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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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Saturday, 14 February 15
SHALE GAS AND TIGHT OIL ARE COMMERCIALLY PRODUCED IN JUST FOUR COUNTRIES - EIA
KNOWLEDGE TO ELEVATE
The United States, Canada, China, and Argentina are currently the only four countries in the world that are producing com ...
Friday, 13 February 15
U.S. WEEKLY COAL PRODUCTION SHOWS 10% DECLINE
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.1 million short tons (mmst) of coal ...
Friday, 13 February 15
SMALL AND MEDIUM-SIZED SHIP OWNERS SQUEEZED OUT OF THE MARKET ON CRASHING DRY BULK MARKET AND EUROZONE CRISIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Financing issues have started to tighten the noose in the throats of small and medium-size ship owners, who were already facing problems over the p ...
Thursday, 12 February 15
CAPESIZE: THE BEST DESCRIPTION FOR THE MARKET IS, FLAT - FEARNRESEARCH
Handy
The handy and supra market is also being affected by the marginal volume of activity in the commodity sales. We see a small upturn in the T ...
Thursday, 12 February 15
DRY BULK OWNERS SCRAP MORE VESSELS, AS MARKET REACHES HISTORICAL LOWS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has reached historical lows this week, with the Baltic Dry Index (BDI) now trading at levels below operating expense levels for ...
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- Central Java Power - Indonesia
- Indika Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- South Luzon Thermal Energy Corporation
- Kaltim Prima Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Carbofer General Trading SA - India
- White Energy Company Limited
- Thai Mozambique Logistica
- Sindya Power Generating Company Private Ltd
- Mercator Lines Limited - India
- Edison Trading Spa - Italy
- Metalloyd Limited - United Kingdom
- Price Waterhouse Coopers - Russia
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- IHS Mccloskey Coal Group - USA
- Attock Cement Pakistan Limited
- Sojitz Corporation - Japan
- Billiton Holdings Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- PowerSource Philippines DevCo
- Samtan Co., Ltd - South Korea
- Singapore Mercantile Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- Gujarat Sidhee Cement - India
- Anglo American - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- Commonwealth Bank - Australia
- GVK Power & Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Posco Energy - South Korea
- Indian Energy Exchange, India
- Bharathi Cement Corporation - India
- GAC Shipping (India) Pvt Ltd
- Savvy Resources Ltd - HongKong
- Bhushan Steel Limited - India
- Ceylon Electricity Board - Sri Lanka
- Manunggal Multi Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Banpu Public Company Limited - Thailand
- Marubeni Corporation - India
- Mjunction Services Limited - India
- Lanco Infratech Ltd - India
- TeaM Sual Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- London Commodity Brokers - England
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- CNBM International Corporation - China
- Indonesian Coal Mining Association
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- Ind-Barath Power Infra Limited - India
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- Borneo Indobara - Indonesia
- Global Coal Blending Company Limited - Australia
- Semirara Mining and Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement PLC, Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sarangani Energy Corporation, Philippines
- Medco Energi Mining Internasional
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
- Alfred C Toepfer International GmbH - Germany
- Sical Logistics Limited - India
- CIMB Investment Bank - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Xindia Steels Limited - India
- ICICI Bank Limited - India
- Meenaskhi Energy Private Limited - India
- SMG Consultants - Indonesia
- Kideco Jaya Agung - Indonesia
- Barasentosa Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Madhucon Powers Ltd - India
- Chettinad Cement Corporation Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement - Thailand
- Semirara Mining Corp, Philippines
- Ministry of Transport, Egypt
- Trasteel International SA, Italy
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- TNB Fuel Sdn Bhd - Malaysia
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Makarim & Taira - Indonesia
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Cigading International Bulk Terminal - Indonesia
- Orica Mining Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- Tamil Nadu electricity Board
- Ministry of Finance - Indonesia
- Wilmar Investment Holdings
- Pipit Mutiara Jaya. PT, Indonesia
- PTC India Limited - India
- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Wood Mackenzie - Singapore
- International Coal Ventures Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Meralco Power Generation, Philippines
- Goldman Sachs - Singapore
- Petron Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Heidelberg Cement - Germany
- Aditya Birla Group - India
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- Star Paper Mills Limited - India
- Riau Bara Harum - Indonesia
- Parliament of New Zealand
- Merrill Lynch Commodities Europe
- Kumho Petrochemical, South Korea
- Independent Power Producers Association of India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Miang Besar Coal Terminal - Indonesia
- McConnell Dowell - Australia
- Australian Coal Association
- Jorong Barutama Greston.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Uttam Galva Steels Limited - India
- Bhoruka Overseas - Indonesia
- Baramulti Group, Indonesia
- Larsen & Toubro Limited - India
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- Eastern Coal Council - USA
- Grasim Industreis Ltd - India
- Sree Jayajothi Cements Limited - India
- Interocean Group of Companies - India
- Latin American Coal - Colombia
- ASAPP Information Group - India
- SMC Global Power, Philippines
- AsiaOL BioFuels Corp., Philippines
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- Global Business Power Corporation, Philippines
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- Ambuja Cements Ltd - India
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- IEA Clean Coal Centre - UK
- Indian Oil Corporation Limited
- Bahari Cakrawala Sebuku - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Renaissance Capital - South Africa
- Deloitte Consulting - India
- Formosa Plastics Group - Taiwan
- Economic Council, Georgia
- Directorate General of MIneral and Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- MS Steel International - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Antam Resourcindo - Indonesia
- The University of Queensland
- The Treasury - Australian Government
- Coal and Oil Company - UAE
- Mercuria Energy - Indonesia
- Vizag Seaport Private Limited - India
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
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