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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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Thursday, 08 September 11
PETROSEA ADDS US$730 MIO CONTRACT
Coal mining contractor PT Petrosea Tbk (PTRO), a majority owned subsidiary of energy integrated company PT Indika Energy Tbk (INDY), has secured a U ...
Wednesday, 07 September 11
ANOTHER EXCEPTIONALLY STRONG WEEK FOR THE CAPESIZE MARKET - BRS
The very strong rise in Cape rates pushed through an overall improvement in the BDI this week, although relatively little benefit from the Capes has ...
Wednesday, 07 September 11
INDIA HIT BY INDONESIAS COAL PRICE - TEMPO INTERACTIVE
TEMPO Interactive, an Indonesian online news portal reported that, The Indian government has complained about the price increase of Indonesian coal, ...
Wednesday, 07 September 11
SAMPUR POWER AGREEMENT SIGNED - DAILY NEWS
Daily News, Sri Lank's national news paper reported that, the agreement for the setting up of a 500 MW coal-fired power plant at Sampur, Trincomale ...
Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
COALspot.com - This is a special interview about Indonesian proposed coal export ban by 2014, with Mr. Dipesh Dipu, Director of Deloitte Touche Tohm ...
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- Star Paper Mills Limited - India
- Price Waterhouse Coopers - Russia
- Ministry of Finance - Indonesia
- Chamber of Mines of South Africa
- Semirara Mining and Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- Attock Cement Pakistan Limited
- PetroVietnam Power Coal Import and Supply Company
- Antam Resourcindo - Indonesia
- Ministry of Transport, Egypt
- Kohat Cement Company Ltd. - Pakistan
- Aboitiz Power Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Electricity Authority, New Zealand
- The University of Queensland
- Samtan Co., Ltd - South Korea
- Altura Mining Limited, Indonesia
- New Zealand Coal & Carbon
- Krishnapatnam Port Company Ltd. - India
- Coalindo Energy - Indonesia
- Georgia Ports Authority, United States
- CNBM International Corporation - China
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
- Jindal Steel & Power Ltd - India
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Bahari Cakrawala Sebuku - Indonesia
- IEA Clean Coal Centre - UK
- Global Coal Blending Company Limited - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Goldman Sachs - Singapore
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- Australian Coal Association
- Madhucon Powers Ltd - India
- Edison Trading Spa - Italy
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Maheswari Brothers Coal Limited - India
- Simpson Spence & Young - Indonesia
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Latin American Coal - Colombia
- South Luzon Thermal Energy Corporation
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Bhoruka Overseas - Indonesia
- MS Steel International - UAE
- Bayan Resources Tbk. - Indonesia
- Sical Logistics Limited - India
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- Romanian Commodities Exchange
- Metalloyd Limited - United Kingdom
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Vizag Seaport Private Limited - India
- Straits Asia Resources Limited - Singapore
- Wood Mackenzie - Singapore
- Intertek Mineral Services - Indonesia
- Lanco Infratech Ltd - India
- Singapore Mercantile Exchange
- Gujarat Sidhee Cement - India
- San Jose City I Power Corp, Philippines
- The Treasury - Australian Government
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Indian Oil Corporation Limited
- TeaM Sual Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- VISA Power Limited - India
- Mintek Dendrill Indonesia
- Parry Sugars Refinery, India
- Kartika Selabumi Mining - Indonesia
- Anglo American - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Minerals Council of Australia
- IHS Mccloskey Coal Group - USA
- GVK Power & Infra Limited - India
- London Commodity Brokers - England
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Pipit Mutiara Jaya. PT, Indonesia
- PTC India Limited - India
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- Eastern Energy - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Toyota Tsusho Corporation, Japan
- Agrawal Coal Company - India
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Ministry of Mines - Canada
- Thai Mozambique Logistica
- Chettinad Cement Corporation Ltd - India
- Cement Manufacturers Association - India
- Malabar Cements Ltd - India
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Interocean Group of Companies - India
- Bharathi Cement Corporation - India
- Bangladesh Power Developement Board
- Karbindo Abesyapradhi - Indoneisa
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- Bhatia International Limited - India
- Ind-Barath Power Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Petron Corporation, Philippines
- Videocon Industries ltd - India
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Indogreen Group - Indonesia
- India Bulls Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Bukit Baiduri Energy - Indonesia
- Marubeni Corporation - India
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Makarim & Taira - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bhushan Steel Limited - India
- Power Finance Corporation Ltd., India
- Wilmar Investment Holdings
- CIMB Investment Bank - Malaysia
- Xindia Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- GAC Shipping (India) Pvt Ltd
- Therma Luzon, Inc, Philippines
- GMR Energy Limited - India
- Global Green Power PLC Corporation, Philippines
- Aditya Birla Group - India
- Energy Link Ltd, New Zealand
- SN Aboitiz Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Indo Tambangraya Megah - Indonesia
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Eastern Coal Council - USA
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- Siam City Cement - Thailand
- Heidelberg Cement - Germany
- Mjunction Services Limited - India
- Oldendorff Carriers - Singapore
- McConnell Dowell - Australia
- Carbofer General Trading SA - India
- Barasentosa Lestari - Indonesia
- Rio Tinto Coal - Australia
- Coal and Oil Company - UAE
- PowerSource Philippines DevCo
- Asmin Koalindo Tuhup - Indonesia
- Karaikal Port Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Renaissance Capital - South Africa
- White Energy Company Limited
- Neyveli Lignite Corporation Ltd, - India
- Kaltim Prima Coal - Indonesia
- Indika Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Riau Bara Harum - Indonesia
- Ambuja Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Australian Commodity Traders Exchange
- Economic Council, Georgia
- Vedanta Resources Plc - India
- Planning Commission, India
- Sojitz Corporation - Japan
- Deloitte Consulting - India
- Timah Investasi Mineral - Indoneisa
- Sakthi Sugars Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Meenaskhi Energy Private Limited - India
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- Orica Australia Pty. Ltd.
- Uttam Galva Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- Indian Energy Exchange, India
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Medco Energi Mining Internasional
- Essar Steel Hazira Ltd - India
- Holcim Trading Pte Ltd - Singapore
- SMC Global Power, Philippines
- Kideco Jaya Agung - Indonesia
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
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