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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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Friday, 09 September 11
SUPRA BARA SECURES $20 MILLION LOAN - JP
The Jakarta Post reported that, Coal miner PT Supra Bara Energi says it has secured a US$20 million loan facility from BNP Paribas to buy heavy equi ...
Friday, 09 September 11
CAPESIZE CAN SECURE USD 17-18K SHORT PERIOD - FEARNBULK
Handy
The US Gulf has remained relatively steady, slightly more activity in the South Atlantic with owners aiming for low to mid USD 20k´s f ...
Thursday, 08 September 11
UKRAINES COAL PRODUCTION TO RISE 8% - IFANDP
Industrial fuels & power reported that, Ukraine will increase its coal output by about 8% this year compared to last year, said the country&rsqu ...
Thursday, 08 September 11
DRY BULK MARKETS RALLY COMES TO AN END - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
As was widely expected by analysts and shipbrokers alike, the latest rally of the dry bulk market came to a halt yesterday, with the Baltic Dry Inde ...
Thursday, 08 September 11
TRADA MARITIME BUYS GUNUNG BARA UTAMA
Insider Stories reported that, PT Trada Maritime Tbk (TRAM) has purchased convertible bonds issued by PT Awesome Coal from Zakia Limited. The memora ...
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- ICICI Bank Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aditya Birla Group - India
- Deloitte Consulting - India
- Sical Logistics Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
- Central Java Power - Indonesia
- Madhucon Powers Ltd - India
- Videocon Industries ltd - India
- Gujarat Sidhee Cement - India
- Cigading International Bulk Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Salva Resources Pvt Ltd - India
- Chamber of Mines of South Africa
- Siam City Cement PLC, Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Formosa Plastics Group - Taiwan
- Barasentosa Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Singapore Mercantile Exchange
- ASAPP Information Group - India
- Samtan Co., Ltd - South Korea
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- Coal and Oil Company - UAE
- Rio Tinto Coal - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- Global Coal Blending Company Limited - Australia
- Central Electricity Authority - India
- SN Aboitiz Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Medco Energi Mining Internasional
- Mercator Lines Limited - India
- Oldendorff Carriers - Singapore
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- The University of Queensland
- Ministry of Finance - Indonesia
- Standard Chartered Bank - UAE
- Timah Investasi Mineral - Indoneisa
- Semirara Mining Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Energy Development Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Savvy Resources Ltd - HongKong
- Bahari Cakrawala Sebuku - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bukit Baiduri Energy - Indonesia
- Planning Commission, India
- Indo Tambangraya Megah - Indonesia
- New Zealand Coal & Carbon
- Heidelberg Cement - Germany
- Australian Coal Association
- Antam Resourcindo - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Goldman Sachs - Singapore
- San Jose City I Power Corp, Philippines
- Essar Steel Hazira Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Toyota Tsusho Corporation, Japan
- Mjunction Services Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Commonwealth Bank - Australia
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Tamil Nadu electricity Board
- Power Finance Corporation Ltd., India
- Maheswari Brothers Coal Limited - India
- Bayan Resources Tbk. - Indonesia
- Ind-Barath Power Infra Limited - India
- Merrill Lynch Commodities Europe
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- Xindia Steels Limited - India
- Bhoruka Overseas - Indonesia
- Meralco Power Generation, Philippines
- Agrawal Coal Company - India
- Indonesian Coal Mining Association
- Meenaskhi Energy Private Limited - India
- Jindal Steel & Power Ltd - India
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- PNOC Exploration Corporation - Philippines
- Metalloyd Limited - United Kingdom
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- Carbofer General Trading SA - India
- Global Business Power Corporation, Philippines
- Independent Power Producers Association of India
- Gujarat Mineral Development Corp Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- CNBM International Corporation - China
- Tata Chemicals Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Star Paper Mills Limited - India
- Economic Council, Georgia
- Thai Mozambique Logistica
- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Ministry of Transport, Egypt
- Bharathi Cement Corporation - India
- Lanco Infratech Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Cement Manufacturers Association - India
- SMG Consultants - Indonesia
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- Australian Commodity Traders Exchange
- Attock Cement Pakistan Limited
- Kumho Petrochemical, South Korea
- Marubeni Corporation - India
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- VISA Power Limited - India
- Uttam Galva Steels Limited - India
- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- Latin American Coal - Colombia
- Interocean Group of Companies - India
- McConnell Dowell - Australia
- Renaissance Capital - South Africa
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Sree Jayajothi Cements Limited - India
- CIMB Investment Bank - Malaysia
- Baramulti Group, Indonesia
- Kaltim Prima Coal - Indonesia
- Minerals Council of Australia
- Ministry of Mines - Canada
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Green Power PLC Corporation, Philippines
- SMC Global Power, Philippines
- Electricity Authority, New Zealand
- Parliament of New Zealand
- Kepco SPC Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Manunggal Multi Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Intertek Mineral Services - Indonesia
- Electricity Generating Authority of Thailand
- Vedanta Resources Plc - India
- Makarim & Taira - Indonesia
- Bangladesh Power Developement Board
- White Energy Company Limited
- Sojitz Corporation - Japan
- IEA Clean Coal Centre - UK
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- MS Steel International - UAE
- Malabar Cements Ltd - India
- Bhatia International Limited - India
- Coalindo Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Posco Energy - South Korea
- Grasim Industreis Ltd - India
- Orica Mining Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Globalindo Alam Lestari - Indonesia
- London Commodity Brokers - England
- Directorate General of MIneral and Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Mintek Dendrill Indonesia
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- PowerSource Philippines DevCo
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- The State Trading Corporation of India Ltd
- Petron Corporation, Philippines
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Wilmar Investment Holdings
- International Coal Ventures Pvt Ltd - India
- Siam City Cement - Thailand
- Sarangani Energy Corporation, Philippines
- Edison Trading Spa - Italy
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