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Saturday, 05 January 13
THE SHIPPING MARKET IN 2012 AND LOOKING FORWARD - BIMCO
 Global Economy: Things will go up from here
The global economy continues to grow, albeit at a slower pace than previous years. The slower economic development has been difficult for ship owners who, with a severe overhang of tonnage, have struggled with a depressed freight market since the start of the financial crisis back in 2008. The good news is that both GDP and world trade currently are expected to go up at 3.6% and 4.5% respectively in 2013, which may bring some relief to the shipping industry. The distribution of the global economic recovery will be a decisive factor in how the recovery is going to impact the different shipping segments.
During the second half of 2012, strong political will from the major economies introducing fiscal and monetary policies underpinned the upturn in economic development. However, many of the sustainable growth indicators remain weak, clearly reflecting the fragility in the financial markets. In China, the HSBC/ Markit Manufacturing PMI has been South of the threshold level of 50 throughout the year, indicating a slowdown. However, the November flash report gave rise to some optimism, probably spurred on by yet another economic stimulus. Meanwhile, the Eurozone continues to bear signs of a stand-still, as demand and consumer confidence remain very weak, but there are more positive signals coming from the US that expect a growth beyond 2% also next year.
BIMCO believes that 2013 will be the turning point on the macroeconomic scene. Our baseline scenario is that global GDP will grow stronger in 2013. This is founded in generally easier access to capital led by central banks, positive advocacy vis-à-vis policymakers in e.g. US, EU, Japan and China. This development is welcome and may well be the recipe to more effectively deal with the present challenges. Consumer confidence hinges on the employment situation and will be the catalyst supporting this development, creating demand for goods, housing and energy. In other words, the macroeconomic development should be a positive factor in the shipping markets in 2013, with a key risk being the fragile financial markets, fiscal consolidation in the advanced economies as well as a slowdown in some major emerging economies.
Supply: Overhang of tonnage is a major concern
The collapse of the financial markets in 2008 has taken its toll on ship owners who, in their predictions of a continued high growth in world trade back then, had ordered newbuildings at an unprecedented level. The effects of this overly-optimistic market outlook continue to haunt ship owners, who are trying their best to manage the overhang of tonnage by slow-steaming, idling and recycling. It will be some time before the fundamental supply and demand ratio is balanced. The fleet expansion during 2012 has not improved the situation, as the dry bulk fleet grew by 70 million DWT and the containership fleet by 1.1 million TEU. Fleet expansion in the tanker segments was more moderate, as the products fleet increased by a bit more than 2% and the crude oil fleet by 5%. Looking forward, BIMCO expects that the fleet will grow at a lower rate than the 2012 level. The containership fleet is expected to grow by 7%, the dry bulk fleet by 6%, the crude oil tanker fleet by 4.5% and finally, the product tanker segment is expected to have a judicious growth of 2% for 2013.
The buzzword of the newbuilding market is the so-called ECO-ships, offering potentially large fuel savings compared with the standard ship in the market. The jury is still out regarding the magnitude of the savings, but if the ships are as energy efficient as advertised by the yards, ECO-ships could be a sound business case for ship owners. The deciding factor will be fuel costs, which are not expected to decline. Many of the new ships, especially within the product tanker segment that have been contracted for since mid-2011, have been ordered with an ECO-design.
It is, however, important to emphasise that any major new influx of ships will only create further problems for the industry, considering the already heavy overhang of tonnage. The real challenge is how to optimise the energy efficiency of the current fleet, which age-wise is the youngest ever.
Dry Bulk: Demand is good but is it enough to save the day?
Coming into 2012, freight rates declined significantly and earnings dropped. The Capesize vessels were hurt the most, with freight rates falling below all other segments despite offering much higher cargo capacity. The dip is obviously a direct consequence of the massive overhang of tonnage, coupled with weaker demand.
Towards the end of 2012, demand for iron ore in particular picked up again, as China introduced another large stimulus package with focus on infrastructural developments. Even though this positively impacted the rates, the unsustainable low freight rate levels during most of 2012 proved only sufficient to cover operating expenses, but hardly any capital cost. Going forward, the economic development in China and India will spur demand for power generation, which will lead to increased imports of thermal coal next year. China is likely to import more iron ore in 2013, considering the infrastructure plan coupled with the falling quality of domestically mined iron ore which, all things being equal, will positively affect the demand for tonnage. The supply side is, however, likely to curb the freight rate upturn due to the significant oversupply in the Capesize and Panamax segments.
Tanker: All eyes on the US!
The world’s largest oil consumer, the US, might put downward pressure on seaborne demand in the coming years as the domestic production of oil and natural gas is expected to increase immensely, according to the International Energy Agency. Looking at imports, the extraction of oil sands in Canada means that more than a quarter of US crude oil imports come from their northern neighbour. This trend is unfortunate for the tanker shipping industry, as the large majority of these imports are transported via pipelines rather than tankers. Meanwhile, the shale gas adventures may prompt a shift in the energy mix, not only in US but also globally, towards more natural gas. The threats come on top of a weak crude tanker market, where freight rates this summer reached the lowest point since the miserable days of 2009.
In the oil product tankers sector, freight rates have been depressed throughout most of the year, with the summer months being the low point, but rate hikes during the Autumn and early Winter indicate that a slowly improving market may be in the making, potentially already next year. Things are stirring below the surface, as trade patterns are changing, with traditional importers becoming exporters, notably the US, and also in the spec-trade volumes are going higher.
Looking forward, the prospects of a big-scale North American oil and gas production may favour niche segments such as the LNG tankers outright. LNG tankers make substantial profits at the moment from the arbitrage opportunities arising from the difference in prices of natural gas across the globe. But it will take its toll on the crude and product tanker segments, unless the US significantly increases exports of these products.
Container: Is cascading the solution?
The first half of 2012 developed in the right direction for the liner trades, with rates from Far East to US West Coast rising to USD 2,600 per FEU in June, up from USD 1,800 per FEU in January. Comparably, rates on Far East to Northern Europe climbed from USD 750 per TEU in January to a peak of 1,900 per TEU in June. While the demand side was able to hold rates up in the trans-Pacific trade, rates to Northern Europe fell to touch USD 1,000 per TEU in November, as demand succumbed in the shadow of the Eurozone crisis.
Going forward, the liner segment is about to settle for lower growth rates than those that were once the norm. Globalisation is expected to continue as the main driver, but stronger intra-Asian demand rather than a speedy return to high demand from Europa and US is on the cards for the coming years.
We have seen a steady main trading lane cascading where the Far East – Europe container trade is now largely conducted by Ultra Large Container Vessels (ULCV), a fleet segment that has increased by a staggering 43% so far in 2012, with more to come in 2013. Some segments are being squeezed by the general economy of scale movement in this sector, notably the sub-3,000 TEUs that have accounted for 75% of the overall containership demolition, testifying a cascading to larger ships.
While voyage and operating expenses may just be covered at current rates, they are unfortunately insufficient to fully cover the cost of capital. In an effort to establish reasonable returns on investment, liner companies resort to deactivating routes, laying-up and demolishing tonnage extensively. Going forward, the route to and perspective of recovery will greatly depend on the container trade’s ability to balance the supply side to demand.
Source: Bimco
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Thursday, 24 January 13
INDO - INDIA NOW AT APS $ 8K + BB USD 90000 - FEARNLEYS AS
Handy
The Atlantic market remains stable as supply of tonnage is still in excess of demand. USG- Far east fixed at $18k and CONT-FEAST at $ 11k. Pa ...
Thursday, 24 January 13
DRY BULK MARKET FALLS ON TROPICAL CYCLONE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been on the downside during the past couple of days, mainly as a result of the tropical storm which forced ports to close do ...
Tuesday, 22 January 13
PORT OF ANTWERP HANDLES 7.0 PERCENT MORE COAL IN 2012 Y-Y
COALspot.com - The port of Antwerp handled 184,134,516 tonnes of freight last year.
This represents a drop of 1.6% compared with 2011, when the v ...
Monday, 21 January 13
NEWCASTLE PORT SHIPPED 10.21 PERCENT LESS COAL W/E 21 JANUARY 2013
COALspot.com - Newcastle port in Australia has loaded 2,804,152 MT of thermal and coking coal for week ended 0700 hours 21 January 2013, Newca ...
Monday, 21 January 13
PANAMAX DRY BULK CARRIERS AND AFRAMAX TANKERS PROVED TO BE THE "WEAPON OF CHOICE" FOR MOST SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
With ship financing getting ever so difficult to procure during the past year or so, ship owners had to get creative in order to persuade banks and ...
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- Eastern Energy - Thailand
- Cement Manufacturers Association - India
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- IHS Mccloskey Coal Group - USA
- Xindia Steels Limited - India
- Antam Resourcindo - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Jindal Steel & Power Ltd - India
- MS Steel International - UAE
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- Karaikal Port Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Australian Coal Association
- Therma Luzon, Inc, Philippines
- India Bulls Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Dalmia Cement Bharat India
- Parry Sugars Refinery, India
- Heidelberg Cement - Germany
- Minerals Council of Australia
- Madhucon Powers Ltd - India
- Economic Council, Georgia
- Georgia Ports Authority, United States
- Indika Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- Parliament of New Zealand
- Marubeni Corporation - India
- Anglo American - United Kingdom
- Agrawal Coal Company - India
- Power Finance Corporation Ltd., India
- Banpu Public Company Limited - Thailand
- Port Waratah Coal Services - Australia
- Kideco Jaya Agung - Indonesia
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vedanta Resources Plc - India
- Grasim Industreis Ltd - India
- Ind-Barath Power Infra Limited - India
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- Coal and Oil Company - UAE
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- Star Paper Mills Limited - India
- Riau Bara Harum - Indonesia
- Simpson Spence & Young - Indonesia
- European Bulk Services B.V. - Netherlands
- Central Electricity Authority - India
- San Jose City I Power Corp, Philippines
- Ministry of Mines - Canada
- Electricity Authority, New Zealand
- New Zealand Coal & Carbon
- Ambuja Cements Ltd - India
- Indogreen Group - Indonesia
- Indonesian Coal Mining Association
- Karbindo Abesyapradhi - Indoneisa
- Tata Chemicals Ltd - India
- Semirara Mining Corp, Philippines
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- Aboitiz Power Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Kartika Selabumi Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Bhushan Steel Limited - India
- McConnell Dowell - Australia
- Alfred C Toepfer International GmbH - Germany
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Formosa Plastics Group - Taiwan
- Posco Energy - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Indo Tambangraya Megah - Indonesia
- Bangladesh Power Developement Board
- Bayan Resources Tbk. - Indonesia
- Coalindo Energy - Indonesia
- SMC Global Power, Philippines
- Semirara Mining and Power Corporation, Philippines
- Bhatia International Limited - India
- Petron Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- IEA Clean Coal Centre - UK
- Attock Cement Pakistan Limited
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- GVK Power & Infra Limited - India
- Coastal Gujarat Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Romanian Commodities Exchange
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Asmin Koalindo Tuhup - Indonesia
- Bhoruka Overseas - Indonesia
- Sojitz Corporation - Japan
- GMR Energy Limited - India
- Mercator Lines Limited - India
- The University of Queensland
- Orica Australia Pty. Ltd.
- Sarangani Energy Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- Directorate Of Revenue Intelligence - India
- Savvy Resources Ltd - HongKong
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chamber of Mines of South Africa
- OPG Power Generation Pvt Ltd - India
- Aditya Birla Group - India
- Kalimantan Lumbung Energi - Indonesia
- White Energy Company Limited
- PTC India Limited - India
- Cigading International Bulk Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Medco Energi Mining Internasional
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Makmur.PT - Indonesia
- Videocon Industries ltd - India
- VISA Power Limited - India
- SMG Consultants - Indonesia
- Commonwealth Bank - Australia
- London Commodity Brokers - England
- Gujarat Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- International Coal Ventures Pvt Ltd - India
- Larsen & Toubro Limited - India
- Merrill Lynch Commodities Europe
- CNBM International Corporation - China
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The Treasury - Australian Government
- CIMB Investment Bank - Malaysia
- Ceylon Electricity Board - Sri Lanka
- The State Trading Corporation of India Ltd
- South Luzon Thermal Energy Corporation
- Leighton Contractors Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Trasteel International SA, Italy
- PowerSource Philippines DevCo
- Sree Jayajothi Cements Limited - India
- Borneo Indobara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Australian Commodity Traders Exchange
- Sakthi Sugars Limited - India
- Bulk Trading Sa - Switzerland
- Carbofer General Trading SA - India
- Orica Mining Services - Indonesia
- TeaM Sual Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Kepco SPC Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Oldendorff Carriers - Singapore
- Deloitte Consulting - India
- Manunggal Multi Energi - Indonesia
- Singapore Mercantile Exchange
- Binh Thuan Hamico - Vietnam
- Malabar Cements Ltd - India
- Ministry of Transport, Egypt
- ASAPP Information Group - India
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Sical Logistics Limited - India
- Mercuria Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Latin American Coal - Colombia
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- Wilmar Investment Holdings
- Essar Steel Hazira Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Mintek Dendrill Indonesia
- Indian Energy Exchange, India
- Petrochimia International Co. Ltd.- Taiwan
- Bharathi Cement Corporation - India
- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Edison Trading Spa - Italy
- Indian Oil Corporation Limited
- Kaltim Prima Coal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Baramulti Group, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kapuas Tunggal Persada - Indonesia
- SN Aboitiz Power Inc, Philippines
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