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Monday, 12 December 11
DRY BULK MARKET LOOKING FOR BALANCE AS WE ENTER 2012 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
 During the past few months, freight rates for dry bulk carriers, especially Capesizes have increased significantly, providing ship owners with a much needed boost. Still, the oversupply haven't been solved overnight. This will take a few more years to happen, provided that newbuilding orders remain at modest levels and scrapping of older ones doesn't seize.In an interview with Hellenic Shipping News Worldwide, BIMCO's
Chief Shipping Analyst, Peter Sand said that for the coming couple of months, BIMCO holds the view that the Capesize Time Charter Average will remain at USD 20,000-30,000 per day. but the tonnage oversupply will eventually hit back. "Meanwhile, we reiterate our forecast on the Panamax and Supramax freight rates that are likely to stay put in the USD 13,000-17,000 per day interval. Handysize rates are expected to gain traction and return to the USD 9,000-13,000 per day interval" said Sand.He went to add that 2012 is likely to become as challenging as 2011. The pressure from the supply-side is set to ease a bit and drift down to around 11-12% but unfortunately the demand-side also looks set to end on the softer side of 2011.
Looking back in 2011, how would you describe this year in terms of dry bulk freight rates and the general movement of the industry’s benchmark, the BDI (Baltic Dry Index)?
Following the positive surprise that the industry experienced during 2010, 2011 have been very different. The combination of several demand-side disruptions and a freak wave of new built tonnage entering the fleet, has made the BDI drop by a significant 44% y-o-y. The fact that the amount of tonnage that went to the breakers was double-up on our initial forecast helped a lot, but cannot prevent the overall fleet to grow by 14%.
The year has been full of surprises. I’ll guess only very few had foreseen the main events of 2011 before they actually happened. The “Arab spring”, the massive flooding in Australia and South Africa and the triple disaster in Japan all events that was affecting dry bulk as well as wet bulk to a large extent. The Capesize segment was mostly hurt. During the first half of year, average time charter earnings of USD 8,500 per day only just covered OPEX for most vessels, leaving nothing to pay financial costs. But after a bit of a summer lull for Capesizes, freight rates really took off in August when China resumed massive buying of iron ore at a time when tonnage was tight in Atlantic basin. Congestion in both exporting and importing ports went up and lifted rates to year-high level where they are still hovering. The fact that the freight rate today is close to USD 30,000 per day is a positive surprise too – framing a year full of surprises and ending it on a happy note.
How is the current balance between demand and supply being shapen up?
The winter market is providing some support to the markets – and when you look at rates for Panamax and Handymax at USD 15,000 per day it actually not that bad when you look at it from a historical perspective. Trouble is of course that the fleet that ploughs the seas today is purchased at relatively higher prices than ever before – requiring higher rates to break even – when taking account of financing costs on top of ordinary OPEX.
For the coming couple of months, BIMCO holds the view that the Capesize Time Charter Average will remain at USD 20,000-30,000 per day but the tonnage oversupply will eventually hit back. Meanwhile, we reiterate our forecast on the Panamax and Supramax freight rates that are likely to stay put in the USD 13,000-17,000 per day interval. Handysize rates are expected to gain traction and return to the USD 9,000-13,000 per day interval.
Despite struggling rates for the most part of the year, 2011 also saw a lot of newbuilding orders for dry bulk carriers. Which factors triggered this development?
From a fundamental point of view – the amount of tonnage that has been ordered during 2011 is sustainable; if you look at 2011 in solitude. Tonnage equivalent to 4% of the active fleet is a more or less what is required to renew a fleet that has a lifetime of 25 years. Moreover it is actually the lowest level of new orders placed since 2002, surpassing even 2009 where 35.6 million DWT was ordered. However, the problem is that 2010-2013 are all years of massive inflow of new tonnage. In order to get the balance back we should have a couple of years with deliveries below the sustainable trend to let demand catch up and balance the market once again.
It seems that 2011 was a record year for demolition activity of older vessels. Would things be a lot worse, shouldn’t those vessels had been sold for scrap?
The amount of demolished tonnage during 2011 has been a much welcomed wonder. And it has certainly provided some relief to the markets, mostly in the larger segments and specifically amongst Capesizes. The pressure on these big ships in particular has been eased by this. A few numbers illustrates this very clearly. The number of Capesize scrapped during 2011 (approx. 68) is equal to the number of Capesize vessels being scrapped during the preceding ten years! In the case that no Capesizes had been recycled the segment would have grown by more than 20% - matching the level of 2009 and 2010. But the demolition activity has cut growth by some 5%.
Do you expect a similar record of demolitions in 2012 as well, or is this dependant upon market swings?
Since freight rates took off in the Capesize segment by mid-August, only few vessels have been sold for recycling. The correlation between freight rates and the amount of recycled tonnage is quite strong right now. BIMCO do not foresee the record from this year to be duplicated in 2012. Our forecast for 2012 is that 10 million DWT is going to leave the fleet by demolition. But the estimate contains a pure upside potential, if rates are facing heat to the tune of first-half of 2011.
Going forward into 2012, do you expect newbuilding deliveries to outpace demand again, or will things slow down versus 2011?
In BIMCO we foresee that 2012 is likely to become as challenging as 2011. The pressure from the supply-side is set to ease a bit and drift down to around 11-12% but unfortunately the demand-side also looks set to end on the softer side of 2011. This leave the present fundamental imbalance between supply and demand more or less all-square – but as the global economy is still in a very fragile condition that now also means that China is slowing down, most risk are probably to be found on the downside.
Which will be the average rates for dry bulk ship types in 2012, according to your view and why?
We see 2012 is likely to become another 2011 on average. As China and India is going to grow a tad slower in the coming year this is like to limit the upside risk to our scenario. The global economic situation must be resolved before demand can surprise on the upside to a large extent. The yards will probably set 80 million DWT of to sea during the year – but handling the supply side remains an internal job. Use a variety of tools from the toolbox: slow steam, postpone/delay delivery, sign only new orders to a very limited extent, focus on customers and work closely together with all your stakeholders.
Source: Nikos Roussanoglou, Hellenic Shipping
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Thursday, 01 March 12
BUKIT ASAM TARGETS EUROPEAN INVESTORS
COALspot.com - PT. Bukit Asam (persero) Tbk, Indonesian state owned coal miner is planning to conduct road show in Europe next week to target at Eur ...
Thursday, 01 March 12
INDO-INDIA, LARGE ECO SUPRA CAN FETCH CLOSE TO USD 9K DOP N.CHINA - FEARNLEYS AS
Handy
The Atlantic Handysize market did not see any signs for recovery this week. It is still a major lack of spot cargoes and an oversupply of pro ...
Wednesday, 29 February 12
69 MINERS AGREE TO RENEGOTIATE CONTRACTS - THE JAKARTA POST
The Jakarta Post, one of the leading English news papaer in Indonesia reported that, as many as 60 coal contracts-of-work (PKP2B) and nine non-coal ...
Wednesday, 29 February 12
PUTTING COAL GASIFICATION TO WORK
Clifford Reese of the SSOE Group looks at practical solutions for district energy leaders who wish to implement clean coal technology.
Coal fuels ...
Monday, 27 February 12
COAL MINING PROFITS TOO HIGH, SAYS GOVT - TEMPO INTERACTIVE
Tempo Interactive reported that, Energy and Mineral Resources Deputy Minister of Indonesia Widjajono Partowidagdo has criticized coal-mining compani ...
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- Kapuas Tunggal Persada - Indonesia
- Bukit Baiduri Energy - Indonesia
- London Commodity Brokers - England
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- AsiaOL BioFuels Corp., Philippines
- Posco Energy - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- The University of Queensland
- Coal and Oil Company - UAE
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- Planning Commission, India
- Africa Commodities Group - South Africa
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Mjunction Services Limited - India
- Deloitte Consulting - India
- Gujarat Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Trasteel International SA, Italy
- Central Java Power - Indonesia
- Rashtriya Ispat Nigam Limited - India
- LBH Netherlands Bv - Netherlands
- Independent Power Producers Association of India
- Jorong Barutama Greston.PT - Indonesia
- Thai Mozambique Logistica
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- Medco Energi Mining Internasional
- Coastal Gujarat Power Limited - India
- Indogreen Group - Indonesia
- Altura Mining Limited, Indonesia
- Pendopo Energi Batubara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- McConnell Dowell - Australia
- VISA Power Limited - India
- Australian Coal Association
- Antam Resourcindo - Indonesia
- Renaissance Capital - South Africa
- New Zealand Coal & Carbon
- Ceylon Electricity Board - Sri Lanka
- Vijayanagar Sugar Pvt Ltd - India
- Madhucon Powers Ltd - India
- Barasentosa Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- CNBM International Corporation - China
- Energy Link Ltd, New Zealand
- Global Business Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Sree Jayajothi Cements Limited - India
- MS Steel International - UAE
- Electricity Generating Authority of Thailand
- Rio Tinto Coal - Australia
- GVK Power & Infra Limited - India
- PTC India Limited - India
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- Kumho Petrochemical, South Korea
- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Riau Bara Harum - Indonesia
- Electricity Authority, New Zealand
- Minerals Council of Australia
- The Treasury - Australian Government
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Power Finance Corporation Ltd., India
- CIMB Investment Bank - Malaysia
- Bhatia International Limited - India
- Meralco Power Generation, Philippines
- Price Waterhouse Coopers - Russia
- Leighton Contractors Pty Ltd - Australia
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- PowerSource Philippines DevCo
- Sojitz Corporation - Japan
- Heidelberg Cement - Germany
- Timah Investasi Mineral - Indoneisa
- Oldendorff Carriers - Singapore
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- Ministry of Finance - Indonesia
- Baramulti Group, Indonesia
- Simpson Spence & Young - Indonesia
- Billiton Holdings Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- South Luzon Thermal Energy Corporation
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- Indian Oil Corporation Limited
- Kaltim Prima Coal - Indonesia
- SMC Global Power, Philippines
- Ministry of Transport, Egypt
- GAC Shipping (India) Pvt Ltd
- Energy Development Corp, Philippines
- Essar Steel Hazira Ltd - India
- Tamil Nadu electricity Board
- IHS Mccloskey Coal Group - USA
- Kepco SPC Power Corporation, Philippines
- Cement Manufacturers Association - India
- Siam City Cement PLC, Thailand
- Intertek Mineral Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- Georgia Ports Authority, United States
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Tata Chemicals Ltd - India
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Port Waratah Coal Services - Australia
- Makarim & Taira - Indonesia
- Anglo American - United Kingdom
- Chamber of Mines of South Africa
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- Jindal Steel & Power Ltd - India
- Star Paper Mills Limited - India
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Singapore Mercantile Exchange
- Economic Council, Georgia
- Parliament of New Zealand
- Alfred C Toepfer International GmbH - Germany
- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Coalindo Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Petron Corporation, Philippines
- Agrawal Coal Company - India
- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- Commonwealth Bank - Australia
- SMG Consultants - Indonesia
- Malabar Cements Ltd - India
- Indian Energy Exchange, India
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- Gujarat Sidhee Cement - India
- Miang Besar Coal Terminal - Indonesia
- India Bulls Power Limited - India
- Therma Luzon, Inc, Philippines
- Ambuja Cements Ltd - India
- Ministry of Mines - Canada
- Neyveli Lignite Corporation Ltd, - India
- Global Coal Blending Company Limited - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Australia Pty. Ltd.
- Maheswari Brothers Coal Limited - India
- OPG Power Generation Pvt Ltd - India
- Bharathi Cement Corporation - India
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
- Vedanta Resources Plc - India
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- Dalmia Cement Bharat India
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- ICICI Bank Limited - India
- European Bulk Services B.V. - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Jaiprakash Power Ventures ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Binh Thuan Hamico - Vietnam
- San Jose City I Power Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Eastern Coal Council - USA
- PNOC Exploration Corporation - Philippines
- Xindia Steels Limited - India
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