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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, 14 August 11
SUPRAMAX CHARTER RATES SHARPLY UP - CAPT.REDDY
COALspot.com - The BDI ended positive with gains in Cape and Panamax index. The BDI was up by 1.50 pct and the cape and panamax index was up by almo ...
Saturday, 13 August 11
GMR HAS ENTERED INTO CSPA WITH GEMS TO ACQUIRE 30% STAKE
COALspot.com - GMR Infrastructure Investments (Singapore) Pte Ltd, a subsidiary of GMR Infrastructure, has signed conditional sale and purchase agre ...
Friday, 12 August 11
COAL MINERS WILL ALLOW TO CONSTRUCT MINE MOUTH POWER PLANT
COALspot.com - The government is set to draft a regulation to enable construction of steam-fired power plants (PLTU) by coal mining companies for th ...
Friday, 12 August 11
CAPESIZE DEMAND HELPS LIFTING OF DRY BULK MARKET - HELLENIC SHIPPING NEWS
The dry bulk market has recovered a small fraction of its lost ground this week, with higher returns as a result of increased capesize demand. This ...
Thursday, 11 August 11
INDO TAMBANGRAYA 1H NET PROFIT SOARS 53.09%
Coal miner PT Indo Tambangraya Megah Tbk (ITMG) today reported a 53.09% jump in net profit for the first 6 months of this year on the back of higher ...
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- Energy Development Corp, Philippines
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- Salva Resources Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- Kaltim Prima Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- Ministry of Transport, Egypt
- Intertek Mineral Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Finance - Indonesia
- Vizag Seaport Private Limited - India
- Parry Sugars Refinery, India
- Altura Mining Limited, Indonesia
- Bhoruka Overseas - Indonesia
- Bulk Trading Sa - Switzerland
- Indogreen Group - Indonesia
- PTC India Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- Binh Thuan Hamico - Vietnam
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- Malabar Cements Ltd - India
- Barasentosa Lestari - Indonesia
- Romanian Commodities Exchange
- Indian Oil Corporation Limited
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- GMR Energy Limited - India
- Global Green Power PLC Corporation, Philippines
- Indian Energy Exchange, India
- Siam City Cement - Thailand
- Goldman Sachs - Singapore
- Xindia Steels Limited - India
- VISA Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Link Ltd, New Zealand
- Port Waratah Coal Services - Australia
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- Planning Commission, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercuria Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- Latin American Coal - Colombia
- Posco Energy - South Korea
- SN Aboitiz Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Maharashtra Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- Kumho Petrochemical, South Korea
- Carbofer General Trading SA - India
- Makarim & Taira - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Straits Asia Resources Limited - Singapore
- Kepco SPC Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Kobexindo Tractors - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Georgia Ports Authority, United States
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Videocon Industries ltd - India
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- Rashtriya Ispat Nigam Limited - India
- Standard Chartered Bank - UAE
- Rio Tinto Coal - Australia
- Mintek Dendrill Indonesia
- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- PetroVietnam Power Coal Import and Supply Company
- Bangladesh Power Developement Board
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- Economic Council, Georgia
- Merrill Lynch Commodities Europe
- Lanco Infratech Ltd - India
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- Aboitiz Power Corporation - Philippines
- Deloitte Consulting - India
- Central Electricity Authority - India
- Parliament of New Zealand
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Chamber of Mines of South Africa
- Central Java Power - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Cigading International Bulk Terminal - Indonesia
- Wood Mackenzie - Singapore
- Minerals Council of Australia
- Dalmia Cement Bharat India
- Bharathi Cement Corporation - India
- LBH Netherlands Bv - Netherlands
- Orica Mining Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Bhatia International Limited - India
- International Coal Ventures Pvt Ltd - India
- Aditya Birla Group - India
- Savvy Resources Ltd - HongKong
- Gujarat Sidhee Cement - India
- MS Steel International - UAE
- Petron Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Coal and Oil Company - UAE
- Anglo American - United Kingdom
- Grasim Industreis Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Essar Steel Hazira Ltd - India
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- OPG Power Generation Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Energy - Thailand
- The Treasury - Australian Government
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Coastal Gujarat Power Limited - India
- Madhucon Powers Ltd - India
- Sakthi Sugars Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Indika Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- CIMB Investment Bank - Malaysia
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- South Luzon Thermal Energy Corporation
- Coalindo Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- Price Waterhouse Coopers - Russia
- Siam City Cement PLC, Thailand
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Ambuja Cements Ltd - India
- Baramulti Group, Indonesia
- India Bulls Power Limited - India
- Semirara Mining Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Borneo Indobara - Indonesia
- The University of Queensland
- New Zealand Coal & Carbon
- Riau Bara Harum - Indonesia
- PowerSource Philippines DevCo
- SMC Global Power, Philippines
- Vedanta Resources Plc - India
- Interocean Group of Companies - India
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- Attock Cement Pakistan Limited
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- Star Paper Mills Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Timah Investasi Mineral - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- Bhushan Steel Limited - India
- Metalloyd Limited - United Kingdom
- Tamil Nadu electricity Board
- Mercator Lines Limited - India
- Gujarat Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Australian Coal Association
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- Power Finance Corporation Ltd., India
- Commonwealth Bank - Australia
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Edison Trading Spa - Italy
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