Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- Karbindo Abesyapradhi - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Riau Bara Harum - Indonesia
- Holcim Trading Pte Ltd - Singapore
- White Energy Company Limited
- Karaikal Port Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Coal and Oil Company - UAE
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