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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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Monday, 22 August 11
MACRO ECONOMICS - PETER SAND BIMCO / HELLENIC SHIPPING
The US is jeopardising the global recovery as job creation remains top challenge across the board.
Global economy: While growth in most emerging ...
Sunday, 21 August 11
SUPRAMAX AVAILABILITY WAS TIGHT DUE TO UPCOMING RAMADAN HOLIDAYS
COALspot.com - The financial markets have been in turmoil with all major stock exchanges down and uncertainty prevails. However the shipping market ...
Sunday, 21 August 11
TUAH TURANGGA ACQUIRES DUTA NURCAHYA
Coal miner PT Tuah Turangga Agung, a wholly owned subsidiary of PT United Tractors Tbk (UNTR) via PT Pamapersada Nusantara), has agreed to acquire 6 ...
Friday, 19 August 11
INDIAS CICTL HAS ACHIEVED ONE MILLION TONS OF DISCHARGE
COALspot.com - Chettinad International Coal Terminal (CICTL) in Ennore port, a state of the art mechanized coal terminal, which was inaugurated on 28t ...
Friday, 19 August 11
AUSTRALIAS' ATH TO ACQUIRE 60% OF APUAH COAL MINE IN INDONESIA
COALspot.com - Australian listed company, Atech Holdings Limited (ATH) has entered into a conditional binding term sheet to acquire 60 percent stake ...
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- Agrawal Coal Company - India
- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- Goldman Sachs - Singapore
- Makarim & Taira - Indonesia
- Singapore Mercantile Exchange
- Coalindo Energy - Indonesia
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- LBH Netherlands Bv - Netherlands
- Romanian Commodities Exchange
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kapuas Tunggal Persada - Indonesia
- Rio Tinto Coal - Australia
- Vizag Seaport Private Limited - India
- Minerals Council of Australia
- Directorate Of Revenue Intelligence - India
- Indika Energy - Indonesia
- Australian Coal Association
- Economic Council, Georgia
- Ministry of Finance - Indonesia
- Metalloyd Limited - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Coal and Oil Company - UAE
- Aboitiz Power Corporation - Philippines
- The Treasury - Australian Government
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- MS Steel International - UAE
- Bangladesh Power Developement Board
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- Altura Mining Limited, Indonesia
- Central Electricity Authority - India
- The University of Queensland
- The State Trading Corporation of India Ltd
- Sindya Power Generating Company Private Ltd
- Independent Power Producers Association of India
- Karbindo Abesyapradhi - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Medco Energi Mining Internasional
- Gujarat Sidhee Cement - India
- Bhoruka Overseas - Indonesia
- Renaissance Capital - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- Ambuja Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- Commonwealth Bank - Australia
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- Anglo American - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- Vedanta Resources Plc - India
- ASAPP Information Group - India
- Kumho Petrochemical, South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Tata Chemicals Ltd - India
- ICICI Bank Limited - India
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Uttam Galva Steels Limited - India
- Antam Resourcindo - Indonesia
- Globalindo Alam Lestari - Indonesia
- Tamil Nadu electricity Board
- Grasim Industreis Ltd - India
- Orica Mining Services - Indonesia
- Savvy Resources Ltd - HongKong
- Essar Steel Hazira Ltd - India
- Kideco Jaya Agung - Indonesia
- Indian Oil Corporation Limited
- White Energy Company Limited
- Maheswari Brothers Coal Limited - India
- Orica Australia Pty. Ltd.
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Pendopo Energi Batubara - Indonesia
- PowerSource Philippines DevCo
- Therma Luzon, Inc, Philippines
- Energy Link Ltd, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Attock Cement Pakistan Limited
- Energy Development Corp, Philippines
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- Karaikal Port Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- European Bulk Services B.V. - Netherlands
- Bharathi Cement Corporation - India
- Coastal Gujarat Power Limited - India
- Jindal Steel & Power Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Wood Mackenzie - Singapore
- Posco Energy - South Korea
- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Thiess Contractors Indonesia
- Petron Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Kepco SPC Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Formosa Plastics Group - Taiwan
- Africa Commodities Group - South Africa
- Semirara Mining Corp, Philippines
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- Eastern Coal Council - USA
- Kohat Cement Company Ltd. - Pakistan
- Bank of Tokyo Mitsubishi UFJ Ltd
- McConnell Dowell - Australia
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- Parliament of New Zealand
- Chettinad Cement Corporation Ltd - India
- Planning Commission, India
- Ceylon Electricity Board - Sri Lanka
- Mjunction Services Limited - India
- OPG Power Generation Pvt Ltd - India
- Deloitte Consulting - India
- Aditya Birla Group - India
- Alfred C Toepfer International GmbH - Germany
- Central Java Power - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Thai Mozambique Logistica
- Siam City Cement PLC, Thailand
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- New Zealand Coal & Carbon
- London Commodity Brokers - England
- Global Coal Blending Company Limited - Australia
- IEA Clean Coal Centre - UK
- Larsen & Toubro Limited - India
- Edison Trading Spa - Italy
- Riau Bara Harum - Indonesia
- Bhatia International Limited - India
- VISA Power Limited - India
- TeaM Sual Corporation - Philippines
- PTC India Limited - India
- Latin American Coal - Colombia
- CNBM International Corporation - China
- Bahari Cakrawala Sebuku - Indonesia
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Malabar Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Wilmar Investment Holdings
- Electricity Authority, New Zealand
- Star Paper Mills Limited - India
- Rashtriya Ispat Nigam Limited - India
- Carbofer General Trading SA - India
- Sree Jayajothi Cements Limited - India
- Bukit Makmur.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Toyota Tsusho Corporation, Japan
- Parry Sugars Refinery, India
- SN Aboitiz Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Port Waratah Coal Services - Australia
- Intertek Mineral Services - Indonesia
- Heidelberg Cement - Germany
- Mercator Lines Limited - India
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Chamber of Mines of South Africa
- GMR Energy Limited - India
- Bulk Trading Sa - Switzerland
- Indo Tambangraya Megah - Indonesia
- Meenaskhi Energy Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Oldendorff Carriers - Singapore
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Leighton Contractors Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Interocean Group of Companies - India
- Straits Asia Resources Limited - Singapore
- Georgia Ports Authority, United States
- Xindia Steels Limited - India
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