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