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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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Saturday, 28 March 15
THE DRY BULK FLEET AT BREAKING POINT - CLARKSONS
The severe oversupply in the bulkcarrier fleet has contributed to the current trough in the dry bulk market, putting considerable financial pressur ...
Friday, 27 March 15
INDONESIA: NEW REGULATION REQUIRES LETTER OF CREDIT FOR EXPORT OF PRODUCTS FROM NATURAL RESOURCES
The Minister of Trade issued Ministerial Regulation No. 04/M-DAG/PER/1/2015 (“Regulation No. 4/2015”) on 5 January 2015. Regulati ...
Friday, 27 March 15
WEEKLY U.S COAL OUTPUT FALLS 1.7% W-W; 7.9% Y-Y
COALspot.com – United States the world's one of the largest coal producers, produced approximately totaled an estimated 18.2 million ...
Thursday, 26 March 15
CHINA IRON ORE IMPORT FOR THE FIRST 2 MONTHS DECLINED BY 1.2 % Y-O-Y; PANAMAX AUSSIE/CHINA ROUNDS BEING FIXED IN THE $4 -5K RANGE - FEARNLEYS
Handy
There has been more activity in both hemispheres this week. Especially the USG market has picked up with more cargoes for prompter dates en ...
Thursday, 26 March 15
RATES FOR THE SMALLER SIZE SEGMENT CONTINUED TO IMPROVE LAST WEEK - INTERMODAL
To see green across the board is a rare occurrence in the Dry Bulk market nowadays and while the upside in which last week closed off is not of the ...
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- Jaiprakash Power Ventures ltd
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- New Zealand Coal & Carbon
- Uttam Galva Steels Limited - India
- Thiess Contractors Indonesia
- Cement Manufacturers Association - India
- Attock Cement Pakistan Limited
- International Coal Ventures Pvt Ltd - India
- Makarim & Taira - Indonesia
- Marubeni Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- Orica Australia Pty. Ltd.
- Sical Logistics Limited - India
- Aditya Birla Group - India
- White Energy Company Limited
- GAC Shipping (India) Pvt Ltd
- Coalindo Energy - Indonesia
- Economic Council, Georgia
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Tamil Nadu electricity Board
- Holcim Trading Pte Ltd - Singapore
- Tata Chemicals Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Price Waterhouse Coopers - Russia
- Eastern Coal Council - USA
- Neyveli Lignite Corporation Ltd, - India
- GMR Energy Limited - India
- Meenaskhi Energy Private Limited - India
- Oldendorff Carriers - Singapore
- ICICI Bank Limited - India
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Bhatia International Limited - India
- Aboitiz Power Corporation - Philippines
- Electricity Generating Authority of Thailand
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- Romanian Commodities Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining and Power Corporation, Philippines
- Edison Trading Spa - Italy
- Madhucon Powers Ltd - India
- Indian Energy Exchange, India
- Kideco Jaya Agung - Indonesia
- Toyota Tsusho Corporation, Japan
- Kapuas Tunggal Persada - Indonesia
- Maheswari Brothers Coal Limited - India
- Bayan Resources Tbk. - Indonesia
- Power Finance Corporation Ltd., India
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- Rashtriya Ispat Nigam Limited - India
- Latin American Coal - Colombia
- Petron Corporation, Philippines
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- SMG Consultants - Indonesia
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Thai Mozambique Logistica
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Indika Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- PTC India Limited - India
- Independent Power Producers Association of India
- Ministry of Mines - Canada
- PowerSource Philippines DevCo
- TeaM Sual Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Global Green Power PLC Corporation, Philippines
- Central Electricity Authority - India
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- Parliament of New Zealand
- Samtan Co., Ltd - South Korea
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- Antam Resourcindo - Indonesia
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
- Singapore Mercantile Exchange
- Bharathi Cement Corporation - India
- Global Coal Blending Company Limited - Australia
- The State Trading Corporation of India Ltd
- Videocon Industries ltd - India
- The University of Queensland
- Deloitte Consulting - India
- Agrawal Coal Company - India
- Wilmar Investment Holdings
- Miang Besar Coal Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Central Java Power - Indonesia
- Anglo American - United Kingdom
- Mjunction Services Limited - India
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- SMC Global Power, Philippines
- OPG Power Generation Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Eastern Energy - Thailand
- ASAPP Information Group - India
- Posco Energy - South Korea
- Vizag Seaport Private Limited - India
- Vedanta Resources Plc - India
- SN Aboitiz Power Inc, Philippines
- Planning Commission, India
- CNBM International Corporation - China
- Meralco Power Generation, Philippines
- PNOC Exploration Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Sidhee Cement - India
- Intertek Mineral Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- VISA Power Limited - India
- Mintek Dendrill Indonesia
- Mercator Lines Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Gujarat Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Heidelberg Cement - Germany
- Dalmia Cement Bharat India
- Indian Oil Corporation Limited
- Grasim Industreis Ltd - India
- Standard Chartered Bank - UAE
- Bangladesh Power Developement Board
- Bulk Trading Sa - Switzerland
- San Jose City I Power Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Energy Development Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- Ministry of Transport, Egypt
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- Interocean Group of Companies - India
- Savvy Resources Ltd - HongKong
- Gujarat Mineral Development Corp Ltd - India
- Karaikal Port Pvt Ltd - India
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- Renaissance Capital - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Bhushan Steel Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Australian Coal Association
- Merrill Lynch Commodities Europe
- MS Steel International - UAE
- Trasteel International SA, Italy
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- Chamber of Mines of South Africa
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- Billiton Holdings Pty Ltd - Australia
- Georgia Ports Authority, United States
- London Commodity Brokers - England
- Xindia Steels Limited - India
- Africa Commodities Group - South Africa
- Globalindo Alam Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Manunggal Multi Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Goldman Sachs - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Global Business Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Essar Steel Hazira Ltd - India
- GVK Power & Infra Limited - India
- Minerals Council of Australia
- Rio Tinto Coal - Australia
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Formosa Plastics Group - Taiwan
- Bukit Baiduri Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Commonwealth Bank - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Straits Asia Resources Limited - Singapore
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