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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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Friday, 27 January 12
DEMOLITION ACTIVITY NEEDS TO INCREASE SIGNIFICANTLY THIS YEAR AS WELL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The oversupply of vessels in most shipping sectors is so intense that it’s become clear to ship owners that unless they scrap as many of their ...
Thursday, 26 January 12
ABM INVESTAMA SEALS US$100 MIO CONTRACT - INSIDER STORIES
Insider Stories reported that, PT Reswara Minergi Hartama, a subsidary of PT ABM Investama Tbk (ABMM), has sealed a 2 million tons of coal export co ...
Thursday, 26 January 12
DRY BULK MARKETS DOWNFALL KNOWS NO LIMITS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market’s demise seems to have no visible end, as China’s Lunar Year Holidays continue this week, thus leaving demand with n ...
Wednesday, 25 January 12
CLEAN AND CLEAR MINING PERMITS TO BE COMPLETED END OF 2012 - BISNIS.COM
Bisnis.com reported that, the government plans to announce 700 mining permits with "clean and clear" status without overlapping on other p ...
Tuesday, 24 January 12
ANOTHER SEVERE DROP IN THE CAPESIZE - BRS
The lunar year celebrations and the high number of new building deliveries (more than 35 Capes so far in January as owners push 2011 deliveries into ...
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- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- International Coal Ventures Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Malabar Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Marubeni Corporation - India
- Interocean Group of Companies - India
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- Trasteel International SA, Italy
- Mintek Dendrill Indonesia
- Coastal Gujarat Power Limited - India
- Electricity Generating Authority of Thailand
- Rio Tinto Coal - Australia
- Energy Link Ltd, New Zealand
- Timah Investasi Mineral - Indoneisa
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Therma Luzon, Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Aditya Birla Group - India
- Miang Besar Coal Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhoruka Overseas - Indonesia
- Central Electricity Authority - India
- Billiton Holdings Pty Ltd - Australia
- The University of Queensland
- The Treasury - Australian Government
- AsiaOL BioFuels Corp., Philippines
- Edison Trading Spa - Italy
- PTC India Limited - India
- Barasentosa Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- Riau Bara Harum - Indonesia
- Africa Commodities Group - South Africa
- Commonwealth Bank - Australia
- Directorate General of MIneral and Coal - Indonesia
- Orica Mining Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wilmar Investment Holdings
- MS Steel International - UAE
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
- Ministry of Mines - Canada
- Indo Tambangraya Megah - Indonesia
- Siam City Cement PLC, Thailand
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- VISA Power Limited - India
- Semirara Mining Corp, Philippines
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Makarim & Taira - Indonesia
- European Bulk Services B.V. - Netherlands
- Kaltim Prima Coal - Indonesia
- Antam Resourcindo - Indonesia
- Energy Development Corp, Philippines
- Indian Energy Exchange, India
- Merrill Lynch Commodities Europe
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- Ministry of Transport, Egypt
- Globalindo Alam Lestari - Indonesia
- Electricity Authority, New Zealand
- Global Business Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- PowerSource Philippines DevCo
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thai Mozambique Logistica
- PNOC Exploration Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- Jindal Steel & Power Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Dalmia Cement Bharat India
- Bangladesh Power Developement Board
- Ambuja Cements Ltd - India
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Pendopo Energi Batubara - Indonesia
- Parliament of New Zealand
- Kartika Selabumi Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- White Energy Company Limited
- GN Power Mariveles Coal Plant, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Heidelberg Cement - Germany
- Indian Oil Corporation Limited
- Parry Sugars Refinery, India
- OPG Power Generation Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Mercuria Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Maheswari Brothers Coal Limited - India
- San Jose City I Power Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Ceylon Electricity Board - Sri Lanka
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- Pipit Mutiara Jaya. PT, Indonesia
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Latin American Coal - Colombia
- Altura Mining Limited, Indonesia
- Eastern Energy - Thailand
- Thiess Contractors Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
- Posco Energy - South Korea
- McConnell Dowell - Australia
- Aboitiz Power Corporation - Philippines
- Salva Resources Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- Karaikal Port Pvt Ltd - India
- Larsen & Toubro Limited - India
- London Commodity Brokers - England
- Anglo American - United Kingdom
- Manunggal Multi Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Deloitte Consulting - India
- Madhucon Powers Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- IHS Mccloskey Coal Group - USA
- Kalimantan Lumbung Energi - Indonesia
- Metalloyd Limited - United Kingdom
- ICICI Bank Limited - India
- Central Java Power - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Mjunction Services Limited - India
- Carbofer General Trading SA - India
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- India Bulls Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chamber of Mines of South Africa
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- Ministry of Finance - Indonesia
- Indogreen Group - Indonesia
- Siam City Cement - Thailand
- Australian Coal Association
- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- New Zealand Coal & Carbon
- Videocon Industries ltd - India
- Kideco Jaya Agung - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Attock Cement Pakistan Limited
- Tamil Nadu electricity Board
- CIMB Investment Bank - Malaysia
- Indika Energy - Indonesia
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- GMR Energy Limited - India
- Banpu Public Company Limited - Thailand
- Coal and Oil Company - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- Petron Corporation, Philippines
- Sical Logistics Limited - India
- Toyota Tsusho Corporation, Japan
- Maharashtra Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jorong Barutama Greston.PT - Indonesia
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- Bhatia International Limited - India
- Vedanta Resources Plc - India
- GAC Shipping (India) Pvt Ltd
- CNBM International Corporation - China
- Xindia Steels Limited - India
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