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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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- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- New Zealand Coal & Carbon
- Bharathi Cement Corporation - India
- Marubeni Corporation - India
- Simpson Spence & Young - Indonesia
- Timah Investasi Mineral - Indoneisa
- Planning Commission, India
- Karbindo Abesyapradhi - Indoneisa
- European Bulk Services B.V. - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- Indo Tambangraya Megah - Indonesia
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- VISA Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Sical Logistics Limited - India
- Rio Tinto Coal - Australia
- Indika Energy - Indonesia
- Antam Resourcindo - Indonesia
- Malabar Cements Ltd - India
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- Romanian Commodities Exchange
- Thiess Contractors Indonesia
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- Pendopo Energi Batubara - Indonesia
- Mjunction Services Limited - India
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- CNBM International Corporation - China
- Africa Commodities Group - South Africa
- Coalindo Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Sarangani Energy Corporation, Philippines
- Xindia Steels Limited - India
- Manunggal Multi Energi - Indonesia
- Heidelberg Cement - Germany
- Neyveli Lignite Corporation Ltd, - India
- Jaiprakash Power Ventures ltd
- Mintek Dendrill Indonesia
- Kideco Jaya Agung - Indonesia
- Indogreen Group - Indonesia
- ICICI Bank Limited - India
- Metalloyd Limited - United Kingdom
- White Energy Company Limited
- Australian Commodity Traders Exchange
- IHS Mccloskey Coal Group - USA
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Cement Manufacturers Association - India
- Parry Sugars Refinery, India
- Meralco Power Generation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Altura Mining Limited, Indonesia
- McConnell Dowell - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- SMC Global Power, Philippines
- Ceylon Electricity Board - Sri Lanka
- Electricity Generating Authority of Thailand
- Alfred C Toepfer International GmbH - Germany
- Wood Mackenzie - Singapore
- Siam City Cement PLC, Thailand
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Finance - Indonesia
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- Barasentosa Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Banpu Public Company Limited - Thailand
- Kepco SPC Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kobexindo Tractors - Indoneisa
- Madhucon Powers Ltd - India
- Ministry of Mines - Canada
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- Wilmar Investment Holdings
- Coal and Oil Company - UAE
- Chettinad Cement Corporation Ltd - India
- Straits Asia Resources Limited - Singapore
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Georgia Ports Authority, United States
- Leighton Contractors Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- GVK Power & Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- Electricity Authority, New Zealand
- Formosa Plastics Group - Taiwan
- Anglo American - United Kingdom
- Vedanta Resources Plc - India
- Mercator Lines Limited - India
- MS Steel International - UAE
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
- Intertek Mineral Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Minerals Council of Australia
- Bhatia International Limited - India
- Semirara Mining Corp, Philippines
- Vizag Seaport Private Limited - India
- Thai Mozambique Logistica
- Standard Chartered Bank - UAE
- Salva Resources Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Larsen & Toubro Limited - India
- Iligan Light & Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Gujarat Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Borneo Indobara - Indonesia
- Bayan Resources Tbk. - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- Sojitz Corporation - Japan
- Essar Steel Hazira Ltd - India
- India Bulls Power Limited - India
- Dalmia Cement Bharat India
- PNOC Exploration Corporation - Philippines
- Riau Bara Harum - Indonesia
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- Medco Energi Mining Internasional
- Therma Luzon, Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Central Java Power - Indonesia
- Siam City Cement - Thailand
- SN Aboitiz Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- GMR Energy Limited - India
- Latin American Coal - Colombia
- IEA Clean Coal Centre - UK
- Edison Trading Spa - Italy
- Attock Cement Pakistan Limited
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Global Coal Blending Company Limited - Australia
- Bulk Trading Sa - Switzerland
- Star Paper Mills Limited - India
- Coastal Gujarat Power Limited - India
- LBH Netherlands Bv - Netherlands
- Uttam Galva Steels Limited - India
- Chamber of Mines of South Africa
- Sakthi Sugars Limited - India
- Power Finance Corporation Ltd., India
- Ministry of Transport, Egypt
- Agrawal Coal Company - India
- Bangladesh Power Developement Board
- Globalindo Alam Lestari - Indonesia
- Parliament of New Zealand
- PetroVietnam Power Coal Import and Supply Company
- ASAPP Information Group - India
- Krishnapatnam Port Company Ltd. - India
- Kartika Selabumi Mining - Indonesia
- Energy Development Corp, Philippines
- Jindal Steel & Power Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Videocon Industries ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Australian Coal Association
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- Merrill Lynch Commodities Europe
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Oldendorff Carriers - Singapore
- PTC India Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMG Consultants - Indonesia
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- The University of Queensland
- Semirara Mining and Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Indian Energy Exchange, India
- GN Power Mariveles Coal Plant, Philippines
- San Jose City I Power Corp, Philippines
- Petron Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Business Power Corporation, Philippines
- Indian Oil Corporation Limited
- CIMB Investment Bank - Malaysia
- Goldman Sachs - Singapore
- The Treasury - Australian Government
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