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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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Sunday, 01 March 15
BDI INDEX SLIGHTLY UP CAUSED AN INCREASE IN THE PANAMAX, SUPARAMAX AND HANDY SIZE INDICES
COALspot.com: The freight market saw some gains this week and BDI was up 5.26 pct closed at 540 points. However the Cape index failed to follow BDI ...
Friday, 27 February 15
WEEKLY US COAL PRODUCTION DOWN AN ESTIMATED 14.0% FROM LAST WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 16.5 million short tons (mmst) of coal ...
Thursday, 26 February 15
DRY BULK MARKET COULD REBOUND FROM HISTORICAL LOWS IN THE COMING WEEKS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market could exit from its historical lows in the coming weeks, as Chinese buyers reenter the market after the holiday celebrations. T ...
Thursday, 26 February 15
COAL POLICY RISK: HIGHER ROYALTIES FOR IUP HOLDERS - BAHANA SECURITIES | JAKARTA POST
The Energy and Mineral Resources Ministry plans to raise coal royalties charged to mining operation permit (IUP) holders by the end of the first qu ...
Thursday, 26 February 15
DRY BULK MARKET LOOKING FOR POSITIVE MOMENTUM, BUT PROSPECTS REMAIN DIM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As the Baltic Dry Index (BDI) inched a bit higher over the past couple of sessions and the Chinese are returning to the market after a week long hi ...
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- Energy Link Ltd, New Zealand
- Ministry of Finance - Indonesia
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- White Energy Company Limited
- PowerSource Philippines DevCo
- Karbindo Abesyapradhi - Indoneisa
- Attock Cement Pakistan Limited
- Anglo American - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PTC India Limited - India
- Oldendorff Carriers - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Sakthi Sugars Limited - India
- Independent Power Producers Association of India
- London Commodity Brokers - England
- Sical Logistics Limited - India
- Globalindo Alam Lestari - Indonesia
- Sojitz Corporation - Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- SMG Consultants - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- ASAPP Information Group - India
- Indo Tambangraya Megah - Indonesia
- Interocean Group of Companies - India
- PetroVietnam Power Coal Import and Supply Company
- Standard Chartered Bank - UAE
- Bulk Trading Sa - Switzerland
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- The University of Queensland
- Global Business Power Corporation, Philippines
- Australian Coal Association
- Aboitiz Power Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Transport, Egypt
- Indika Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Eastern Coal Council - USA
- Agrawal Coal Company - India
- Renaissance Capital - South Africa
- Parliament of New Zealand
- South Luzon Thermal Energy Corporation
- Straits Asia Resources Limited - Singapore
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Coal and Oil Company - UAE
- Samtan Co., Ltd - South Korea
- Parry Sugars Refinery, India
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- Baramulti Group, Indonesia
- Price Waterhouse Coopers - Russia
- The Treasury - Australian Government
- Eastern Energy - Thailand
- Meralco Power Generation, Philippines
- Semirara Mining Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Kartika Selabumi Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- Commonwealth Bank - Australia
- SN Aboitiz Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Tata Chemicals Ltd - India
- Siam City Cement - Thailand
- TeaM Sual Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- McConnell Dowell - Australia
- Ambuja Cements Ltd - India
- Star Paper Mills Limited - India
- Orica Mining Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Intertek Mineral Services - Indonesia
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Posco Energy - South Korea
- Ministry of Mines - Canada
- OPG Power Generation Pvt Ltd - India
- Indonesian Coal Mining Association
- CNBM International Corporation - China
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercator Lines Limited - India
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- Merrill Lynch Commodities Europe
- Wilmar Investment Holdings
- San Jose City I Power Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Carbofer General Trading SA - India
- Port Waratah Coal Services - Australia
- Kalimantan Lumbung Energi - Indonesia
- Singapore Mercantile Exchange
- Simpson Spence & Young - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sree Jayajothi Cements Limited - India
- Energy Development Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Salva Resources Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Toyota Tsusho Corporation, Japan
- Deloitte Consulting - India
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- Bharathi Cement Corporation - India
- Africa Commodities Group - South Africa
- Global Green Power PLC Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Thiess Contractors Indonesia
- Wood Mackenzie - Singapore
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Minerals Council of Australia
- Rashtriya Ispat Nigam Limited - India
- Orica Australia Pty. Ltd.
- India Bulls Power Limited - India
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- Indian Energy Exchange, India
- LBH Netherlands Bv - Netherlands
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- Indian Oil Corporation Limited
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- GVK Power & Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Latin American Coal - Colombia
- IHS Mccloskey Coal Group - USA
- Sinarmas Energy and Mining - Indonesia
- Malabar Cements Ltd - India
- Goldman Sachs - Singapore
- Electricity Generating Authority of Thailand
- Banpu Public Company Limited - Thailand
- Essar Steel Hazira Ltd - India
- Mercuria Energy - Indonesia
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- MS Steel International - UAE
- Medco Energi Mining Internasional
- Bukit Baiduri Energy - Indonesia
- Tamil Nadu electricity Board
- Vedanta Resources Plc - India
- Neyveli Lignite Corporation Ltd, - India
- Directorate Of Revenue Intelligence - India
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Gujarat Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Sindya Power Generating Company Private Ltd
- Economic Council, Georgia
- Billiton Holdings Pty Ltd - Australia
- Bangladesh Power Developement Board
- Kumho Petrochemical, South Korea
- Siam City Cement PLC, Thailand
- Cement Manufacturers Association - India
- Miang Besar Coal Terminal - Indonesia
- Aditya Birla Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Madhucon Powers Ltd - India
- Borneo Indobara - Indonesia
- Chamber of Mines of South Africa
- Electricity Authority, New Zealand
- Mjunction Services Limited - India
- Makarim & Taira - Indonesia
- Metalloyd Limited - United Kingdom
- Maheswari Brothers Coal Limited - India
- Planning Commission, India
- Savvy Resources Ltd - HongKong
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- IEA Clean Coal Centre - UK
- GMR Energy Limited - India
- ICICI Bank Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Romanian Commodities Exchange
- GAC Shipping (India) Pvt Ltd
- Directorate General of MIneral and Coal - Indonesia
- Ind-Barath Power Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- Bhoruka Overseas - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Larsen & Toubro Limited - India
- Marubeni Corporation - India
- Bukit Makmur.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- SMC Global Power, Philippines
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
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