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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, 25 August 11
OPG EXPECTS COAL PRICES TO REMAIN FIRM IN THE SHORT TERM
COALspot.com - Revenue of OPG, the developer and operator of Group Captive power plants in India up 188% to £33.15m and Income from continuing ...
Thursday, 25 August 11
PAITON POWER LOOKING FOR 3.96 MILLION TONS OF COAL
COALspot.com - PT Pembangkit Jawa Bali (PJB) is looking for 3.96 million tons coal with calorific value 4,800 kcal/kg on as received basis. Accordin ...
Tuesday, 23 August 11
ICMA CALLS GOVERNMENT TO REVIEW EXPORT BAN REGULATION
COALspot.com - Chairman of the Indonesian Coal Mining Association (ICMA) Bob Kamandanu asks the government to review the regulation that being draft ...
Tuesday, 23 August 11
ADARO ENERGY ACQUIRES 75% STAKE OF PT MUSTIKA INDAH PERMAI FOR US$ 222.5 MILLION
COALspot.com - PT Alam Tri Abadi, a wholly owned subsidiary of PT Adaro Energy Tbk, signed a share purchase agreement to acquire a 75% stake of PT M ...
Tuesday, 23 August 11
COAL DEMAND IS REMAINED STRONG IN SPITE OF CURRENT GLOBAL ECONOMIC UNCERTAINTY - BUMI
COALspot.com - Indonesia's largest coal producer, PT Bumi Resources, Tbk (BUMI)'s sales revenue has increased to US$1.79 billion (compared with US ...
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- Eastern Coal Council - USA
- Maheswari Brothers Coal Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Xindia Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Cement Manufacturers Association - India
- Sree Jayajothi Cements Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bangladesh Power Developement Board
- Kumho Petrochemical, South Korea
- Kobexindo Tractors - Indoneisa
- Price Waterhouse Coopers - Russia
- Karaikal Port Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- IHS Mccloskey Coal Group - USA
- Interocean Group of Companies - India
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- CIMB Investment Bank - Malaysia
- Central Electricity Authority - India
- Kideco Jaya Agung - Indonesia
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Vijayanagar Sugar Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- ASAPP Information Group - India
- GMR Energy Limited - India
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- Anglo American - United Kingdom
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- The University of Queensland
- Coastal Gujarat Power Limited - India
- San Jose City I Power Corp, Philippines
- Minerals Council of Australia
- Bukit Makmur.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Petron Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Mjunction Services Limited - India
- Tamil Nadu electricity Board
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- International Coal Ventures Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Wilmar Investment Holdings
- Sinarmas Energy and Mining - Indonesia
- Electricity Generating Authority of Thailand
- MS Steel International - UAE
- Georgia Ports Authority, United States
- Ministry of Finance - Indonesia
- The State Trading Corporation of India Ltd
- Intertek Mineral Services - Indonesia
- Manunggal Multi Energi - Indonesia
- SMG Consultants - Indonesia
- Latin American Coal - Colombia
- Grasim Industreis Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Pendopo Energi Batubara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PowerSource Philippines DevCo
- TeaM Sual Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Mercuria Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Parliament of New Zealand
- Baramulti Group, Indonesia
- Lanco Infratech Ltd - India
- Electricity Authority, New Zealand
- Global Business Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Trasteel International SA, Italy
- Indian Oil Corporation Limited
- Vizag Seaport Private Limited - India
- Africa Commodities Group - South Africa
- Riau Bara Harum - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Global Coal Blending Company Limited - Australia
- Thiess Contractors Indonesia
- India Bulls Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Antam Resourcindo - Indonesia
- Indika Energy - Indonesia
- Posco Energy - South Korea
- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Planning Commission, India
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Ind-Barath Power Infra Limited - India
- Vedanta Resources Plc - India
- Jindal Steel & Power Ltd - India
- Energy Development Corp, Philippines
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- Tata Chemicals Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Australian Coal Association
- Essar Steel Hazira Ltd - India
- Standard Chartered Bank - UAE
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- Sindya Power Generating Company Private Ltd
- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- European Bulk Services B.V. - Netherlands
- Energy Link Ltd, New Zealand
- PNOC Exploration Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement PLC, Thailand
- Sical Logistics Limited - India
- OPG Power Generation Pvt Ltd - India
- Independent Power Producers Association of India
- Commonwealth Bank - Australia
- Simpson Spence & Young - Indonesia
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- Marubeni Corporation - India
- Sarangani Energy Corporation, Philippines
- Gujarat Sidhee Cement - India
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
- Parry Sugars Refinery, India
- Directorate General of MIneral and Coal - Indonesia
- Eastern Energy - Thailand
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- New Zealand Coal & Carbon
- Ambuja Cements Ltd - India
- Makarim & Taira - Indonesia
- Orica Australia Pty. Ltd.
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Carbofer General Trading SA - India
- Indonesian Coal Mining Association
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- Wood Mackenzie - Singapore
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Videocon Industries ltd - India
- Deloitte Consulting - India
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- Star Paper Mills Limited - India
- Kaltim Prima Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- PTC India Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Jorong Barutama Greston.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bhatia International Limited - India
- CNBM International Corporation - China
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Mintek Dendrill Indonesia
- McConnell Dowell - Australia
- Kalimantan Lumbung Energi - Indonesia
- White Energy Company Limited
- Altura Mining Limited, Indonesia
- Sakthi Sugars Limited - India
- SMC Global Power, Philippines
- South Luzon Thermal Energy Corporation
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Mining Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Meenaskhi Energy Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- ICICI Bank Limited - India
- Central Java Power - Indonesia
- Singapore Mercantile Exchange
- Ministry of Mines - Canada
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
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