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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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Tuesday, 10 February 15
SUB-BIT FOB INDONESIA COAL SWAP ADVANCES 3.79% WEEK ON WEEK
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 rose week over week and month on month.
The Q2 swap up US$ 0.85 (+1.81%) month o ...
Tuesday, 10 February 15
FOB NEWCASTLE COAL SWAPS SURGE WEEK OVER WEEK, RAISING HOPES?
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 0.95 per MT (+1.91%) week over week and declined US$ 0.06 (-0.12%) ...
Monday, 09 February 15
AUSTRALIAN COAL PRODUCERS BEST POSITIONED IN OVERSUPPLIED MARKET; US MINES MOST AT RISK - WOOD MACKENZIE
In a 2015 global coal outlook report, Wood Mackenzie says that Australia and Indonesian coal suppliers will see some upside in the difficult months ...
Monday, 09 February 15
FOB RICHARDS BAY COAL SWAP GAINS 3.65% TO ONE-MONTH HIGH
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 surge month over month and day on day.
The Q2 swap has soared US$ 2.1 ...
Monday, 09 February 15
Q2' CFR SOUTH CHINA COAL SWAP DECLINED 3.28% TO $ 56.92 W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 1.93 (-3.28%) per MT month over month and US$ 0.10 (-0 ...
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- Ind-Barath Power Infra Limited - India
- Parry Sugars Refinery, India
- Pipit Mutiara Jaya. PT, Indonesia
- Straits Asia Resources Limited - Singapore
- Uttam Galva Steels Limited - India
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Videocon Industries ltd - India
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- Timah Investasi Mineral - Indoneisa
- Coalindo Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Minerals Council of Australia
- Rio Tinto Coal - Australia
- Medco Energi Mining Internasional
- Economic Council, Georgia
- Singapore Mercantile Exchange
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- Sarangani Energy Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Tamil Nadu electricity Board
- Vizag Seaport Private Limited - India
- Lanco Infratech Ltd - India
- Price Waterhouse Coopers - Russia
- Mercator Lines Limited - India
- Independent Power Producers Association of India
- Semirara Mining Corp, Philippines
- Standard Chartered Bank - UAE
- Bukit Baiduri Energy - Indonesia
- Kumho Petrochemical, South Korea
- Sical Logistics Limited - India
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- Georgia Ports Authority, United States
- Trasteel International SA, Italy
- Neyveli Lignite Corporation Ltd, - India
- Commonwealth Bank - Australia
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- Dalmia Cement Bharat India
- Bayan Resources Tbk. - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bharathi Cement Corporation - India
- The University of Queensland
- Port Waratah Coal Services - Australia
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- Carbofer General Trading SA - India
- IEA Clean Coal Centre - UK
- VISA Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Miang Besar Coal Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Baramulti Group, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- ICICI Bank Limited - India
- GMR Energy Limited - India
- SMG Consultants - Indonesia
- South Luzon Thermal Energy Corporation
- Bank of Tokyo Mitsubishi UFJ Ltd
- IHS Mccloskey Coal Group - USA
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Goldman Sachs - Singapore
- CNBM International Corporation - China
- Coal and Oil Company - UAE
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- Australian Coal Association
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- Mercuria Energy - Indonesia
- Meralco Power Generation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Sojitz Corporation - Japan
- Power Finance Corporation Ltd., India
- Planning Commission, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- San Jose City I Power Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Authority, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Makarim & Taira - Indonesia
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- TeaM Sual Corporation - Philippines
- Central Java Power - Indonesia
- Orica Mining Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- SMC Global Power, Philippines
- Deloitte Consulting - India
- TNB Fuel Sdn Bhd - Malaysia
- Energy Link Ltd, New Zealand
- GAC Shipping (India) Pvt Ltd
- Iligan Light & Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Riau Bara Harum - Indonesia
- Sindya Power Generating Company Private Ltd
- Bhoruka Overseas - Indonesia
- ASAPP Information Group - India
- Indian Oil Corporation Limited
- New Zealand Coal & Carbon
- Agrawal Coal Company - India
- Meenaskhi Energy Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- Ministry of Finance - Indonesia
- Bangladesh Power Developement Board
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- Bhatia International Limited - India
- Mjunction Services Limited - India
- Aditya Birla Group - India
- Ministry of Transport, Egypt
- Indo Tambangraya Megah - Indonesia
- Posco Energy - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Jaiprakash Power Ventures ltd
- Chamber of Mines of South Africa
- Aboitiz Power Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- Ministry of Mines - Canada
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
- Indonesian Coal Mining Association
- LBH Netherlands Bv - Netherlands
- Altura Mining Limited, Indonesia
- Madhucon Powers Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Krishnapatnam Port Company Ltd. - India
- Parliament of New Zealand
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Xindia Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Malabar Cements Ltd - India
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- Samtan Co., Ltd - South Korea
- PowerSource Philippines DevCo
- International Coal Ventures Pvt Ltd - India
- Petron Corporation, Philippines
- Attock Cement Pakistan Limited
- Pendopo Energi Batubara - Indonesia
- Formosa Plastics Group - Taiwan
- Metalloyd Limited - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Asmin Koalindo Tuhup - Indonesia
- Coastal Gujarat Power Limited - India
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Borneo Indobara - Indonesia
- Maheswari Brothers Coal Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Africa Commodities Group - South Africa
- AsiaOL BioFuels Corp., Philippines
- Kobexindo Tractors - Indoneisa
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- Electricity Generating Authority of Thailand
- McConnell Dowell - Australia
- Holcim Trading Pte Ltd - Singapore
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- PTC India Limited - India
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- Wilmar Investment Holdings
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- Orica Australia Pty. Ltd.
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