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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, 02 January 12
THE PROMISE OF INDIA: A BRIEF INTERRUPTION? - CLARKSONS / HELLENIC SHIPPING
Future growth in Indian seaborne coal imports has sometimes been considered as one of the largest potential upsides in the currently oversupplied dr ...
Sunday, 01 January 12
IS INDIA FOLLOWING INDONESIA TO STANDARDIZE COAL PRICES TO GET MAXIMUM BENEFITS?
COALspot.com - Coal India limited, an Indian state owned and world largest coal producer has introduced gross calorific value (GCV) based pricing me ...
Saturday, 31 December 11
GLOBALCOAL NEWC INDEX SURGED 2.32 PERCENT
COALspot.com - globalCOAL index in Newcastle Port, benchmark for Asian market, ended substantially higher, surged 2.32 percent to US$115.47 per ...
Saturday, 31 December 11
BORNEO LUMBUNG TO BUY BUMI STAKE, SWAP CEO - THE JAKARTA GLOBE
The Jakarta Globe, one of the leading english news paper in Indonesia reported yesterday, shareholders of Indonesian coking coal miner Borneo Lumbun ...
Friday, 30 December 11
CENTRAL GOVERNMENT SHOULD ISSUE PERMITS - THE JAKARTA POST
The Jakarta Post reported that, business associations from both the palm oil and mining sectors have suggested that the central government should re ...
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- Chettinad Cement Corporation Ltd - India
- Makarim & Taira - Indonesia
- Star Paper Mills Limited - India
- Posco Energy - South Korea
- Gujarat Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Port Waratah Coal Services - Australia
- Mercuria Energy - Indonesia
- Aditya Birla Group - India
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Latin American Coal - Colombia
- Rashtriya Ispat Nigam Limited - India
- Riau Bara Harum - Indonesia
- Madhucon Powers Ltd - India
- Tata Chemicals Ltd - India
- Kapuas Tunggal Persada - Indonesia
- CIMB Investment Bank - Malaysia
- Orica Australia Pty. Ltd.
- Electricity Authority, New Zealand
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Indika Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Oldendorff Carriers - Singapore
- Mjunction Services Limited - India
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- The State Trading Corporation of India Ltd
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Minerals Council of Australia
- Karaikal Port Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Bharathi Cement Corporation - India
- Independent Power Producers Association of India
- South Luzon Thermal Energy Corporation
- Mintek Dendrill Indonesia
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- GMR Energy Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Sarangani Energy Corporation, Philippines
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- Wilmar Investment Holdings
- IEA Clean Coal Centre - UK
- Indonesian Coal Mining Association
- Electricity Generating Authority of Thailand
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- PowerSource Philippines DevCo
- ICICI Bank Limited - India
- Metalloyd Limited - United Kingdom
- Parliament of New Zealand
- White Energy Company Limited
- Binh Thuan Hamico - Vietnam
- Wood Mackenzie - Singapore
- Miang Besar Coal Terminal - Indonesia
- Agrawal Coal Company - India
- Antam Resourcindo - Indonesia
- Lanco Infratech Ltd - India
- Australian Commodity Traders Exchange
- Renaissance Capital - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Kumho Petrochemical, South Korea
- Bhoruka Overseas - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bhatia International Limited - India
- Barasentosa Lestari - Indonesia
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- VISA Power Limited - India
- PNOC Exploration Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asmin Koalindo Tuhup - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Merrill Lynch Commodities Europe
- Therma Luzon, Inc, Philippines
- Banpu Public Company Limited - Thailand
- Romanian Commodities Exchange
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Videocon Industries ltd - India
- Coal and Oil Company - UAE
- Salva Resources Pvt Ltd - India
- SMC Global Power, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bangladesh Power Developement Board
- Kartika Selabumi Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- SMG Consultants - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Attock Cement Pakistan Limited
- Ind-Barath Power Infra Limited - India
- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- GVK Power & Infra Limited - India
- Power Finance Corporation Ltd., India
- Anglo American - United Kingdom
- Indogreen Group - Indonesia
- Carbofer General Trading SA - India
- Timah Investasi Mineral - Indoneisa
- Directorate Of Revenue Intelligence - India
- Vijayanagar Sugar Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Thiess Contractors Indonesia
- Simpson Spence & Young - Indonesia
- San Jose City I Power Corp, Philippines
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- Jaiprakash Power Ventures ltd
- Altura Mining Limited, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Edison Trading Spa - Italy
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Grasim Industreis Ltd - India
- Chamber of Mines of South Africa
- Baramulti Group, Indonesia
- Kepco SPC Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Africa Commodities Group - South Africa
- Vedanta Resources Plc - India
- CNBM International Corporation - China
- New Zealand Coal & Carbon
- Ministry of Transport, Egypt
- Bayan Resources Tbk. - Indonesia
- Indian Energy Exchange, India
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- Standard Chartered Bank - UAE
- Meenaskhi Energy Private Limited - India
- Kaltim Prima Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- Manunggal Multi Energi - Indonesia
- Australian Coal Association
- Ceylon Electricity Board - Sri Lanka
- Thai Mozambique Logistica
- Tamil Nadu electricity Board
- Gujarat Sidhee Cement - India
- TeaM Sual Corporation - Philippines
- Medco Energi Mining Internasional
- Larsen & Toubro Limited - India
- Indian Oil Corporation Limited
- The Treasury - Australian Government
- Indo Tambangraya Megah - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sindya Power Generating Company Private Ltd
- Cement Manufacturers Association - India
- Trasteel International SA, Italy
- AsiaOL BioFuels Corp., Philippines
- Coalindo Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Vizag Seaport Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- MS Steel International - UAE
- Straits Asia Resources Limited - Singapore
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- Georgia Ports Authority, United States
- Mercator Lines Limited - India
- Commonwealth Bank - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Borneo Indobara - Indonesia
- Deloitte Consulting - India
- Iligan Light & Power Inc, Philippines
- Ambuja Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement PLC, Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- London Commodity Brokers - England
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- McConnell Dowell - Australia
- Parry Sugars Refinery, India
- Global Coal Blending Company Limited - Australia
- Leighton Contractors Pty Ltd - Australia
- Eastern Coal Council - USA
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