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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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- Siam City Cement - Thailand
- Aditya Birla Group - India
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Kideco Jaya Agung - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- European Bulk Services B.V. - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- Altura Mining Limited, Indonesia
- Economic Council, Georgia
- Indian Energy Exchange, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Goldman Sachs - Singapore
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- Maharashtra Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Standard Chartered Bank - UAE
- McConnell Dowell - Australia
- Bulk Trading Sa - Switzerland
- Parliament of New Zealand
- Grasim Industreis Ltd - India
- Mintek Dendrill Indonesia
- Antam Resourcindo - Indonesia
- Sree Jayajothi Cements Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- Ministry of Transport, Egypt
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cigading International Bulk Terminal - Indonesia
- Wilmar Investment Holdings
- PowerSource Philippines DevCo
- Ind-Barath Power Infra Limited - India
- Price Waterhouse Coopers - Russia
- Globalindo Alam Lestari - Indonesia
- Indogreen Group - Indonesia
- Pendopo Energi Batubara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Directorate Of Revenue Intelligence - India
- Intertek Mineral Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Link Ltd, New Zealand
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Jindal Steel & Power Ltd - India
- Independent Power Producers Association of India
- Gujarat Sidhee Cement - India
- Timah Investasi Mineral - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Bangladesh Power Developement Board
- Essar Steel Hazira Ltd - India
- Commonwealth Bank - Australia
- GMR Energy Limited - India
- Latin American Coal - Colombia
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- CNBM International Corporation - China
- Merrill Lynch Commodities Europe
- Deloitte Consulting - India
- Central Electricity Authority - India
- OPG Power Generation Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Malabar Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Mineral Development Corp Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Binh Thuan Hamico - Vietnam
- ICICI Bank Limited - India
- Chettinad Cement Corporation Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- White Energy Company Limited
- Bhatia International Limited - India
- Kumho Petrochemical, South Korea
- Iligan Light & Power Inc, Philippines
- Makarim & Taira - Indonesia
- Formosa Plastics Group - Taiwan
- Star Paper Mills Limited - India
- ASAPP Information Group - India
- Bhushan Steel Limited - India
- Uttam Galva Steels Limited - India
- Orica Mining Services - Indonesia
- Ambuja Cements Ltd - India
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- PetroVietnam Power Coal Import and Supply Company
- Bharathi Cement Corporation - India
- Anglo American - United Kingdom
- Electricity Authority, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- PNOC Exploration Corporation - Philippines
- Global Business Power Corporation, Philippines
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bhoruka Overseas - Indonesia
- Sical Logistics Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Miang Besar Coal Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Tata Chemicals Ltd - India
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- Cement Manufacturers Association - India
- Sarangani Energy Corporation, Philippines
- Indika Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- The University of Queensland
- Semirara Mining and Power Corporation, Philippines
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- Straits Asia Resources Limited - Singapore
- Bukit Baiduri Energy - Indonesia
- Attock Cement Pakistan Limited
- Kepco SPC Power Corporation, Philippines
- Dalmia Cement Bharat India
- Therma Luzon, Inc, Philippines
- Ministry of Mines - Canada
- Karbindo Abesyapradhi - Indoneisa
- Savvy Resources Ltd - HongKong
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- Holcim Trading Pte Ltd - Singapore
- Barasentosa Lestari - Indonesia
- Wood Mackenzie - Singapore
- SN Aboitiz Power Inc, Philippines
- Indian Oil Corporation Limited
- Asmin Koalindo Tuhup - Indonesia
- Marubeni Corporation - India
- Edison Trading Spa - Italy
- Heidelberg Cement - Germany
- Kohat Cement Company Ltd. - Pakistan
- CIMB Investment Bank - Malaysia
- Sojitz Corporation - Japan
- MS Steel International - UAE
- Videocon Industries ltd - India
- Romanian Commodities Exchange
- Kartika Selabumi Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Posco Energy - South Korea
- SMC Global Power, Philippines
- Carbofer General Trading SA - India
- Eastern Coal Council - USA
- GAC Shipping (India) Pvt Ltd
- Madhucon Powers Ltd - India
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- Interocean Group of Companies - India
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Thiess Contractors Indonesia
- Karaikal Port Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Minerals Council of Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parry Sugars Refinery, India
- Africa Commodities Group - South Africa
- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Finance - Indonesia
- Meralco Power Generation, Philippines
- Mercator Lines Limited - India
- SMG Consultants - Indonesia
- Tamil Nadu electricity Board
- Indonesian Coal Mining Association
- Trasteel International SA, Italy
- PTC India Limited - India
- Sakthi Sugars Limited - India
- New Zealand Coal & Carbon
- Oldendorff Carriers - Singapore
- Baramulti Group, Indonesia
- Jaiprakash Power Ventures ltd
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- San Jose City I Power Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Chamber of Mines of South Africa
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- AsiaOL BioFuels Corp., Philippines
- Petron Corporation, Philippines
- Lanco Infratech Ltd - India
- Mercuria Energy - Indonesia
- Larsen & Toubro Limited - India
- Salva Resources Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Aboitiz Power Corporation - Philippines
- Riau Bara Harum - Indonesia
- Planning Commission, India
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