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