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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, 13 September 11
CAPITAL COSTS OF INDIAN COAL MINING PROJECT - AN ANALYST VIEW
By Mr Dipesh Dipu, Director - Consulting (Mining), Deloitte Touche Tohmatsu India Private Limited
The coal mining sector that has been opened par ...
Tuesday, 13 September 11
INDONESIAS COAL SECTOR EYES 2012 BOOM - JG
The Jakarta Globe, Indonesian English language News paper reported that, Coal production is set to surge next year as coal miners bolster their busi ...
Tuesday, 13 September 11
DRY BULK RALLY MAINTAINS MOMENTUM AT START OF THE WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market kept its upward momentum at the start of the week, as the industry’s benchmark, the Baltic Dry Index (BDI) was up by 2.07% ...
Monday, 12 September 11
INDONESIAN GOVERNMENT HAS ALLOCATED MORE COAL FOR 2012
COALspot.com - Indonesian government has increased the domestic market obligation allocation to 82.07 million tons of coal for 2012, which is 4 perc ...
Saturday, 10 September 11
THE FREIGHT MARKET LIKELY TO BE FIRM NEXT WEEK - CAPT. REDDY
COALspot.com - The freight market continued the upward trend during last week with BDI crossing 1,800 points and closing at 1,838 points up by 5.63 ...
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- Planning Commission, India
- London Commodity Brokers - England
- Dalmia Cement Bharat India
- Bukit Makmur.PT - Indonesia
- Electricity Generating Authority of Thailand
- The State Trading Corporation of India Ltd
- Maheswari Brothers Coal Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- White Energy Company Limited
- Attock Cement Pakistan Limited
- Uttam Galva Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Bhatia International Limited - India
- Vizag Seaport Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Sojitz Corporation - Japan
- PowerSource Philippines DevCo
- Ministry of Finance - Indonesia
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- PTC India Limited - India
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- Star Paper Mills Limited - India
- GVK Power & Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- Alfred C Toepfer International GmbH - Germany
- Xindia Steels Limited - India
- Singapore Mercantile Exchange
- Straits Asia Resources Limited - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Romanian Commodities Exchange
- Agrawal Coal Company - India
- Indika Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Renaissance Capital - South Africa
- Grasim Industreis Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- Georgia Ports Authority, United States
- Independent Power Producers Association of India
- Salva Resources Pvt Ltd - India
- Latin American Coal - Colombia
- Minerals Council of Australia
- Banpu Public Company Limited - Thailand
- Altura Mining Limited, Indonesia
- Marubeni Corporation - India
- SMC Global Power, Philippines
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Coal and Oil Company - UAE
- Bayan Resources Tbk. - Indonesia
- IHS Mccloskey Coal Group - USA
- Kapuas Tunggal Persada - Indonesia
- Petron Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- Bhoruka Overseas - Indonesia
- Posco Energy - South Korea
- Eastern Coal Council - USA
- Mjunction Services Limited - India
- AsiaOL BioFuels Corp., Philippines
- Coalindo Energy - Indonesia
- Central Electricity Authority - India
- Larsen & Toubro Limited - India
- Malabar Cements Ltd - India
- Ministry of Mines - Canada
- Formosa Plastics Group - Taiwan
- Sinarmas Energy and Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- Savvy Resources Ltd - HongKong
- Wood Mackenzie - Singapore
- Port Waratah Coal Services - Australia
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Siam City Cement - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Videocon Industries ltd - India
- Leighton Contractors Pty Ltd - Australia
- Orica Mining Services - Indonesia
- CNBM International Corporation - China
- Price Waterhouse Coopers - Russia
- Pipit Mutiara Jaya. PT, Indonesia
- Iligan Light & Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Toyota Tsusho Corporation, Japan
- Kideco Jaya Agung - Indonesia
- Indo Tambangraya Megah - Indonesia
- Standard Chartered Bank - UAE
- Merrill Lynch Commodities Europe
- Indian Energy Exchange, India
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Transport, Egypt
- Wilmar Investment Holdings
- Global Green Power PLC Corporation, Philippines
- Anglo American - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parry Sugars Refinery, India
- Directorate General of MIneral and Coal - Indonesia
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- Chamber of Mines of South Africa
- Holcim Trading Pte Ltd - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Commonwealth Bank - Australia
- MS Steel International - UAE
- Semirara Mining and Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Chettinad Cement Corporation Ltd - India
- Rashtriya Ispat Nigam Limited - India
- South Luzon Thermal Energy Corporation
- Krishnapatnam Port Company Ltd. - India
- SMG Consultants - Indonesia
- Meralco Power Generation, Philippines
- Meenaskhi Energy Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Lanco Infratech Ltd - India
- Metalloyd Limited - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Medco Energi Mining Internasional
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Edison Trading Spa - Italy
- LBH Netherlands Bv - Netherlands
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- Goldman Sachs - Singapore
- Sakthi Sugars Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Tata Chemicals Ltd - India
- Kepco SPC Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Vedanta Resources Plc - India
- Intertek Mineral Services - Indonesia
- Kumho Petrochemical, South Korea
- Australian Coal Association
- Tamil Nadu electricity Board
- Miang Besar Coal Terminal - Indonesia
- Thai Mozambique Logistica
- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- Ambuja Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Africa Commodities Group - South Africa
- Orica Australia Pty. Ltd.
- Directorate Of Revenue Intelligence - India
- TNB Fuel Sdn Bhd - Malaysia
- Jaiprakash Power Ventures ltd
- Karbindo Abesyapradhi - Indoneisa
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- Indian Oil Corporation Limited
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Essar Steel Hazira Ltd - India
- Aditya Birla Group - India
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Development Corp, Philippines
- McConnell Dowell - Australia
- VISA Power Limited - India
- Mercuria Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Central Java Power - Indonesia
- Deloitte Consulting - India
- Eastern Energy - Thailand
- Energy Link Ltd, New Zealand
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Economic Council, Georgia
- New Zealand Coal & Carbon
- Rio Tinto Coal - Australia
- Manunggal Multi Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Sarangani Energy Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercator Lines Limited - India
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- Heidelberg Cement - Germany
- Indonesian Coal Mining Association
- Bharathi Cement Corporation - India
- Jindal Steel & Power Ltd - India
- Madhucon Powers Ltd - India
- Trasteel International SA, Italy
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