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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, 23 December 14
SHIPOWNERS ARE FINALIZING MORE DEALS AS YEAR END COMES CLOSER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS WORLDWIDE
With the 2014 year just a few days before waving goodbye, shipowners are looking to close their pending deals in both the newbuilding and S&P m ...
Monday, 22 December 14
Q2'15 CFR SOUTH CHINA COAL SWAP CLOSED $ 0.30 LOWER THAN Q1'15 CLOSING
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased by US$ 3.67 (-5.81%) month over month and US$ 0.35 (-0.58%) ...
Monday, 22 December 14
API 5 FOB NEWCASTLE COAL SWAPS ARE HEADING SOUTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.71 per MT (-3.24%) and closed at US$ 51.02 on 19 December month ...
Sunday, 21 December 14
PANAMAX COAL FREIGHT FROM INDONESIA TO INDIA FALLS FURTHER
COALspot.com: The BDI continued its fall as cape index lost heavily week on week.
The BDI was down 6.95 percent week over week and closed at 8 ...
Friday, 19 December 14
HOW WILL LOWER BUNKER PRICES AFFECT THE SUBSTANTIAL OVERCAPACITY IN DRY BULK MARKET? - BIMCO
As bunker fuel costs have come down from USD 600 per tonnes to USD 330 per tonnes in the past 6 months, much talk about increased ship speed have s ...
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- Banpu Public Company Limited - Thailand
- Kapuas Tunggal Persada - Indonesia
- Indika Energy - Indonesia
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Cigading International Bulk Terminal - Indonesia
- Energy Development Corp, Philippines
- MS Steel International - UAE
- Globalindo Alam Lestari - Indonesia
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
- Samtan Co., Ltd - South Korea
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- Price Waterhouse Coopers - Russia
- Parliament of New Zealand
- Sindya Power Generating Company Private Ltd
- Coalindo Energy - Indonesia
- Global Business Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- White Energy Company Limited
- Agrawal Coal Company - India
- Xindia Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- Asmin Koalindo Tuhup - Indonesia
- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- The Treasury - Australian Government
- Riau Bara Harum - Indonesia
- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- SN Aboitiz Power Inc, Philippines
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- Australian Coal Association
- Neyveli Lignite Corporation Ltd, - India
- Trasteel International SA, Italy
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- Romanian Commodities Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- GN Power Mariveles Coal Plant, Philippines
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meenaskhi Energy Private Limited - India
- CNBM International Corporation - China
- Altura Mining Limited, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Finance - Indonesia
- Maheswari Brothers Coal Limited - India
- Intertek Mineral Services - Indonesia
- Coastal Gujarat Power Limited - India
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Independent Power Producers Association of India
- Barasentosa Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Africa Commodities Group - South Africa
- Posco Energy - South Korea
- Ambuja Cements Ltd - India
- Baramulti Group, Indonesia
- Renaissance Capital - South Africa
- Larsen & Toubro Limited - India
- TeaM Sual Corporation - Philippines
- Mintek Dendrill Indonesia
- Medco Energi Mining Internasional
- Metalloyd Limited - United Kingdom
- Siam City Cement - Thailand
- Krishnapatnam Port Company Ltd. - India
- Central Electricity Authority - India
- Jorong Barutama Greston.PT - Indonesia
- Cement Manufacturers Association - India
- GVK Power & Infra Limited - India
- Wilmar Investment Holdings
- Kumho Petrochemical, South Korea
- The State Trading Corporation of India Ltd
- Indogreen Group - Indonesia
- Borneo Indobara - Indonesia
- Indian Energy Exchange, India
- Grasim Industreis Ltd - India
- Dalmia Cement Bharat India
- Ministry of Transport, Egypt
- Kobexindo Tractors - Indoneisa
- Heidelberg Cement - Germany
- Therma Luzon, Inc, Philippines
- PowerSource Philippines DevCo
- Essar Steel Hazira Ltd - India
- India Bulls Power Limited - India
- San Jose City I Power Corp, Philippines
- The University of Queensland
- Meralco Power Generation, Philippines
- Minerals Council of Australia
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- Bhushan Steel Limited - India
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- GMR Energy Limited - India
- Economic Council, Georgia
- Indonesian Coal Mining Association
- Petron Corporation, Philippines
- London Commodity Brokers - England
- South Luzon Thermal Energy Corporation
- Miang Besar Coal Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- LBH Netherlands Bv - Netherlands
- Oldendorff Carriers - Singapore
- Global Green Power PLC Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Mjunction Services Limited - India
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Deloitte Consulting - India
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Marubeni Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- Carbofer General Trading SA - India
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
- AsiaOL BioFuels Corp., Philippines
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- Chamber of Mines of South Africa
- Karbindo Abesyapradhi - Indoneisa
- Eastern Coal Council - USA
- Ind-Barath Power Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Latin American Coal - Colombia
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- Semirara Mining Corp, Philippines
- Georgia Ports Authority, United States
- Power Finance Corporation Ltd., India
- Jaiprakash Power Ventures ltd
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- Star Paper Mills Limited - India
- PNOC Exploration Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Sical Logistics Limited - India
- McConnell Dowell - Australia
- Sarangani Energy Corporation, Philippines
- Malabar Cements Ltd - India
- Tamil Nadu electricity Board
- Coal and Oil Company - UAE
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Interocean Group of Companies - India
- Siam City Cement PLC, Thailand
- Electricity Authority, New Zealand
- Parry Sugars Refinery, India
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- SMC Global Power, Philippines
- Goldman Sachs - Singapore
- Gujarat Sidhee Cement - India
- Simpson Spence & Young - Indonesia
- Karaikal Port Pvt Ltd - India
- VISA Power Limited - India
- Sojitz Corporation - Japan
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- GAC Shipping (India) Pvt Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- Planning Commission, India
- CIMB Investment Bank - Malaysia
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