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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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Monday, 23 February 15
Q2' CFR SOUTH CHINA COAL SWAP FOR Q2 ROSE 3.39% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery rose US$ 1.90 (+3.39%) per MT month over month and declined US$ 0.08 ...
Monday, 23 February 15
Q2' API 5 FOB NEWCASTLE COAL SWAP CLOSED $1 HIGHER THAN Q3
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 3.12 per MT (+6.44%) month over month and fall US$ 0.43 (-0.83%) w ...
Sunday, 22 February 15
THE BALTIC DRY INDEX LOST ALMOST 3.2% OR 17 POINTS WEEK ON WEEK
COALspot.com: The Baltic Dry Index, one of the economic indicators that monitors the health of the world's economy by tracking the price of shi ...
Friday, 20 February 15
GOVT SET TO INCREASE COAL OUTPUT TARGET THIS YEAR - JAKARTA POST
The Energy and Mineral Resources Ministry is planning to increase its coal output target this year as the government seeks to offset the ongoing de ...
Friday, 20 February 15
U.S. PRODUCED AROUND 19.2 MILLION SHORT TONS OF COAL WEEK ON WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.2 million short tons (mmst) of coal ...
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- Savvy Resources Ltd - HongKong
- Bangladesh Power Developement Board
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- GMR Energy Limited - India
- Indonesian Coal Mining Association
- Cigading International Bulk Terminal - Indonesia
- Bhushan Steel Limited - India
- International Coal Ventures Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Bhoruka Overseas - Indonesia
- Barasentosa Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- CIMB Investment Bank - Malaysia
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Neyveli Lignite Corporation Ltd, - India
- GAC Shipping (India) Pvt Ltd
- Renaissance Capital - South Africa
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- Kobexindo Tractors - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- VISA Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Thai Mozambique Logistica
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Georgia Ports Authority, United States
- Parry Sugars Refinery, India
- Ministry of Mines - Canada
- Pendopo Energi Batubara - Indonesia
- India Bulls Power Limited - India
- Interocean Group of Companies - India
- Krishnapatnam Port Company Ltd. - India
- Jindal Steel & Power Ltd - India
- IHS Mccloskey Coal Group - USA
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- Tata Chemicals Ltd - India
- Anglo American - United Kingdom
- Romanian Commodities Exchange
- Orica Mining Services - Indonesia
- Sarangani Energy Corporation, Philippines
- Power Finance Corporation Ltd., India
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- Larsen & Toubro Limited - India
- Siam City Cement PLC, Thailand
- AsiaOL BioFuels Corp., Philippines
- Eastern Coal Council - USA
- Borneo Indobara - Indonesia
- Kaltim Prima Coal - Indonesia
- Marubeni Corporation - India
- SMC Global Power, Philippines
- Xindia Steels Limited - India
- Australian Coal Association
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- Central Electricity Authority - India
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- GVK Power & Infra Limited - India
- Indian Oil Corporation Limited
- Deloitte Consulting - India
- Economic Council, Georgia
- Sakthi Sugars Limited - India
- Eastern Energy - Thailand
- Sojitz Corporation - Japan
- Minerals Council of Australia
- LBH Netherlands Bv - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- Indian Energy Exchange, India
- Energy Development Corp, Philippines
- Riau Bara Harum - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Straits Asia Resources Limited - Singapore
- Kalimantan Lumbung Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Heidelberg Cement - Germany
- Sical Logistics Limited - India
- Oldendorff Carriers - Singapore
- Independent Power Producers Association of India
- Aditya Birla Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- Carbofer General Trading SA - India
- Bukit Makmur.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- New Zealand Coal & Carbon
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- Singapore Mercantile Exchange
- White Energy Company Limited
- MS Steel International - UAE
- Sindya Power Generating Company Private Ltd
- TeaM Sual Corporation - Philippines
- Ministry of Transport, Egypt
- Semirara Mining Corp, Philippines
- Indogreen Group - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- SMG Consultants - Indonesia
- Mintek Dendrill Indonesia
- Cement Manufacturers Association - India
- Ind-Barath Power Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Petron Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- OPG Power Generation Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Mercator Lines Limited - India
- The University of Queensland
- Meenaskhi Energy Private Limited - India
- Siam City Cement - Thailand
- Vizag Seaport Private Limited - India
- Planning Commission, India
- London Commodity Brokers - England
- Trasteel International SA, Italy
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- ICICI Bank Limited - India
- Sree Jayajothi Cements Limited - India
- Holcim Trading Pte Ltd - Singapore
- Therma Luzon, Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Makarim & Taira - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- Intertek Mineral Services - Indonesia
- The Treasury - Australian Government
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- Semirara Mining and Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- South Luzon Thermal Energy Corporation
- ASAPP Information Group - India
- Latin American Coal - Colombia
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Bhatia International Limited - India
- Baramulti Group, Indonesia
- Goldman Sachs - Singapore
- Electricity Authority, New Zealand
- PowerSource Philippines DevCo
- PNOC Exploration Corporation - Philippines
- Grasim Industreis Ltd - India
- Vedanta Resources Plc - India
- Australian Commodity Traders Exchange
- Kepco SPC Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Electricity Generating Authority of Thailand
- Rashtriya Ispat Nigam Limited - India
- Kumho Petrochemical, South Korea
- Edison Trading Spa - Italy
- Posco Energy - South Korea
- Star Paper Mills Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Toyota Tsusho Corporation, Japan
- Wilmar Investment Holdings
- Indika Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Essar Steel Hazira Ltd - India
- Indo Tambangraya Megah - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Gujarat Sidhee Cement - India
- PTC India Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- McConnell Dowell - Australia
- Asmin Koalindo Tuhup - Indonesia
- Tamil Nadu electricity Board
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Lanco Infratech Ltd - India
- Standard Chartered Bank - UAE
- Coal and Oil Company - UAE
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- Directorate Of Revenue Intelligence - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercuria Energy - Indonesia
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