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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, 09 December 13
SUB-BIT INDONESIA COAL SWAP FOR Q3' 14 DELIVERY CLOSED $ 0.57 LESSER THAN Q1 CLOSING
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q1’ 14 delivery gained $ 1.49 pmt month on month on Friday 6 Decembe ...
Sunday, 08 December 13
SOUTH CHINA COAL SWAPS SHOW A DECLINE TREND IN Q2 & Q3' 14
COALspot.com : API 8 CFR South China Coal swaps for average Q1’ 14 delivery gained 6.76 percept month on month as on Friday 6 December 2013. T ...
Sunday, 08 December 13
RBCT SHIPPED 63.446 MMT OF COALS YTD
COALspot.com - Richards Bay Coal Terminal (RBCT), the world's single largest coal terminal has shipped 63,446,232 mt of coals YTD, according to por ...
Saturday, 07 December 13
SUPRAMAX SHIPS FOR EC INDIA TO CHINA ROUTE BEING FIXED AT AROUND US$ 13K - SOLYM
COALspot.com: The freight market continued to be firm due to high Iron ore demand. The cape index was up by almost 25 pct this week. The grain seaso ...
Saturday, 07 December 13
A RARE TIME IN RECENT SHIPPING MARKET HISTORY: BOTH DRY BULK AND VLCC TANKER EARNINGS ARE ON THE RISE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Around this time of year, back in 2008, i.e. five years ago, the shipping markets were plagued with the aftermath of the global financial crisis tha ...
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- Posco Energy - South Korea
- Coal and Oil Company - UAE
- India Bulls Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Madhucon Powers Ltd - India
- OPG Power Generation Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Bayan Resources Tbk. - Indonesia
- Bhatia International Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Baramulti Group, Indonesia
- Ministry of Transport, Egypt
- Australian Coal Association
- Essar Steel Hazira Ltd - India
- Mercuria Energy - Indonesia
- Indonesian Coal Mining Association
- GVK Power & Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Africa Commodities Group - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Bharathi Cement Corporation - India
- Borneo Indobara - Indonesia
- Barasentosa Lestari - Indonesia
- Petron Corporation, Philippines
- Independent Power Producers Association of India
- Commonwealth Bank - Australia
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- Makarim & Taira - Indonesia
- Bukit Makmur.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- GN Power Mariveles Coal Plant, Philippines
- Iligan Light & Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- London Commodity Brokers - England
- Manunggal Multi Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Kartika Selabumi Mining - Indonesia
- Orica Mining Services - Indonesia
- Sical Logistics Limited - India
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Carbofer General Trading SA - India
- Siam City Cement - Thailand
- Merrill Lynch Commodities Europe
- Dalmia Cement Bharat India
- VISA Power Limited - India
- TeaM Sual Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Energy Development Corp, Philippines
- Jaiprakash Power Ventures ltd
- Sree Jayajothi Cements Limited - India
- Riau Bara Harum - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Sidhee Cement - India
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Antam Resourcindo - Indonesia
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- Simpson Spence & Young - Indonesia
- Thai Mozambique Logistica
- Kumho Petrochemical, South Korea
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Heidelberg Cement - Germany
- International Coal Ventures Pvt Ltd - India
- Minerals Council of Australia
- San Jose City I Power Corp, Philippines
- Larsen & Toubro Limited - India
- Intertek Mineral Services - Indonesia
- Parry Sugars Refinery, India
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- LBH Netherlands Bv - Netherlands
- ASAPP Information Group - India
- European Bulk Services B.V. - Netherlands
- Grasim Industreis Ltd - India
- Agrawal Coal Company - India
- Central Electricity Authority - India
- Orica Australia Pty. Ltd.
- Malabar Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Tamil Nadu electricity Board
- PowerSource Philippines DevCo
- Central Java Power - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- Port Waratah Coal Services - Australia
- Cigading International Bulk Terminal - Indonesia
- Electricity Authority, New Zealand
- Medco Energi Mining Internasional
- Coalindo Energy - Indonesia
- Latin American Coal - Colombia
- Banpu Public Company Limited - Thailand
- Rio Tinto Coal - Australia
- Interocean Group of Companies - India
- Neyveli Lignite Corporation Ltd, - India
- Bukit Baiduri Energy - Indonesia
- The State Trading Corporation of India Ltd
- Oldendorff Carriers - Singapore
- Cement Manufacturers Association - India
- The University of Queensland
- Directorate Of Revenue Intelligence - India
- Altura Mining Limited, Indonesia
- PNOC Exploration Corporation - Philippines
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- Marubeni Corporation - India
- GAC Shipping (India) Pvt Ltd
- White Energy Company Limited
- Price Waterhouse Coopers - Russia
- Kideco Jaya Agung - Indonesia
- Trasteel International SA, Italy
- Holcim Trading Pte Ltd - Singapore
- Romanian Commodities Exchange
- Savvy Resources Ltd - HongKong
- Aboitiz Power Corporation - Philippines
- Economic Council, Georgia
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining Corp, Philippines
- Aditya Birla Group - India
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- Standard Chartered Bank - UAE
- Binh Thuan Hamico - Vietnam
- Salva Resources Pvt Ltd - India
- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- Indian Oil Corporation Limited
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Meralco Power Generation, Philippines
- Star Paper Mills Limited - India
- PTC India Limited - India
- Maheswari Brothers Coal Limited - India
- AsiaOL BioFuels Corp., Philippines
- New Zealand Coal & Carbon
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Xindia Steels Limited - India
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- Ambuja Cements Ltd - India
- Tata Chemicals Ltd - India
- Jindal Steel & Power Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Wilmar Investment Holdings
- Offshore Bulk Terminal Pte Ltd, Singapore
- GMR Energy Limited - India
- Coastal Gujarat Power Limited - India
- Videocon Industries ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Indika Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- McConnell Dowell - Australia
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- Kobexindo Tractors - Indoneisa
- Bhoruka Overseas - Indonesia
- Anglo American - United Kingdom
- ICICI Bank Limited - India
- Krishnapatnam Port Company Ltd. - India
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMC Global Power, Philippines
- Vizag Seaport Private Limited - India
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- Ceylon Electricity Board - Sri Lanka
- Ind-Barath Power Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- Metalloyd Limited - United Kingdom
- Formosa Plastics Group - Taiwan
- Global Business Power Corporation, Philippines
- Vedanta Resources Plc - India
- Planning Commission, India
- Timah Investasi Mineral - Indoneisa
- Georgia Ports Authority, United States
- Kepco SPC Power Corporation, Philippines
- Parliament of New Zealand
- Mintek Dendrill Indonesia
- SMG Consultants - Indonesia
- Bulk Trading Sa - Switzerland
- Power Finance Corporation Ltd., India
- Singapore Mercantile Exchange
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