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Wednesday, 04 March 15
KEEP CALM AND INVEST IN DRY - THEODORE NTALAKOS
 Keep Calm and Carry On was originally a motivational poster, intended to raise the morale of the British public, produced by the British government in 1939 in preparation for the Second World War. In today's shipping environment where the daily headlines are in the likes of “excess vessel supply continues to weigh on the dry bulk market” and “slower growth in steel output and reduced coal demand contribute to a declining freight rate environment”, we also need all the motivation we can get. Companies’ revenues have declined and many operators are in the red, some are chopping charter rates, we hear about bankruptcies, restructurings and anyone can easily paint a very bleak outlook for the next couple of years.
According to the IMF, global growth in 2014 was 3.3% and in 2015 - 2016 it is projected to be 3.5 and 3.7 percent respectively. It is notable that the 2015-16 projections were revised downwards by 0.3% in October 2014, reflecting the reassessment of prospects in China, Russia, the euro area, and Japan, as well as weaker activity in some major oil exporters because of the sharp drop in oil prices. The United States is the only major economy for which growth projections have been raised.
In January 2014 the dry bulk fleet (over 20,000tons dwt) stood at 8,979 vessels or 697,63million tons deadweight. During 2014 the net growth (deliveries/additions minus demolitions/removals) was 5% in terms of deadweight (a closer proxy to the carrying capacity). Given the fact that there is high correlation between global growth and seaborne trade, unless the GDP growth is higher than the fleet growth, then simply put “the ships are always too many for the cargoes”. With the world growth at 3.3% in 2014 it is evident that the world fleet has been under-utilized and supply has exceeded demand.
In 2015 demolition levels and slippage/cancellations/conversions will be the key. Let’s look at some numbers. The current dry fleet is at 737.65 million tons deadweight while the dry orderbook for 2015 stands at 69million tons deadweight. Assuming that only 80% of this will be delivered (due to slippage, cancellations, conversions etc.) the increase will be 55.2mil tons deadweight. If demolition activity, which has kicked off the year encouragingly, ends up being similar to the levels of 2012, it will be a huge relief valve. In 2012 according to our data about 30million tons dwt was scrapped so if this repeats, the net growth of the fleet will be about 25million tons dwt or 3.4%. This is quite marginal against the projected global growth for 2015 but it may very well signal a balanced supply-demand outlook. So any upside on either the supply (more cancellations, more demolition) or the demand side (the boost to global demand from lower oil prices could be greater than is currently factored into the projections) can reverse the current situation.
The obvious question is if demolition activity can indeed reach 2012 levels. Well, the fleet of ships older than 25 years stands at 29.4mil tonnes i.e. a shade lower than the “required” volume that needs to be scrapped; another 40mil tonnes deadweight are the ships between 20-25 years. In the first two months of 2015, we have already seen much younger vessels sent for scrap. So the relief valve is there and needs to be kept open. Upcoming regulations that will require the shipowners to invest in upgrading their assets will also help in that direction since older assets will not be worth the investment.
So there you have it, there is a quite plausible scenario that can play out this year that can shift things towards the right direction and as long as a series of logical events occur, then we may be looking at a stronger and more balanced 2nd half of 2015. So, Keep Calm and Invest in Dry.
By Theodore Ntalakos
Newbuildings / SnP Broker
Compiled by:
Intermodal Research & Valuations
Analysts:
Ms. Eva Tzima
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no re-producing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
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Thursday, 02 April 15
NEWBUILDING ORDERS FOR DRY BULK CARRIERS "DRY" UP
Newbuilding ordering activity remained subdued over the course of the past week, as ship owners are wary of adding further tonnage to an already pr ...
Wednesday, 01 April 15
SUPRAMAX & HANDY: RATES HELD STEADY TOWARDS THE WEEKEND
“Despite the fact that the Dry Bulk market closed off on the green last week, sentiment didn't improve by any means, not only because of ...
Wednesday, 01 April 15
WEEKLY SHIPPING MARKET UPDATE - INTERMODAL
There is no doubt that we are still witnessing a very challenging and at the same time very uncertain market, both with respect to dry chartering a ...
Wednesday, 01 April 15
Q4' 15 INDONESIA COAL SWAP CLOSED AT $45.15 W/E 27 MARCH 2015
COALspot.com: Indonesian coal swap for delivery Q2' 2015 drops month on month and week over week.
The Q2 swap declined US$ 1.54 (3.24%) mo ...
Tuesday, 31 March 15
RICHARDS BAY COAL SWAPS GAIN WEEK OVER WEEK
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 declined month over month but increased week on week.
The Q2 swap has ...
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- Interocean Group of Companies - India
- Metalloyd Limited - United Kingdom
- Siam City Cement PLC, Thailand
- Essar Steel Hazira Ltd - India
- Karaikal Port Pvt Ltd - India
- Coalindo Energy - Indonesia
- Central Electricity Authority - India
- LBH Netherlands Bv - Netherlands
- Central Java Power - Indonesia
- Thai Mozambique Logistica
- Trasteel International SA, Italy
- Gujarat Mineral Development Corp Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Oil Corporation Limited
- Mintek Dendrill Indonesia
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- Semirara Mining Corp, Philippines
- GVK Power & Infra Limited - India
- Sojitz Corporation - Japan
- Marubeni Corporation - India
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Bulk Trading Sa - Switzerland
- Xindia Steels Limited - India
- Wilmar Investment Holdings
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Minerals Council of Australia
- SMC Global Power, Philippines
- GMR Energy Limited - India
- PTC India Limited - India
- Directorate General of MIneral and Coal - Indonesia
- The State Trading Corporation of India Ltd
- Edison Trading Spa - Italy
- Power Finance Corporation Ltd., India
- Kapuas Tunggal Persada - Indonesia
- TeaM Sual Corporation - Philippines
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- Oldendorff Carriers - Singapore
- Parliament of New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Eastern Energy - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- Commonwealth Bank - Australia
- GAC Shipping (India) Pvt Ltd
- Global Business Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- PNOC Exploration Corporation - Philippines
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
- Indika Energy - Indonesia
- SMG Consultants - Indonesia
- Mjunction Services Limited - India
- Agrawal Coal Company - India
- Cigading International Bulk Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Billiton Holdings Pty Ltd - Australia
- Baramulti Group, Indonesia
- OPG Power Generation Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bangladesh Power Developement Board
- Port Waratah Coal Services - Australia
- Ministry of Mines - Canada
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- Antam Resourcindo - Indonesia
- Anglo American - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Ceylon Electricity Board - Sri Lanka
- Jindal Steel & Power Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Singapore Mercantile Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sinarmas Energy and Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Georgia Ports Authority, United States
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Iligan Light & Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Salva Resources Pvt Ltd - India
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Electricity Generating Authority of Thailand
- Sakthi Sugars Limited - India
- Chamber of Mines of South Africa
- Australian Coal Association
- Maharashtra Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- Vijayanagar Sugar Pvt Ltd - India
- India Bulls Power Limited - India
- Coal and Oil Company - UAE
- Vizag Seaport Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- McConnell Dowell - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Standard Chartered Bank - UAE
- Straits Asia Resources Limited - Singapore
- Ministry of Finance - Indonesia
- Posco Energy - South Korea
- Parry Sugars Refinery, India
- Romanian Commodities Exchange
- Pendopo Energi Batubara - Indonesia
- Orica Mining Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indonesian Coal Mining Association
- Mercuria Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- Goldman Sachs - Singapore
- Kobexindo Tractors - Indoneisa
- Economic Council, Georgia
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- Gujarat Sidhee Cement - India
- Larsen & Toubro Limited - India
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- Barasentosa Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- Meralco Power Generation, Philippines
- Rio Tinto Coal - Australia
- Independent Power Producers Association of India
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Deloitte Consulting - India
- Holcim Trading Pte Ltd - Singapore
- ASAPP Information Group - India
- Indian Energy Exchange, India
- Ind-Barath Power Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Planning Commission, India
- Simpson Spence & Young - Indonesia
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Mercator Lines Limited - India
- Aboitiz Power Corporation - Philippines
- London Commodity Brokers - England
- CIMB Investment Bank - Malaysia
- Energy Development Corp, Philippines
- Kumho Petrochemical, South Korea
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- Kalimantan Lumbung Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Price Waterhouse Coopers - Russia
- IEA Clean Coal Centre - UK
- Carbofer General Trading SA - India
- Latin American Coal - Colombia
- Global Green Power PLC Corporation, Philippines
- Ministry of Transport, Egypt
- Sree Jayajothi Cements Limited - India
- Africa Commodities Group - South Africa
- Sical Logistics Limited - India
- Indo Tambangraya Megah - Indonesia
- European Bulk Services B.V. - Netherlands
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Chettinad Cement Corporation Ltd - India
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Ambuja Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Kaltim Prima Coal - Indonesia
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- Malabar Cements Ltd - India
- Petron Corporation, Philippines
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- Cement Manufacturers Association - India
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- New Zealand Coal & Carbon
- Tata Chemicals Ltd - India
- Electricity Authority, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Eastern Coal Council - USA
- Manunggal Multi Energi - Indonesia
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