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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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Thursday, 05 March 15
INDIA WILL BE THE LARGEST DRIVER OF GLOBAL SEABORNE COKING COAL DEMAND GROWTH IN 2015 - WOOD MACKENZIE
Global demand growth will remain weak because of China’s negative demand growth.
COALspot.com: At Coaltrans India, Wood Mackenzie says I ...
Thursday, 05 March 15
BUKIT ASAM BOOKED US$ 1 BILLION REVENUE IN 2014
COALspot.com: Indonesian publicly listed and state owned coal miner PT. Bukit Asam, has announced that, the revenue of the company for the period J ...
Wednesday, 04 March 15
AN AGENDA FOR CHANGE - FITCH INDONESIA CONFERENCE
Fitch Indonesia Conference - 5 March 2015
Fitch Ratings will host its annual Indonesia conference on 5 March 2015.
The theme of this year ...
Tuesday, 03 March 15
INDONESIAN COAL EXPORT VOLUME TO DECLINE 50% BY 2019
COALspot.com: The Indonesian government is planning to reduce coal export volume by 50% within the next five years while keeping its coal productio ...
Tuesday, 03 March 15
INDIAN THERMAL COAL IMPORTS: STEAMING FORWARD - CLARKSONS
Coal-fired power stations comprise around 60% of India’s power output, and with domestic supply issues and favourable international coal pric ...
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- Kaltim Prima Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Bhushan Steel Limited - India
- Medco Energi Mining Internasional
- Siam City Cement - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Karaikal Port Pvt Ltd - India
- Minerals Council of Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- Jorong Barutama Greston.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- MS Steel International - UAE
- Marubeni Corporation - India
- Ambuja Cements Ltd - India
- Electricity Generating Authority of Thailand
- Straits Asia Resources Limited - Singapore
- Semirara Mining Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Petron Corporation, Philippines
- Meralco Power Generation, Philippines
- Toyota Tsusho Corporation, Japan
- Bukit Makmur.PT - Indonesia
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Kepco SPC Power Corporation, Philippines
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Larsen & Toubro Limited - India
- Ceylon Electricity Board - Sri Lanka
- Samtan Co., Ltd - South Korea
- Power Finance Corporation Ltd., India
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- Pendopo Energi Batubara - Indonesia
- Bharathi Cement Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- Kartika Selabumi Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- GAC Shipping (India) Pvt Ltd
- Videocon Industries ltd - India
- Maheswari Brothers Coal Limited - India
- Holcim Trading Pte Ltd - Singapore
- Carbofer General Trading SA - India
- Tata Chemicals Ltd - India
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- Altura Mining Limited, Indonesia
- PNOC Exploration Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Trasteel International SA, Italy
- Uttam Galva Steels Limited - India
- Ministry of Transport, Egypt
- Anglo American - United Kingdom
- IEA Clean Coal Centre - UK
- Miang Besar Coal Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Thai Mozambique Logistica
- Heidelberg Cement - Germany
- IHS Mccloskey Coal Group - USA
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- McConnell Dowell - Australia
- London Commodity Brokers - England
- Parliament of New Zealand
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- Savvy Resources Ltd - HongKong
- Therma Luzon, Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Planning Commission, India
- Banpu Public Company Limited - Thailand
- Timah Investasi Mineral - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SN Aboitiz Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Thiess Contractors Indonesia
- Coastal Gujarat Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- Chamber of Mines of South Africa
- Global Green Power PLC Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Barasentosa Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Australian Coal Association
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Parry Sugars Refinery, India
- Asmin Koalindo Tuhup - Indonesia
- CNBM International Corporation - China
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Pipit Mutiara Jaya. PT, Indonesia
- Merrill Lynch Commodities Europe
- Kalimantan Lumbung Energi - Indonesia
- Commonwealth Bank - Australia
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Link Ltd, New Zealand
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Eastern Energy - Thailand
- Posco Energy - South Korea
- LBH Netherlands Bv - Netherlands
- Agrawal Coal Company - India
- Star Paper Mills Limited - India
- Manunggal Multi Energi - Indonesia
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- Sical Logistics Limited - India
- Deloitte Consulting - India
- Semirara Mining and Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Indonesian Coal Mining Association
- Wilmar Investment Holdings
- Gujarat Sidhee Cement - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cement Manufacturers Association - India
- Indogreen Group - Indonesia
- Electricity Authority, New Zealand
- Kapuas Tunggal Persada - Indonesia
- VISA Power Limited - India
- The Treasury - Australian Government
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- Independent Power Producers Association of India
- White Energy Company Limited
- Kideco Jaya Agung - Indonesia
- GVK Power & Infra Limited - India
- Indian Energy Exchange, India
- Attock Cement Pakistan Limited
- Siam City Cement PLC, Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kohat Cement Company Ltd. - Pakistan
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- Formosa Plastics Group - Taiwan
- Bangladesh Power Developement Board
- Antam Resourcindo - Indonesia
- Meenaskhi Energy Private Limited - India
- Directorate Of Revenue Intelligence - India
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- Lanco Infratech Ltd - India
- Intertek Mineral Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Essar Steel Hazira Ltd - India
- Central Electricity Authority - India
- Mintek Dendrill Indonesia
- European Bulk Services B.V. - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Vedanta Resources Plc - India
- Globalindo Alam Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- SMG Consultants - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Latin American Coal - Colombia
- CIMB Investment Bank - Malaysia
- Edison Trading Spa - Italy
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- Rio Tinto Coal - Australia
- Jaiprakash Power Ventures ltd
- Aditya Birla Group - India
- Bukit Baiduri Energy - Indonesia
- Bhatia International Limited - India
- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- South Luzon Thermal Energy Corporation
- Central Java Power - Indonesia
- Romanian Commodities Exchange
- Madhucon Powers Ltd - India
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Finance - Indonesia
- Metalloyd Limited - United Kingdom
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Coalindo Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Malabar Cements Ltd - India
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- The University of Queensland
- Energy Development Corp, Philippines
- Sojitz Corporation - Japan
- Sree Jayajothi Cements Limited - India
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