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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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Tuesday, 06 September 11
SEMEN GRESIK TO ACQUIRE COAL MINE FOR RP. 1 TRILLION
COALspot.com - PT Semen Gresik Tbk (SMGR) is planning to acquire a low calorific value coal concession (IUP). According to Semen Gresik, the coal mi ...
Tuesday, 06 September 11
DRY BULK MARKETS RALLY POWERS THROUGH TO NEW WEEK, BUT A CORRECTION COULD BE OVERDUE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market’s freights rates kept leaping forwards during the beginning of the week, with the industry’s benchmark, the Baltic D ...
Monday, 05 September 11
TNPL POSTPONES BID OPENING UNTIL 12 SEPTEMBER 2011
COALspot.com - TNPL has postponed submission of the offer until 12 September 2011 on request from the supplier, an Indian trader said.
Due to Ram ...
Monday, 05 September 11
INDONESIAN COAL BENCHMARK PRICE - ANALYSIS
Analyst : Sunil K Kumbhat
COALspot.com - As a part of the Government’s efforts to stop transfer pricing abuses which have resulted in the los ...
Saturday, 03 September 11
FEW SHIPS REPORTED FIXED FROM INDONESIA TO INDIA - VISTAAR
COALspot.com - The freight market continued the upward trend during last week with BDI up by about 13 pct closing at 1,740 points and cape index up ...
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- Holcim Trading Pte Ltd - Singapore
- Siam City Cement - Thailand
- Billiton Holdings Pty Ltd - Australia
- Medco Energi Mining Internasional
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Karbindo Abesyapradhi - Indoneisa
- Metalloyd Limited - United Kingdom
- Binh Thuan Hamico - Vietnam
- Wood Mackenzie - Singapore
- European Bulk Services B.V. - Netherlands
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Dalmia Cement Bharat India
- Samtan Co., Ltd - South Korea
- LBH Netherlands Bv - Netherlands
- Vedanta Resources Plc - India
- Jindal Steel & Power Ltd - India
- Marubeni Corporation - India
- Central Electricity Authority - India
- Trasteel International SA, Italy
- Cement Manufacturers Association - India
- Lanco Infratech Ltd - India
- Sakthi Sugars Limited - India
- Indika Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- Kapuas Tunggal Persada - Indonesia
- Bulk Trading Sa - Switzerland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jaiprakash Power Ventures ltd
- Riau Bara Harum - Indonesia
- Tamil Nadu electricity Board
- Neyveli Lignite Corporation Ltd, - India
- Vizag Seaport Private Limited - India
- The Treasury - Australian Government
- Energy Development Corp, Philippines
- Antam Resourcindo - Indonesia
- Indogreen Group - Indonesia
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Mercuria Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Posco Energy - South Korea
- Banpu Public Company Limited - Thailand
- Power Finance Corporation Ltd., India
- PowerSource Philippines DevCo
- Essar Steel Hazira Ltd - India
- Eastern Energy - Thailand
- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Karaikal Port Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Kobexindo Tractors - Indoneisa
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Mintek Dendrill Indonesia
- Coalindo Energy - Indonesia
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- London Commodity Brokers - England
- Straits Asia Resources Limited - Singapore
- Miang Besar Coal Terminal - Indonesia
- Heidelberg Cement - Germany
- Electricity Generating Authority of Thailand
- Sinarmas Energy and Mining - Indonesia
- ICICI Bank Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- CIMB Investment Bank - Malaysia
- Timah Investasi Mineral - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Petron Corporation, Philippines
- Bharathi Cement Corporation - India
- Bukit Baiduri Energy - Indonesia
- Commonwealth Bank - Australia
- Sical Logistics Limited - India
- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- AsiaOL BioFuels Corp., Philippines
- SN Aboitiz Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhushan Steel Limited - India
- Attock Cement Pakistan Limited
- Uttam Galva Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Independent Power Producers Association of India
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Edison Trading Spa - Italy
- Sarangani Energy Corporation, Philippines
- Deloitte Consulting - India
- Parliament of New Zealand
- Tata Chemicals Ltd - India
- Global Coal Blending Company Limited - Australia
- Kepco SPC Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Bangladesh Power Developement Board
- Ministry of Transport, Egypt
- Carbofer General Trading SA - India
- Sree Jayajothi Cements Limited - India
- Thai Mozambique Logistica
- Ind-Barath Power Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Anglo American - United Kingdom
- Indian Energy Exchange, India
- Australian Coal Association
- Borneo Indobara - Indonesia
- Global Business Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Maheswari Brothers Coal Limited - India
- IEA Clean Coal Centre - UK
- VISA Power Limited - India
- Altura Mining Limited, Indonesia
- Iligan Light & Power Inc, Philippines
- Malabar Cements Ltd - India
- MS Steel International - UAE
- IHS Mccloskey Coal Group - USA
- Global Green Power PLC Corporation, Philippines
- Baramulti Group, Indonesia
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- Planning Commission, India
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- Ambuja Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Intertek Mineral Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- McConnell Dowell - Australia
- White Energy Company Limited
- Rio Tinto Coal - Australia
- Central Java Power - Indonesia
- Aditya Birla Group - India
- Barasentosa Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- Leighton Contractors Pty Ltd - Australia
- Singapore Mercantile Exchange
- The University of Queensland
- Indonesian Coal Mining Association
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Finance - Indonesia
- ASAPP Information Group - India
- New Zealand Coal & Carbon
- PNOC Exploration Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Price Waterhouse Coopers - Russia
- Bhoruka Overseas - Indonesia
- Africa Commodities Group - South Africa
- CNBM International Corporation - China
- Georgia Ports Authority, United States
- Semirara Mining Corp, Philippines
- Bhatia International Limited - India
- Agrawal Coal Company - India
- Semirara Mining and Power Corporation, Philippines
- Xindia Steels Limited - India
- Port Waratah Coal Services - Australia
- Gujarat Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Directorate Of Revenue Intelligence - India
- Star Paper Mills Limited - India
- Alfred C Toepfer International GmbH - Germany
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- SMG Consultants - Indonesia
- TeaM Sual Corporation - Philippines
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- Interocean Group of Companies - India
- Kumho Petrochemical, South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Minerals Council of Australia
- Maharashtra Electricity Regulatory Commission - India
- Economic Council, Georgia
- Wilmar Investment Holdings
- Ministry of Mines - Canada
- Meenaskhi Energy Private Limited - India
- Oldendorff Carriers - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
- Coastal Gujarat Power Limited - India
- Madhucon Powers Ltd - India
- Videocon Industries ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Grasim Industreis Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Formosa Plastics Group - Taiwan
- India Bulls Power Limited - India
- Orica Mining Services - Indonesia
- GMR Energy Limited - India
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