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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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Thursday, 12 February 15
DRY BULK OWNERS SCRAP MORE VESSELS, AS MARKET REACHES HISTORICAL LOWS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has reached historical lows this week, with the Baltic Dry Index (BDI) now trading at levels below operating expense levels for ...
Thursday, 12 February 15
INDONESIAN COAL PRICE REFERENCE INCHED DOWN 1.44% IN FEBRUARY
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down Indonesian coal bench mark price this month to US$ 62.92 pe ...
Thursday, 12 February 15
NEWBUILDING ORDERING ACTIVITY DRAGS ON, AS OWNERS ARE LOOKING FOR LOWER PRICES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Ship owners appear to be waiting for lower prices in their dealings with Asian shipyards, as the dry bulk market is at historical lows. According t ...
Wednesday, 11 February 15
DRY BULK MARKET REMAINED UNDER PRESSURE : STABILIZING CAPE MARKET HARDLY HELPED SENTIMENT
COALspot.com: The Dry Bulk market remained under pressure last week, while the stabilizing Cape market hardly helped sentiment.
Greece based s ...
Wednesday, 11 February 15
BDI HITTING THE ALL-TIME LOW; FFA MARKETS NOT SHOWING ANY POSITIVE SIGNS
With the BDI hitting the all-time low and with FFA markets not showing any positive signs for a possible recovery in the near future, pessimism is ...
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- Sojitz Corporation - Japan
- Romanian Commodities Exchange
- Coastal Gujarat Power Limited - India
- London Commodity Brokers - England
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- GN Power Mariveles Coal Plant, Philippines
- GAC Shipping (India) Pvt Ltd
- Central Java Power - Indonesia
- Global Business Power Corporation, Philippines
- New Zealand Coal & Carbon
- Star Paper Mills Limited - India
- Minerals Council of Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercator Lines Limited - India
- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- Petron Corporation, Philippines
- McConnell Dowell - Australia
- Rio Tinto Coal - Australia
- Pendopo Energi Batubara - Indonesia
- Thiess Contractors Indonesia
- Rashtriya Ispat Nigam Limited - India
- Coalindo Energy - Indonesia
- Larsen & Toubro Limited - India
- European Bulk Services B.V. - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- PNOC Exploration Corporation - Philippines
- Sical Logistics Limited - India
- Independent Power Producers Association of India
- Attock Cement Pakistan Limited
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Xindia Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Medco Energi Mining Internasional
- Kobexindo Tractors - Indoneisa
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- Chamber of Mines of South Africa
- Standard Chartered Bank - UAE
- Africa Commodities Group - South Africa
- Ceylon Electricity Board - Sri Lanka
- Jorong Barutama Greston.PT - Indonesia
- Bhatia International Limited - India
- Bharathi Cement Corporation - India
- Agrawal Coal Company - India
- Makarim & Taira - Indonesia
- Economic Council, Georgia
- Bukit Baiduri Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bulk Trading Sa - Switzerland
- GMR Energy Limited - India
- Ministry of Finance - Indonesia
- Mjunction Services Limited - India
- Coal and Oil Company - UAE
- The University of Queensland
- Samtan Co., Ltd - South Korea
- Metalloyd Limited - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Kaltim Prima Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Riau Bara Harum - Indonesia
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Electricity Authority, New Zealand
- PTC India Limited - India
- SN Aboitiz Power Inc, Philippines
- Singapore Mercantile Exchange
- Indian Oil Corporation Limited
- AsiaOL BioFuels Corp., Philippines
- Bangladesh Power Developement Board
- Australian Commodity Traders Exchange
- Altura Mining Limited, Indonesia
- Orica Australia Pty. Ltd.
- Kepco SPC Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Parry Sugars Refinery, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Bhoruka Overseas - Indonesia
- Ind-Barath Power Infra Limited - India
- Indika Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Jindal Steel & Power Ltd - India
- Energy Link Ltd, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- TeaM Sual Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Bhushan Steel Limited - India
- Sakthi Sugars Limited - India
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Sinarmas Energy and Mining - Indonesia
- Gujarat Sidhee Cement - India
- Heidelberg Cement - Germany
- Planning Commission, India
- Aditya Birla Group - India
- IEA Clean Coal Centre - UK
- VISA Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Electricity Generating Authority of Thailand
- Central Electricity Authority - India
- Siam City Cement - Thailand
- Vizag Seaport Private Limited - India
- Interocean Group of Companies - India
- Siam City Cement PLC, Thailand
- Neyveli Lignite Corporation Ltd, - India
- Meralco Power Generation, Philippines
- Australian Coal Association
- Directorate General of MIneral and Coal - Indonesia
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- Sarangani Energy Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Dalmia Cement Bharat India
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Deloitte Consulting - India
- San Jose City I Power Corp, Philippines
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- PowerSource Philippines DevCo
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- ICICI Bank Limited - India
- Kideco Jaya Agung - Indonesia
- Global Coal Blending Company Limited - Australia
- Oldendorff Carriers - Singapore
- Bukit Makmur.PT - Indonesia
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Cigading International Bulk Terminal - Indonesia
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
- Malabar Cements Ltd - India
- Vedanta Resources Plc - India
- White Energy Company Limited
- LBH Netherlands Bv - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Kumho Petrochemical, South Korea
- Power Finance Corporation Ltd., India
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Krishnapatnam Port Company Ltd. - India
- SMC Global Power, Philippines
- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Renaissance Capital - South Africa
- Barasentosa Lestari - Indonesia
- Wilmar Investment Holdings
- Simpson Spence & Young - Indonesia
- Anglo American - United Kingdom
- Ministry of Mines - Canada
- Globalindo Alam Lestari - Indonesia
- Energy Development Corp, Philippines
- ASAPP Information Group - India
- Karbindo Abesyapradhi - Indoneisa
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
- International Coal Ventures Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Posco Energy - South Korea
- Madhucon Powers Ltd - India
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMG Consultants - Indonesia
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- Indian Energy Exchange, India
- Lanco Infratech Ltd - India
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Trasteel International SA, Italy
- Ministry of Transport, Egypt
- Georgia Ports Authority, United States
- The Treasury - Australian Government
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meenaskhi Energy Private Limited - India
- MS Steel International - UAE
- Merrill Lynch Commodities Europe
- Therma Luzon, Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
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