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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, 16 January 12
BUMA MINED 2.7 MILLION TONS COAL LAST MONTH
COALspot.com - BUMA has mined 2.7 million tons (-14.1% YoY) coal last month and removed 25.8 million bcm (-5.6% YoY) overburden, according to compan ...
Sunday, 15 January 12
THE FREIGHT MARKET CONTINUED TO BLEED - VISTAAR
COALspot.com - "The markets continued to bleed with BDI touching almost 1000 points , almost reaching the collapse of 2008 levels," said C ...
Saturday, 14 January 12
GOLDEN MINES TO SUPPLY 4 MIO TONS - INSIDER STORIES
Insider Stories reported that, Coal miner under Sinarmas Group PT Golden Energy Mines Tbk (GEMS), a subsidiary of PT Dian Swastatika Sentosa Tbk (DS ...
Friday, 13 January 12
DIFFICULT START OF 2012 FOR DRY BULK MARKET SEEN HARD TO CHANGE IN THE COURSE OF THE YEAR, UNLESS DEMOLITION PICKS UP
The dry bulk market has been on a freefall this week after a rocky start to the new year. Yesterday, the BDI (Baltic Dry Index) the industry's benc ...
Thursday, 12 January 12
DRY BULK MARKET CRASHING AT START OF THE YEAR - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept being on freefall mode yesterday, with the industry's benchmark, the BDI (Baltic Dry Index) losing a massive 5.17% on ...
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- London Commodity Brokers - England
- Australian Coal Association
- Gujarat Sidhee Cement - India
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- The University of Queensland
- Global Coal Blending Company Limited - Australia
- International Coal Ventures Pvt Ltd - India
- Renaissance Capital - South Africa
- Wilmar Investment Holdings
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- Bukit Makmur.PT - Indonesia
- Vedanta Resources Plc - India
- Miang Besar Coal Terminal - Indonesia
- Ministry of Mines - Canada
- Petron Corporation, Philippines
- New Zealand Coal & Carbon
- Carbofer General Trading SA - India
- Jindal Steel & Power Ltd - India
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- SN Aboitiz Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- Therma Luzon, Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Electricity Generating Authority of Thailand
- Aditya Birla Group - India
- Independent Power Producers Association of India
- Neyveli Lignite Corporation Ltd, - India
- Marubeni Corporation - India
- Siam City Cement - Thailand
- Binh Thuan Hamico - Vietnam
- TeaM Sual Corporation - Philippines
- Cement Manufacturers Association - India
- Goldman Sachs - Singapore
- Chamber of Mines of South Africa
- Coal and Oil Company - UAE
- Larsen & Toubro Limited - India
- Tamil Nadu electricity Board
- ASAPP Information Group - India
- Kobexindo Tractors - Indoneisa
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- Interocean Group of Companies - India
- Thiess Contractors Indonesia
- Parry Sugars Refinery, India
- Vijayanagar Sugar Pvt Ltd - India
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Meralco Power Generation, Philippines
- Latin American Coal - Colombia
- Australian Commodity Traders Exchange
- Indian Oil Corporation Limited
- Cigading International Bulk Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Bayan Resources Tbk. - Indonesia
- Standard Chartered Bank - UAE
- Rashtriya Ispat Nigam Limited - India
- Edison Trading Spa - Italy
- Sindya Power Generating Company Private Ltd
- Toyota Tsusho Corporation, Japan
- Ministry of Transport, Egypt
- Ceylon Electricity Board - Sri Lanka
- Kaltim Prima Coal - Indonesia
- Videocon Industries ltd - India
- Iligan Light & Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Mintek Dendrill Indonesia
- Borneo Indobara - Indonesia
- Tata Chemicals Ltd - India
- Indian Energy Exchange, India
- Kartika Selabumi Mining - Indonesia
- Mjunction Services Limited - India
- Planning Commission, India
- Alfred C Toepfer International GmbH - Germany
- Indogreen Group - Indonesia
- Coalindo Energy - Indonesia
- Merrill Lynch Commodities Europe
- Samtan Co., Ltd - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Heidelberg Cement - Germany
- Global Business Power Corporation, Philippines
- Medco Energi Mining Internasional
- Offshore Bulk Terminal Pte Ltd, Singapore
- MS Steel International - UAE
- South Luzon Thermal Energy Corporation
- McConnell Dowell - Australia
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- IHS Mccloskey Coal Group - USA
- Holcim Trading Pte Ltd - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- Altura Mining Limited, Indonesia
- Jaiprakash Power Ventures ltd
- Bhatia International Limited - India
- Chettinad Cement Corporation Ltd - India
- Ambuja Cements Ltd - India
- Antam Resourcindo - Indonesia
- Eastern Coal Council - USA
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
- VISA Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Sojitz Corporation - Japan
- CNBM International Corporation - China
- PTC India Limited - India
- Pendopo Energi Batubara - Indonesia
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- The State Trading Corporation of India Ltd
- Central Electricity Authority - India
- Eastern Energy - Thailand
- Dalmia Cement Bharat India
- Orica Australia Pty. Ltd.
- European Bulk Services B.V. - Netherlands
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Karaikal Port Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Lanco Infratech Ltd - India
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- PNOC Exploration Corporation - Philippines
- Grasim Industreis Ltd - India
- Africa Commodities Group - South Africa
- Uttam Galva Steels Limited - India
- Siam City Cement PLC, Thailand
- GAC Shipping (India) Pvt Ltd
- Singapore Mercantile Exchange
- Agrawal Coal Company - India
- Oldendorff Carriers - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Parliament of New Zealand
- Makarim & Taira - Indonesia
- GVK Power & Infra Limited - India
- Rio Tinto Coal - Australia
- White Energy Company Limited
- Vizag Seaport Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bharathi Cement Corporation - India
- Simpson Spence & Young - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Coastal Gujarat Power Limited - India
- Riau Bara Harum - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- Wood Mackenzie - Singapore
- Power Finance Corporation Ltd., India
- Anglo American - United Kingdom
- Kumho Petrochemical, South Korea
- Ministry of Finance - Indonesia
- CIMB Investment Bank - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Malabar Cements Ltd - India
- Star Paper Mills Limited - India
- Kepco SPC Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Mercator Lines Limited - India
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- India Bulls Power Limited - India
- Sical Logistics Limited - India
- Trasteel International SA, Italy
- Banpu Public Company Limited - Thailand
- Deloitte Consulting - India
- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- ICICI Bank Limited - India
- Bangladesh Power Developement Board
- OPG Power Generation Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- Metalloyd Limited - United Kingdom
- Kideco Jaya Agung - Indonesia
- Sree Jayajothi Cements Limited - India
- Port Waratah Coal Services - Australia
- Posco Energy - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Energy Development Corp, Philippines
- Minerals Council of Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- Mercuria Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- IEA Clean Coal Centre - UK
- Directorate Of Revenue Intelligence - India
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