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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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Wednesday, 22 February 12
RAW COMMODITY EXPORT BAN SPARKS SMELTER BUILDING BOOM IN INDONESIA ANTARA / THE JAKARTA GLOBE
Antara / The Jakarta Globe reported that, as the government gears up to ban all exports of unprocessed commodities, Indonesia will see 12 new ...
Tuesday, 21 February 12
THREAT ISSUED ON MINERAL FIRMS AS GOVT PLANS EXPORT BAN - THE JAKARTA POST
The Jakarta Post, one of the leading english news papaer in Indonesia reported that, the government has given mineral producers three months to subm ...
Monday, 20 February 12
WEEKLY DRY MARKET OVERVIEW - MARIA BERTZELETOU
The dry market experienced one more disappointing week with tonnage oversupply and limited cargo demand that pushes earnings for shipping players to ...
Monday, 20 February 12
JATENERGY SECURES FIRST 8000-TONNE COAL SALES CONTRACT FOR JONGKANG MINES
8000-tonne contract with Singaporean buyer signed for March delivery
50% down payment due in five working days
Production continues at both Jongka ...
Monday, 20 February 12
DIAN SWASTATIKA ACQUIRES ANDALAN LESTARI - INSIDER STORIES
Insider Stories reported that, PT Dian Swastatika Sentosa Tbk (DSSA), controlled by Fuganto Widjaja, son of Indra Widjaja, reported a 99.83% takeove ...
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- Indogreen Group - Indonesia
- Karaikal Port Pvt Ltd - India
- Tamil Nadu electricity Board
- Jaiprakash Power Ventures ltd
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- Global Green Power PLC Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Mercator Lines Limited - India
- VISA Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Aditya Birla Group - India
- Iligan Light & Power Inc, Philippines
- Orica Mining Services - Indonesia
- White Energy Company Limited
- Kideco Jaya Agung - Indonesia
- Coastal Gujarat Power Limited - India
- New Zealand Coal & Carbon
- Barasentosa Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- Parry Sugars Refinery, India
- Port Waratah Coal Services - Australia
- Neyveli Lignite Corporation Ltd, - India
- Carbofer General Trading SA - India
- Goldman Sachs - Singapore
- The Treasury - Australian Government
- Coal and Oil Company - UAE
- South Luzon Thermal Energy Corporation
- London Commodity Brokers - England
- Latin American Coal - Colombia
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Formosa Plastics Group - Taiwan
- Cigading International Bulk Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Renaissance Capital - South Africa
- Mintek Dendrill Indonesia
- Lanco Infratech Ltd - India
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- Bhatia International Limited - India
- Thai Mozambique Logistica
- PNOC Exploration Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- Heidelberg Cement - Germany
- Bayan Resources Tbk. - Indonesia
- Toyota Tsusho Corporation, Japan
- Holcim Trading Pte Ltd - Singapore
- Salva Resources Pvt Ltd - India
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Karbindo Abesyapradhi - Indoneisa
- Minerals Council of Australia
- Meralco Power Generation, Philippines
- Interocean Group of Companies - India
- ASAPP Information Group - India
- Riau Bara Harum - Indonesia
- Petron Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- The University of Queensland
- Directorate Of Revenue Intelligence - India
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Transport, Egypt
- Gujarat Mineral Development Corp Ltd - India
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Borneo Indobara - Indonesia
- GMR Energy Limited - India
- Bulk Trading Sa - Switzerland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rashtriya Ispat Nigam Limited - India
- Larsen & Toubro Limited - India
- The State Trading Corporation of India Ltd
- Deloitte Consulting - India
- Global Coal Blending Company Limited - Australia
- Planning Commission, India
- Semirara Mining and Power Corporation, Philippines
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- Georgia Ports Authority, United States
- Vizag Seaport Private Limited - India
- Chamber of Mines of South Africa
- PowerSource Philippines DevCo
- Leighton Contractors Pty Ltd - Australia
- Cement Manufacturers Association - India
- Binh Thuan Hamico - Vietnam
- Miang Besar Coal Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- IEA Clean Coal Centre - UK
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
- IHS Mccloskey Coal Group - USA
- Parliament of New Zealand
- Posco Energy - South Korea
- McConnell Dowell - Australia
- Eastern Energy - Thailand
- Kaltim Prima Coal - Indonesia
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Marubeni Corporation - India
- ICICI Bank Limited - India
- Vedanta Resources Plc - India
- Electricity Generating Authority of Thailand
- Anglo American - United Kingdom
- Agrawal Coal Company - India
- Siam City Cement - Thailand
- SN Aboitiz Power Inc, Philippines
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- Sindya Power Generating Company Private Ltd
- Sinarmas Energy and Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Straits Asia Resources Limited - Singapore
- Bhoruka Overseas - Indonesia
- AsiaOL BioFuels Corp., Philippines
- India Bulls Power Limited - India
- Malabar Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- CNBM International Corporation - China
- TNB Fuel Sdn Bhd - Malaysia
- Trasteel International SA, Italy
- Savvy Resources Ltd - HongKong
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Bhushan Steel Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Standard Chartered Bank - UAE
- TeaM Sual Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Mines - Canada
- Jindal Steel & Power Ltd - India
- Tata Chemicals Ltd - India
- Bangladesh Power Developement Board
- Commonwealth Bank - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wilmar Investment Holdings
- Metalloyd Limited - United Kingdom
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- Merrill Lynch Commodities Europe
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- Kohat Cement Company Ltd. - Pakistan
- Mercuria Energy - Indonesia
- Bharathi Cement Corporation - India
- Indian Oil Corporation Limited
- Billiton Holdings Pty Ltd - Australia
- Thiess Contractors Indonesia
- Electricity Authority, New Zealand
- Energy Link Ltd, New Zealand
- Australian Coal Association
- Timah Investasi Mineral - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Coal Council - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Sakthi Sugars Limited - India
- Dalmia Cement Bharat India
- Ind-Barath Power Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- Global Business Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- SMC Global Power, Philippines
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- Bukit Baiduri Energy - Indonesia
- Singapore Mercantile Exchange
- Rio Tinto Coal - Australia
- Romanian Commodities Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Australian Commodity Traders Exchange
- CIMB Investment Bank - Malaysia
- Coalindo Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kapuas Tunggal Persada - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Intertek Mineral Services - Indonesia
- San Jose City I Power Corp, Philippines
- Grasim Industreis Ltd - India
- Videocon Industries ltd - India
- Uttam Galva Steels Limited - India
- Essar Steel Hazira Ltd - India
- Africa Commodities Group - South Africa
- Price Waterhouse Coopers - Russia
- Wood Mackenzie - Singapore
- Ambuja Cements Ltd - India
- Makarim & Taira - Indonesia
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