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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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Monday, 19 January 15
FOB RICHARDS BAY COAL SWAP FOR Q4 DELIVERY CLOSED 4% LOWER THAN Q1 DELIVERY PRICE
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 declined month over month and week over week.
The Q1 swap has f ...
Sunday, 18 January 15
INDONESIA TO INDIA SUPRAMAX FREIGHT RATES ARE EXPECTED TO REMAIN WEAK NEXT WEEK
COALspot.com: The BDI was up 4.51 pct week on week on Friday 16, January 2015. The BDI closed at 741 points on this Friday after gaining arou ...
Friday, 16 January 15
U.S. WEEKLY COAL PRODUCTION UP 7.3% W-O-W
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.9 million short tons (mmst) of coal ...
Thursday, 15 January 15
PANAMAX : MARKET CONTINUE ON LOW PACE - FEARNLEYS
Handy
On a general basis we can say that rates are softening in both hemispheres. Although for some specific trades we can see premiums being ach ...
Thursday, 15 January 15
LOW CASH COSTS, GOOD LIQUIDITY HELP ASIAN OIL COMPANIES IN PRICE ROUT - FITCH
Fitch Ratings says that rated oil and gas production companies in Asia can comfortably operate under low oil prices for some time given their gener ...
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- Interocean Group of Companies - India
- Mjunction Services Limited - India
- Parry Sugars Refinery, India
- Videocon Industries ltd - India
- PTC India Limited - India
- Global Green Power PLC Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMC Global Power, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Wilmar Investment Holdings
- Maheswari Brothers Coal Limited - India
- Medco Energi Mining Internasional
- Indian Energy Exchange, India
- Parliament of New Zealand
- Altura Mining Limited, Indonesia
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Heidelberg Cement - Germany
- PowerSource Philippines DevCo
- Antam Resourcindo - Indonesia
- Global Coal Blending Company Limited - Australia
- Planning Commission, India
- Goldman Sachs - Singapore
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- Eastern Energy - Thailand
- London Commodity Brokers - England
- Coalindo Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kumho Petrochemical, South Korea
- Madhucon Powers Ltd - India
- Wood Mackenzie - Singapore
- Sakthi Sugars Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- MS Steel International - UAE
- Bhatia International Limited - India
- Power Finance Corporation Ltd., India
- Makarim & Taira - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kaltim Prima Coal - Indonesia
- Sojitz Corporation - Japan
- The State Trading Corporation of India Ltd
- Vizag Seaport Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Indogreen Group - Indonesia
- ICICI Bank Limited - India
- Kartika Selabumi Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Meenaskhi Energy Private Limited - India
- Bulk Trading Sa - Switzerland
- International Coal Ventures Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rio Tinto Coal - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Latin American Coal - Colombia
- Gujarat Sidhee Cement - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- VISA Power Limited - India
- India Bulls Power Limited - India
- Kobexindo Tractors - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Petrochimia International Co. Ltd.- Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Renaissance Capital - South Africa
- Coal and Oil Company - UAE
- Leighton Contractors Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Deloitte Consulting - India
- Marubeni Corporation - India
- Indonesian Coal Mining Association
- Krishnapatnam Port Company Ltd. - India
- Mercuria Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Independent Power Producers Association of India
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- GAC Shipping (India) Pvt Ltd
- PNOC Exploration Corporation - Philippines
- Oldendorff Carriers - Singapore
- Essar Steel Hazira Ltd - India
- Karaikal Port Pvt Ltd - India
- Mintek Dendrill Indonesia
- Anglo American - United Kingdom
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Carbofer General Trading SA - India
- OPG Power Generation Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Riau Bara Harum - Indonesia
- Australian Coal Association
- Therma Luzon, Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- SMG Consultants - Indonesia
- LBH Netherlands Bv - Netherlands
- Jaiprakash Power Ventures ltd
- Indian Oil Corporation Limited
- Indo Tambangraya Megah - Indonesia
- Price Waterhouse Coopers - Russia
- Manunggal Multi Energi - Indonesia
- Chamber of Mines of South Africa
- Merrill Lynch Commodities Europe
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- Siam City Cement PLC, Thailand
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- Electricity Authority, New Zealand
- Indika Energy - Indonesia
- Ministry of Transport, Egypt
- Kepco SPC Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Star Paper Mills Limited - India
- GVK Power & Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Mines - Canada
- Sarangani Energy Corporation, Philippines
- White Energy Company Limited
- Iligan Light & Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- IHS Mccloskey Coal Group - USA
- Edison Trading Spa - Italy
- Asmin Koalindo Tuhup - Indonesia
- South Luzon Thermal Energy Corporation
- Vedanta Resources Plc - India
- Toyota Tsusho Corporation, Japan
- IEA Clean Coal Centre - UK
- ASAPP Information Group - India
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- The University of Queensland
- Aboitiz Power Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Eastern Coal Council - USA
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- Georgia Ports Authority, United States
- Alfred C Toepfer International GmbH - Germany
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- CNBM International Corporation - China
- Ambuja Cements Ltd - India
- Central Java Power - Indonesia
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Cigading International Bulk Terminal - Indonesia
- Africa Commodities Group - South Africa
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- Minerals Council of Australia
- Global Business Power Corporation, Philippines
- Posco Energy - South Korea
- Australian Commodity Traders Exchange
- Economic Council, Georgia
- Orica Mining Services - Indonesia
- Metalloyd Limited - United Kingdom
- Romanian Commodities Exchange
- Tamil Nadu electricity Board
- Sical Logistics Limited - India
- Xindia Steels Limited - India
- TeaM Sual Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dalmia Cement Bharat India
- Straits Asia Resources Limited - Singapore
- Malabar Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Lanco Infratech Ltd - India
- Commonwealth Bank - Australia
- CIMB Investment Bank - Malaysia
- Globalindo Alam Lestari - Indonesia
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Pendopo Energi Batubara - Indonesia
- Trasteel International SA, Italy
- Directorate General of MIneral and Coal - Indonesia
- Bhoruka Overseas - Indonesia
- SN Aboitiz Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- PetroVietnam Power Coal Import and Supply Company
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Bhushan Steel Limited - India
- Orica Australia Pty. Ltd.
- Savvy Resources Ltd - HongKong
- Tata Chemicals Ltd - India
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Petron Corporation, Philippines
- Cement Manufacturers Association - India
- Larsen & Toubro Limited - India
- Electricity Generating Authority of Thailand
- Bharathi Cement Corporation - India
- Borneo Indobara - Indonesia
- Ind-Barath Power Infra Limited - India
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