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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, 23 August 11
PENRHYN COAL USING EVERGREEN ENERGYS COAL UPGRADING PROCESS
Evergreen Energy Inc has announced the successful testing results of the initial batches of Penrhyn coal using Evergreen Energy’s coal upgradi ...
Tuesday, 23 August 11
A SHARP INCREASE IN THE BDI - BRS
A sharp increase in the BDI this week, driven by the rise in Capesize rates. Overall the BDI was up 13.5% to 1,462 points on the back of a 20% surge ...
Monday, 22 August 11
INDONESIA TO BAN BELOW 5700 KCAL/KG COAL FOR EXPORT
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia is in the process of drafting a regulation which is requiring mine owners ...
Monday, 22 August 11
JATENERGY AGREED TO FORM JV WITH AN INDONESIAN COAL MINING COMPANY
COALspot.com - Australian’s listed company, Jatenergy Limited has entered conditional agreement to form joint venture with Indonesia’s c ...
Monday, 22 August 11
NTPC TO IMPORT 16 MILLION TON OF COAL TO BRIDGE THE GAP
COALspot.com - NTPC to import 16 million tons of imported coal, which is equivalent to 23-24 million tons of Indian coal to bridge the gap.
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- Ministry of Finance - Indonesia
- Bhushan Steel Limited - India
- Global Business Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Neyveli Lignite Corporation Ltd, - India
- OPG Power Generation Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Renaissance Capital - South Africa
- Semirara Mining Corp, Philippines
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Parliament of New Zealand
- New Zealand Coal & Carbon
- GMR Energy Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CIMB Investment Bank - Malaysia
- The State Trading Corporation of India Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Interocean Group of Companies - India
- Wood Mackenzie - Singapore
- The University of Queensland
- Bangladesh Power Developement Board
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- Kaltim Prima Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- GVK Power & Infra Limited - India
- Star Paper Mills Limited - India
- Borneo Indobara - Indonesia
- Larsen & Toubro Limited - India
- SMC Global Power, Philippines
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- Indogreen Group - Indonesia
- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- VISA Power Limited - India
- Coal and Oil Company - UAE
- Mjunction Services Limited - India
- ASAPP Information Group - India
- Wilmar Investment Holdings
- Sree Jayajothi Cements Limited - India
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Bahari Cakrawala Sebuku - Indonesia
- McConnell Dowell - Australia
- Dalmia Cement Bharat India
- Directorate General of MIneral and Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asmin Koalindo Tuhup - Indonesia
- Formosa Plastics Group - Taiwan
- Videocon Industries ltd - India
- Singapore Mercantile Exchange
- Aboitiz Power Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- PNOC Exploration Corporation - Philippines
- Grasim Industreis Ltd - India
- Barasentosa Lestari - Indonesia
- Medco Energi Mining Internasional
- Semirara Mining and Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Intertek Mineral Services - Indonesia
- Siam City Cement - Thailand
- Goldman Sachs - Singapore
- AsiaOL BioFuels Corp., Philippines
- Timah Investasi Mineral - Indoneisa
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- Anglo American - United Kingdom
- Gujarat Sidhee Cement - India
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- Global Green Power PLC Corporation, Philippines
- Heidelberg Cement - Germany
- Australian Coal Association
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Uttam Galva Steels Limited - India
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
- Miang Besar Coal Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- Toyota Tsusho Corporation, Japan
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- Economic Council, Georgia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Binh Thuan Hamico - Vietnam
- Therma Luzon, Inc, Philippines
- CNBM International Corporation - China
- Riau Bara Harum - Indonesia
- PTC India Limited - India
- Electricity Generating Authority of Thailand
- LBH Netherlands Bv - Netherlands
- Trasteel International SA, Italy
- The Treasury - Australian Government
- Energy Development Corp, Philippines
- Deloitte Consulting - India
- Bulk Trading Sa - Switzerland
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- London Commodity Brokers - England
- Malabar Cements Ltd - India
- Attock Cement Pakistan Limited
- Parry Sugars Refinery, India
- Sical Logistics Limited - India
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Madhucon Powers Ltd - India
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Jaiprakash Power Ventures ltd
- Orica Australia Pty. Ltd.
- Gujarat Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Maheswari Brothers Coal Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- Tamil Nadu electricity Board
- Straits Asia Resources Limited - Singapore
- Marubeni Corporation - India
- Kobexindo Tractors - Indoneisa
- Orica Mining Services - Indonesia
- PowerSource Philippines DevCo
- Kalimantan Lumbung Energi - Indonesia
- Tata Chemicals Ltd - India
- Power Finance Corporation Ltd., India
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Antam Resourcindo - Indonesia
- Chamber of Mines of South Africa
- Rashtriya Ispat Nigam Limited - India
- Indo Tambangraya Megah - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Meralco Power Generation, Philippines
- Vedanta Resources Plc - India
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Standard Chartered Bank - UAE
- Ministry of Mines - Canada
- ICICI Bank Limited - India
- MS Steel International - UAE
- Kepco SPC Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Altura Mining Limited, Indonesia
- San Jose City I Power Corp, Philippines
- Minerals Council of Australia
- Electricity Authority, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Bharathi Cement Corporation - India
- Eastern Coal Council - USA
- Lanco Infratech Ltd - India
- Baramulti Group, Indonesia
- IEA Clean Coal Centre - UK
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Sojitz Corporation - Japan
- Coastal Gujarat Power Limited - India
- Simpson Spence & Young - Indonesia
- Bukit Makmur.PT - Indonesia
- Sakthi Sugars Limited - India
- Latin American Coal - Colombia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Transport, Egypt
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
- Bayan Resources Tbk. - Indonesia
- IHS Mccloskey Coal Group - USA
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
- Indonesian Coal Mining Association
- Kohat Cement Company Ltd. - Pakistan
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Ind-Barath Power Infra Limited - India
- Petron Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Central Electricity Authority - India
- GAC Shipping (India) Pvt Ltd
- Chettinad Cement Corporation Ltd - India
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Central Java Power - Indonesia
- Port Waratah Coal Services - Australia
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Bukit Baiduri Energy - Indonesia
- Siam City Cement PLC, Thailand
- Sinarmas Energy and Mining - Indonesia
- Australian Commodity Traders Exchange
- Meenaskhi Energy Private Limited - India
- Coalindo Energy - Indonesia
- TeaM Sual Corporation - Philippines
- European Bulk Services B.V. - Netherlands
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