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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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Sunday, 28 August 11
FREIGHT MARKET COULD BE FIRM NEXT MONTH - VISTAAR
COALspot.com - The freight market continued the upward trend first half of the week . However, towards the end of the week lost momentum and the BDI ...
Saturday, 27 August 11
JAPANESE BULK CARRIER SETS RECORD ON NORTHERN SEA ROUTE - BARENTS OBSERVER
The Northern Sea Route will see its third record in less than a month when the largest ever bulk carrier to take the route leaves Murmansk next week ...
Saturday, 27 August 11
RBCT-INDIA ROUNDS FIXED AT AROUND US$ 12K - FEARNBULK
Handy
Stable but very positional markets across all segments in the Atlantic: the gap between owners and charterers rate ideas is building up as o ...
Friday, 26 August 11
TUAH TURANGGA AGUNG ACQUIRES AN ADDITIONAL 40% SHARES IN BARA PRIMA AGUNG
COALspot.com - PT Tuah Turangga Agung, a subsidiary of PT United Tractors Tbk, has signed an acquisition agreement to acquire 40% of PT Bara Prima A ...
Friday, 26 August 11
INTRACO EYES US$200 MIO COAL TAKEOVER - INSIDER STORIES
Heavy equipment distributor PT Intraco Penta Tbk, that was founded by Halex Halim, is scouting a coal acquisition with the valuation above US$200 mi ...
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- Sarangani Energy Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Bhushan Steel Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Price Waterhouse Coopers - Russia
- Therma Luzon, Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Indika Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Kepco SPC Power Corporation, Philippines
- Coal and Oil Company - UAE
- Tamil Nadu electricity Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vijayanagar Sugar Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mintek Dendrill Indonesia
- Anglo American - United Kingdom
- Semirara Mining Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Sojitz Corporation - Japan
- TeaM Sual Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- Central Electricity Authority - India
- Borneo Indobara - Indonesia
- Eastern Energy - Thailand
- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- Marubeni Corporation - India
- Bangladesh Power Developement Board
- Australian Coal Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Lanco Infratech Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Jindal Steel & Power Ltd - India
- Bayan Resources Tbk. - Indonesia
- Toyota Tsusho Corporation, Japan
- Chamber of Mines of South Africa
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Latin American Coal - Colombia
- Orica Mining Services - Indonesia
- Parliament of New Zealand
- VISA Power Limited - India
- Bhoruka Overseas - Indonesia
- The Treasury - Australian Government
- Indo Tambangraya Megah - Indonesia
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Singapore Mercantile Exchange
- McConnell Dowell - Australia
- Kohat Cement Company Ltd. - Pakistan
- OPG Power Generation Pvt Ltd - India
- Mercuria Energy - Indonesia
- Goldman Sachs - Singapore
- Aditya Birla Group - India
- GAC Shipping (India) Pvt Ltd
- International Coal Ventures Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Indogreen Group - Indonesia
- Ministry of Finance - Indonesia
- Agrawal Coal Company - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- GMR Energy Limited - India
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- Meralco Power Generation, Philippines
- Savvy Resources Ltd - HongKong
- Kapuas Tunggal Persada - Indonesia
- Heidelberg Cement - Germany
- AsiaOL BioFuels Corp., Philippines
- Wood Mackenzie - Singapore
- Meenaskhi Energy Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- Miang Besar Coal Terminal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Renaissance Capital - South Africa
- Sinarmas Energy and Mining - Indonesia
- Tata Chemicals Ltd - India
- Sakthi Sugars Limited - India
- GVK Power & Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- Karaikal Port Pvt Ltd - India
- Economic Council, Georgia
- GN Power Mariveles Coal Plant, Philippines
- Romanian Commodities Exchange
- Medco Energi Mining Internasional
- ASAPP Information Group - India
- Interocean Group of Companies - India
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Business Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Aboitiz Power Corporation - Philippines
- Siam City Cement - Thailand
- Deloitte Consulting - India
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- Mercator Lines Limited - India
- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- India Bulls Power Limited - India
- Energy Link Ltd, New Zealand
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Kumho Petrochemical, South Korea
- Makarim & Taira - Indonesia
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- PTC India Limited - India
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- Videocon Industries ltd - India
- Coalindo Energy - Indonesia
- Carbofer General Trading SA - India
- Global Green Power PLC Corporation, Philippines
- Eastern Coal Council - USA
- Minerals Council of Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- New Zealand Coal & Carbon
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- Australian Commodity Traders Exchange
- Sree Jayajothi Cements Limited - India
- Malabar Cements Ltd - India
- Attock Cement Pakistan Limited
- Orica Australia Pty. Ltd.
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- Bulk Trading Sa - Switzerland
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- Coastal Gujarat Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Baramulti Group, Indonesia
- Chettinad Cement Corporation Ltd - India
- IEA Clean Coal Centre - UK
- SN Aboitiz Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Bhatia International Limited - India
- CNBM International Corporation - China
- Posco Energy - South Korea
- Essar Steel Hazira Ltd - India
- Timah Investasi Mineral - Indoneisa
- Commonwealth Bank - Australia
- London Commodity Brokers - England
- Independent Power Producers Association of India
- Siam City Cement PLC, Thailand
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- Port Waratah Coal Services - Australia
- Central Java Power - Indonesia
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
- Holcim Trading Pte Ltd - Singapore
- Kobexindo Tractors - Indoneisa
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Bukit Asam (Persero) Tbk - Indonesia
- Xindia Steels Limited - India
- PowerSource Philippines DevCo
- The University of Queensland
- Madhucon Powers Ltd - India
- Energy Development Corp, Philippines
- Grasim Industreis Ltd - India
- Oldendorff Carriers - Singapore
- Planning Commission, India
- Larsen & Toubro Limited - India
- Gujarat Sidhee Cement - India
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- Samtan Co., Ltd - South Korea
- Thai Mozambique Logistica
- Edison Trading Spa - Italy
- Uttam Galva Steels Limited - India
- Iligan Light & Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Standard Chartered Bank - UAE
- Sindya Power Generating Company Private Ltd
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