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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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Saturday, 03 September 11
TNPL TO BUY 240K MT OF NON-COKING COAL
COALspot.com - Tamil Nadu Newsprint and Papers Limited (TNPL), is seeking to procure 240,000 MT +/- 5 percent of non-coking imported coal with ...
Friday, 02 September 11
CAPESIZE DEMAND LIFTS DRY BULK MARKET ONCE AGAIN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In what proves to be the best week of the year for Capesize owners, strong demand has helped propel the dry bulk market to new highs yesterday. The ...
Thursday, 01 September 11
EWP TO BUY 195KT OF VIETNAM COAL
COALspot.com - Korea Midland Power (KOMIPO) has issued an International open bidding for 490kt of sub bituminous coal, according to a bid invitation ...
Thursday, 01 September 11
DRY BULK MARKET TAKES GREAT LEAP FORWARD - NIKOS ROUSSANOGLOU
In what turned out to be a rather hopeful ending of the month, the last day of August saw the dry bulk market’s benchmark, the BDI (Baltic Dry ...
Tuesday, 30 August 11
FAUJI CEMENT CONSUMED MORE THAN 1 MILLION TONS OF LOCAL COAL
Cooper Minerals Inc.based in Vancouver, BC, Canada, is a junior exploration company engaged in the acquisition, exploration and development of miner ...
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- India Bulls Power Limited - India
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Marubeni Corporation - India
- Ministry of Mines - Canada
- The University of Queensland
- Coastal Gujarat Power Limited - India
- Indika Energy - Indonesia
- Baramulti Group, Indonesia
- Chamber of Mines of South Africa
- Kaltim Prima Coal - Indonesia
- Banpu Public Company Limited - Thailand
- San Jose City I Power Corp, Philippines
- Electricity Generating Authority of Thailand
- IEA Clean Coal Centre - UK
- Tamil Nadu electricity Board
- Interocean Group of Companies - India
- Binh Thuan Hamico - Vietnam
- Indogreen Group - Indonesia
- Formosa Plastics Group - Taiwan
- Attock Cement Pakistan Limited
- Vedanta Resources Plc - India
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- Thai Mozambique Logistica
- Cement Manufacturers Association - India
- Kapuas Tunggal Persada - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Toyota Tsusho Corporation, Japan
- Global Business Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Parliament of New Zealand
- Sical Logistics Limited - India
- Altura Mining Limited, Indonesia
- Indian Oil Corporation Limited
- Dalmia Cement Bharat India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GMR Energy Limited - India
- Star Paper Mills Limited - India
- Directorate General of MIneral and Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Oldendorff Carriers - Singapore
- Bhatia International Limited - India
- Makarim & Taira - Indonesia
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Independent Power Producers Association of India
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Directorate Of Revenue Intelligence - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- GVK Power & Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Australian Coal Association
- European Bulk Services B.V. - Netherlands
- Malabar Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Meenaskhi Energy Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Makmur.PT - Indonesia
- Parry Sugars Refinery, India
- Kalimantan Lumbung Energi - Indonesia
- Minerals Council of Australia
- Asmin Koalindo Tuhup - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Posco Energy - South Korea
- ASAPP Information Group - India
- Indian Energy Exchange, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- CNBM International Corporation - China
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- Central Java Power - Indonesia
- Goldman Sachs - Singapore
- SMG Consultants - Indonesia
- The State Trading Corporation of India Ltd
- Thiess Contractors Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Larsen & Toubro Limited - India
- Energy Development Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- SMC Global Power, Philippines
- Bulk Trading Sa - Switzerland
- South Luzon Thermal Energy Corporation
- Madhucon Powers Ltd - India
- Singapore Mercantile Exchange
- Ministry of Finance - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- Meralco Power Generation, Philippines
- Bhoruka Overseas - Indonesia
- Georgia Ports Authority, United States
- Mercator Lines Limited - India
- Sree Jayajothi Cements Limited - India
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- GAC Shipping (India) Pvt Ltd
- Aboitiz Power Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Grasim Industreis Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Borneo Indobara - Indonesia
- Australian Commodity Traders Exchange
- Chettinad Cement Corporation Ltd - India
- Mintek Dendrill Indonesia
- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- Ambuja Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Sojitz Corporation - Japan
- Coalindo Energy - Indonesia
- Siam City Cement - Thailand
- Standard Chartered Bank - UAE
- Africa Commodities Group - South Africa
- Bangladesh Power Developement Board
- Electricity Authority, New Zealand
- SN Aboitiz Power Inc, Philippines
- Mjunction Services Limited - India
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Mercuria Energy - Indonesia
- Intertek Mineral Services - Indonesia
- New Zealand Coal & Carbon
- Globalindo Alam Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Xindia Steels Limited - India
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Maheswari Brothers Coal Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- Coal and Oil Company - UAE
- Ministry of Transport, Egypt
- Antam Resourcindo - Indonesia
- IHS Mccloskey Coal Group - USA
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- Sarangani Energy Corporation, Philippines
- Petron Corporation, Philippines
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- The Treasury - Australian Government
- Savvy Resources Ltd - HongKong
- Lanco Infratech Ltd - India
- Deloitte Consulting - India
- Latin American Coal - Colombia
- London Commodity Brokers - England
- Essar Steel Hazira Ltd - India
- Eastern Energy - Thailand
- Semirara Mining and Power Corporation, Philippines
- PowerSource Philippines DevCo
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- Therma Luzon, Inc, Philippines
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- Iligan Light & Power Inc, Philippines
- Central Electricity Authority - India
- Planning Commission, India
- Renaissance Capital - South Africa
- Jaiprakash Power Ventures ltd
- Kohat Cement Company Ltd. - Pakistan
- Energy Link Ltd, New Zealand
- MS Steel International - UAE
- VISA Power Limited - India
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Aditya Birla Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- Samtan Co., Ltd - South Korea
- TeaM Sual Corporation - Philippines
- Bharathi Cement Corporation - India
- Timah Investasi Mineral - Indoneisa
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- PNOC Exploration Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- Global Green Power PLC Corporation, Philippines
- Edison Trading Spa - Italy
- Bukit Baiduri Energy - Indonesia
- Economic Council, Georgia
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