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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, 13 January 15
MORE PITFALLS FOR OWNERS LOOKING TO TERMINATE FOR UNPAID HIRE - INCE & CO
KNOWLEDGE TO ELEVATE
It is a debatable point whether or not the obligation to pay hire under a time charter is a condition of the contract or ...
Tuesday, 13 January 15
Q2 CFR SOUTH CHINA COAL SWAP DECLINED 8.66% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined by US$ 3.48 (-5.73%) month over month and US$ 2.35 (-3.94%) week ...
Tuesday, 13 January 15
Q1' 2015 RICHARDS BAY COAL SWAP SLIGHTLY HIGHER THAN Q2 & Q4 2015 SWAPS
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 lost month on month and week over week.
The Q1 swap has lost US$ 7.21 ...
Monday, 12 January 15
COAL: LOW PRICES ARE EXPECTED TO DRIVE A SUPPLY-DRIVEN RECOVERY IN THE MEDIUM TERM - SGX
COALspot.com: Thermal coal prices dropped to six-year lows in 2014 driven by persistent oversupply, SGX says in its “ Commodities 2014 - A ye ...
Monday, 12 January 15
FREIGHT MARKET: 2015 FLEET SUPPLY GROWTH IS EXPECTED TO REMAIN SLIGHTLY AHEAD OF CARGO GROWTH - SGX
COALspot.com: The dry bulk freight market was forced to digest a number of negatives in 2014 leading the Baltic Dry Index to fall 66% through the y ...
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- Manunggal Multi Energi - Indonesia
- Grasim Industreis Ltd - India
- Uttam Galva Steels Limited - India
- Interocean Group of Companies - India
- Medco Energi Mining Internasional
- GVK Power & Infra Limited - India
- Global Business Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bayan Resources Tbk. - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Central Electricity Authority - India
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- Larsen & Toubro Limited - India
- Independent Power Producers Association of India
- Kumho Petrochemical, South Korea
- Gujarat Sidhee Cement - India
- Minerals Council of Australia
- Semirara Mining Corp, Philippines
- MS Steel International - UAE
- Kartika Selabumi Mining - Indonesia
- Essar Steel Hazira Ltd - India
- CIMB Investment Bank - Malaysia
- Globalindo Alam Lestari - Indonesia
- Mjunction Services Limited - India
- Chamber of Mines of South Africa
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- Georgia Ports Authority, United States
- New Zealand Coal & Carbon
- Parry Sugars Refinery, India
- Sakthi Sugars Limited - India
- Maheswari Brothers Coal Limited - India
- India Bulls Power Limited - India
- Vedanta Resources Plc - India
- AsiaOL BioFuels Corp., Philippines
- Electricity Authority, New Zealand
- IEA Clean Coal Centre - UK
- SMC Global Power, Philippines
- Bharathi Cement Corporation - India
- Tata Chemicals Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TeaM Sual Corporation - Philippines
- Ministry of Finance - Indonesia
- White Energy Company Limited
- Kohat Cement Company Ltd. - Pakistan
- Barasentosa Lestari - Indonesia
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Riau Bara Harum - Indonesia
- Holcim Trading Pte Ltd - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Oldendorff Carriers - Singapore
- Indian Energy Exchange, India
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- Metalloyd Limited - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Thiess Contractors Indonesia
- Savvy Resources Ltd - HongKong
- Standard Chartered Bank - UAE
- Energy Development Corp, Philippines
- Romanian Commodities Exchange
- Kalimantan Lumbung Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Power Finance Corporation Ltd., India
- Bhoruka Overseas - Indonesia
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- Xindia Steels Limited - India
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- Australian Coal Association
- Siam City Cement - Thailand
- Ceylon Electricity Board - Sri Lanka
- Petron Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Salva Resources Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- The University of Queensland
- Parliament of New Zealand
- Sical Logistics Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- McConnell Dowell - Australia
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- Kideco Jaya Agung - Indonesia
- Commonwealth Bank - Australia
- Bulk Trading Sa - Switzerland
- Price Waterhouse Coopers - Russia
- Global Green Power PLC Corporation, Philippines
- Bangladesh Power Developement Board
- Straits Asia Resources Limited - Singapore
- Dalmia Cement Bharat India
- Thai Mozambique Logistica
- Africa Commodities Group - South Africa
- Kepco SPC Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Makarim & Taira - Indonesia
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Coastal Gujarat Power Limited - India
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Baramulti Group, Indonesia
- Marubeni Corporation - India
- PTC India Limited - India
- Cement Manufacturers Association - India
- Karbindo Abesyapradhi - Indoneisa
- VISA Power Limited - India
- Deloitte Consulting - India
- Meenaskhi Energy Private Limited - India
- PNOC Exploration Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Leighton Contractors Pty Ltd - Australia
- Videocon Industries ltd - India
- Wood Mackenzie - Singapore
- SMG Consultants - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pendopo Energi Batubara - Indonesia
- IHS Mccloskey Coal Group - USA
- Kapuas Tunggal Persada - Indonesia
- London Commodity Brokers - England
- Indonesian Coal Mining Association
- Bukit Asam (Persero) Tbk - Indonesia
- Malabar Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Gujarat Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- Tamil Nadu electricity Board
- Eastern Energy - Thailand
- Intertek Mineral Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- Planning Commission, India
- Renaissance Capital - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Simpson Spence & Young - Indonesia
- SN Aboitiz Power Inc, Philippines
- Trasteel International SA, Italy
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Indo Tambangraya Megah - Indonesia
- Indian Oil Corporation Limited
- Wilmar Investment Holdings
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- PowerSource Philippines DevCo
- Energy Link Ltd, New Zealand
- Electricity Generating Authority of Thailand
- Sojitz Corporation - Japan
- CNBM International Corporation - China
- Vizag Seaport Private Limited - India
- Aboitiz Power Corporation - Philippines
- Latin American Coal - Colombia
- Star Paper Mills Limited - India
- Orica Australia Pty. Ltd.
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- Therma Luzon, Inc, Philippines
- Posco Energy - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Ambuja Cements Ltd - India
- Indogreen Group - Indonesia
- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- Kaltim Prima Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- Mercator Lines Limited - India
- Sindya Power Generating Company Private Ltd
- The Treasury - Australian Government
- Central Java Power - Indonesia
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- Cigading International Bulk Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Goldman Sachs - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- GMR Energy Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Agrawal Coal Company - India
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