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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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Wednesday, 02 January 13
NEWCASTLE PORT SHIPPED 23.61 PERCENT MORE COAL W-W
COALspot.com - Newcastle port in Australia has loaded 3,533,183 MT of thermal and coking coal for week ended 0700 hours 31 December 2012, Newc ...
Wednesday, 02 January 13
DRY BULK MARKET TO STAY ELEVATED IN START OF 2013 BUT THE NEW YEAR WILL NOT BE WITHOUT TURBULENCE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
In its regular update on the dry bulk market, BIMCO forecasted, that Capesize time-charter rates are expected to stay elevated in the following six ...
Monday, 31 December 12
KOSEP IS LOOKING FOR 280K MT OF 4600 NCV COAL FOR APRIL - JUNE 2013
COALspot.com : South Korean state-owned utility Korea South-East Power Co., Ltd. (KOSEP), has issued an new tender for prompt supply of 280,00 ...
Monday, 31 December 12
VALE CELEBRATES ARRIVAL OF "VALE SOHAR" BULK CARRIER TO SULTANATE WITH MEMBERS OF COMMUNITY
'Vale Sohar', one of the largest bulk carriers in the world, was welcomed to Oman by members of the North Al Batinah community headed by H.E. Shei ...
Monday, 31 December 12
"DISTRESSED", "ECO" AND "FINANCE" ARE THE THREE WORDS WHICH CHARACTERIZED 2012 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
2012 was yet another year of speculation, anticipation, pessimism and more speculation in the shipping markets. According to the latest weekly repor ...
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- Bukit Makmur.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- International Coal Ventures Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Sakthi Sugars Limited - India
- MS Steel International - UAE
- Deloitte Consulting - India
- CIMB Investment Bank - Malaysia
- Madhucon Powers Ltd - India
- Wood Mackenzie - Singapore
- Ind-Barath Power Infra Limited - India
- Bhoruka Overseas - Indonesia
- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- VISA Power Limited - India
- Ambuja Cements Ltd - India
- SMC Global Power, Philippines
- Timah Investasi Mineral - Indoneisa
- GMR Energy Limited - India
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Siam City Cement PLC, Thailand
- The State Trading Corporation of India Ltd
- PetroVietnam Power Coal Import and Supply Company
- Oldendorff Carriers - Singapore
- Pendopo Energi Batubara - Indonesia
- ASAPP Information Group - India
- Simpson Spence & Young - Indonesia
- Ministry of Mines - Canada
- Indian Energy Exchange, India
- CNBM International Corporation - China
- The University of Queensland
- Singapore Mercantile Exchange
- India Bulls Power Limited - India
- PowerSource Philippines DevCo
- Maheswari Brothers Coal Limited - India
- Tamil Nadu electricity Board
- Australian Commodity Traders Exchange
- Chettinad Cement Corporation Ltd - India
- Grasim Industreis Ltd - India
- Altura Mining Limited, Indonesia
- Trasteel International SA, Italy
- SN Aboitiz Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Renaissance Capital - South Africa
- Bangladesh Power Developement Board
- Kepco SPC Power Corporation, Philippines
- Baramulti Group, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Posco Energy - South Korea
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- Sree Jayajothi Cements Limited - India
- Mintek Dendrill Indonesia
- Sinarmas Energy and Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Barasentosa Lestari - Indonesia
- Eastern Energy - Thailand
- Indika Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- Straits Asia Resources Limited - Singapore
- Videocon Industries ltd - India
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- Parliament of New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- Samtan Co., Ltd - South Korea
- Edison Trading Spa - Italy
- Alfred C Toepfer International GmbH - Germany
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Commonwealth Bank - Australia
- Georgia Ports Authority, United States
- OPG Power Generation Pvt Ltd - India
- Attock Cement Pakistan Limited
- Coal and Oil Company - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Therma Luzon, Inc, Philippines
- Central Electricity Authority - India
- Semirara Mining and Power Corporation, Philippines
- Mercator Lines Limited - India
- Global Green Power PLC Corporation, Philippines
- Malabar Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Savvy Resources Ltd - HongKong
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IHS Mccloskey Coal Group - USA
- Marubeni Corporation - India
- Billiton Holdings Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Star Paper Mills Limited - India
- Anglo American - United Kingdom
- Global Business Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Independent Power Producers Association of India
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- Vedanta Resources Plc - India
- Economic Council, Georgia
- PNOC Exploration Corporation - Philippines
- Latin American Coal - Colombia
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Larsen & Toubro Limited - India
- Kaltim Prima Coal - Indonesia
- Orica Mining Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Thiess Contractors Indonesia
- Krishnapatnam Port Company Ltd. - India
- Indo Tambangraya Megah - Indonesia
- Thai Mozambique Logistica
- Vijayanagar Sugar Pvt Ltd - India
- Energy Development Corp, Philippines
- London Commodity Brokers - England
- Petron Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ICICI Bank Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Xindia Steels Limited - India
- Vizag Seaport Private Limited - India
- Medco Energi Mining Internasional
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- Electricity Authority, New Zealand
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- Price Waterhouse Coopers - Russia
- AsiaOL BioFuels Corp., Philippines
- Ministry of Transport, Egypt
- Sical Logistics Limited - India
- Global Coal Blending Company Limited - Australia
- Bulk Trading Sa - Switzerland
- Parry Sugars Refinery, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GVK Power & Infra Limited - India
- Sojitz Corporation - Japan
- Planning Commission, India
- Kapuas Tunggal Persada - Indonesia
- Essar Steel Hazira Ltd - India
- PTC India Limited - India
- Wilmar Investment Holdings
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Binh Thuan Hamico - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- Romanian Commodities Exchange
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- Carbofer General Trading SA - India
- Asmin Koalindo Tuhup - Indonesia
- SMG Consultants - Indonesia
- Tata Chemicals Ltd - India
- Australian Coal Association
- McConnell Dowell - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Chamber of Mines of South Africa
- Standard Chartered Bank - UAE
- Karbindo Abesyapradhi - Indoneisa
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- TNB Fuel Sdn Bhd - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Bayan Resources Tbk. - Indonesia
- Salva Resources Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Aditya Birla Group - India
- Mjunction Services Limited - India
- Minerals Council of Australia
- Siam City Cement - Thailand
- Mercuria Energy - Indonesia
- Bharathi Cement Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Energy Link Ltd, New Zealand
- Bhatia International Limited - India
- Kideco Jaya Agung - Indonesia
- Indian Oil Corporation Limited
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