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