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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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Friday, 30 January 15
U.S. YEAR-TO-DATE COAL PRODUCTION REACHED 65.7 MMST
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.9 million short tons (mmst) of coal ...
Friday, 30 January 15
CAN BULKER CONVERSIONS SPOIL THE TANKER MARKET'S PARTY? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Oversupply of tonnage has always been in the back of the head of ship owners when it comes to taking advantage of favorable market conditions. As s ...
Thursday, 29 January 15
CHINA ENERGY DEMAND MUST BE REVIEWED DUE TO FUNDAMENTAL ECONOMIC CHANGES - WOOD MACKENZIE
New patterns emerging as energy demand growth decoupled significantly from GDP growth for the first time in 2014
Wood Mackenzie says 2014 was ...
Thursday, 29 January 15
CAPE MARKET IS STILL STRUGGLING WITH LOW DEMAND AND LOW COMMODITY PRICES
Handy
Supramax rates are heading south with slipping rates all across the block. USG activity is slow with mid-week levels in the mid 8.000s, Fea ...
Wednesday, 28 January 15
MARKET INSIGHT - STELIOS KOLLINTZAS
With most traders having returned to action from year end festivities, we have already seen signs of activity in the specialized product markets. L ...
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- Madhucon Powers Ltd - India
- Cement Manufacturers Association - India
- Lanco Infratech Ltd - India
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- Toyota Tsusho Corporation, Japan
- London Commodity Brokers - England
- PowerSource Philippines DevCo
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Power Finance Corporation Ltd., India
- ICICI Bank Limited - India
- Independent Power Producers Association of India
- IEA Clean Coal Centre - UK
- CIMB Investment Bank - Malaysia
- Altura Mining Limited, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Star Paper Mills Limited - India
- Alfred C Toepfer International GmbH - Germany
- Aditya Birla Group - India
- Parry Sugars Refinery, India
- Vedanta Resources Plc - India
- Chamber of Mines of South Africa
- GMR Energy Limited - India
- Gujarat Sidhee Cement - India
- OPG Power Generation Pvt Ltd - India
- The University of Queensland
- Gujarat Mineral Development Corp Ltd - India
- India Bulls Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- Africa Commodities Group - South Africa
- Aboitiz Power Corporation - Philippines
- Grasim Industreis Ltd - India
- New Zealand Coal & Carbon
- Siam City Cement - Thailand
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
- Billiton Holdings Pty Ltd - Australia
- McConnell Dowell - Australia
- Meralco Power Generation, Philippines
- Sinarmas Energy and Mining - Indonesia
- White Energy Company Limited
- Bayan Resources Tbk. - Indonesia
- Standard Chartered Bank - UAE
- Coal and Oil Company - UAE
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- Rio Tinto Coal - Australia
- Maharashtra Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- PTC India Limited - India
- The Treasury - Australian Government
- Medco Energi Mining Internasional
- Tata Chemicals Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Riau Bara Harum - Indonesia
- Bulk Trading Sa - Switzerland
- Binh Thuan Hamico - Vietnam
- Bukit Baiduri Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Ambuja Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Baramulti Group, Indonesia
- Orica Mining Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- IHS Mccloskey Coal Group - USA
- Salva Resources Pvt Ltd - India
- Bhatia International Limited - India
- Wilmar Investment Holdings
- GAC Shipping (India) Pvt Ltd
- Indian Oil Corporation Limited
- International Coal Ventures Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Formosa Plastics Group - Taiwan
- Deloitte Consulting - India
- Siam City Cement PLC, Thailand
- Latin American Coal - Colombia
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- Timah Investasi Mineral - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Interocean Group of Companies - India
- VISA Power Limited - India
- Mercuria Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- Samtan Co., Ltd - South Korea
- Parliament of New Zealand
- Manunggal Multi Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Energy Link Ltd, New Zealand
- Borneo Indobara - Indonesia
- Sarangani Energy Corporation, Philippines
- Eastern Energy - Thailand
- Sree Jayajothi Cements Limited - India
- Global Business Power Corporation, Philippines
- Tamil Nadu electricity Board
- Bharathi Cement Corporation - India
- Carbofer General Trading SA - India
- Planning Commission, India
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indonesian Coal Mining Association
- Videocon Industries ltd - India
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- ASAPP Information Group - India
- Goldman Sachs - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Economic Council, Georgia
- Wood Mackenzie - Singapore
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- South Luzon Thermal Energy Corporation
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Antam Resourcindo - Indonesia
- CNBM International Corporation - China
- Makarim & Taira - Indonesia
- Eastern Coal Council - USA
- Petron Corporation, Philippines
- Xindia Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Dalmia Cement Bharat India
- Intertek Mineral Services - Indonesia
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Minerals Council of Australia
- Kideco Jaya Agung - Indonesia
- Sojitz Corporation - Japan
- Edison Trading Spa - Italy
- Attock Cement Pakistan Limited
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Mjunction Services Limited - India
- Savvy Resources Ltd - HongKong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Essar Steel Hazira Ltd - India
- Metalloyd Limited - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Bhushan Steel Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Transport, Egypt
- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
- Thiess Contractors Indonesia
- Maheswari Brothers Coal Limited - India
- Kobexindo Tractors - Indoneisa
- European Bulk Services B.V. - Netherlands
- Meenaskhi Energy Private Limited - India
- Commonwealth Bank - Australia
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Trasteel International SA, Italy
- Anglo American - United Kingdom
- Malabar Cements Ltd - India
- Merrill Lynch Commodities Europe
- Indika Energy - Indonesia
- Kumho Petrochemical, South Korea
- Ind-Barath Power Infra Limited - India
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- Australian Coal Association
- Orica Australia Pty. Ltd.
- Romanian Commodities Exchange
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- MS Steel International - UAE
- Global Coal Blending Company Limited - Australia
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- TeaM Sual Corporation - Philippines
- Central Electricity Authority - India
- Global Green Power PLC Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Mines - Canada
- Sakthi Sugars Limited - India
- Barasentosa Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Marubeni Corporation - India
- Oldendorff Carriers - Singapore
- Thai Mozambique Logistica
- Karbindo Abesyapradhi - Indoneisa
- Indogreen Group - Indonesia
- Holcim Trading Pte Ltd - Singapore
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Georgia Ports Authority, United States
- Larsen & Toubro Limited - India
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