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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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Wednesday, 11 March 15
RICHARDS BAY COAL SWAPS DROP $ 3.65 - 4.0/T W-O-W
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 declined month over month and week on week.
The Q2 swap has fell US$ ...
Wednesday, 11 March 15
DRY BULK MARKET CLOSED OFF ON THE GREEN FOR A SECOND WEEK IN A ROW - INTERMODAL
COALspot.com: The Dry Bulk market closed off on the green for a second week in a row, while the performance of Capesizes hindered a more substantia ...
Wednesday, 11 March 15
MARKET INSIGHT : NEWBUILDINGS - PANOS TSILINGIRIS
From a cost-based, buy-low perspective, there is currently a buying opportunity in the second-hand dry bulk market. I am an anti-cyclical (buy-low) ...
Wednesday, 11 March 15
DRY BULK MARKET: ALL IS NOT LOST FOR A RECOVERY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The low cost of commodities across the board could trigger an increase of trade among many countries, which in turn could lead to a recovery of the ...
Wednesday, 11 March 15
U.S. ELECTRIC GENERATING COMPANIES TO ADD MORE THAN 20 GW OF GENERATING CAPACITY IN 2015; 16 GW OF GENERATING CAPACITY IS EXPECTED TO RETIRE IN 2015
COALspot.com: In 2015, electric generating companies in U.S. expect to add more than 20 gigawatts (GW) of utility-scale generating capacity to the ...
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- MS Steel International - UAE
- Sree Jayajothi Cements Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GMR Energy Limited - India
- Indian Energy Exchange, India
- Anglo American - United Kingdom
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Interocean Group of Companies - India
- Savvy Resources Ltd - HongKong
- Meralco Power Generation, Philippines
- Makarim & Taira - Indonesia
- Bangladesh Power Developement Board
- Energy Development Corp, Philippines
- Heidelberg Cement - Germany
- Riau Bara Harum - Indonesia
- Indonesian Coal Mining Association
- SMG Consultants - Indonesia
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Indian Oil Corporation Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kalimantan Lumbung Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indogreen Group - Indonesia
- Parliament of New Zealand
- Semirara Mining and Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Indika Energy - Indonesia
- Lanco Infratech Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- AsiaOL BioFuels Corp., Philippines
- Merrill Lynch Commodities Europe
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Therma Luzon, Inc, Philippines
- Baramulti Group, Indonesia
- Orica Mining Services - Indonesia
- Planning Commission, India
- Sindya Power Generating Company Private Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- Banpu Public Company Limited - Thailand
- Sical Logistics Limited - India
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Thai Mozambique Logistica
- Bukit Asam (Persero) Tbk - Indonesia
- Bharathi Cement Corporation - India
- LBH Netherlands Bv - Netherlands
- Romanian Commodities Exchange
- Trasteel International SA, Italy
- GAC Shipping (India) Pvt Ltd
- Rashtriya Ispat Nigam Limited - India
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Salva Resources Pvt Ltd - India
- Parry Sugars Refinery, India
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- Altura Mining Limited, Indonesia
- Directorate Of Revenue Intelligence - India
- ASAPP Information Group - India
- Central Electricity Authority - India
- Bukit Baiduri Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Madhucon Powers Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- Aboitiz Power Corporation - Philippines
- IEA Clean Coal Centre - UK
- Mjunction Services Limited - India
- Mercator Lines Limited - India
- Ambuja Cements Ltd - India
- Xindia Steels Limited - India
- Attock Cement Pakistan Limited
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- Sarangani Energy Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Ind-Barath Power Infra Limited - India
- Borneo Indobara - Indonesia
- PTC India Limited - India
- Sinarmas Energy and Mining - Indonesia
- Formosa Plastics Group - Taiwan
- Renaissance Capital - South Africa
- San Jose City I Power Corp, Philippines
- CIMB Investment Bank - Malaysia
- CNBM International Corporation - China
- Bayan Resources Tbk. - Indonesia
- Ministry of Transport, Egypt
- Ministry of Mines - Canada
- ICICI Bank Limited - India
- Jindal Steel & Power Ltd - India
- Goldman Sachs - Singapore
- Metalloyd Limited - United Kingdom
- Vedanta Resources Plc - India
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Minerals Council of Australia
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- Karaikal Port Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Coalindo Energy - Indonesia
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- Dalmia Cement Bharat India
- Bhushan Steel Limited - India
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- Edison Trading Spa - Italy
- PowerSource Philippines DevCo
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- European Bulk Services B.V. - Netherlands
- Energy Link Ltd, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- GN Power Mariveles Coal Plant, Philippines
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
- Barasentosa Lestari - Indonesia
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Chamber of Mines of South Africa
- The University of Queensland
- Coal and Oil Company - UAE
- Billiton Holdings Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- Pendopo Energi Batubara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- Petron Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Kumho Petrochemical, South Korea
- International Coal Ventures Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Antam Resourcindo - Indonesia
- Georgia Ports Authority, United States
- Sojitz Corporation - Japan
- Aditya Birla Group - India
- Ceylon Electricity Board - Sri Lanka
- Posco Energy - South Korea
- South Luzon Thermal Energy Corporation
- TNB Fuel Sdn Bhd - Malaysia
- New Zealand Coal & Carbon
- Price Waterhouse Coopers - Russia
- Videocon Industries ltd - India
- Indo Tambangraya Megah - Indonesia
- The State Trading Corporation of India Ltd
- Carbofer General Trading SA - India
- Thiess Contractors Indonesia
- Tata Chemicals Ltd - India
- Deloitte Consulting - India
- Kohat Cement Company Ltd. - Pakistan
- Eastern Coal Council - USA
- IHS Mccloskey Coal Group - USA
- Star Paper Mills Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Economic Council, Georgia
- Chettinad Cement Corporation Ltd - India
- Global Business Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Java Power - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- Siam City Cement - Thailand
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- Siam City Cement PLC, Thailand
- Toyota Tsusho Corporation, Japan
- Agrawal Coal Company - India
- Uttam Galva Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Cement Manufacturers Association - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Australian Coal Association
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- Maharashtra Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Iligan Light & Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Rio Tinto Coal - Australia
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