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Monday, 05 January 15
THE SHIPPING MARKET IN 2014 AND LOOKING FORWARD - BIMCO
 2014 started with plenty of optimism for a considerably better global economy and an improved shipping market. Things turned out somewhat differently. Adverse weather conditions in the US during winter were the dominant factor, creating a difficult first half of the year for the global economy. The developing and emerging markets continued on a downward trend, while a sunnier outlook from the US and Europe had the effect of moving the already more advanced economies forward.
The quantitative easing programme of the US Central Bank has now ended. This is a landmark in terms of recovery. Following a quadrupling of the US monetary base, unemployment has come down, the stock market has gone up and economic growth has become more robust. The UK has followed the same path as the US, with similar results. This is outstanding in the otherwise sluggish European economic development.
In Japan, “Abenomics” is facing headwinds caused by a hike in sales taxes and a subsequent return to recession. Japan’s economy has been stagnating for decades, and it is unlikely to move much further forward from this in 2015.
The slowing of the Chinese economy is adding uncertainty to the level of shipping demand generated in the Far East. Its soft landing seems to incur turbulence, with some indicators suggesting the official GDP data may not give us the full story.
Growth in emerging markets and developing economies is set for a comeback in 2015, with GDP-growth improving from 4.4% in 2014 to 5.0% in 2015. The advanced economies are likely to stay on the recovery track, and improve their GDP-growth to 2.3% in 2015 (1.8% in 2014). The common challenges remain poor inflation expectations, a lack of structural reforms and lack of job creation. There is clearly room for more political initiatives in 2015 to support the global economy.
Supply: A stalling orderbook means reality has hit home
The total orderbook remained unchanged during 2014. This signals that the industry is now realising that more new orders may not be the right thing to do after all.
The fundamental oversupply of capacity in all of the major shipping segments has not changed much over the past year. A higher level of demand has only just matched the net supply of new tonnage coming on stream.
Crude oil tankers are the only exception to the general status quo in the balance of freight markets. A multi-year low inflow of new crude oil tankers has stimulated earnings growth of some 20% compared to 2013. Meanwhile, the growing supply pressure in product tankers neutralised most of the growing demand side, with earnings coming in just a little shy of 2013.
Container ships keep getting bigger, breaking previous size records for both individual ships and the average size across the fleet. The CSCL Globe, with a capacity of 19,000 TEU, was launched in November, and the average TEU capacity of a 2014-newbuild increased to 7,400 TEU, up from 6,600 TEU in 2013. Next year the scheduled average is 8,000 TEU.
Looking forward to 2015, BIMCO expects the dry bulk fleet to have found a new “normal” level of supply side growth, expanding by 5.1% (5.5% in 2014). Regrettably, the level is still too high to reduce the glut of ships in the market. For tankers, BIMCO expects the dirty segment to grow by 1.7% (1.3% in 2014). Three years of low supply growth has led to more positive short-term prospects for crude oil tankers. In the clean segment, the estimated supply growth for 2015 is 4.6% (4.3% in 2014). Supply growth in the container ship segment is expected to drop to 5.8% in 2015 (6.2% in 2014).
Dry Bulk: New challenges await as demand slows down
BIMCO expects dry bulk demand to slow in 2015 to a rate of 4-5%. Iron ore demand will again be the centre of attention. In recent years, demand growth has been biased heavily towards the Capesize segment. In 2014, 70% of the total volume growth came from increased iron ore demand driven by China. BIMCO expects this trend to continue, with Capesizes outperforming the smaller sizes relatively.
The strong iron ore demand in 2014 was somewhat neutralised by weaker coal demand from China. Meanwhile, the Indonesian ban on exports of unprocessed bauxite and nickel ore resulted in a weak Supramax market in the Far East.
Towards the end of the year, the late arrival of strong exports of iron ore out of Brazil proved to be insufficient to deliver on the promise of 2013, when rates for all segments went up. While earnings had hit the floor in 2012, BIMCO expected 2014 to build on the optimism of 2013 and continue on the road to recovery. That did not materialise.
Tanker: what is the “new normal” demand level?
The crude oil tanker market started 2014 on a very positive note, with a five-year-high for earnings in the first quarter. The market’s strength showed clearly in early autumn and in the current winter market. The export of crude oil from West Africa has shifted from West to East as the US has reduced its imports to almost zero. This has given the demand side momentum, as West Africa now export more to the Far East, creating many more ton-miles.
For product tankers, the final quarter of 2014 contrasts greatly with the dull and flat market we have seen for most of the year. Despite US oil product export growth slowing down, it remains a positive story overall. Demand growth just managed to match supply growth, as the positive events arrived late in the year for the shipping market as well as in global economics.
Falling oil prices stirred some positive unrest in the tanker market, with rising tonnage demand in their wake. In spite of the price drop arising from weak oil demand and oversupply in the market, the current low and volatile commodity price is good for trading and shipping.
With a dramatic fall in bunker prices, it is vital for a continued industry recovery that all shipping segments resist higher speeds. Failure to do so may compromise improvement of the fundamental balance, which is essential to bring prosperity back.
Container: Will strong demand and slow steaming remain?
Strong demand growth on the large-volume trades from Far East to US and Europe has brought lower volatility in freight rates on key trades while re-activating most of the previously idle ships.
However, during peak season, the steep drop in freight rates on the Far East to Europe trade lane made it clear that the utmost care is constantly required for the supply side, while the introduction of ever-larger ships continues.
Improved industry earnings currently rest on one central requirement: slow steaming and defence of individual market share. This highly competitive market only returns a positive margin if the cost base is extremely low.
BIMCO expects containership supply to continue to grow at its “new normal” level of around 6%, making the demand side a focal point. European demand has been stronger than private consumption figures indicated, and we may well see further improvement for US demand. The US East Coast could build further on a remarkable year as the ports prepare for the imminent arrival of ultra-large container ships. Enlargement projects in the Panama Canal and Suez Canal will further influence the deployment of ships.
Source: BIMCO | Hellenic Shipping
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Tuesday, 24 February 15
IHS ENERGY COAL CONFERENCE OF THE AMERICAS
Attend the IHS Energy Coal Conference of the Americas 17-19 March in Cartagena, Colombia and learn about timely concerns in today's coal indust ...
Monday, 23 February 15
Q2' CFR SOUTH CHINA COAL SWAP FOR Q2 ROSE 3.39% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery rose US$ 1.90 (+3.39%) per MT month over month and declined US$ 0.08 ...
Monday, 23 February 15
Q2' API 5 FOB NEWCASTLE COAL SWAP CLOSED $1 HIGHER THAN Q3
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 3.12 per MT (+6.44%) month over month and fall US$ 0.43 (-0.83%) w ...
Sunday, 22 February 15
THE BALTIC DRY INDEX LOST ALMOST 3.2% OR 17 POINTS WEEK ON WEEK
COALspot.com: The Baltic Dry Index, one of the economic indicators that monitors the health of the world's economy by tracking the price of shi ...
Friday, 20 February 15
GOVT SET TO INCREASE COAL OUTPUT TARGET THIS YEAR - JAKARTA POST
The Energy and Mineral Resources Ministry is planning to increase its coal output target this year as the government seeks to offset the ongoing de ...
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- Parliament of New Zealand
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- Sical Logistics Limited - India
- Sakthi Sugars Limited - India
- Vedanta Resources Plc - India
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- Australian Coal Association
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- White Energy Company Limited
- Energy Link Ltd, New Zealand
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- Globalindo Alam Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- The Treasury - Australian Government
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Java Power - Indonesia
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Gujarat Mineral Development Corp Ltd - India
- Metalloyd Limited - United Kingdom
- Indian Oil Corporation Limited
- GN Power Mariveles Coal Plant, Philippines
- Global Coal Blending Company Limited - Australia
- Maharashtra Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- European Bulk Services B.V. - Netherlands
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- Ind-Barath Power Infra Limited - India
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- Maheswari Brothers Coal Limited - India
- PNOC Exploration Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Barasentosa Lestari - Indonesia
- Economic Council, Georgia
- Salva Resources Pvt Ltd - India
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- Indogreen Group - Indonesia
- Carbofer General Trading SA - India
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- San Jose City I Power Corp, Philippines
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- Thai Mozambique Logistica
- Marubeni Corporation - India
- Mintek Dendrill Indonesia
- Eastern Energy - Thailand
- Lanco Infratech Ltd - India
- Indika Energy - Indonesia
- Mjunction Services Limited - India
- Makarim & Taira - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- IEA Clean Coal Centre - UK
- Krishnapatnam Port Company Ltd. - India
- Bhatia International Limited - India
- SN Aboitiz Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- LBH Netherlands Bv - Netherlands
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- Antam Resourcindo - Indonesia
- New Zealand Coal & Carbon
- Bank of Tokyo Mitsubishi UFJ Ltd
- Interocean Group of Companies - India
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- SMG Consultants - Indonesia
- Mercator Lines Limited - India
- Iligan Light & Power Inc, Philippines
- Minerals Council of Australia
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- Kartika Selabumi Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Star Paper Mills Limited - India
- TeaM Sual Corporation - Philippines
- Electricity Generating Authority of Thailand
- Meralco Power Generation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Ministry of Transport, Egypt
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- Bangladesh Power Developement Board
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- Semirara Mining Corp, Philippines
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- South Luzon Thermal Energy Corporation
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- Energy Development Corp, Philippines
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- London Commodity Brokers - England
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- Bulk Trading Sa - Switzerland
- Indian Energy Exchange, India
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- Indonesian Coal Mining Association
- Chamber of Mines of South Africa
- Kohat Cement Company Ltd. - Pakistan
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- VISA Power Limited - India
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- PetroVietnam Power Coal Import and Supply Company
- The University of Queensland
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- Kapuas Tunggal Persada - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- PowerSource Philippines DevCo
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Coastal Gujarat Power Limited - India
- Intertek Mineral Services - Indonesia
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Sree Jayajothi Cements Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Goldman Sachs - Singapore
- Semirara Mining and Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement - Thailand
- Electricity Authority, New Zealand
- Bhushan Steel Limited - India
- Vizag Seaport Private Limited - India
- Eastern Coal Council - USA
- Power Finance Corporation Ltd., India
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- Thiess Contractors Indonesia
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- Coal and Oil Company - UAE
- The State Trading Corporation of India Ltd
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Price Waterhouse Coopers - Russia
- GVK Power & Infra Limited - India
- Bharathi Cement Corporation - India
- Planning Commission, India
- Parry Sugars Refinery, India
- Medco Energi Mining Internasional
- Heidelberg Cement - Germany
- Port Waratah Coal Services - Australia
- SMC Global Power, Philippines
- Ambuja Cements Ltd - India
- Xindia Steels Limited - India
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- Attock Cement Pakistan Limited
- Petrochimia International Co. Ltd.- Taiwan
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- Georgia Ports Authority, United States
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- Agrawal Coal Company - India
- CNBM International Corporation - China
- Central Electricity Authority - India
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- Sindya Power Generating Company Private Ltd
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