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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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Friday, 19 August 11
INDIA IMPORTS LESS INDONESIAN COAL THAN CHINA IN JULY
COALspot.com - Indonesia shipped 31.30 Million tons of coal in July 2011, up by 10.69 percent compared to June's export of about 28.27 ...
Thursday, 18 August 11
INDONESIAS PROPOSED LOW GRADE COAL EXPORT BAN WILL NOT HAVE A SIGNIFICANT IMPACT ON INDIA - MISWIN MAHESH
COALspot.com - The Indonesian government is currently in the process of drafting a new regulation that could ban the export of low-grade coal by Jan ...
Thursday, 18 August 11
MARUBENI ACQUIRED 42.86% OF YTL JAWA POWER
COALspot.com - Marubeni Corporation (Marubeni) has completed the acquisition of 42.86 percent of the shares of YTL Jawa Power Holdings BV from YTL P ...
Wednesday, 17 August 11
CME LAUNCHES ARGUS COKING COAL SWAP FUTURES
COALspot.com - Argus media reported that, leading exchange CME Group will list an Australian coking coal swap futures contract for trading on the Ny ...
Wednesday, 17 August 11
TAVESCO KILLARA ENERGY TO ACQUIRE COAL CONCESSIONS IN EAST KALIMANTAN
COALspot.com - Killara Resources Limited, an Australian listed company has formed PT Tavesco Killara Energy (TKE), a joint company with PT Tavesco I ...
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- Formosa Plastics Group - Taiwan
- Petron Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Indogreen Group - Indonesia
- Medco Energi Mining Internasional
- Georgia Ports Authority, United States
- Sarangani Energy Corporation, Philippines
- Planning Commission, India
- Singapore Mercantile Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rio Tinto Coal - Australia
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- Indika Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Tamil Nadu electricity Board
- Samtan Co., Ltd - South Korea
- Metalloyd Limited - United Kingdom
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The University of Queensland
- Port Waratah Coal Services - Australia
- SMG Consultants - Indonesia
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- Sindya Power Generating Company Private Ltd
- Banpu Public Company Limited - Thailand
- Commonwealth Bank - Australia
- Bharathi Cement Corporation - India
- Parliament of New Zealand
- Leighton Contractors Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Maheswari Brothers Coal Limited - India
- Edison Trading Spa - Italy
- OPG Power Generation Pvt Ltd - India
- Romanian Commodities Exchange
- Agrawal Coal Company - India
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- Coastal Gujarat Power Limited - India
- Lanco Infratech Ltd - India
- Intertek Mineral Services - Indonesia
- PNOC Exploration Corporation - Philippines
- PTC India Limited - India
- Anglo American - United Kingdom
- Makarim & Taira - Indonesia
- Parry Sugars Refinery, India
- SMC Global Power, Philippines
- SN Aboitiz Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Global Business Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- LBH Netherlands Bv - Netherlands
- Bukit Baiduri Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Cement Manufacturers Association - India
- Semirara Mining and Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Asmin Koalindo Tuhup - Indonesia
- The Treasury - Australian Government
- Eastern Coal Council - USA
- Therma Luzon, Inc, Philippines
- Ambuja Cements Ltd - India
- Bhushan Steel Limited - India
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Central Electricity Authority - India
- Attock Cement Pakistan Limited
- Kobexindo Tractors - Indoneisa
- ASAPP Information Group - India
- Star Paper Mills Limited - India
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Renaissance Capital - South Africa
- Karaikal Port Pvt Ltd - India
- Thiess Contractors Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- Bhatia International Limited - India
- VISA Power Limited - India
- Wilmar Investment Holdings
- Indian Oil Corporation Limited
- Iligan Light & Power Inc, Philippines
- Ministry of Mines - Canada
- CNBM International Corporation - China
- Thai Mozambique Logistica
- Marubeni Corporation - India
- Larsen & Toubro Limited - India
- Kartika Selabumi Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Xindia Steels Limited - India
- San Jose City I Power Corp, Philippines
- Mercator Lines Limited - India
- European Bulk Services B.V. - Netherlands
- Riau Bara Harum - Indonesia
- MS Steel International - UAE
- Directorate Of Revenue Intelligence - India
- Sojitz Corporation - Japan
- Chamber of Mines of South Africa
- GAC Shipping (India) Pvt Ltd
- Straits Asia Resources Limited - Singapore
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Bangladesh Power Developement Board
- Bahari Cakrawala Sebuku - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Barasentosa Lestari - Indonesia
- Aditya Birla Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Indian Energy Exchange, India
- Bukit Makmur.PT - Indonesia
- The State Trading Corporation of India Ltd
- Sinarmas Energy and Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- GMR Energy Limited - India
- Wood Mackenzie - Singapore
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- India Bulls Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Gujarat Sidhee Cement - India
- Directorate General of MIneral and Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Holcim Trading Pte Ltd - Singapore
- Gujarat Mineral Development Corp Ltd - India
- White Energy Company Limited
- Jorong Barutama Greston.PT - Indonesia
- Salva Resources Pvt Ltd - India
- Latin American Coal - Colombia
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- CIMB Investment Bank - Malaysia
- Trasteel International SA, Italy
- Kalimantan Lumbung Energi - Indonesia
- Energy Development Corp, Philippines
- Videocon Industries ltd - India
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- Sakthi Sugars Limited - India
- Savvy Resources Ltd - HongKong
- Heidelberg Cement - Germany
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- Standard Chartered Bank - UAE
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- Sical Logistics Limited - India
- ICICI Bank Limited - India
- Goldman Sachs - Singapore
- Mintek Dendrill Indonesia
- Ministry of Finance - Indonesia
- Australian Coal Association
- Oldendorff Carriers - Singapore
- Miang Besar Coal Terminal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Grasim Industreis Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Central Java Power - Indonesia
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Authority, New Zealand
- Minerals Council of Australia
- Deloitte Consulting - India
- Eastern Energy - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Vizag Seaport Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- Interocean Group of Companies - India
- Kepco SPC Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Dalmia Cement Bharat India
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- Africa Commodities Group - South Africa
- Baramulti Group, Indonesia
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Mercuria Energy - Indonesia
- Madhucon Powers Ltd - India
- Ministry of Transport, Egypt
- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
- Carbofer General Trading SA - India
- Essar Steel Hazira Ltd - India
- Orica Mining Services - Indonesia
- IEA Clean Coal Centre - UK
- New Zealand Coal & Carbon
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