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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, 12 February 15
INDONESIAN COAL PRICE REFERENCE INCHED DOWN 1.44% IN FEBRUARY
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down Indonesian coal bench mark price this month to US$ 62.92 pe ...
Thursday, 12 February 15
NEWBUILDING ORDERING ACTIVITY DRAGS ON, AS OWNERS ARE LOOKING FOR LOWER PRICES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Ship owners appear to be waiting for lower prices in their dealings with Asian shipyards, as the dry bulk market is at historical lows. According t ...
Wednesday, 11 February 15
DRY BULK MARKET REMAINED UNDER PRESSURE : STABILIZING CAPE MARKET HARDLY HELPED SENTIMENT
COALspot.com: The Dry Bulk market remained under pressure last week, while the stabilizing Cape market hardly helped sentiment.
Greece based s ...
Wednesday, 11 February 15
BDI HITTING THE ALL-TIME LOW; FFA MARKETS NOT SHOWING ANY POSITIVE SIGNS
With the BDI hitting the all-time low and with FFA markets not showing any positive signs for a possible recovery in the near future, pessimism is ...
Tuesday, 10 February 15
IRON ORE MARKET TO REMAIN OVERSUPPLIED IN 2015: PRICE FORECAST $70/T - WOOD MACKENZIE
COALspot.com: With January witnessing the price of iron ore falling to its lowest levels since May 2009, Roger Emslie, Principal Metals & ...
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- Bhoruka Overseas - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sindya Power Generating Company Private Ltd
- The Treasury - Australian Government
- Australian Coal Association
- Posco Energy - South Korea
- Romanian Commodities Exchange
- Bukit Makmur.PT - Indonesia
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- Alfred C Toepfer International GmbH - Germany
- Therma Luzon, Inc, Philippines
- Essar Steel Hazira Ltd - India
- Altura Mining Limited, Indonesia
- Central Java Power - Indonesia
- Chettinad Cement Corporation Ltd - India
- Siam City Cement PLC, Thailand
- Oldendorff Carriers - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Commonwealth Bank - Australia
- SMG Consultants - Indonesia
- Orica Australia Pty. Ltd.
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Mintek Dendrill Indonesia
- Planning Commission, India
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- India Bulls Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Madhucon Powers Ltd - India
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
- Holcim Trading Pte Ltd - Singapore
- LBH Netherlands Bv - Netherlands
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- SN Aboitiz Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Meralco Power Generation, Philippines
- Marubeni Corporation - India
- Uttam Galva Steels Limited - India
- Deloitte Consulting - India
- AsiaOL BioFuels Corp., Philippines
- GN Power Mariveles Coal Plant, Philippines
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Indo Tambangraya Megah - Indonesia
- Singapore Mercantile Exchange
- Tata Chemicals Ltd - India
- Salva Resources Pvt Ltd - India
- Ministry of Finance - Indonesia
- Independent Power Producers Association of India
- Minerals Council of Australia
- ASAPP Information Group - India
- Indian Energy Exchange, India
- Cement Manufacturers Association - India
- Bukit Baiduri Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Pipit Mutiara Jaya. PT, Indonesia
- Wood Mackenzie - Singapore
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- Renaissance Capital - South Africa
- Power Finance Corporation Ltd., India
- The University of Queensland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement - Thailand
- Economic Council, Georgia
- Pendopo Energi Batubara - Indonesia
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- Ministry of Transport, Egypt
- Borneo Indobara - Indonesia
- McConnell Dowell - Australia
- Mercuria Energy - Indonesia
- Grasim Industreis Ltd - India
- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- Gujarat Sidhee Cement - India
- Trasteel International SA, Italy
- Asmin Koalindo Tuhup - Indonesia
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Central Electricity Authority - India
- Krishnapatnam Port Company Ltd. - India
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- Coalindo Energy - Indonesia
- The State Trading Corporation of India Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Aditya Birla Group - India
- CIMB Investment Bank - Malaysia
- Indogreen Group - Indonesia
- Coal and Oil Company - UAE
- Makarim & Taira - Indonesia
- Kideco Jaya Agung - Indonesia
- Bayan Resources Tbk. - Indonesia
- Port Waratah Coal Services - Australia
- Manunggal Multi Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- Ministry of Mines - Canada
- PNOC Exploration Corporation - Philippines
- Eastern Energy - Thailand
- Indonesian Coal Mining Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- White Energy Company Limited
- Antam Resourcindo - Indonesia
- Bhatia International Limited - India
- Anglo American - United Kingdom
- PTC India Limited - India
- Ceylon Electricity Board - Sri Lanka
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Larsen & Toubro Limited - India
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- Miang Besar Coal Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Thiess Contractors Indonesia
- Samtan Co., Ltd - South Korea
- Wilmar Investment Holdings
- VISA Power Limited - India
- Edison Trading Spa - Italy
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Globalindo Alam Lestari - Indonesia
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- Coastal Gujarat Power Limited - India
- Baramulti Group, Indonesia
- Orica Mining Services - Indonesia
- Bharathi Cement Corporation - India
- Maheswari Brothers Coal Limited - India
- Parliament of New Zealand
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- Merrill Lynch Commodities Europe
- Kapuas Tunggal Persada - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Australian Commodity Traders Exchange
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- South Luzon Thermal Energy Corporation
- Carbofer General Trading SA - India
- Kepco SPC Power Corporation, Philippines
- GMR Energy Limited - India
- Dalmia Cement Bharat India
- Riau Bara Harum - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kartika Selabumi Mining - Indonesia
- PowerSource Philippines DevCo
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- OPG Power Generation Pvt Ltd - India
- Kumho Petrochemical, South Korea
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Directorate Of Revenue Intelligence - India
- Energy Link Ltd, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- Intertek Mineral Services - Indonesia
- Medco Energi Mining Internasional
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- Timah Investasi Mineral - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Sakthi Sugars Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Toyota Tsusho Corporation, Japan
- SMC Global Power, Philippines
- Rashtriya Ispat Nigam Limited - India
- New Zealand Coal & Carbon
- Semirara Mining Corp, Philippines
- Thai Mozambique Logistica
- Binh Thuan Hamico - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Barasentosa Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Iligan Light & Power Inc, Philippines
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