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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.
Information contained within the website of COALspot.com is intended for informational purposes only and is not intended as professional counsel and should not be used as such.
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Monday, 30 March 15
WORST IS OVER FOR THE DRY BULK MARKET, BUT THE PAIN WILL REMAIN FOR YEARS TO COME, SAYS BIMCO CHIEF ANALYST - HELLENIC SHIPPING
The current demise of the dry bulk market isn’t one to go away anytime soon. That doesn’t mean that it can’t improve, with all sh ...
Monday, 30 March 15
Q3' 15 CFR SOUTH CHINA COAL SWAP: DECLINED 8.7% M-M; 12.77% Y-TO-D
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 5.00 (-8.70%) per MT month over month and US$ 1.33 (-2 ...
Monday, 30 March 15
Q2' FOB NEWCASTLE COAL SWAP CLOSED 4.47% HIGHER THAN Q4' CLOSING PRICE
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 5.42 per MT (-10.43%) month over month and US$ 1.60 (-3.32%) w ...
Sunday, 29 March 15
INDO - INDIA: SUPRAMAX & PANAMAX FREIGHT MARKET STEADY
COALspot.com: The freight market was almost stable as all segments slightly up except Panamax sector.
The BDI was up by just 0.85% week over w ...
Saturday, 28 March 15
IS NORTHERN EUROPE THE NEW MINING ELDORADO?
The Europe Mining 2015 Summit, organised by Global Summits organizer IRN on 17-18 June in Amsterdam, The Netherlands, will gather senior level repr ...
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- Karaikal Port Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Thiess Contractors Indonesia
- Antam Resourcindo - Indonesia
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- Orica Mining Services - Indonesia
- Ambuja Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Indian Oil Corporation Limited
- Jorong Barutama Greston.PT - Indonesia
- London Commodity Brokers - England
- Mjunction Services Limited - India
- Bukit Makmur.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- TNB Fuel Sdn Bhd - Malaysia
- South Luzon Thermal Energy Corporation
- Sindya Power Generating Company Private Ltd
- Attock Cement Pakistan Limited
- GMR Energy Limited - India
- Intertek Mineral Services - Indonesia
- Gujarat Sidhee Cement - India
- Vijayanagar Sugar Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Petron Corporation, Philippines
- Romanian Commodities Exchange
- Videocon Industries ltd - India
- Bangladesh Power Developement Board
- Lanco Infratech Ltd - India
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Makarim & Taira - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Samtan Co., Ltd - South Korea
- Bhatia International Limited - India
- Altura Mining Limited, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- Trasteel International SA, Italy
- Ind-Barath Power Infra Limited - India
- Meralco Power Generation, Philippines
- Therma Luzon, Inc, Philippines
- Ministry of Transport, Egypt
- OPG Power Generation Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement - Thailand
- Salva Resources Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Indian Energy Exchange, India
- Electricity Generating Authority of Thailand
- Barasentosa Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Borneo Indobara - Indonesia
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- Ceylon Electricity Board - Sri Lanka
- Australian Commodity Traders Exchange
- Anglo American - United Kingdom
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- Renaissance Capital - South Africa
- Globalindo Alam Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- PetroVietnam Power Coal Import and Supply Company
- IHS Mccloskey Coal Group - USA
- Georgia Ports Authority, United States
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- Holcim Trading Pte Ltd - Singapore
- Parliament of New Zealand
- Kapuas Tunggal Persada - Indonesia
- Interocean Group of Companies - India
- Indo Tambangraya Megah - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Latin American Coal - Colombia
- Bhoruka Overseas - Indonesia
- Sree Jayajothi Cements Limited - India
- Eastern Energy - Thailand
- Mercuria Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Agrawal Coal Company - India
- Minerals Council of Australia
- Eastern Coal Council - USA
- LBH Netherlands Bv - Netherlands
- Economic Council, Georgia
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Tata Chemicals Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Dalmia Cement Bharat India
- Kumho Petrochemical, South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- SMG Consultants - Indonesia
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- Electricity Authority, New Zealand
- Energy Link Ltd, New Zealand
- TeaM Sual Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Bhushan Steel Limited - India
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- Marubeni Corporation - India
- Central Electricity Authority - India
- Sakthi Sugars Limited - India
- Port Waratah Coal Services - Australia
- Thai Mozambique Logistica
- GAC Shipping (India) Pvt Ltd
- Meenaskhi Energy Private Limited - India
- ASAPP Information Group - India
- Uttam Galva Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Wilmar Investment Holdings
- Coalindo Energy - Indonesia
- CNBM International Corporation - China
- ICICI Bank Limited - India
- Indogreen Group - Indonesia
- Larsen & Toubro Limited - India
- IEA Clean Coal Centre - UK
- Ministry of Mines - Canada
- Power Finance Corporation Ltd., India
- Straits Asia Resources Limited - Singapore
- Chettinad Cement Corporation Ltd - India
- Ministry of Finance - Indonesia
- Planning Commission, India
- San Jose City I Power Corp, Philippines
- Orica Australia Pty. Ltd.
- Merrill Lynch Commodities Europe
- Pipit Mutiara Jaya. PT, Indonesia
- Global Green Power PLC Corporation, Philippines
- Madhucon Powers Ltd - India
- White Energy Company Limited
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- Commonwealth Bank - Australia
- Goldman Sachs - Singapore
- Chamber of Mines of South Africa
- PNOC Exploration Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Singapore Mercantile Exchange
- Savvy Resources Ltd - HongKong
- Global Coal Blending Company Limited - Australia
- European Bulk Services B.V. - Netherlands
- Parry Sugars Refinery, India
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- Kobexindo Tractors - Indoneisa
- Edison Trading Spa - Italy
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- Mintek Dendrill Indonesia
- Formosa Plastics Group - Taiwan
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- Malabar Cements Ltd - India
- Tamil Nadu electricity Board
- Bukit Baiduri Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Mercator Lines Limited - India
- Coastal Gujarat Power Limited - India
- Independent Power Producers Association of India
- Heidelberg Cement - Germany
- The Treasury - Australian Government
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- Central Java Power - Indonesia
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Sojitz Corporation - Japan
- Maharashtra Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- SMC Global Power, Philippines
- Indika Energy - Indonesia
- MS Steel International - UAE
- Karbindo Abesyapradhi - Indoneisa
- Rio Tinto Coal - Australia
- The University of Queensland
- Metalloyd Limited - United Kingdom
- Coal and Oil Company - UAE
- Gujarat Mineral Development Corp Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Banpu Public Company Limited - Thailand
- PTC India Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cement Manufacturers Association - India
- Riau Bara Harum - Indonesia
- India Bulls Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
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