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