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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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Sunday, 08 January 12
THARPAK CONSORTIUM FORMED TO DEVELOP MEGA ENERGY COMPLEX IN SINDH PROVINCE, PAKISTAN
Press Release: On January 5th, TharPak, LLC met with officials of the Embassy of Pakistan in Washington DC to introduce and announce the formation o ...
Saturday, 07 January 12
COAL MARKETS SEE FALLING SPOT PRICES
COALspot.com – World’s thermal coal spot prices have slipped this week..
globalCOAL index in Newcastle Port, benchmark for Asian mark ...
Friday, 06 January 12
COAL INDIA LINKED COAL PRICES WITH INTERNATIONAL COAL PRICES
COALspot.com - Consumers of indigenous coal in India to pay International prices in the future. Coal India has recently moved from UHV pricing mecha ...
Friday, 06 January 12
CLARIDEN GLOBAL BRINGS YOU INDONESIA MINING 2012
Capitalizing Business & Investment Opportunities in an Uncertain Market.Press Release - Clariden Global brings you Indonesia Mining 2012, the dedi ...
Friday, 06 January 12
THE PANAMAX MARKET EXPERIENCED A SLOW START TO 2012 - FEARNLEYS AS
Handy
As usual after a holiday owners and charterers both try to get a feel of the market. An Armada of Supras were talking to ballast towards USG, ...
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- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- Georgia Ports Authority, United States
- Ministry of Mines - Canada
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Thiess Contractors Indonesia
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- Gujarat Sidhee Cement - India
- Neyveli Lignite Corporation Ltd, - India
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- Intertek Mineral Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Sojitz Corporation - Japan
- Electricity Authority, New Zealand
- IEA Clean Coal Centre - UK
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
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- Ind-Barath Power Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Makarim & Taira - Indonesia
- Indian Oil Corporation Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parry Sugars Refinery, India
- Bharathi Cement Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Commonwealth Bank - Australia
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- Eastern Coal Council - USA
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Meenaskhi Energy Private Limited - India
- TeaM Sual Corporation - Philippines
- Australian Coal Association
- Therma Luzon, Inc, Philippines
- Siam City Cement PLC, Thailand
- Posco Energy - South Korea
- ICICI Bank Limited - India
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- Toyota Tsusho Corporation, Japan
- Latin American Coal - Colombia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- Maheswari Brothers Coal Limited - India
- SMG Consultants - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- Economic Council, Georgia
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- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- London Commodity Brokers - England
- Sinarmas Energy and Mining - Indonesia
- Interocean Group of Companies - India
- Heidelberg Cement - Germany
- Indo Tambangraya Megah - Indonesia
- Indonesian Coal Mining Association
- Alfred C Toepfer International GmbH - Germany
- Coastal Gujarat Power Limited - India
- MS Steel International - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Power Finance Corporation Ltd., India
- Indogreen Group - Indonesia
- Baramulti Group, Indonesia
- Pendopo Energi Batubara - Indonesia
- Carbofer General Trading SA - India
- Global Business Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Bhatia International Limited - India
- Ceylon Electricity Board - Sri Lanka
- Orica Mining Services - Indonesia
- Kumho Petrochemical, South Korea
- Tata Chemicals Ltd - India
- Antam Resourcindo - Indonesia
- Africa Commodities Group - South Africa
- Directorate Of Revenue Intelligence - India
- Jindal Steel & Power Ltd - India
- GMR Energy Limited - India
- Kobexindo Tractors - Indoneisa
- New Zealand Coal & Carbon
- Straits Asia Resources Limited - Singapore
- India Bulls Power Limited - India
- Price Waterhouse Coopers - Russia
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- Sree Jayajothi Cements Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- South Luzon Thermal Energy Corporation
- Wood Mackenzie - Singapore
- Essar Steel Hazira Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Bukit Baiduri Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Wilmar Investment Holdings
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- Central Electricity Authority - India
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMC Global Power, Philippines
- Semirara Mining Corp, Philippines
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
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- Goldman Sachs - Singapore
- International Coal Ventures Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Deloitte Consulting - India
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- PTC India Limited - India
- Bhushan Steel Limited - India
- Bulk Trading Sa - Switzerland
- Singapore Mercantile Exchange
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- Bukit Makmur.PT - Indonesia
- Planning Commission, India
- Ministry of Transport, Egypt
- Energy Link Ltd, New Zealand
- Global Coal Blending Company Limited - Australia
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- Kepco SPC Power Corporation, Philippines
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- Mercuria Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Minerals Council of Australia
- Coalindo Energy - Indonesia
- ASAPP Information Group - India
- Energy Development Corp, Philippines
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- Anglo American - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Medco Energi Mining Internasional
- VISA Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Metalloyd Limited - United Kingdom
- IHS Mccloskey Coal Group - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Renaissance Capital - South Africa
- PowerSource Philippines DevCo
- Mercator Lines Limited - India
- Aboitiz Power Corporation - Philippines
- Larsen & Toubro Limited - India
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Mintek Dendrill Indonesia
- Simpson Spence & Young - Indonesia
- Dalmia Cement Bharat India
- Gujarat Mineral Development Corp Ltd - India
- Parliament of New Zealand
- The Treasury - Australian Government
- Vijayanagar Sugar Pvt Ltd - India
- Cement Manufacturers Association - India
- Global Green Power PLC Corporation, Philippines
- Chamber of Mines of South Africa
- Directorate General of MIneral and Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Mjunction Services Limited - India
- Petron Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- White Energy Company Limited
- Banpu Public Company Limited - Thailand
- Savvy Resources Ltd - HongKong
- Aditya Birla Group - India
- Coal and Oil Company - UAE
- The University of Queensland
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- Altura Mining Limited, Indonesia
- Lanco Infratech Ltd - India
- Tamil Nadu electricity Board
- Malabar Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Eastern Energy - Thailand
- Siam City Cement - Thailand
- Grasim Industreis Ltd - India
- Edison Trading Spa - Italy
- Indika Energy - Indonesia
- Uttam Galva Steels Limited - India
- Sarangani Energy Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Meralco Power Generation, Philippines
- Bayan Resources Tbk. - Indonesia
- Madhucon Powers Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Indian Energy Exchange, India
- McConnell Dowell - Australia
- GAC Shipping (India) Pvt Ltd
- Merrill Lynch Commodities Europe
- SN Aboitiz Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
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