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Tuesday, 08 July 14
ENERGY IN THE MIX - INTERMODAL SHIPBROKERS
 With the Tanker freight market having showed much promise this year compared to the performance that had been noted during the previous five, it is interesting to take on a review and outlook of the energy market as a whole. With the Developing nations having played a catch up gain during most of the 2000’s and having been found in a more advantageous position in terms of their continued economic development after the financial crisis of 2008, a considerable weight has been placed on these economies to drive demand forward for most of the energy commodities such as crude oil, coal and natural gas which play an integral part in shipping. Whilst most regions such as North America and Europe, which historically held the lions share for consumption of energy, have been holding steady in their requirements the Astronomical growth in demand from the Asia Pacific region has been the main source of demand growth for much more than a decade now.
China has been the main reason for those, with a key part having been played in the past by Japan and North Korea as well and India now quickly stepping up to take up it’s as a main contender. As these economies went through their stages of economic development, it was well known that an exponential increase in energy consumption would be one of the main byproducts of this. However, with time another pattern has slowly started to emerge.
Despite the rapid growth of energy consumption per capita, the growing worries regarding sources of energy and the sustainability and “cleanness” of our energy consumption has pushed for an ever more efficient and innovative mix of energy consumption, in turn driving for an ever slower growth of energy demand compared to the average GDP growth of the global economy. As pointed out earlier this year by the BP in its Energy outlook report, the amount of energy required per unit of GDP is expected to decline by 1.9% per year over the next 20 years while this figure is more than double the decline rate that was noted in the past decade. This means that we are slowly moving to a higher independence from energy, requiring less input to achieve an ever higher economic output. This could even prove to be an underestimate as typically energy plays a more primal role at the early stages of economic development and once both China and India (the current mammoths of global economic growth) get past this stage, they will likely shift their needs respectively causing a further slowdown in energy consumption per GDP.
A second point which will prove to be of more vital importance, though the trend seems to be moving at a slower pace, is how the world economy as a whole is slowly moving away from fossil fuels towards renewable sources of energy, with the latter expected to take a further 5% from the energy mix within the next 20 years. This has its significance on the shipping industry, as its fossil fuels that are transported by sea and they also take up a considerable portion of world seaborne trade.
Further to this we have seen a rapid shift amongst the preference of fossil fuels within the energy consumption mix. Oil has continued its rapid decline is close to losing its dominant position as the primary source of energy, while Coal has made considerable leaps over the past decade with natural gas following close behind. This has been evident within trade as well as the dry bulk market has significantly benefited from the growing importance of coal while the tanker market has been struggling to see an equal amount of growth in demand even before the crisis. This has followed through with an increasing amount of innovation in oil exploration such as that of tight oil and shale gas. This has been one of the important factors why we have seen a shift in trade with the U.S. decreasing its Crude oil imports last year by almost 40 million tonnes, while it was mainly thanks to China and India which in-creased theirs by 11 and 13 million tonnes respectively which helped cover much of this gap and provide the tanker market with some support.
Going forward, it is increasingly difficult to see any support from the market fundamentals that could provide a justification to a fast paced increase in tanker tonnage. Tonne miles are running shorter and shorter and although the demand for the commodity is there it seems that there isn’t much room for further growth in the fleet. The big promise that was West Africa in helping create further tonne-miles will likely be outshined by the slowly increasing production from East and Southern Africa. The Middle East still holds its top podium position with regards to trade exports and is situated fairly close to both China and India when compared to the distance VLs had to take to go around the Cape to get to the U.S. At the same time we expect more pipeline deals with the Far East to be struck by the other main exporter which is Russia.
In conclusion, there may well be an optimistic growth in demand for energy commodities such as crude oil, however it is looking increasingly difficult for this to translate over to increased seaborne trade and although Chinese and India Consumption will likely rise rapidly over the next couple of years , unless there is a rapid change in regional energy imbalances, the growth in shipping requirements is set to hold at a fairly slow pace.
- George Lazaridis - Research Analyst -
Analysts:
Mr. George Lazaridis
Ms. Eva Tzima
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no re-producing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
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Sunday, 20 July 14
THE FREIGHT MARKET CONTINUED ITS DOWNWARD TREND
COALspot.com: The market continued its downward trend this week as all segments were down compared to last week. The Cape and Panamax indices being ...
Friday, 18 July 14
3RD CHINA INTERNATIONAL SHALE GAS SUMMIT
Building on the massive success of the past 2 shale gas programs that has generated huge success by attracting 500+ industry players, and intrig ...
Friday, 18 July 14
US WEEKLY COAL PRODUCTION UP BY 1.4% TO 18.3 MMST
COALspot.com – United States the world's second largest coal producer, produced approximately 18.3 million short tons (mmst) of coal in a ...
Thursday, 17 July 14
PANAMAX : MARKET HAS COOLED DOWN AGAIN TO LOW AND DEPRESSED LEVELS
Handy
The supra market remains pretty flat in the Atlantic while for the smaller sizes there has been little reported with ships chasing business ...
Thursday, 17 July 14
INDIAN GOVERNMENT WISE TO TAKE ADVANTAGE OF CURRENTLY LOW THERMAL COAL PRICES AND SHIPPING RATES - JEFFREY LANDSBERG
With thermal coal import prices (and also shipping rates) very low at present, India's government would be very wise to take advantage of curre ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Authority, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- Economic Council, Georgia
- Makarim & Taira - Indonesia
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Planning Commission, India
- Electricity Generating Authority of Thailand
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Thiess Contractors Indonesia
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Malabar Cements Ltd - India
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- Global Business Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Semirara Mining Corp, Philippines
- Indika Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- PowerSource Philippines DevCo
- Timah Investasi Mineral - Indoneisa
- Aditya Birla Group - India
- Romanian Commodities Exchange
- SN Aboitiz Power Inc, Philippines
- The University of Queensland
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Toyota Tsusho Corporation, Japan
- Kaltim Prima Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- Bukit Makmur.PT - Indonesia
- Indogreen Group - Indonesia
- Rio Tinto Coal - Australia
- Standard Chartered Bank - UAE
- Global Green Power PLC Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Sical Logistics Limited - India
- Chamber of Mines of South Africa
- Kumho Petrochemical, South Korea
- Indonesian Coal Mining Association
- PNOC Exploration Corporation - Philippines
- Renaissance Capital - South Africa
- European Bulk Services B.V. - Netherlands
- Parliament of New Zealand
- The Treasury - Australian Government
- AsiaOL BioFuels Corp., Philippines
- Neyveli Lignite Corporation Ltd, - India
- San Jose City I Power Corp, Philippines
- ASAPP Information Group - India
- International Coal Ventures Pvt Ltd - India
- New Zealand Coal & Carbon
- Mercator Lines Limited - India
- Bhushan Steel Limited - India
- Banpu Public Company Limited - Thailand
- Edison Trading Spa - Italy
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- IEA Clean Coal Centre - UK
- Baramulti Group, Indonesia
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- Oldendorff Carriers - Singapore
- IHS Mccloskey Coal Group - USA
- Directorate Of Revenue Intelligence - India
- Alfred C Toepfer International GmbH - Germany
- Grasim Industreis Ltd - India
- Latin American Coal - Colombia
- Globalindo Alam Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- SMC Global Power, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Straits Asia Resources Limited - Singapore
- Global Coal Blending Company Limited - Australia
- PetroVietnam Power Coal Import and Supply Company
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- CIMB Investment Bank - Malaysia
- Coastal Gujarat Power Limited - India
- Ministry of Transport, Egypt
- Indian Oil Corporation Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Barasentosa Lestari - Indonesia
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- Mjunction Services Limited - India
- Larsen & Toubro Limited - India
- Tata Chemicals Ltd - India
- Orica Mining Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Indo Tambangraya Megah - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Simpson Spence & Young - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- India Bulls Power Limited - India
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- Deloitte Consulting - India
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Power Finance Corporation Ltd., India
- Coalindo Energy - Indonesia
- ICICI Bank Limited - India
- Marubeni Corporation - India
- Lanco Infratech Ltd - India
- Star Paper Mills Limited - India
- Ministry of Finance - Indonesia
- LBH Netherlands Bv - Netherlands
- Sarangani Energy Corporation, Philippines
- Madhucon Powers Ltd - India
- Kobexindo Tractors - Indoneisa
- Energy Development Corp, Philippines
- PTC India Limited - India
- Medco Energi Mining Internasional
- Manunggal Multi Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Binh Thuan Hamico - Vietnam
- Price Waterhouse Coopers - Russia
- Jaiprakash Power Ventures ltd
- London Commodity Brokers - England
- Africa Commodities Group - South Africa
- Samtan Co., Ltd - South Korea
- Dalmia Cement Bharat India
- Energy Link Ltd, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- GVK Power & Infra Limited - India
- Metalloyd Limited - United Kingdom
- Borneo Indobara - Indonesia
- Salva Resources Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Independent Power Producers Association of India
- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- Coal and Oil Company - UAE
- Ministry of Mines - Canada
- Pipit Mutiara Jaya. PT, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bukit Baiduri Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Bahari Cakrawala Sebuku - Indonesia
- Thai Mozambique Logistica
- OPG Power Generation Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Minerals Council of Australia
- Videocon Industries ltd - India
- Kideco Jaya Agung - Indonesia
- Orica Australia Pty. Ltd.
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parry Sugars Refinery, India
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- Riau Bara Harum - Indonesia
- VISA Power Limited - India
- Sindya Power Generating Company Private Ltd
- Australian Commodity Traders Exchange
- Anglo American - United Kingdom
- Trasteel International SA, Italy
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- Meralco Power Generation, Philippines
- TeaM Sual Corporation - Philippines
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- Gujarat Sidhee Cement - India
- Aboitiz Power Corporation - Philippines
- Port Waratah Coal Services - Australia
- Jindal Steel & Power Ltd - India
- Pendopo Energi Batubara - Indonesia
- Sakthi Sugars Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bangladesh Power Developement Board
- Heidelberg Cement - Germany
- Georgia Ports Authority, United States
- Siam City Cement - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Coal Association
- McConnell Dowell - Australia
- Commonwealth Bank - Australia
- CNBM International Corporation - China
- SMG Consultants - Indonesia
- Maharashtra Electricity Regulatory Commission - India
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