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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, 20 September 11
MTD INAUGURATES ITS COAL TERMINAL IN JAVA ISLAND
Press Release – MTD Group of Malaysia, one of prominent key players in the development of infrastructure in Malaysia, today inaugurated their ...
Tuesday, 20 September 11
DRY BULK MARKET LOSING ITS EDGE, RETREATING AT THE START OF THE WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
After a surge during the past couple of weeks, which saw Capesize earnings boosted and the BDI (Baltic Dry Index) reaching levels of year high and c ...
Monday, 19 September 11
CHINA IMPORTS MORE THAN 10 MMT INDO COAL IN AUGUST 2011
COALspot.com - Indonesian coal exports dropped 1.642 million tons in August compared to July exports. Indonesia exports 29.662 million tons of coal ...
Monday, 19 September 11
INDOMOBIL ENTERING INTO COAL MINING BUSINESS
COALspot.Com- PT Indomobil Sukses Internasional Tbk, part of, one of Indonesia's largest conglomerates, to enter into mining industry ac ...
Sunday, 18 September 11
THE COAL IMPORTS TO INDIA, OUT OF INDONESIA LIKELY TO PICK UP - CAPT. REDDY
COALspot.com - The freight market continued the upward trend until midweek almost touching 2,000 points, however towards second half of the week the ...
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- Bhushan Steel Limited - India
- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- LBH Netherlands Bv - Netherlands
- Bukit Makmur.PT - Indonesia
- Kumho Petrochemical, South Korea
- Indonesian Coal Mining Association
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
- Siam City Cement - Thailand
- Larsen & Toubro Limited - India
- Ind-Barath Power Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Edison Trading Spa - Italy
- Borneo Indobara - Indonesia
- The University of Queensland
- Timah Investasi Mineral - Indoneisa
- TeaM Sual Corporation - Philippines
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- Global Business Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- SN Aboitiz Power Inc, Philippines
- Carbofer General Trading SA - India
- Neyveli Lignite Corporation Ltd, - India
- Coalindo Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Grasim Industreis Ltd - India
- Intertek Mineral Services - Indonesia
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Planning Commission, India
- PTC India Limited - India
- Standard Chartered Bank - UAE
- Barasentosa Lestari - Indonesia
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Dalmia Cement Bharat India
- Petron Corporation, Philippines
- Central Java Power - Indonesia
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Jaiprakash Power Ventures ltd
- Petrochimia International Co. Ltd.- Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- Central Electricity Authority - India
- Oldendorff Carriers - Singapore
- Electricity Generating Authority of Thailand
- Global Coal Blending Company Limited - Australia
- Chettinad Cement Corporation Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Antam Resourcindo - Indonesia
- SMG Consultants - Indonesia
- Videocon Industries ltd - India
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- OPG Power Generation Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- Simpson Spence & Young - Indonesia
- Chamber of Mines of South Africa
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- PowerSource Philippines DevCo
- Independent Power Producers Association of India
- Africa Commodities Group - South Africa
- ICICI Bank Limited - India
- Global Green Power PLC Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Baramulti Group, Indonesia
- Sindya Power Generating Company Private Ltd
- Power Finance Corporation Ltd., India
- Riau Bara Harum - Indonesia
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- White Energy Company Limited
- Ambuja Cements Ltd - India
- Renaissance Capital - South Africa
- Eastern Energy - Thailand
- South Luzon Thermal Energy Corporation
- Interocean Group of Companies - India
- Parry Sugars Refinery, India
- Commonwealth Bank - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mjunction Services Limited - India
- Uttam Galva Steels Limited - India
- Wilmar Investment Holdings
- Therma Luzon, Inc, Philippines
- New Zealand Coal & Carbon
- Romanian Commodities Exchange
- Iligan Light & Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- India Bulls Power Limited - India
- Jindal Steel & Power Ltd - India
- Indo Tambangraya Megah - Indonesia
- Gujarat Sidhee Cement - India
- Sical Logistics Limited - India
- McConnell Dowell - Australia
- Globalindo Alam Lestari - Indonesia
- London Commodity Brokers - England
- Alfred C Toepfer International GmbH - Germany
- Aditya Birla Group - India
- Minerals Council of Australia
- Billiton Holdings Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- GMR Energy Limited - India
- MS Steel International - UAE
- Ministry of Mines - Canada
- Goldman Sachs - Singapore
- Mercuria Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- Singapore Mercantile Exchange
- Thiess Contractors Indonesia
- Xindia Steels Limited - India
- Indika Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- IEA Clean Coal Centre - UK
- TNB Fuel Sdn Bhd - Malaysia
- San Jose City I Power Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Tata Chemicals Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Meralco Power Generation, Philippines
- Star Paper Mills Limited - India
- Formosa Plastics Group - Taiwan
- Bharathi Cement Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Mining Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Mercator Lines Limited - India
- Bangladesh Power Developement Board
- Australian Coal Association
- Karbindo Abesyapradhi - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Attock Cement Pakistan Limited
- Indian Energy Exchange, India
- Banpu Public Company Limited - Thailand
- Karaikal Port Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- Rio Tinto Coal - Australia
- Bayan Resources Tbk. - Indonesia
- Indogreen Group - Indonesia
- Price Waterhouse Coopers - Russia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Energy Development Corp, Philippines
- Marubeni Corporation - India
- Australian Commodity Traders Exchange
- Mintek Dendrill Indonesia
- Parliament of New Zealand
- Pendopo Energi Batubara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Makarim & Taira - Indonesia
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- GAC Shipping (India) Pvt Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Savvy Resources Ltd - HongKong
- Directorate General of MIneral and Coal - Indonesia
- Orica Australia Pty. Ltd.
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- Salva Resources Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Electricity Authority, New Zealand
- Tamil Nadu electricity Board
- PNOC Exploration Corporation - Philippines
- Port Waratah Coal Services - Australia
- Cigading International Bulk Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Vizag Seaport Private Limited - India
- Manunggal Multi Energi - Indonesia
- Georgia Ports Authority, United States
- Leighton Contractors Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Heidelberg Cement - Germany
- Merrill Lynch Commodities Europe
- Bulk Trading Sa - Switzerland
- Toyota Tsusho Corporation, Japan
- Vedanta Resources Plc - India
- IHS Mccloskey Coal Group - USA
- Thai Mozambique Logistica
- Coal and Oil Company - UAE
- Semirara Mining Corp, Philippines
- Energy Link Ltd, New Zealand
- International Coal Ventures Pvt Ltd - India
- Trasteel International SA, Italy
- Siam City Cement PLC, Thailand
- The State Trading Corporation of India Ltd
- GVK Power & Infra Limited - India
- Cement Manufacturers Association - India
- Gujarat Mineral Development Corp Ltd - India
- Kapuas Tunggal Persada - Indonesia
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