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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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Monday, 09 March 15
CHINA'S IMPORTS - NEVER MORE IMPORTANT TO SHIPPING? - CLARKSONS
Over the last 15 years China has led maritime forecasters a right old dance. In 2002, rumours that Chinese iron ore imports were about to take off ...
Sunday, 08 March 15
FREIGHT RATES FROM INDONESIA TO INDIA IS TRENDING UP
COALspot.com: The freight market continued to see gains this week and all the indices were rose except for Cape index. The BDI was increased 4.62 p ...
Friday, 06 March 15
BALTIC DRY INDEX: IS THIS POWERFUL INDICATOR SIGNALING A GLOBAL RECESSION? - STREET AUTHORITY
Although memories of the Great Recession linger, a case can be made that better days lie ahead.
That’s because central banks around the ...
Friday, 06 March 15
U.S. WEEKLY COAL PRODUCTION ROSE 3.5% WEEK ON WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.1 million short tons (mmst) of coal ...
Thursday, 05 March 15
PANAMAX : THE ATLANTIC ROUND IS NOW PAYING AROUND US$ 5K PER DAY
COALspot.com: Handy - The activity in the handy/supra segment is back. “ We see more fresh cargo in the market for 2nd half March dates ...
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- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- The State Trading Corporation of India Ltd
- Holcim Trading Pte Ltd - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- SN Aboitiz Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Ministry of Mines - Canada
- Rio Tinto Coal - Australia
- European Bulk Services B.V. - Netherlands
- Cement Manufacturers Association - India
- Ambuja Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Sinarmas Energy and Mining - Indonesia
- San Jose City I Power Corp, Philippines
- CIMB Investment Bank - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Bhatia International Limited - India
- ICICI Bank Limited - India
- Planning Commission, India
- White Energy Company Limited
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- Singapore Mercantile Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Indogreen Group - Indonesia
- London Commodity Brokers - England
- IHS Mccloskey Coal Group - USA
- SMC Global Power, Philippines
- Alfred C Toepfer International GmbH - Germany
- Jaiprakash Power Ventures ltd
- Straits Asia Resources Limited - Singapore
- Wood Mackenzie - Singapore
- Goldman Sachs - Singapore
- Gujarat Sidhee Cement - India
- Chettinad Cement Corporation Ltd - India
- Sical Logistics Limited - India
- Ministry of Transport, Egypt
- Grasim Industreis Ltd - India
- Minerals Council of Australia
- GAC Shipping (India) Pvt Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Interocean Group of Companies - India
- Neyveli Lignite Corporation Ltd, - India
- Intertek Mineral Services - Indonesia
- Indika Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- Coastal Gujarat Power Limited - India
- Mercuria Energy - Indonesia
- PTC India Limited - India
- Madhucon Powers Ltd - India
- Metalloyd Limited - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Energy Link Ltd, New Zealand
- Maheswari Brothers Coal Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Banpu Public Company Limited - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Coalindo Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- Iligan Light & Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Aditya Birla Group - India
- PetroVietnam Power Coal Import and Supply Company
- Wilmar Investment Holdings
- Thai Mozambique Logistica
- Antam Resourcindo - Indonesia
- Price Waterhouse Coopers - Russia
- Electricity Generating Authority of Thailand
- New Zealand Coal & Carbon
- Global Coal Blending Company Limited - Australia
- Siam City Cement - Thailand
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kepco SPC Power Corporation, Philippines
- Central Java Power - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bhoruka Overseas - Indonesia
- Orica Australia Pty. Ltd.
- Coal and Oil Company - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- Savvy Resources Ltd - HongKong
- Vedanta Resources Plc - India
- Economic Council, Georgia
- Sree Jayajothi Cements Limited - India
- MS Steel International - UAE
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- Parliament of New Zealand
- CNBM International Corporation - China
- PowerSource Philippines DevCo
- South Luzon Thermal Energy Corporation
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Electricity Authority, New Zealand
- Malabar Cements Ltd - India
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
- Chamber of Mines of South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- Ministry of Finance - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Uttam Galva Steels Limited - India
- Thiess Contractors Indonesia
- McConnell Dowell - Australia
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Kideco Jaya Agung - Indonesia
- Toyota Tsusho Corporation, Japan
- Kapuas Tunggal Persada - Indonesia
- Mintek Dendrill Indonesia
- Sarangani Energy Corporation, Philippines
- Indonesian Coal Mining Association
- Latin American Coal - Colombia
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Petrochimia International Co. Ltd.- Taiwan
- Indian Oil Corporation Limited
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Baramulti Group, Indonesia
- The University of Queensland
- Aboitiz Power Corporation - Philippines
- Renaissance Capital - South Africa
- Mjunction Services Limited - India
- Siam City Cement PLC, Thailand
- Bharathi Cement Corporation - India
- Posco Energy - South Korea
- GMR Energy Limited - India
- Indo Tambangraya Megah - Indonesia
- Sindya Power Generating Company Private Ltd
- Rashtriya Ispat Nigam Limited - India
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Eastern Coal Council - USA
- Globalindo Alam Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- Semirara Mining and Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining Corp, Philippines
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- VISA Power Limited - India
- Timah Investasi Mineral - Indoneisa
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- Dalmia Cement Bharat India
- Tamil Nadu electricity Board
- Eastern Energy - Thailand
- Leighton Contractors Pty Ltd - Australia
- Marubeni Corporation - India
- Star Paper Mills Limited - India
- OPG Power Generation Pvt Ltd - India
- SMG Consultants - Indonesia
- Australian Commodity Traders Exchange
- Kalimantan Lumbung Energi - Indonesia
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- The Treasury - Australian Government
- Attock Cement Pakistan Limited
- Petron Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Directorate Of Revenue Intelligence - India
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- Oldendorff Carriers - Singapore
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Indian Energy Exchange, India
- Simpson Spence & Young - Indonesia
- Romanian Commodities Exchange
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parry Sugars Refinery, India
- Pendopo Energi Batubara - Indonesia
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Barasentosa Lestari - Indonesia
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- Kobexindo Tractors - Indoneisa
- India Bulls Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Merrill Lynch Commodities Europe
- Tata Chemicals Ltd - India
- Larsen & Toubro Limited - India
- Lanco Infratech Ltd - India
- Bangladesh Power Developement Board
- ASAPP Information Group - India
- Orica Mining Services - Indonesia
- Xindia Steels Limited - India
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