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Thursday, 09 January 14
THE SHIPPING MARKET IN 2013 AND LOOKING FORWARD GLOBAL ECONOMY: STEADY AS SHE GOES UPWARDS - BIMCO
 Over the past year, developed economies have gained traction while developing and emerging economies have suffered from slower growth. Despite key economic regions’ notable fiscal policies aimed at stimulating growth, there is still no full-blown and self-sustainable economic recovery. For the second quarter of 2013, Europe recorded the first positive GDP growth numbers in eighteen months, a healthy contrast to the previous double-dip recession of earlier quarters. However, rising unemployment, particularly among young people, continue to be the main concern of the euro-zone policy makers.
With a projected growth in the US GDP of 2.6%, the quantitative easing programme of the US Central Bank continues to be the vital ingredient to uphold the country’s positive momentum; there is little will or ability by Congress to exercise other effective fiscal policies.
In Asia, the world’s second and third largest economies provide added comfort for solid international shipping demand in 2014. China is on track for a softer landing with GDP growth at 7.3%, while Japan is driven forward by a determined effort labelled “Abenomics” that is set out to boost the country’s monetary base, bringing back inflation and lifting GDP.
The distribution of economic growth is set to shift in favour of demand driven by advanced economies. This will affect individual shipping segments differently.
In short, the signs of recovery continue, however fragile they may seem. IMF expects 2014 GDP and world import volume growth to hit a three-year high at 3.6% and 4.8% respectively. Europe will crawl away from the abyss bringing with it slightly higher demand for containerships and tankers. The driver in the US will be strong private demand and increased domestic oil production. This should benefit containerships and product tankers.
Growth in emerging market and developing economies is expected to remain strong at 5.1% in 2014, supported by solid domestic demand, recovering exports, and supportive fiscal, monetary and financial conditions. Generally a positive sign for all shipping sectors.
Supply: Will the excessive ordering postpone the recovery?
All the main shipping segments remain heavy on the supply side, causing great volatility in freight rates. Fortunately, the industry has now improved its ability to apply counter-balancing measures to such a degree that even the most oversupplied sectors may experience periodic healthy earnings.
Looking at the newbuilding market developments during 2013, yards aspiring to fill capacity continued to tempt owners with low prices and with some success. With the high cost of fuel, shipowners’ quest for more fuel-efficient or eco tonnage continues to be the main motivator, filling berths and driving newbuilding prices upwards. There appears to be no scarcity of capital for what investors may see as healthy business, but the traditional bank lending has declined and new sources of capital made their entry into the market such as private equity and debt investors.
Tonnage demand in 2013 turned out a bit weaker than initially expected, however, on the supply side the fleet continued to outweigh demand across all segments. 2014 is likely to see a change for the better, as the pace of deliveries slows down, perhaps except for product tankers.
Looking forward to 2014, BIMCO expects the dry bulk fleet to grow by 4.4% [2013E:5.9%] as both deliveries and recycling activity cool off. For the tankers, we expect the dirty segment to grow by 2.9% [2013E:2.3%] negatively affected by small recycling volumes whereas the clean sector will touch a 4-year high at 4.0% [2013E:3.2%]. Supply growth in the containership segment is estimated at 5.7% [2013E:5.9%].
Dry Bulk: Improving fundamentals as demand outstrips supply growth
BIMCO expects dry bulk demand to grow at 4.5 to 6%, driven forward by the major bulk trades: iron ore, steam coal and coking coal, with grain in a supporting role. China remains in the driving seat, a scenario that will benefit the larger ships more than the smaller ones.
Following a rather uneventful first half of 2013, July and August were on fire, one that raged through September and October bringing Capesize rates north of USD 42,000 per day. Expanding Chinese steel production and restocking of iron ore were at the centre of the action.
In 2014 and beyond, the economic and social progress in the main developing nations that seek inexpensive energy and prosperity will set the tone and affect shipping demand positively.
Volatility is likely to rise as the market balance improves. Positive demand shocks will benefit owners and operators to a higher extent than in previous years. The significant oversupply of dry bulk tonnage will, however, influence the pace of the recovery as will the deliveries that follow on from the many newbuilding contracts signed during 2013.
Tanker: The US oil story develops
An uninspiring crude tanker market throughout most of 2013 was fortunately disrupted by an unexpectedly rally in VLCC freight rates during the final quarter.
In the product tanker market, expectations strengthen for this to be the first shipping segment to recover from the market downturn. 2014 is set for stronger demand growth than seen in 2013, but the year will also bring about a larger fleet to cater for expected growth in demand. Having said that, the fundamentals appear to have improved during 2013 although this has yet to be reflected in the freight rates.
Most of the changes to the established, well-known tanker trade routes stem from the fast-track changes in the US domestic oil market. Traditional front-haul routes into the US have reversed as more oil products are now exported.
For patient participants in the crude oil tanker market, the question will be whether China’s aim to diversify its sources of oil supply in favour of West Africa and South America, can offset the tonne-mile losses from the US lowering its long-haul imports. A quick calculation show that for every barrel of crude oil lost from the Arabian Gulf to the US, we need two extra barrels to head for the Far East in order to prevent a reduction in tonne-mile demand.
Container: Moving forward on a knife’s edge
Volatility in freight rates is driven by a full-focused drive towards enhanced competitiveness by lowering unit costs through economies of scale. This is inducing carriers to deploy increasingly large vessels throughout their networks to optimise services.
The two significant spot freight rate hikes on the Shanghai to Europe trade lane during the second half of 2013 proved the point that balancing deployed tonnage to demand can bring sustainable earnings around – at least for a short while. For 2014, carriers are likely to bring tonnage into service while walking on a knife’s edge trying to balance the freight market.
The highest demand growth is seen on the smaller trades; the North-South trades in particular. The pulse on intra-Asia trades is beating fastest of all as ASEAN economic activity strengthens and picks up pace.
Going forward the charter markets will continue to suffer from the high volatility in the sector. Pressure stems from extensive cascading of tonnage and general oversupply. We expect this trend to ease somewhat in 2014, with the return of growth in volumes throughout the year, including the main-lanes, where better economic conditions will prevail in Europe alongside those in the US.
Source: BIMCO / Hellenic Shipping News
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Monday, 13 January 14
INDONESIAN ORE BAN TO HAVE LIMITED IMPACT ON CHINESE ALUMINIUM PRODUCERS, FITCH RATINGS SAYS
COALspot.com: Fitch Ratings says today that Indonesia's ban on exports of unprocessed mineral ore will have limited impact on Chinese aluminium pro ...
Sunday, 12 January 14
THE FREIGHT MARKET CONTINUE TO REMAIN WEAK NEXT WEEK - SOLYM CARRIERS
Wish You A very Happy New Year
COALspot.com: The market has dropped quite a lot as expected due to holidays and probably also the effect of ban o ...
Friday, 10 January 14
DECISION ON ORE EXPORT BAN WILL BE MADE TOMORROW: INDUSTRY MINISTER, JG SAYS
Industry Minister M.S. Hidayat dismissed reports on Thursday that the government had made a decision on the matter. “We will only make a decis ...
Friday, 10 January 14
US COAL PRODUCTION UP 5.8% ON WEEK IN WEEK ENDED SATURDAY 4 JANUARY
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.8 million short tons (mmst) of coal in ...
Thursday, 09 January 14
THE INDONESIAN GOVERNMENT EASES ORE EXPORT BAN
COALspot.com: The Indonesian government has finally agreed to ease the ore-export ban just a few days before the Sunday deadline amid protests from ...
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- Coalindo Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Mercator Lines Limited - India
- Globalindo Alam Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Electricity Authority, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- VISA Power Limited - India
- Siam City Cement PLC, Thailand
- Uttam Galva Steels Limited - India
- Singapore Mercantile Exchange
- Bhatia International Limited - India
- Meralco Power Generation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMG Consultants - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhushan Steel Limited - India
- Economic Council, Georgia
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- Kohat Cement Company Ltd. - Pakistan
- Global Green Power PLC Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Thai Mozambique Logistica
- McConnell Dowell - Australia
- Marubeni Corporation - India
- Minerals Council of Australia
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- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
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- Altura Mining Limited, Indonesia
- Chamber of Mines of South Africa
- Oldendorff Carriers - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Kapuas Tunggal Persada - Indonesia
- Mercuria Energy - Indonesia
- Georgia Ports Authority, United States
- San Jose City I Power Corp, Philippines
- Independent Power Producers Association of India
- Posco Energy - South Korea
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Energy - Thailand
- Formosa Plastics Group - Taiwan
- PNOC Exploration Corporation - Philippines
- Lanco Infratech Ltd - India
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- Makarim & Taira - Indonesia
- Parry Sugars Refinery, India
- GAC Shipping (India) Pvt Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- Medco Energi Mining Internasional
- Romanian Commodities Exchange
- Star Paper Mills Limited - India
- Semirara Mining Corp, Philippines
- Planning Commission, India
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining and Power Corporation, Philippines
- Wilmar Investment Holdings
- Karaikal Port Pvt Ltd - India
- Energy Development Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Aboitiz Power Corporation - Philippines
- Electricity Generating Authority of Thailand
- AsiaOL BioFuels Corp., Philippines
- Kumho Petrochemical, South Korea
- Asmin Koalindo Tuhup - Indonesia
- Jindal Steel & Power Ltd - India
- Interocean Group of Companies - India
- Jaiprakash Power Ventures ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Petron Corporation, Philippines
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
- GVK Power & Infra Limited - India
- The Treasury - Australian Government
- London Commodity Brokers - England
- Siam City Cement - Thailand
- Dalmia Cement Bharat India
- India Bulls Power Limited - India
- MS Steel International - UAE
- SMC Global Power, Philippines
- Wood Mackenzie - Singapore
- White Energy Company Limited
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Straits Asia Resources Limited - Singapore
- IEA Clean Coal Centre - UK
- Jorong Barutama Greston.PT - Indonesia
- GMR Energy Limited - India
- Holcim Trading Pte Ltd - Singapore
- LBH Netherlands Bv - Netherlands
- Ministry of Transport, Egypt
- PTC India Limited - India
- Orica Australia Pty. Ltd.
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
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- Edison Trading Spa - Italy
- Mjunction Services Limited - India
- Energy Link Ltd, New Zealand
- Sarangani Energy Corporation, Philippines
- New Zealand Coal & Carbon
- Ceylon Electricity Board - Sri Lanka
- Price Waterhouse Coopers - Russia
- Intertek Mineral Services - Indonesia
- Madhucon Powers Ltd - India
- Standard Chartered Bank - UAE
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Essar Steel Hazira Ltd - India
- Baramulti Group, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- Indonesian Coal Mining Association
- Riau Bara Harum - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kobexindo Tractors - Indoneisa
- Global Business Power Corporation, Philippines
- Australian Coal Association
- Tata Chemicals Ltd - India
- Therma Luzon, Inc, Philippines
- Bangladesh Power Developement Board
- Carbofer General Trading SA - India
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- The University of Queensland
- Bayan Resources Tbk. - Indonesia
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Goldman Sachs - Singapore
- Indo Tambangraya Megah - Indonesia
- Commonwealth Bank - Australia
- Central Java Power - Indonesia
- Ministry of Finance - Indonesia
- Barasentosa Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Indogreen Group - Indonesia
- IHS Mccloskey Coal Group - USA
- CIMB Investment Bank - Malaysia
- Grasim Industreis Ltd - India
- South Luzon Thermal Energy Corporation
- Kideco Jaya Agung - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Africa Commodities Group - South Africa
- Videocon Industries ltd - India
- ICICI Bank Limited - India
- Indika Energy - Indonesia
- Xindia Steels Limited - India
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Agrawal Coal Company - India
- Port Waratah Coal Services - Australia
- Kaltim Prima Coal - Indonesia
- Australian Commodity Traders Exchange
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- Sree Jayajothi Cements Limited - India
- Rashtriya Ispat Nigam Limited - India
- Tamil Nadu electricity Board
- Parliament of New Zealand
- Latin American Coal - Colombia
- Renaissance Capital - South Africa
- Bukit Baiduri Energy - Indonesia
- Malabar Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Merrill Lynch Commodities Europe
- Deloitte Consulting - India
- Bukit Asam (Persero) Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Bukit Makmur.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Sojitz Corporation - Japan
- Directorate General of MIneral and Coal - Indonesia
- The State Trading Corporation of India Ltd
- Coal and Oil Company - UAE
- Borneo Indobara - Indonesia
- Antam Resourcindo - Indonesia
- Attock Cement Pakistan Limited
- PowerSource Philippines DevCo
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