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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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Saturday, 22 December 12
DELTA DUNIA MAKMUR PRODUCED 3.2 MILLION TONS OF COAL IN NOVEMBER' 12
COALspot.com - PT Delta Dunia Makmur Tbk., has removed 28.1 million bcm* (+1.8% YoY) of Overburden in November 2012 while coal production was at 3.2 ...
Friday, 21 December 12
JORC CODE, 2012 EDITION NOW FINALIZED
COALspot.com - The JORC Committee has announced that, the completion of the review of the JORC Code of 2012 Edition.
The JORC Code, 2012 Ed ...
Thursday, 20 December 12
COAL CLOSING IN ON OIL AS WORLD'S TOP ENERGY SOURCE BY 2017
COALspot.com - Coal’s share of the global energy mix continues to rise, and by 2017 coal will come close to surpassing oil as the world’ ...
Thursday, 20 December 12
CHINA'S IRON ORE AND COAL DEMAND WILL SHAPE THE CAPESIZE DRY BULK TRADE DURING 2013 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite the best efforts from ship owners to help alleviate the current tonnage oversupply issue in the dry bulk segment, especially in the larger v ...
Tuesday, 18 December 12
NEWCASTLE PORT IN AUSTRALIA SHIPPED 20.19 PERCENT MORE COAL W/E 17 DECEMBER 2012
COALspot.com - Newcastle port in Australia has loaded 3,269,640 MT of thermal and coking coal for week ended 0700 hours 17 December 2012, Newc ...
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- Eastern Coal Council - USA
- Bharathi Cement Corporation - India
- Mintek Dendrill Indonesia
- New Zealand Coal & Carbon
- Marubeni Corporation - India
- Baramulti Group, Indonesia
- Chettinad Cement Corporation Ltd - India
- Deloitte Consulting - India
- Neyveli Lignite Corporation Ltd, - India
- Krishnapatnam Port Company Ltd. - India
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Renaissance Capital - South Africa
- Carbofer General Trading SA - India
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Bayan Resources Tbk. - Indonesia
- Sindya Power Generating Company Private Ltd
- Kartika Selabumi Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Port Waratah Coal Services - Australia
- Trasteel International SA, Italy
- European Bulk Services B.V. - Netherlands
- Chamber of Mines of South Africa
- The Treasury - Australian Government
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- San Jose City I Power Corp, Philippines
- Georgia Ports Authority, United States
- Maharashtra Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kumho Petrochemical, South Korea
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Energy Link Ltd, New Zealand
- Attock Cement Pakistan Limited
- Dalmia Cement Bharat India
- Vizag Seaport Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Riau Bara Harum - Indonesia
- Minerals Council of Australia
- Savvy Resources Ltd - HongKong
- Maheswari Brothers Coal Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Petrochimia International Co. Ltd.- Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Latin American Coal - Colombia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Africa Commodities Group - South Africa
- Gujarat Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Meralco Power Generation, Philippines
- Samtan Co., Ltd - South Korea
- Romanian Commodities Exchange
- Tata Chemicals Ltd - India
- Mjunction Services Limited - India
- Siam City Cement - Thailand
- Bhatia International Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Singapore Mercantile Exchange
- Timah Investasi Mineral - Indoneisa
- TeaM Sual Corporation - Philippines
- Central Java Power - Indonesia
- Bulk Trading Sa - Switzerland
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Grasim Industreis Ltd - India
- Bhoruka Overseas - Indonesia
- OPG Power Generation Pvt Ltd - India
- Indian Energy Exchange, India
- LBH Netherlands Bv - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
- SMC Global Power, Philippines
- Billiton Holdings Pty Ltd - Australia
- Energy Development Corp, Philippines
- McConnell Dowell - Australia
- Miang Besar Coal Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Indian Oil Corporation Limited
- Formosa Plastics Group - Taiwan
- Economic Council, Georgia
- Agrawal Coal Company - India
- Petron Corporation, Philippines
- PTC India Limited - India
- Mercuria Energy - Indonesia
- Heidelberg Cement - Germany
- Directorate General of MIneral and Coal - Indonesia
- Makarim & Taira - Indonesia
- Banpu Public Company Limited - Thailand
- Bukit Baiduri Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- IEA Clean Coal Centre - UK
- The State Trading Corporation of India Ltd
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- MS Steel International - UAE
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Aditya Birla Group - India
- Siam City Cement PLC, Thailand
- Indogreen Group - Indonesia
- Ind-Barath Power Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Sakthi Sugars Limited - India
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- Pipit Mutiara Jaya. PT, Indonesia
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- Larsen & Toubro Limited - India
- Kepco SPC Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Australian Coal Association
- Orica Australia Pty. Ltd.
- Coal and Oil Company - UAE
- India Bulls Power Limited - India
- Commonwealth Bank - Australia
- Ministry of Finance - Indonesia
- Coastal Gujarat Power Limited - India
- CNBM International Corporation - China
- Standard Chartered Bank - UAE
- Bangladesh Power Developement Board
- Posco Energy - South Korea
- South Luzon Thermal Energy Corporation
- Indika Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Ministry of Transport, Egypt
- Ambuja Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Sree Jayajothi Cements Limited - India
- Straits Asia Resources Limited - Singapore
- Kobexindo Tractors - Indoneisa
- Barasentosa Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Therma Luzon, Inc, Philippines
- SMG Consultants - Indonesia
- Edison Trading Spa - Italy
- VISA Power Limited - India
- The University of Queensland
- Wilmar Investment Holdings
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Anglo American - United Kingdom
- Directorate Of Revenue Intelligence - India
- CIMB Investment Bank - Malaysia
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- Planning Commission, India
- Mercator Lines Limited - India
- ASAPP Information Group - India
- Orica Mining Services - Indonesia
- Vedanta Resources Plc - India
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- Alfred C Toepfer International GmbH - Germany
- Malabar Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- ICICI Bank Limited - India
- Globalindo Alam Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- SN Aboitiz Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Electricity Generating Authority of Thailand
- White Energy Company Limited
- Sical Logistics Limited - India
- Sinarmas Energy and Mining - Indonesia
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- Jindal Steel & Power Ltd - India
- Bhushan Steel Limited - India
- Eastern Energy - Thailand
- Meenaskhi Energy Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Commodity Traders Exchange
- Sojitz Corporation - Japan
- Merrill Lynch Commodities Europe
- Iligan Light & Power Inc, Philippines
- Tamil Nadu electricity Board
- PetroVietnam Power Coal Import and Supply Company
- Aboitiz Power Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Metalloyd Limited - United Kingdom
- Xindia Steels Limited - India
- Binh Thuan Hamico - Vietnam
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