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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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Friday, 13 March 15
U.S. COAL PRODUCTION UP 2.3% WEEK OVER WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.5 million short tons (mmst) of coal ...
Friday, 13 March 15
ADARO RECORDED A 7% INCREASE IN EBITDA OF $877 MILLION IN 2014
“Coal market continues to be difficult and challenging” – Adaro Energy
The world’s Top 5 thermal coal exporter, ...
Thursday, 12 March 15
CAPESIZE : ACTIVITY IS LOW; PANAMAX: BIT MORE ACTIVITY; HANDY: A FIRMING WEEK
Handy
It has been a firming week in both hemispheres this week and especially in the Pacific, says Fearnleys AS in its week's week report.
...
Thursday, 12 March 15
COAL MINERS REMAIN UNDER PRESSURE AS GLUT CONTINUES - THE JAKARTA POST
Indonesia’s major coal miners reported a significant drop in their earnings last year as the sharp drop in the global demand, mainly from Chi ...
Thursday, 12 March 15
FOB INDONESIA COAL SWAP DROP TO $47.33 A TON IN THE WEEK ENDED MAR.6
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 drop month on month and week over week.
The Q2 swap fell US$ 0.37 (0.78%) month ...
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- PNOC Exploration Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Georgia Ports Authority, United States
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- The University of Queensland
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- Toyota Tsusho Corporation, Japan
- Jaiprakash Power Ventures ltd
- Indian Oil Corporation Limited
- Electricity Generating Authority of Thailand
- Lanco Infratech Ltd - India
- IHS Mccloskey Coal Group - USA
- Larsen & Toubro Limited - India
- Karaikal Port Pvt Ltd - India
- Planning Commission, India
- Minerals Council of Australia
- Altura Mining Limited, Indonesia
- Bhatia International Limited - India
- Thai Mozambique Logistica
- Cigading International Bulk Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Sree Jayajothi Cements Limited - India
- Rio Tinto Coal - Australia
- Jindal Steel & Power Ltd - India
- Central Electricity Authority - India
- Parliament of New Zealand
- Latin American Coal - Colombia
- LBH Netherlands Bv - Netherlands
- Carbofer General Trading SA - India
- Attock Cement Pakistan Limited
- Mercator Lines Limited - India
- Kaltim Prima Coal - Indonesia
- Petron Corporation, Philippines
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- Grasim Industreis Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Thiess Contractors Indonesia
- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Bharathi Cement Corporation - India
- Intertek Mineral Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- PowerSource Philippines DevCo
- Power Finance Corporation Ltd., India
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- Antam Resourcindo - Indonesia
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- South Luzon Thermal Energy Corporation
- Port Waratah Coal Services - Australia
- Central Java Power - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Timah Investasi Mineral - Indoneisa
- Maheswari Brothers Coal Limited - India
- Orica Mining Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Electricity Authority, New Zealand
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- Mintek Dendrill Indonesia
- Energy Development Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- PTC India Limited - India
- GMR Energy Limited - India
- Indo Tambangraya Megah - Indonesia
- CNBM International Corporation - China
- New Zealand Coal & Carbon
- Madhucon Powers Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- Formosa Plastics Group - Taiwan
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
- Ind-Barath Power Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Goldman Sachs - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Parry Sugars Refinery, India
- IEA Clean Coal Centre - UK
- Price Waterhouse Coopers - Russia
- London Commodity Brokers - England
- Dalmia Cement Bharat India
- Iligan Light & Power Inc, Philippines
- White Energy Company Limited
- Uttam Galva Steels Limited - India
- Sojitz Corporation - Japan
- Meralco Power Generation, Philippines
- Australian Coal Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ICICI Bank Limited - India
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Barasentosa Lestari - Indonesia
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- Energy Link Ltd, New Zealand
- Tamil Nadu electricity Board
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
- Riau Bara Harum - Indonesia
- Ambuja Cements Ltd - India
- Bangladesh Power Developement Board
- Salva Resources Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Straits Asia Resources Limited - Singapore
- Coal and Oil Company - UAE
- McConnell Dowell - Australia
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Global Business Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Singapore Mercantile Exchange
- Africa Commodities Group - South Africa
- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- Karbindo Abesyapradhi - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Gujarat Sidhee Cement - India
- Agrawal Coal Company - India
- Anglo American - United Kingdom
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Indian Energy Exchange, India
- Ministry of Transport, Egypt
- Bhushan Steel Limited - India
- Eastern Coal Council - USA
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- Heidelberg Cement - Germany
- Alfred C Toepfer International GmbH - Germany
- Banpu Public Company Limited - Thailand
- SMC Global Power, Philippines
- Wood Mackenzie - Singapore
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Vedanta Resources Plc - India
- Baramulti Group, Indonesia
- Aditya Birla Group - India
- Independent Power Producers Association of India
- Kobexindo Tractors - Indoneisa
- Bhoruka Overseas - Indonesia
- The Treasury - Australian Government
- Posco Energy - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Billiton Holdings Pty Ltd - Australia
- Star Paper Mills Limited - India
- Bukit Makmur.PT - Indonesia
- Tata Chemicals Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Cement Manufacturers Association - India
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- India Bulls Power Limited - India
- SMG Consultants - Indonesia
- Standard Chartered Bank - UAE
- Miang Besar Coal Terminal - Indonesia
- Economic Council, Georgia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Edison Trading Spa - Italy
- Mjunction Services Limited - India
- Siam City Cement - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Mercuria Energy - Indonesia
- Makarim & Taira - Indonesia
- Merrill Lynch Commodities Europe
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sical Logistics Limited - India
- Simpson Spence & Young - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Indogreen Group - Indonesia
- Interocean Group of Companies - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Chamber of Mines of South Africa
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- Marubeni Corporation - India
- Wilmar Investment Holdings
- Eastern Energy - Thailand
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