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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, 26 December 14
SHIPS FACE LOWER SULPHUR FUEL REQUIREMENTS IN EMISSION CONTROL AREAS FROM 1 JANUARY 2015 - IMO
Ships trading in designated emission control areas will have to use on board fuel oil with a sulphur content of no more than 0.10% from 1 January 2 ...
Wednesday, 24 December 14
CAPE DEMAND WAS STILL EXTREMELY SOFT THIS PAST WEEK ACROSS BOTH BASINS - INTERMODAL
COALspot.com: The performance of the Dry Bulk market, which found itself in desperate search of support for yet another week, has left very little ...
Wednesday, 24 December 14
MARKET INSIGHT - JOHN N. COTZIAS, INTERMODAL SNP BROKER
The year is coming to an end, and we should be able to assess if this was a good year, a bad year, or even a lousy one? The answer clearly de ...
Tuesday, 23 December 14
Q1'15 FOB INDONESIA COAL SWAP GAINED 48 CENTS IN ONE WEEK
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month and gained week over week and day on day.
The Q1 swap has lo ...
Tuesday, 23 December 14
Q4'15 FOB RICHARDS BAY COAL SWAPS FALL $ 3.85 IN A MONTH
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 lost month on month.
The Q1 swap has lost US$ 2.13 (-3.17%) month on month ...
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- London Commodity Brokers - England
- McConnell Dowell - Australia
- Orica Australia Pty. Ltd.
- International Coal Ventures Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Samtan Co., Ltd - South Korea
- Cigading International Bulk Terminal - Indonesia
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Australian Commodity Traders Exchange
- Makarim & Taira - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Borneo Indobara - Indonesia
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- Trasteel International SA, Italy
- Ministry of Transport, Egypt
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- Madhucon Powers Ltd - India
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- Miang Besar Coal Terminal - Indonesia
- Energy Development Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Renaissance Capital - South Africa
- Globalindo Alam Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Star Paper Mills Limited - India
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- Price Waterhouse Coopers - Russia
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- Mjunction Services Limited - India
- Medco Energi Mining Internasional
- Meralco Power Generation, Philippines
- Videocon Industries ltd - India
- San Jose City I Power Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Timah Investasi Mineral - Indoneisa
- ASAPP Information Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Indo Tambangraya Megah - Indonesia
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Agrawal Coal Company - India
- Coastal Gujarat Power Limited - India
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- Minerals Council of Australia
- Kalimantan Lumbung Energi - Indonesia
- Marubeni Corporation - India
- Kepco SPC Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Chamber of Mines of South Africa
- Thiess Contractors Indonesia
- Banpu Public Company Limited - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- Siam City Cement - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Link Ltd, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- IEA Clean Coal Centre - UK
- Sakthi Sugars Limited - India
- Heidelberg Cement - Germany
- Eastern Energy - Thailand
- Kapuas Tunggal Persada - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- MS Steel International - UAE
- Indian Oil Corporation Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wood Mackenzie - Singapore
- Kumho Petrochemical, South Korea
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- VISA Power Limited - India
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- Latin American Coal - Colombia
- Carbofer General Trading SA - India
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
- ICICI Bank Limited - India
- OPG Power Generation Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- Standard Chartered Bank - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Manunggal Multi Energi - Indonesia
- Planning Commission, India
- Wilmar Investment Holdings
- South Luzon Thermal Energy Corporation
- European Bulk Services B.V. - Netherlands
- Bangladesh Power Developement Board
- AsiaOL BioFuels Corp., Philippines
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Altura Mining Limited, Indonesia
- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- Barasentosa Lestari - Indonesia
- Coalindo Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- CNBM International Corporation - China
- Bhushan Steel Limited - India
- PTC India Limited - India
- Global Business Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Mercator Lines Limited - India
- Electricity Generating Authority of Thailand
- White Energy Company Limited
- Bahari Cakrawala Sebuku - Indonesia
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Posco Energy - South Korea
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Larsen & Toubro Limited - India
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Bharathi Cement Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- New Zealand Coal & Carbon
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- GN Power Mariveles Coal Plant, Philippines
- Maharashtra Electricity Regulatory Commission - India
- The University of Queensland
- CIMB Investment Bank - Malaysia
- Vizag Seaport Private Limited - India
- Xindia Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- Mercuria Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Essar Steel Hazira Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Ministry of Finance - Indonesia
- Indika Energy - Indonesia
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Karaikal Port Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Australian Coal Association
- Lanco Infratech Ltd - India
- PNOC Exploration Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Anglo American - United Kingdom
- Electricity Authority, New Zealand
- Petron Corporation, Philippines
- Indian Energy Exchange, India
- Neyveli Lignite Corporation Ltd, - India
- Vedanta Resources Plc - India
- Sojitz Corporation - Japan
- Attock Cement Pakistan Limited
- Rashtriya Ispat Nigam Limited - India
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- IHS Mccloskey Coal Group - USA
- Central Electricity Authority - India
- Coal and Oil Company - UAE
- Merrill Lynch Commodities Europe
- India Bulls Power Limited - India
- Ind-Barath Power Infra Limited - India
- Deloitte Consulting - India
- SMG Consultants - Indonesia
- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- Ministry of Mines - Canada
- Jaiprakash Power Ventures ltd
- Directorate Of Revenue Intelligence - India
- Parliament of New Zealand
- Romanian Commodities Exchange
- Kideco Jaya Agung - Indonesia
- Indogreen Group - Indonesia
- Interocean Group of Companies - India
- Krishnapatnam Port Company Ltd. - India
- Jorong Barutama Greston.PT - Indonesia
- Economic Council, Georgia
- Maheswari Brothers Coal Limited - India
- Bukit Makmur.PT - Indonesia
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