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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, 16 March 15
MAKING THE WORLD GO ROUND - SEABORNE TRADE! - CLARKSONS
Money, or even love if you prefer, are claimed to make the world go round. For the shipping world, however, it’s trade that sets things spinn ...
Monday, 16 March 15
API 5 FOB NEWCASTLE COAL SWAPS: DECLINED
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 2.48 per MT (-4.77%) month over month and US$ 0.93 (-1.84%) we ...
Monday, 16 March 15
CFR SOUTH CHINA THERMAL COAL SWAP DECLINED 3.74% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 2.17 (-3.74%) per MT month over month and US$ 0.67 (-1 ...
Sunday, 15 March 15
BDI DECLINED LESSER THAN 1% WEEK OVER WEEK; INDO-INDIA FIRM
COALspot.com: The most of indices, including bulk dry index were falling this week. The BDI has been down by just 0.53 points and closing at 562 po ...
Saturday, 14 March 15
CAPESIZE DRY BULKERS TO AVERAGE BETWEEN $3,000 AND $9,000/DAY IN THE COMING WEEKS SAYS BIMCO
BIMCO issued its latest short-term estimates for the dry bulk market. For March/May: BIMCO assesses that the Capesize time charter (T/C) average ra ...
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- Lanco Infratech Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Mjunction Services Limited - India
- Dalmia Cement Bharat India
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- Bahari Cakrawala Sebuku - Indonesia
- Mintek Dendrill Indonesia
- Jindal Steel & Power Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Xindia Steels Limited - India
- Eastern Energy - Thailand
- Central Java Power - Indonesia
- Petron Corporation, Philippines
- Wilmar Investment Holdings
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- GN Power Mariveles Coal Plant, Philippines
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Electricity Authority, New Zealand
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Standard Chartered Bank - UAE
- ASAPP Information Group - India
- Sarangani Energy Corporation, Philippines
- Economic Council, Georgia
- SMC Global Power, Philippines
- Globalindo Alam Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kideco Jaya Agung - Indonesia
- Bayan Resources Tbk. - Indonesia
- Samtan Co., Ltd - South Korea
- Attock Cement Pakistan Limited
- Minerals Council of Australia
- Mercator Lines Limited - India
- IEA Clean Coal Centre - UK
- Asmin Koalindo Tuhup - Indonesia
- India Bulls Power Limited - India
- New Zealand Coal & Carbon
- Trasteel International SA, Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- Essar Steel Hazira Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Sree Jayajothi Cements Limited - India
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- White Energy Company Limited
- Carbofer General Trading SA - India
- Global Coal Blending Company Limited - Australia
- Deloitte Consulting - India
- Medco Energi Mining Internasional
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vedanta Resources Plc - India
- Indika Energy - Indonesia
- Altura Mining Limited, Indonesia
- Banpu Public Company Limited - Thailand
- Australian Commodity Traders Exchange
- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- Wood Mackenzie - Singapore
- Kaltim Prima Coal - Indonesia
- Romanian Commodities Exchange
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Cement Manufacturers Association - India
- Grasim Industreis Ltd - India
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- Directorate General of MIneral and Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Tamil Nadu electricity Board
- Salva Resources Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Barasentosa Lestari - Indonesia
- Edison Trading Spa - Italy
- Kepco SPC Power Corporation, Philippines
- Agrawal Coal Company - India
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Africa Commodities Group - South Africa
- Interocean Group of Companies - India
- MS Steel International - UAE
- Kartika Selabumi Mining - Indonesia
- The Treasury - Australian Government
- ICICI Bank Limited - India
- Madhucon Powers Ltd - India
- Iligan Light & Power Inc, Philippines
- Bharathi Cement Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- PTC India Limited - India
- Toyota Tsusho Corporation, Japan
- Commonwealth Bank - Australia
- Intertek Mineral Services - Indonesia
- Makarim & Taira - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- Vizag Seaport Private Limited - India
- Uttam Galva Steels Limited - India
- Therma Luzon, Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- AsiaOL BioFuels Corp., Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Formosa Plastics Group - Taiwan
- Tata Chemicals Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Chamber of Mines of South Africa
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- Aditya Birla Group - India
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Renaissance Capital - South Africa
- Bhatia International Limited - India
- Holcim Trading Pte Ltd - Singapore
- Savvy Resources Ltd - HongKong
- SN Aboitiz Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Latin American Coal - Colombia
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Maheswari Brothers Coal Limited - India
- Kumho Petrochemical, South Korea
- Power Finance Corporation Ltd., India
- Manunggal Multi Energi - Indonesia
- Videocon Industries ltd - India
- Goldman Sachs - Singapore
- Borneo Indobara - Indonesia
- Sical Logistics Limited - India
- Bukit Makmur.PT - Indonesia
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- Orica Australia Pty. Ltd.
- Siam City Cement - Thailand
- Chettinad Cement Corporation Ltd - India
- Bhoruka Overseas - Indonesia
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- Meenaskhi Energy Private Limited - India
- Star Paper Mills Limited - India
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Central Electricity Authority - India
- Billiton Holdings Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Marubeni Corporation - India
- Ind-Barath Power Infra Limited - India
- Rio Tinto Coal - Australia
- San Jose City I Power Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- Anglo American - United Kingdom
- Coal and Oil Company - UAE
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- Neyveli Lignite Corporation Ltd, - India
- Georgia Ports Authority, United States
- Ambuja Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Price Waterhouse Coopers - Russia
- Siam City Cement PLC, Thailand
- Bukit Baiduri Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Indian Energy Exchange, India
- Timah Investasi Mineral - Indoneisa
- IHS Mccloskey Coal Group - USA
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- Sakthi Sugars Limited - India
- PowerSource Philippines DevCo
- Coastal Gujarat Power Limited - India
- Ministry of Mines - Canada
- The State Trading Corporation of India Ltd
- The University of Queensland
- Energy Development Corp, Philippines
- Indian Oil Corporation Limited
- Sindya Power Generating Company Private Ltd
- Australian Coal Association
- Kobexindo Tractors - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Sojitz Corporation - Japan
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