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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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Monday, 27 February 12
INDONESIAN COAL EXPORTS TO CHINA DROPS 39.76 PERCENT IN JANUARY 2012
COALspot.com: Indonesia, the world largest coal exporter, shipped 28.21* mln mt of coal in January 2012, slightly lower than its December 2011 ...
Monday, 27 February 12
WEEKLY DRY MARKET OVERVIEW - MARIA BERTZELETOU, HELLENIC SHIPPING
The pessimism in the dry market persists with the Baltic Dry Index still trying to find a steady pace of growth and average time charter earnings fo ...
Sunday, 26 February 12
THE FREIGHT RATES FOR INDONESIA TO INDIA IS LIKELY TO BE FIRM FOR NEXT 2/3 WEEKS - VISTAAR
COALspot.com – “There was not much change in the BDI and other indices this week except for the Panamax which was down by 11.91 pc ...
Friday, 24 February 12
DRY BULK MARKET POSTS FIRST REBOUND IN A WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
As was expected since mid-week, the dry bulk market's benchmark, the BDI (Baltic Dry Index) has managed to put a stop in a 6-day losing rally, endi ...
Thursday, 23 February 12
2.5 PANAMAX VESSELS PER AVAILABLE CARGO FOR MARCH DATES - FEARN BULK
Handy
Another depressing week for Supras in both basins. Lack of fresh business and over-supply of tonnage in the Atlantic pushed rates south. Cont ...
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- Banpu Public Company Limited - Thailand
- Posco Energy - South Korea
- Madhucon Powers Ltd - India
- GVK Power & Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Directorate General of MIneral and Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Global Business Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Meralco Power Generation, Philippines
- Samtan Co., Ltd - South Korea
- Jaiprakash Power Ventures ltd
- Lanco Infratech Ltd - India
- Edison Trading Spa - Italy
- Salva Resources Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Goldman Sachs - Singapore
- Electricity Authority, New Zealand
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- Energy Development Corp, Philippines
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- White Energy Company Limited
- Mercuria Energy - Indonesia
- Tata Chemicals Ltd - India
- Commonwealth Bank - Australia
- Trasteel International SA, Italy
- Vizag Seaport Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Mintek Dendrill Indonesia
- Indonesian Coal Mining Association
- Economic Council, Georgia
- Timah Investasi Mineral - Indoneisa
- Mjunction Services Limited - India
- Mercator Lines Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- OPG Power Generation Pvt Ltd - India
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- ICICI Bank Limited - India
- Vedanta Resources Plc - India
- Sarangani Energy Corporation, Philippines
- Borneo Indobara - Indonesia
- Sree Jayajothi Cements Limited - India
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- San Jose City I Power Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- South Luzon Thermal Energy Corporation
- Eastern Energy - Thailand
- The Treasury - Australian Government
- Kapuas Tunggal Persada - Indonesia
- Xindia Steels Limited - India
- Attock Cement Pakistan Limited
- Renaissance Capital - South Africa
- Orica Mining Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- Sindya Power Generating Company Private Ltd
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- Parliament of New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- PowerSource Philippines DevCo
- Coastal Gujarat Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Chamber of Mines of South Africa
- Siam City Cement - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Antam Resourcindo - Indonesia
- Dalmia Cement Bharat India
- Petrochimia International Co. Ltd.- Taiwan
- Price Waterhouse Coopers - Russia
- Kumho Petrochemical, South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Global Green Power PLC Corporation, Philippines
- Cement Manufacturers Association - India
- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Indogreen Group - Indonesia
- Barasentosa Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- McConnell Dowell - Australia
- Malabar Cements Ltd - India
- Riau Bara Harum - Indonesia
- Power Finance Corporation Ltd., India
- Makarim & Taira - Indonesia
- TeaM Sual Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Uttam Galva Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Videocon Industries ltd - India
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Orica Australia Pty. Ltd.
- Bayan Resources Tbk. - Indonesia
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- Therma Luzon, Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- Sical Logistics Limited - India
- Heidelberg Cement - Germany
- GMR Energy Limited - India
- Deloitte Consulting - India
- Petron Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Medco Energi Mining Internasional
- Tamil Nadu electricity Board
- Australian Coal Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ambuja Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- PTC India Limited - India
- Rio Tinto Coal - Australia
- Baramulti Group, Indonesia
- Ind-Barath Power Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- Cigading International Bulk Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- LBH Netherlands Bv - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Indo Tambangraya Megah - Indonesia
- Manunggal Multi Energi - Indonesia
- Grasim Industreis Ltd - India
- Maheswari Brothers Coal Limited - India
- Pendopo Energi Batubara - Indonesia
- Sakthi Sugars Limited - India
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Carbofer General Trading SA - India
- Romanian Commodities Exchange
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- PNOC Exploration Corporation - Philippines
- ASAPP Information Group - India
- Larsen & Toubro Limited - India
- Savvy Resources Ltd - HongKong
- Bangladesh Power Developement Board
- Aditya Birla Group - India
- Coalindo Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Meenaskhi Energy Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- MS Steel International - UAE
- Central Electricity Authority - India
- CNBM International Corporation - China
- PetroVietnam Power Coal Import and Supply Company
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- Oldendorff Carriers - Singapore
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- Globalindo Alam Lestari - Indonesia
- Singapore Mercantile Exchange
- Parry Sugars Refinery, India
- Minerals Council of Australia
- Bharathi Cement Corporation - India
- Marubeni Corporation - India
- Chettinad Cement Corporation Ltd - India
- Global Coal Blending Company Limited - Australia
- Wilmar Investment Holdings
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Anglo American - United Kingdom
- Semirara Mining Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Bhatia International Limited - India
- Gujarat Sidhee Cement - India
- The University of Queensland
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