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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, 05 January 12
DRY BULK MARKET TAKES A PLUNGE OF LOW ACTIVITY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
As was widely expected the first days of the new year are characterized by significantly low chartering across the board of the dry bulk market, pus ...
Wednesday, 04 January 12
NEWBUILDING ORDERS PICKED UP IN 2011, BUT 2012 EXPECTED TO BE A DIFFERENT STORY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the BDI (Baltic Dry Index) starting the year on a sour note, losing 114 points and ending yesterday’s session, the first of the new year, ...
Wednesday, 04 January 12
MAHAGENCO TO IMPORT LOW MOISTURE COAL
COALspot.com - Maharashtra State Power Generation Co. Ltd. is the state power generation utility owned by Government of Maharashtra, intends to proc ...
Tuesday, 03 January 12
INDONESIA COAL REFERENCE PRICE FELL AGAIN
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia has sets the January 2012 coal reference price at US$ 109.29 per ton or US$ 3.3 ...
Tuesday, 03 January 12
WHICH WAY WILL THE DRY BULK MARKET HEAD ON FIRST WEEK OF THE YEAR? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Dry bulk ship owners will be wondering which way will the BDI (Baltic Dry Index), the industry’s benchmark, will head during the first days of ...
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- SMC Global Power, Philippines
- Indian Energy Exchange, India
- Thai Mozambique Logistica
- GVK Power & Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Price Waterhouse Coopers - Russia
- Makarim & Taira - Indonesia
- PowerSource Philippines DevCo
- Deloitte Consulting - India
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Parry Sugars Refinery, India
- Sarangani Energy Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- Coalindo Energy - Indonesia
- Madhucon Powers Ltd - India
- GMR Energy Limited - India
- Larsen & Toubro Limited - India
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
- Therma Luzon, Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Star Paper Mills Limited - India
- The State Trading Corporation of India Ltd
- Kartika Selabumi Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- Aboitiz Power Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Planning Commission, India
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- Marubeni Corporation - India
- Energy Development Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Coastal Gujarat Power Limited - India
- Bukit Makmur.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Carbofer General Trading SA - India
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- Billiton Holdings Pty Ltd - Australia
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- Globalindo Alam Lestari - Indonesia
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- Toyota Tsusho Corporation, Japan
- Gujarat Sidhee Cement - India
- Straits Asia Resources Limited - Singapore
- Mintek Dendrill Indonesia
- Bulk Trading Sa - Switzerland
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Global Green Power PLC Corporation, Philippines
- Independent Power Producers Association of India
- Power Finance Corporation Ltd., India
- Antam Resourcindo - Indonesia
- Meenaskhi Energy Private Limited - India
- Siam City Cement - Thailand
- Central Electricity Authority - India
- Siam City Cement PLC, Thailand
- Riau Bara Harum - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Mercator Lines Limited - India
- Heidelberg Cement - Germany
- Savvy Resources Ltd - HongKong
- Electricity Generating Authority of Thailand
- Manunggal Multi Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Minerals Council of Australia
- International Coal Ventures Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- PTC India Limited - India
- Altura Mining Limited, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Barasentosa Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- San Jose City I Power Corp, Philippines
- Australian Commodity Traders Exchange
- London Commodity Brokers - England
- CNBM International Corporation - China
- Kepco SPC Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Java Power - Indonesia
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- ICICI Bank Limited - India
- Vedanta Resources Plc - India
- Global Coal Blending Company Limited - Australia
- Eastern Energy - Thailand
- Goldman Sachs - Singapore
- Standard Chartered Bank - UAE
- Cement Manufacturers Association - India
- Economic Council, Georgia
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Transport, Egypt
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- Grasim Industreis Ltd - India
- Indika Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- Oldendorff Carriers - Singapore
- Lanco Infratech Ltd - India
- European Bulk Services B.V. - Netherlands
- Uttam Galva Steels Limited - India
- Singapore Mercantile Exchange
- Trasteel International SA, Italy
- Borneo Indobara - Indonesia
- Ministry of Mines - Canada
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Semirara Mining Corp, Philippines
- New Zealand Coal & Carbon
- Chamber of Mines of South Africa
- McConnell Dowell - Australia
- Intertek Mineral Services - Indonesia
- Africa Commodities Group - South Africa
- Miang Besar Coal Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Essar Steel Hazira Ltd - India
- Jindal Steel & Power Ltd - India
- Medco Energi Mining Internasional
- Kapuas Tunggal Persada - Indonesia
- Coal and Oil Company - UAE
- White Energy Company Limited
- Kumho Petrochemical, South Korea
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Global Business Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Thiess Contractors Indonesia
- India Bulls Power Limited - India
- Sical Logistics Limited - India
- Commonwealth Bank - Australia
- Aditya Birla Group - India
- Ind-Barath Power Infra Limited - India
- Mercuria Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- SN Aboitiz Power Inc, Philippines
- Indonesian Coal Mining Association
- Tata Chemicals Ltd - India
- Simpson Spence & Young - Indonesia
- Rio Tinto Coal - Australia
- Merrill Lynch Commodities Europe
- Indo Tambangraya Megah - Indonesia
- The University of Queensland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Malabar Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Tamil Nadu electricity Board
- Indian Oil Corporation Limited
- Romanian Commodities Exchange
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bangladesh Power Developement Board
- The Treasury - Australian Government
- Bhatia International Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Xindia Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Meralco Power Generation, Philippines
- Parliament of New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Australian Coal Association
- Posco Energy - South Korea
- Electricity Authority, New Zealand
- Formosa Plastics Group - Taiwan
- VISA Power Limited - India
- Agrawal Coal Company - India
- Bharathi Cement Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wood Mackenzie - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- OPG Power Generation Pvt Ltd - India
- Renaissance Capital - South Africa
- LBH Netherlands Bv - Netherlands
- Latin American Coal - Colombia
- Kobexindo Tractors - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- PNOC Exploration Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
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