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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.
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Tuesday, 10 March 15
OIL PRICE FORECASTING - IGNORE THE EXPERTS: COLIN MARSHALL
KNOWLEDGE TO ELEVATE
Experts put themselves on a pedestal, making claims to have special forecasting abilities for oil price trends. They, too ...
Tuesday, 10 March 15
FOB NEWCASTLE COAL SWAPS HEADING SOUTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 0.24 per MT (-0.47%) month over month and US$ 1.52 (-2.93%) we ...
Tuesday, 10 March 15
CFR SOUTH CHINA POWER-STATION COAL SWAPS DECLINE
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery fell US$ 0.42 (-0.74%) per MT month over month and declined US$ 1.00 &nbs ...
Monday, 09 March 15
INDONESIA GREETS INDIA RATE CUT AS GOOD FOR EXPORTS - GLOBEASIA
Indonesian commodity producers and economists have hailed the Indian central bank’s rate cut as good for boosting exports from Southeast Asia ...
Monday, 09 March 15
CHINA'S SUPREME COURT ISSUES NEW JUDICIAL INTERPRETATION ON SHIP ARREST AND JUDICIAL SALE OF SHIPS - GARD
KNOWLEDGE TO ELEVATE
China is not traditionally a popular jurisdiction for ship arrest. However, Members and clients with ships calling at por ...
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- Coastal Gujarat Power Limited - India
- Jindal Steel & Power Ltd - India
- Coalindo Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Sojitz Corporation - Japan
- PNOC Exploration Corporation - Philippines
- Parliament of New Zealand
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- Central Java Power - Indonesia
- Straits Asia Resources Limited - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Sical Logistics Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Sree Jayajothi Cements Limited - India
- Dalmia Cement Bharat India
- Mercuria Energy - Indonesia
- Carbofer General Trading SA - India
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Energy Development Corp, Philippines
- Barasentosa Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Madhucon Powers Ltd - India
- Larsen & Toubro Limited - India
- Posco Energy - South Korea
- Manunggal Multi Energi - Indonesia
- Salva Resources Pvt Ltd - India
- The Treasury - Australian Government
- Meenaskhi Energy Private Limited - India
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- India Bulls Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- Jaiprakash Power Ventures ltd
- Bharathi Cement Corporation - India
- Riau Bara Harum - Indonesia
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Bhoruka Overseas - Indonesia
- Global Green Power PLC Corporation, Philippines
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- Grasim Industreis Ltd - India
- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Orica Mining Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Vizag Seaport Private Limited - India
- Coal and Oil Company - UAE
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- Kideco Jaya Agung - Indonesia
- Central Electricity Authority - India
- Pendopo Energi Batubara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Singapore Mercantile Exchange
- Ministry of Mines - Canada
- Vijayanagar Sugar Pvt Ltd - India
- MS Steel International - UAE
- GMR Energy Limited - India
- Goldman Sachs - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Simpson Spence & Young - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Rio Tinto Coal - Australia
- Mjunction Services Limited - India
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- London Commodity Brokers - England
- Bukit Baiduri Energy - Indonesia
- Independent Power Producers Association of India
- Aboitiz Power Corporation - Philippines
- Electricity Authority, New Zealand
- Wood Mackenzie - Singapore
- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Therma Luzon, Inc, Philippines
- Attock Cement Pakistan Limited
- Neyveli Lignite Corporation Ltd, - India
- Standard Chartered Bank - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Minerals Council of Australia
- Star Paper Mills Limited - India
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- LBH Netherlands Bv - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Edison Trading Spa - Italy
- Indian Energy Exchange, India
- Marubeni Corporation - India
- Cement Manufacturers Association - India
- South Luzon Thermal Energy Corporation
- Global Business Power Corporation, Philippines
- Agrawal Coal Company - India
- Africa Commodities Group - South Africa
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- Anglo American - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhatia International Limited - India
- Eastern Energy - Thailand
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- SMC Global Power, Philippines
- Formosa Plastics Group - Taiwan
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- ICICI Bank Limited - India
- Deloitte Consulting - India
- White Energy Company Limited
- Tata Chemicals Ltd - India
- Planning Commission, India
- Georgia Ports Authority, United States
- SN Aboitiz Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- TeaM Sual Corporation - Philippines
- Bangladesh Power Developement Board
- Kepco SPC Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Antam Resourcindo - Indonesia
- Tamil Nadu electricity Board
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- Thiess Contractors Indonesia
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Sidhee Cement - India
- Directorate Of Revenue Intelligence - India
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- Chamber of Mines of South Africa
- Holcim Trading Pte Ltd - Singapore
- Power Finance Corporation Ltd., India
- Australian Coal Association
- Karbindo Abesyapradhi - Indoneisa
- Borneo Indobara - Indonesia
- Mintek Dendrill Indonesia
- Lanco Infratech Ltd - India
- Aditya Birla Group - India
- Samtan Co., Ltd - South Korea
- Savvy Resources Ltd - HongKong
- Petrochimia International Co. Ltd.- Taiwan
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Indian Oil Corporation Limited
- Malabar Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- SMG Consultants - Indonesia
- The University of Queensland
- Xindia Steels Limited - India
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- Bayan Resources Tbk. - Indonesia
- IEA Clean Coal Centre - UK
- Electricity Generating Authority of Thailand
- San Jose City I Power Corp, Philippines
- Renaissance Capital - South Africa
- The State Trading Corporation of India Ltd
- Uttam Galva Steels Limited - India
- Commonwealth Bank - Australia
- Romanian Commodities Exchange
- Indonesian Coal Mining Association
- Jorong Barutama Greston.PT - Indonesia
- Port Waratah Coal Services - Australia
- GAC Shipping (India) Pvt Ltd
- OPG Power Generation Pvt Ltd - India
- Indika Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Latin American Coal - Colombia
- Siam City Cement PLC, Thailand
- Wilmar Investment Holdings
- Indogreen Group - Indonesia
- Sindya Power Generating Company Private Ltd
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