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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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Tuesday, 24 December 13
AUSTRALIAN NEWCASTLE PORT'S WEEKLY COAL EXPORTS UP 11.46% W-W
COALspot.com: In the week ended December 23, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled 3.84 ...
Tuesday, 24 December 13
SGX HAS LAUNCHED FREIGHT FUTURES
COALspot.com: Singapore Exchange (SGX) has announced the launch of freight future yesterday.
According to SGX’s press release, SGX has laun ...
Monday, 23 December 13
API 8 CFR SOUTH CHINA COAL SWAP FOR AVERAGE Q1' 14 CLOSED AT $ 82.80
COALspot.com : API 8 CFR South China Coal swaps for average Q1’ 14 delivery gained 2.97 percept month on month as on Friday 20 December 2013. ...
Sunday, 22 December 13
Q1' 14 DELIVERY COAL SWAPS CLOSING HIGH COMPARED TO Q4' 14 DELIVERY CLOSING
COALspot.com – Sub-Bit Indonesia coal swap (FOB) for average Q1’ 14 delivery gained $ 1.31 pmt month on month on Friday 20 December 2013 ...
Sunday, 22 December 13
QUIET FREIGHT MARKET DUE TO LONG HOLIDAYS
COALspot.com: The market was soft this week with all indices down. However towards second half of the week the futures on segments was firming up.
...
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- Bukit Asam (Persero) Tbk - Indonesia
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Heidelberg Cement - Germany
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- Petron Corporation, Philippines
- Bharathi Cement Corporation - India
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- Simpson Spence & Young - Indonesia
- OPG Power Generation Pvt Ltd - India
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- Indonesian Coal Mining Association
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- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- GN Power Mariveles Coal Plant, Philippines
- White Energy Company Limited
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- Ind-Barath Power Infra Limited - India
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Mining Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Therma Luzon, Inc, Philippines
- CIMB Investment Bank - Malaysia
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- Rashtriya Ispat Nigam Limited - India
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- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- Planning Commission, India
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- Indian Energy Exchange, India
- Merrill Lynch Commodities Europe
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- Singapore Mercantile Exchange
- Latin American Coal - Colombia
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- Salva Resources Pvt Ltd - India
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- Ministry of Finance - Indonesia
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Georgia Ports Authority, United States
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- International Coal Ventures Pvt Ltd - India
- Bangladesh Power Developement Board
- Makarim & Taira - Indonesia
- Mercuria Energy - Indonesia
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- CNBM International Corporation - China
- Oldendorff Carriers - Singapore
- Siam City Cement PLC, Thailand
- TeaM Sual Corporation - Philippines
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- Globalindo Alam Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
- Coalindo Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Mintek Dendrill Indonesia
- Minerals Council of Australia
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tata Chemicals Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
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- Jaiprakash Power Ventures ltd
- PetroVietnam Power Coal Import and Supply Company
- New Zealand Coal & Carbon
- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- Interocean Group of Companies - India
- Agrawal Coal Company - India
- Larsen & Toubro Limited - India
- Maheswari Brothers Coal Limited - India
- SMG Consultants - Indonesia
- Antam Resourcindo - Indonesia
- Power Finance Corporation Ltd., India
- Tamil Nadu electricity Board
- Indian Oil Corporation Limited
- Cigading International Bulk Terminal - Indonesia
- Thai Mozambique Logistica
- McConnell Dowell - Australia
- The University of Queensland
- Coal and Oil Company - UAE
- PowerSource Philippines DevCo
- Eastern Coal Council - USA
- Altura Mining Limited, Indonesia
- Savvy Resources Ltd - HongKong
- European Bulk Services B.V. - Netherlands
- Rio Tinto Coal - Australia
- Bahari Cakrawala Sebuku - Indonesia
- The State Trading Corporation of India Ltd
- Eastern Energy - Thailand
- Vijayanagar Sugar Pvt Ltd - India
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- Asmin Koalindo Tuhup - Indonesia
- Global Coal Blending Company Limited - Australia
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- Semirara Mining and Power Corporation, Philippines
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- Siam City Cement - Thailand
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- Wilmar Investment Holdings
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- Ministry of Mines - Canada
- Romanian Commodities Exchange
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- Ministry of Transport, Egypt
- Holcim Trading Pte Ltd - Singapore
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- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Thiess Contractors Indonesia
- Samtan Co., Ltd - South Korea
- Standard Chartered Bank - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Energy Development Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Xindia Steels Limited - India
- The Treasury - Australian Government
- Kapuas Tunggal Persada - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- Gujarat Sidhee Cement - India
- Star Paper Mills Limited - India
- Deloitte Consulting - India
- Timah Investasi Mineral - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Global Business Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- Sree Jayajothi Cements Limited - India
- Trasteel International SA, Italy
- Banpu Public Company Limited - Thailand
- Aditya Birla Group - India
- Binh Thuan Hamico - Vietnam
- Mjunction Services Limited - India
- Ceylon Electricity Board - Sri Lanka
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- Riau Bara Harum - Indonesia
- Borneo Indobara - Indonesia
- SMC Global Power, Philippines
- IEA Clean Coal Centre - UK
- Renaissance Capital - South Africa
- Sarangani Energy Corporation, Philippines
- Posco Energy - South Korea
- Electricity Generating Authority of Thailand
- Vedanta Resources Plc - India
- Carbofer General Trading SA - India
- Bukit Makmur.PT - Indonesia
- Attock Cement Pakistan Limited
- Indika Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Energy Link Ltd, New Zealand
- Australian Coal Association
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
- Formosa Plastics Group - Taiwan
- Dalmia Cement Bharat India
- Independent Power Producers Association of India
- Port Waratah Coal Services - Australia
- Gujarat Electricity Regulatory Commission - India
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- Baramulti Group, Indonesia
- SN Aboitiz Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Chamber of Mines of South Africa
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
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- LBH Netherlands Bv - Netherlands
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