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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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Tuesday, 13 December 11
CAPESIZES AND PANAMAXES LEAD DRY BULK MARKET HIGHER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market inched closer to the 2,000 mark on Monday, with Panamaxes rebounding firmly and leading the gains. As a result, the industry&rsq ...
Sunday, 11 December 11
THE PANAMAX INDEX ENDED ON POSITIVE DIRECTION - VISTAAR
COALspot.com - The BDI and Cape index continued the upward trend this week also with BDI up by 3.00 pct closing at 1,922 points and Cape index up by ...
Saturday, 10 December 11
MAHAKAM RIVER RESUMES COAL TRANSPORTATION
COALspot.com - East Kalimantan local government has resumed limited coal barging through Mahakam River after two weeks of suspension following the c ...
Friday, 09 December 11
DRY BULK MARKET REBOUNDS ON HEALTHIER DEMAND OUTLOOK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market edged forward yesterday, at the highest rate of the past couple of weeks, as a result of stonger iron ore demand, backed by lowe ...
Thursday, 08 December 11
INDIA MAY SEE 41% ANNUAL GROWTH OF ITS COAL DEMAND DURING THE NEXT 5 YEARS - ICAP SHIPPING
India’s Ministry of Coal expects that India’s coal demand may face an annual 41% rise during the next 5 years, while its coal deficit is ...
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- Chamber of Mines of South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Karaikal Port Pvt Ltd - India
- Altura Mining Limited, Indonesia
- San Jose City I Power Corp, Philippines
- Mercuria Energy - Indonesia
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- GVK Power & Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Power Finance Corporation Ltd., India
- Interocean Group of Companies - India
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- Deloitte Consulting - India
- Electricity Generating Authority of Thailand
- Petron Corporation, Philippines
- Economic Council, Georgia
- Mjunction Services Limited - India
- Makarim & Taira - Indonesia
- Romanian Commodities Exchange
- Agrawal Coal Company - India
- Iligan Light & Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Carbofer General Trading SA - India
- Planning Commission, India
- Latin American Coal - Colombia
- Offshore Bulk Terminal Pte Ltd, Singapore
- The State Trading Corporation of India Ltd
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Ministry of Mines - Canada
- GMR Energy Limited - India
- Eastern Energy - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bhushan Steel Limited - India
- Straits Asia Resources Limited - Singapore
- Singapore Mercantile Exchange
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Vedanta Resources Plc - India
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- Medco Energi Mining Internasional
- Semirara Mining and Power Corporation, Philippines
- Thiess Contractors Indonesia
- Kepco SPC Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Sarangani Energy Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Formosa Plastics Group - Taiwan
- Samtan Co., Ltd - South Korea
- Wilmar Investment Holdings
- Meralco Power Generation, Philippines
- LBH Netherlands Bv - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Goldman Sachs - Singapore
- Leighton Contractors Pty Ltd - Australia
- Commonwealth Bank - Australia
- Indo Tambangraya Megah - Indonesia
- Minerals Council of Australia
- Dalmia Cement Bharat India
- Chettinad Cement Corporation Ltd - India
- Directorate Of Revenue Intelligence - India
- Indika Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Central Electricity Authority - India
- Vizag Seaport Private Limited - India
- Indonesian Coal Mining Association
- Bulk Trading Sa - Switzerland
- Sojitz Corporation - Japan
- Heidelberg Cement - Germany
- Kumho Petrochemical, South Korea
- MS Steel International - UAE
- Coalindo Energy - Indonesia
- Larsen & Toubro Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Neyveli Lignite Corporation Ltd, - India
- ICICI Bank Limited - India
- PNOC Exploration Corporation - Philippines
- Xindia Steels Limited - India
- Parry Sugars Refinery, India
- GAC Shipping (India) Pvt Ltd
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Independent Power Producers Association of India
- Australian Coal Association
- Ministry of Transport, Egypt
- Posco Energy - South Korea
- TeaM Sual Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sical Logistics Limited - India
- Indian Energy Exchange, India
- Siam City Cement - Thailand
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- Gujarat Sidhee Cement - India
- Global Business Power Corporation, Philippines
- Cement Manufacturers Association - India
- Bayan Resources Tbk. - Indonesia
- Siam City Cement PLC, Thailand
- Bangladesh Power Developement Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Bukit Makmur.PT - Indonesia
- McConnell Dowell - Australia
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
- Standard Chartered Bank - UAE
- Bhoruka Overseas - Indonesia
- Barasentosa Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Ministry of Finance - Indonesia
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
- Salva Resources Pvt Ltd - India
- Merrill Lynch Commodities Europe
- ASAPP Information Group - India
- AsiaOL BioFuels Corp., Philippines
- Globalindo Alam Lestari - Indonesia
- Eastern Coal Council - USA
- Videocon Industries ltd - India
- Baramulti Group, Indonesia
- PTC India Limited - India
- Jaiprakash Power Ventures ltd
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- CIMB Investment Bank - Malaysia
- Bharathi Cement Corporation - India
- Coal and Oil Company - UAE
- PetroVietnam Power Coal Import and Supply Company
- Riau Bara Harum - Indonesia
- Indian Oil Corporation Limited
- Global Green Power PLC Corporation, Philippines
- New Zealand Coal & Carbon
- The University of Queensland
- Krishnapatnam Port Company Ltd. - India
- International Coal Ventures Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- Wood Mackenzie - Singapore
- Kaltim Prima Coal - Indonesia
- Grasim Industreis Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Aditya Birla Group - India
- Madhucon Powers Ltd - India
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Rio Tinto Coal - Australia
- Thai Mozambique Logistica
- Energy Development Corp, Philippines
- Trasteel International SA, Italy
- Intertek Mineral Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- Sinarmas Energy and Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Toyota Tsusho Corporation, Japan
- Metalloyd Limited - United Kingdom
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- The Treasury - Australian Government
- Aboitiz Power Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Sakthi Sugars Limited - India
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Africa Commodities Group - South Africa
- Malabar Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Marubeni Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Electricity Authority, New Zealand
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- Kobexindo Tractors - Indoneisa
- Tata Chemicals Ltd - India
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- Bhatia International Limited - India
- CNBM International Corporation - China
- Mintek Dendrill Indonesia
- Ind-Barath Power Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karbindo Abesyapradhi - Indoneisa
- Ambuja Cements Ltd - India
- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Anglo American - United Kingdom
- Simpson Spence & Young - Indonesia
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