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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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Friday, 20 December 13
US PRODUCED 2.71% MORE COAL WEEK ON WEEK
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.9 million short tons (mmst) of coal in ...
Friday, 20 December 13
DRY BULK MARKET SLUMPS AHEAD OF HOLIDAY SEASON - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As has been the case in recent years, the dry bulk market has been on a downward trend ahead of the Holiday Season for a large part of the world. Th ...
Thursday, 19 December 13
SHIPPING CONFIDENCE HITS THREE-YEAR HIGH - MOORE STEPHENS
Overall confidence levels in the shipping industry rose to their highest level for more than three years over the three-month period to November 201 ...
Wednesday, 18 December 13
SNP ACTIVITY IN CHINA SEEMS TO BE SLOWING DOWN - CHRISTOS TRAGEAS
Approaching the end of the year, SnP activity in China seems to be slowing down in comparison to the first half of this quarter, as most Chinese Shi ...
Wednesday, 18 December 13
DEMOLITION ACTIVITY SCALED BACK AS FREIGHT RATES RISE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
It's always been the case that each time we witness a spike in freight rates, demolition activity is decreasing, as owners are looking for more car ...
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- European Bulk Services B.V. - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Georgia Ports Authority, United States
- Vedanta Resources Plc - India
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- CNBM International Corporation - China
- Rio Tinto Coal - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- The Treasury - Australian Government
- Siam City Cement PLC, Thailand
- Kapuas Tunggal Persada - Indonesia
- Tamil Nadu electricity Board
- Rashtriya Ispat Nigam Limited - India
- SMG Consultants - Indonesia
- Central Java Power - Indonesia
- Timah Investasi Mineral - Indoneisa
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Coal Council - USA
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- Sarangani Energy Corporation, Philippines
- Sojitz Corporation - Japan
- Power Finance Corporation Ltd., India
- Kohat Cement Company Ltd. - Pakistan
- Larsen & Toubro Limited - India
- Krishnapatnam Port Company Ltd. - India
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Borneo Indobara - Indonesia
- ASAPP Information Group - India
- Gujarat Sidhee Cement - India
- IEA Clean Coal Centre - UK
- Semirara Mining and Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Bharathi Cement Corporation - India
- Orica Mining Services - Indonesia
- Heidelberg Cement - Germany
- PTC India Limited - India
- The State Trading Corporation of India Ltd
- Indogreen Group - Indonesia
- Oldendorff Carriers - Singapore
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
- Indika Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Electricity Generating Authority of Thailand
- Bulk Trading Sa - Switzerland
- Africa Commodities Group - South Africa
- Meenaskhi Energy Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Chamber of Mines of South Africa
- Energy Link Ltd, New Zealand
- Bayan Resources Tbk. - Indonesia
- OPG Power Generation Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Global Business Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Edison Trading Spa - Italy
- Posco Energy - South Korea
- Eastern Energy - Thailand
- Ministry of Finance - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- White Energy Company Limited
- Merrill Lynch Commodities Europe
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- New Zealand Coal & Carbon
- Ministry of Transport, Egypt
- Coastal Gujarat Power Limited - India
- Videocon Industries ltd - India
- Trasteel International SA, Italy
- Samtan Co., Ltd - South Korea
- Romanian Commodities Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Binh Thuan Hamico - Vietnam
- Barasentosa Lestari - Indonesia
- Ministry of Mines - Canada
- Lanco Infratech Ltd - India
- Mercator Lines Limited - India
- Indo Tambangraya Megah - Indonesia
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- Holcim Trading Pte Ltd - Singapore
- Electricity Authority, New Zealand
- Baramulti Group, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhatia International Limited - India
- Agrawal Coal Company - India
- Australian Coal Association
- Global Green Power PLC Corporation, Philippines
- Standard Chartered Bank - UAE
- The University of Queensland
- Bukit Baiduri Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Cement Manufacturers Association - India
- Makarim & Taira - Indonesia
- Ambuja Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Coal and Oil Company - UAE
- Leighton Contractors Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Globalindo Alam Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Directorate Of Revenue Intelligence - India
- Interocean Group of Companies - India
- Minerals Council of Australia
- Kobexindo Tractors - Indoneisa
- Anglo American - United Kingdom
- Thiess Contractors Indonesia
- Wilmar Investment Holdings
- Siam City Cement - Thailand
- Australian Commodity Traders Exchange
- IHS Mccloskey Coal Group - USA
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Manunggal Multi Energi - Indonesia
- Indian Oil Corporation Limited
- Commonwealth Bank - Australia
- Banpu Public Company Limited - Thailand
- Latin American Coal - Colombia
- LBH Netherlands Bv - Netherlands
- Pendopo Energi Batubara - Indonesia
- Thai Mozambique Logistica
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- Altura Mining Limited, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
- Intertek Mineral Services - Indonesia
- Goldman Sachs - Singapore
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- Port Waratah Coal Services - Australia
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- Marubeni Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Central Electricity Authority - India
- Mercuria Energy - Indonesia
- Economic Council, Georgia
- Billiton Holdings Pty Ltd - Australia
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Indonesian Coal Mining Association
- Grasim Industreis Ltd - India
- Madhucon Powers Ltd - India
- Metalloyd Limited - United Kingdom
- Kepco SPC Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- London Commodity Brokers - England
- Coalindo Energy - Indonesia
- Parliament of New Zealand
- Planning Commission, India
- Savvy Resources Ltd - HongKong
- Petron Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- McConnell Dowell - Australia
- Deloitte Consulting - India
- Bhushan Steel Limited - India
- Therma Luzon, Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Salva Resources Pvt Ltd - India
- GVK Power & Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Maharashtra Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- International Coal Ventures Pvt Ltd - India
- Singapore Mercantile Exchange
- MS Steel International - UAE
- Jorong Barutama Greston.PT - Indonesia
- Uttam Galva Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Dalmia Cement Bharat India
- Kalimantan Lumbung Energi - Indonesia
- Sakthi Sugars Limited - India
- Carbofer General Trading SA - India
- Karbindo Abesyapradhi - Indoneisa
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- Mintek Dendrill Indonesia
- Malabar Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- TNB Fuel Sdn Bhd - Malaysia
- VISA Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
- Cigading International Bulk Terminal - Indonesia
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