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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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Thursday, 15 September 11
BOTSWANA COAL AND ENERGY CONFERENCE 2011
Press Release - Botswana Coal and Energy Conference 2011 | 29-30 November 2011 | Gaborone. Botswana represents Africa’s exciting new coal and ...
Thursday, 15 September 11
DRY BULK MARKET EDGING FURTHER UP THE SCALE, CLOSING IN ON 2,000 POINTS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market was up once again yesterday, reaching 1,927 points, or 1.375 higher on the day. Thus, it has kept its rising trend established d ...
Wednesday, 14 September 11
INDO STRAITS BAGS 2.4 MILLION TON COAL TRANSPORTATION CONTRACT FROM ARUTMIN
COALspot.com - PT Indo Straits Tbk (PTIS) bagged a contract to tranship about 2.40 million tons of coal over an initial period of 6 months fro ...
Wednesday, 14 September 11
DUTA PERTIWI DISCOVERS COAL RESERVE - INSIDER STORIES
Insider Stories reported that, PT Duta Pertiwi Nusantara Tbk (DPNS) yesterday steeply jumped 24.56% to Rp710 a share after the company discove ...
Wednesday, 14 September 11
GOVT SETS SEPTEMBER COAL REFERENCE PRICE AT $116.26 PER TON
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia has set the September 2011 coal reference price at US$ 116.26 per ton slightly ...
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- Star Paper Mills Limited - India
- Kumho Petrochemical, South Korea
- Baramulti Group, Indonesia
- Medco Energi Mining Internasional
- Planning Commission, India
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- The University of Queensland
- Anglo American - United Kingdom
- SMC Global Power, Philippines
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- LBH Netherlands Bv - Netherlands
- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- Bhatia International Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Goldman Sachs - Singapore
- CIMB Investment Bank - Malaysia
- The State Trading Corporation of India Ltd
- Price Waterhouse Coopers - Russia
- Posco Energy - South Korea
- Cement Manufacturers Association - India
- Agrawal Coal Company - India
- Xindia Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Renaissance Capital - South Africa
- Grasim Industreis Ltd - India
- Vizag Seaport Private Limited - India
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- Eastern Coal Council - USA
- Petron Corporation, Philippines
- Georgia Ports Authority, United States
- Borneo Indobara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Orica Mining Services - Indonesia
- VISA Power Limited - India
- Kaltim Prima Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Mercator Lines Limited - India
- Energy Link Ltd, New Zealand
- Sical Logistics Limited - India
- Aboitiz Power Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Development Corp, Philippines
- Directorate Of Revenue Intelligence - India
- PTC India Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Minerals Council of Australia
- South Luzon Thermal Energy Corporation
- Jaiprakash Power Ventures ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Commonwealth Bank - Australia
- Bharathi Cement Corporation - India
- TeaM Sual Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bhoruka Overseas - Indonesia
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coastal Gujarat Power Limited - India
- Rio Tinto Coal - Australia
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Electricity Authority, New Zealand
- European Bulk Services B.V. - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Australian Coal Association
- Lanco Infratech Ltd - India
- Standard Chartered Bank - UAE
- Kepco SPC Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Orica Australia Pty. Ltd.
- Toyota Tsusho Corporation, Japan
- Thai Mozambique Logistica
- Maheswari Brothers Coal Limited - India
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- Kideco Jaya Agung - Indonesia
- MS Steel International - UAE
- Larsen & Toubro Limited - India
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- India Bulls Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Siam City Cement - Thailand
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Alfred C Toepfer International GmbH - Germany
- Asmin Koalindo Tuhup - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- SN Aboitiz Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Jindal Steel & Power Ltd - India
- ASAPP Information Group - India
- New Zealand Coal & Carbon
- Edison Trading Spa - Italy
- Africa Commodities Group - South Africa
- Salva Resources Pvt Ltd - India
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- Altura Mining Limited, Indonesia
- Siam City Cement PLC, Thailand
- Formosa Plastics Group - Taiwan
- Bangladesh Power Developement Board
- Savvy Resources Ltd - HongKong
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dalmia Cement Bharat India
- Simpson Spence & Young - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- GMR Energy Limited - India
- International Coal Ventures Pvt Ltd - India
- Romanian Commodities Exchange
- Karaikal Port Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Samtan Co., Ltd - South Korea
- Billiton Holdings Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- The Treasury - Australian Government
- Wilmar Investment Holdings
- Singapore Mercantile Exchange
- Parliament of New Zealand
- Ministry of Mines - Canada
- Kobexindo Tractors - Indoneisa
- Tamil Nadu electricity Board
- Global Green Power PLC Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Tata Chemicals Ltd - India
- Coal and Oil Company - UAE
- Ministry of Finance - Indonesia
- Uttam Galva Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- San Jose City I Power Corp, Philippines
- Therma Luzon, Inc, Philippines
- Power Finance Corporation Ltd., India
- Central Java Power - Indonesia
- Interocean Group of Companies - India
- ICICI Bank Limited - India
- Mintek Dendrill Indonesia
- Deloitte Consulting - India
- Indogreen Group - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Energy - Thailand
- Global Coal Blending Company Limited - Australia
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- Leighton Contractors Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Ambuja Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Heidelberg Cement - Germany
- White Energy Company Limited
- CNBM International Corporation - China
- Gujarat Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- Oldendorff Carriers - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Madhucon Powers Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Essar Steel Hazira Ltd - India
- Indonesian Coal Mining Association
- Economic Council, Georgia
- Aditya Birla Group - India
- Ind-Barath Power Infra Limited - India
- Indika Energy - Indonesia
- London Commodity Brokers - England
- Carbofer General Trading SA - India
- Metalloyd Limited - United Kingdom
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- Globalindo Alam Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Banpu Public Company Limited - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Mercuria Energy - Indonesia
- GVK Power & Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Central Electricity Authority - India
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
- Meenaskhi Energy Private Limited - India
- Semirara Mining Corp, Philippines
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