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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, 23 March 15
CFR SOUTH CHINA COAL SWAP: Q3 DELIVERY HAS FALLEN 7.93% MONTH-ON-MONTH
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 4.09 (-7.06%) per MT month over month and US$ 2.00 (-3 ...
Monday, 23 March 15
SEABORNE WORLD COAL TRADE: GROWTH +5% - GERMAN COAL IMPORTER ASSOCIATION
Hard Coal Market 2014: Despite The Energy Turnaround, Hard Coal Imports To Germany Rise By More Than 6%, Although Hard Coal-Fired Power Generation ...
Sunday, 22 March 15
DRY BULK RATES CONTINUED TO RISE THIS WEEK
COALspot.com: The freight market was steady this week as all the segments increased after many weeks of weak trend.
The Baltic Dry Index (BDI) ...
Friday, 20 March 15
HARD COAL MARKET 2014: DESPITE THE ENERGY TURNAROUND, HARD COAL IMPORTS TO GERMANY RISE BY MORE THAN 6% (PART 1)
Hard Coal Market 2014: Despite The Energy Turnaround, Hard Coal Imports To Germany Rise By More Than 6%, Although Hard Coal-Fired Power Generation ...
Friday, 20 March 15
U.S. WEEKLY COAL PRODUCTION SHOWS 5.9% INCREASE WEEK OVER WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.5 million short tons (mmst) of coal ...
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- Aditya Birla Group - India
- Holcim Trading Pte Ltd - Singapore
- Ambuja Cements Ltd - India
- Samtan Co., Ltd - South Korea
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Bukit Baiduri Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- White Energy Company Limited
- Globalindo Alam Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
- Australian Commodity Traders Exchange
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Sakthi Sugars Limited - India
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- Formosa Plastics Group - Taiwan
- Leighton Contractors Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- GMR Energy Limited - India
- Kumho Petrochemical, South Korea
- Dalmia Cement Bharat India
- Deloitte Consulting - India
- Baramulti Group, Indonesia
- Jaiprakash Power Ventures ltd
- India Bulls Power Limited - India
- PowerSource Philippines DevCo
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- Sinarmas Energy and Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercator Lines Limited - India
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- ASAPP Information Group - India
- Bhatia International Limited - India
- LBH Netherlands Bv - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Rio Tinto Coal - Australia
- Thiess Contractors Indonesia
- Mjunction Services Limited - India
- Krishnapatnam Port Company Ltd. - India
- Star Paper Mills Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bangladesh Power Developement Board
- Alfred C Toepfer International GmbH - Germany
- Borneo Indobara - Indonesia
- Minerals Council of Australia
- Chettinad Cement Corporation Ltd - India
- Renaissance Capital - South Africa
- Indonesian Coal Mining Association
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- AsiaOL BioFuels Corp., Philippines
- McConnell Dowell - Australia
- Coastal Gujarat Power Limited - India
- Planning Commission, India
- Ministry of Finance - Indonesia
- PNOC Exploration Corporation - Philippines
- Attock Cement Pakistan Limited
- Pendopo Energi Batubara - Indonesia
- Mintek Dendrill Indonesia
- Independent Power Producers Association of India
- Antam Resourcindo - Indonesia
- Sical Logistics Limited - India
- Bharathi Cement Corporation - India
- Vizag Seaport Private Limited - India
- CNBM International Corporation - China
- VISA Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Energy Link Ltd, New Zealand
- New Zealand Coal & Carbon
- Electricity Generating Authority of Thailand
- Kobexindo Tractors - Indoneisa
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- Anglo American - United Kingdom
- Indian Oil Corporation Limited
- GVK Power & Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- SMG Consultants - Indonesia
- Commonwealth Bank - Australia
- Eastern Coal Council - USA
- Savvy Resources Ltd - HongKong
- SN Aboitiz Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Timah Investasi Mineral - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- Power Finance Corporation Ltd., India
- Parliament of New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Romanian Commodities Exchange
- Orica Australia Pty. Ltd.
- Billiton Holdings Pty Ltd - Australia
- The University of Queensland
- SMC Global Power, Philippines
- Africa Commodities Group - South Africa
- Iligan Light & Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Grasim Industreis Ltd - India
- Standard Chartered Bank - UAE
- Tamil Nadu electricity Board
- Heidelberg Cement - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Oldendorff Carriers - Singapore
- Tata Chemicals Ltd - India
- Central Electricity Authority - India
- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- GAC Shipping (India) Pvt Ltd
- Kapuas Tunggal Persada - Indonesia
- Ministry of Mines - Canada
- Indian Energy Exchange, India
- Larsen & Toubro Limited - India
- Therma Luzon, Inc, Philippines
- Edison Trading Spa - Italy
- Kideco Jaya Agung - Indonesia
- Indika Energy - Indonesia
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Thai Mozambique Logistica
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- Energy Development Corp, Philippines
- Interocean Group of Companies - India
- San Jose City I Power Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- Price Waterhouse Coopers - Russia
- Uttam Galva Steels Limited - India
- Cement Manufacturers Association - India
- Ministry of Transport, Egypt
- Singapore Mercantile Exchange
- Semirara Mining Corp, Philippines
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- Riau Bara Harum - Indonesia
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Australian Coal Association
- Sree Jayajothi Cements Limited - India
- Malabar Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- IEA Clean Coal Centre - UK
- Binh Thuan Hamico - Vietnam
- Wilmar Investment Holdings
- Meralco Power Generation, Philippines
- Petron Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- Cigading International Bulk Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Meenaskhi Energy Private Limited - India
- Orica Mining Services - Indonesia
- Coalindo Energy - Indonesia
- Mercuria Energy - Indonesia
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- London Commodity Brokers - England
- Parry Sugars Refinery, India
- Bayan Resources Tbk. - Indonesia
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- Global Green Power PLC Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Latin American Coal - Colombia
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- Semirara Mining and Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Goldman Sachs - Singapore
- Siam City Cement - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
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