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