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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, 19 January 12
SOUTHGOBI RESOURCES SELLS MORE THAN FOUR MILLION TONNES OF COAL IN 2011, 58% MORE THAN 2010
COALspot.com - SouthGobi Resources Ltd. (TSX: SGQ, HK: 1878) has successfully complets year 2011 on guidance in terms of coal sales and production.
...
Thursday, 19 January 12
14TH VOGP MEETING IN HO CHI MINH CITY HANDS OUT LATEST UPDATES AND DEVELOPMENTS IN VIETNAM'S ENERGY INDUSTRY
Press Release: At upcoming 14th Vietnam Oil Gas Power on 27-28 Feb in Ho Chi Minh City the industry’s most influential names including Petrovi ...
Thursday, 19 January 12
DELTA DUNIA SEALS US$820 MIO CONTRACT INSIDER STORIES
Insider Stories reported that, PT Delta Dunia Makmur Tbk (DOID) has announced that its primary operating subsidiary, PT Bukit Makmur Mandiri Utama ( ...
Wednesday, 18 January 12
WARM WINTER ACROSS EUROPE HAS IMPACTED NEGATIVELY COAL DEMAND - BRS
With the Chinese New Year just a week away, all markets are slowing down. The drop in freight rates for all sizes has been significant over the past ...
Wednesday, 18 January 12
DRY BULK MARKET'S DRAMA CONTINUES IN START OF NEW WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A flurry of newbuilding deliveries, coupled with a slow start to the new year, a typical trend for the dry bulk market, has led the industry's benc ...
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- Interocean Group of Companies - India
- Kaltim Prima Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Barasentosa Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Semirara Mining and Power Corporation, Philippines
- Minerals Council of Australia
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- MS Steel International - UAE
- Bangladesh Power Developement Board
- SMC Global Power, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Electricity Generating Authority of Thailand
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- Edison Trading Spa - Italy
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- Jindal Steel & Power Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- Agrawal Coal Company - India
- Kartika Selabumi Mining - Indonesia
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Gujarat Sidhee Cement - India
- European Bulk Services B.V. - Netherlands
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Central Electricity Authority - India
- Dalmia Cement Bharat India
- Riau Bara Harum - Indonesia
- Carbofer General Trading SA - India
- Malabar Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Sinarmas Energy and Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Planning Commission, India
- Singapore Mercantile Exchange
- Romanian Commodities Exchange
- Maharashtra Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Attock Cement Pakistan Limited
- Australian Coal Association
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Ministry of Finance - Indonesia
- Chamber of Mines of South Africa
- GVK Power & Infra Limited - India
- Petron Corporation, Philippines
- The University of Queensland
- Posco Energy - South Korea
- Wood Mackenzie - Singapore
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- Anglo American - United Kingdom
- Toyota Tsusho Corporation, Japan
- Gujarat Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Rio Tinto Coal - Australia
- Salva Resources Pvt Ltd - India
- Videocon Industries ltd - India
- Bukit Makmur.PT - Indonesia
- Oldendorff Carriers - Singapore
- SMG Consultants - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Aditya Birla Group - India
- Lanco Infratech Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Eastern Energy - Thailand
- Ministry of Transport, Egypt
- Deloitte Consulting - India
- Makarim & Taira - Indonesia
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
- Heidelberg Cement - Germany
- Marubeni Corporation - India
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Simpson Spence & Young - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- Ind-Barath Power Infra Limited - India
- Indian Oil Corporation Limited
- Leighton Contractors Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- New Zealand Coal & Carbon
- Commonwealth Bank - Australia
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- Indo Tambangraya Megah - Indonesia
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- LBH Netherlands Bv - Netherlands
- Wilmar Investment Holdings
- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- Therma Luzon, Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Neyveli Lignite Corporation Ltd, - India
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- Cement Manufacturers Association - India
- SN Aboitiz Power Inc, Philippines
- Star Paper Mills Limited - India
- Georgia Ports Authority, United States
- Independent Power Producers Association of India
- Sarangani Energy Corporation, Philippines
- The State Trading Corporation of India Ltd
- White Energy Company Limited
- Aboitiz Power Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- South Luzon Thermal Energy Corporation
- Bukit Asam (Persero) Tbk - Indonesia
- Standard Chartered Bank - UAE
- Tata Chemicals Ltd - India
- Savvy Resources Ltd - HongKong
- Africa Commodities Group - South Africa
- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Mercator Lines Limited - India
- Indian Energy Exchange, India
- Bayan Resources Tbk. - Indonesia
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- ICICI Bank Limited - India
- Indogreen Group - Indonesia
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- CIMB Investment Bank - Malaysia
- Kumho Petrochemical, South Korea
- Larsen & Toubro Limited - India
- Economic Council, Georgia
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- Siam City Cement - Thailand
- VISA Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Bank of Tokyo Mitsubishi UFJ Ltd
- Xindia Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Bulk Trading Sa - Switzerland
- McConnell Dowell - Australia
- OPG Power Generation Pvt Ltd - India
- Indika Energy - Indonesia
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- Parliament of New Zealand
- Merrill Lynch Commodities Europe
- Mintek Dendrill Indonesia
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- GAC Shipping (India) Pvt Ltd
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- India Bulls Power Limited - India
- Renaissance Capital - South Africa
- PowerSource Philippines DevCo
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- Altura Mining Limited, Indonesia
- TeaM Sual Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- Meralco Power Generation, Philippines
- Semirara Mining Corp, Philippines
- Grasim Industreis Ltd - India
- Energy Link Ltd, New Zealand
- Coastal Gujarat Power Limited - India
- Coalindo Energy - Indonesia
- CNBM International Corporation - China
- Siam City Cement PLC, Thailand
- Karaikal Port Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Sical Logistics Limited - India
- Orica Mining Services - Indonesia
- Sree Jayajothi Cements Limited - India
- The Treasury - Australian Government
- Trasteel International SA, Italy
- Eastern Coal Council - USA
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