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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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Wednesday, 04 February 15
MARKET INSIGHT - LINOS KOGEVINAS
It has been just about over 2 months since, in a move that surprised many and caused widespread apprehension, OPEC decided to maintain its producti ...
Tuesday, 03 February 15
Q1'15 FOB INDONESIA COAL SWAP CLOSED $ 3.29 HIGHER COMPARED TO Q4'15 DELIVERY PRICE
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 rose week over week and month on month.
The Q1 swap up US$ 0.68 (+1.41%) month o ...
Tuesday, 03 February 15
FOB NEWCASTLE COAL SWAP FOR Q4 DELIVERY CLOSED 5.86% LOWER THAN Q1 PRICE
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery rose US$ 0.26 per MT (+0.51%) week over week and declined US$ 0.02 (-0.04%) ...
Monday, 02 February 15
API 4 FOB RICHARDS BAY COAL SWAP ROSE WEEK OVER WEEK
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 declined month over month and day on day.
The Q1 swap has decli ...
Monday, 02 February 15
INDONESIA'S ADARO ENERGY PRODUCED 56.21 MILLION TONNES OF COAL IN 2014; UP 8% Y-O-Y
COALspot.com: PT. Adaro Energy, Indonesia’s largest coal producer, has increased coal production by 8% to 56.21 million tonnes (Mt) from both ...
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- Globalindo Alam Lestari - Indonesia
- Carbofer General Trading SA - India
- Jorong Barutama Greston.PT - Indonesia
- Bukit Makmur.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
- Baramulti Group, Indonesia
- Videocon Industries ltd - India
- Uttam Galva Steels Limited - India
- Bangladesh Power Developement Board
- TeaM Sual Corporation - Philippines
- Merrill Lynch Commodities Europe
- Maharashtra Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Lanco Infratech Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coastal Gujarat Power Limited - India
- Bharathi Cement Corporation - India
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- CNBM International Corporation - China
- Toyota Tsusho Corporation, Japan
- Gujarat Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Australian Coal Association
- Makarim & Taira - Indonesia
- Thai Mozambique Logistica
- Vijayanagar Sugar Pvt Ltd - India
- Sical Logistics Limited - India
- Manunggal Multi Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Commonwealth Bank - Australia
- Essar Steel Hazira Ltd - India
- Central Electricity Authority - India
- Vedanta Resources Plc - India
- Posco Energy - South Korea
- IEA Clean Coal Centre - UK
- Rashtriya Ispat Nigam Limited - India
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- Tata Chemicals Ltd - India
- Vizag Seaport Private Limited - India
- Planning Commission, India
- South Luzon Thermal Energy Corporation
- Grasim Industreis Ltd - India
- Jaiprakash Power Ventures ltd
- Larsen & Toubro Limited - India
- Bayan Resources Tbk. - Indonesia
- Coal and Oil Company - UAE
- Sindya Power Generating Company Private Ltd
- Global Green Power PLC Corporation, Philippines
- Gujarat Sidhee Cement - India
- Standard Chartered Bank - UAE
- LBH Netherlands Bv - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Chamber of Mines of South Africa
- GVK Power & Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMC Global Power, Philippines
- Parry Sugars Refinery, India
- Sree Jayajothi Cements Limited - India
- Jindal Steel & Power Ltd - India
- Thiess Contractors Indonesia
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
- Price Waterhouse Coopers - Russia
- Karbindo Abesyapradhi - Indoneisa
- ASAPP Information Group - India
- Meralco Power Generation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Dalmia Cement Bharat India
- Minerals Council of Australia
- Cement Manufacturers Association - India
- Heidelberg Cement - Germany
- Semirara Mining Corp, Philippines
- Indonesian Coal Mining Association
- Gujarat Mineral Development Corp Ltd - India
- European Bulk Services B.V. - Netherlands
- Malabar Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- Mercuria Energy - Indonesia
- Madhucon Powers Ltd - India
- Maheswari Brothers Coal Limited - India
- Sakthi Sugars Limited - India
- Simpson Spence & Young - Indonesia
- Marubeni Corporation - India
- VISA Power Limited - India
- Anglo American - United Kingdom
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
- Kepco SPC Power Corporation, Philippines
- Electricity Authority, New Zealand
- Karaikal Port Pvt Ltd - India
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Ind-Barath Power Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Java Power - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sojitz Corporation - Japan
- Kalimantan Lumbung Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Deloitte Consulting - India
- Orica Mining Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Electricity Generating Authority of Thailand
- Asmin Koalindo Tuhup - Indonesia
- Riau Bara Harum - Indonesia
- CIMB Investment Bank - Malaysia
- Indian Oil Corporation Limited
- Therma Luzon, Inc, Philippines
- San Jose City I Power Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Petron Corporation, Philippines
- Economic Council, Georgia
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Mintek Dendrill Indonesia
- PowerSource Philippines DevCo
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- Attock Cement Pakistan Limited
- Agrawal Coal Company - India
- Oldendorff Carriers - Singapore
- Sarangani Energy Corporation, Philippines
- Power Finance Corporation Ltd., India
- Renaissance Capital - South Africa
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- Bhoruka Overseas - Indonesia
- Goldman Sachs - Singapore
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- Ministry of Transport, Egypt
- Latin American Coal - Colombia
- The State Trading Corporation of India Ltd
- Kapuas Tunggal Persada - Indonesia
- McConnell Dowell - Australia
- Xindia Steels Limited - India
- India Bulls Power Limited - India
- Wood Mackenzie - Singapore
- PTC India Limited - India
- Mercator Lines Limited - India
- Medco Energi Mining Internasional
- Ceylon Electricity Board - Sri Lanka
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- Siam City Cement PLC, Thailand
- Tamil Nadu electricity Board
- Binh Thuan Hamico - Vietnam
- Aboitiz Power Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Baiduri Energy - Indonesia
- Singapore Mercantile Exchange
- Independent Power Producers Association of India
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
- Indogreen Group - Indonesia
- SMG Consultants - Indonesia
- Wilmar Investment Holdings
- Metalloyd Limited - United Kingdom
- GMR Energy Limited - India
- Siam City Cement - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- Eastern Energy - Thailand
- Pendopo Energi Batubara - Indonesia
- Aditya Birla Group - India
- Borneo Indobara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ministry of Finance - Indonesia
- Samtan Co., Ltd - South Korea
- Georgia Ports Authority, United States
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Alfred C Toepfer International GmbH - Germany
- Rio Tinto Coal - Australia
- Star Paper Mills Limited - India
- Edison Trading Spa - Italy
- Energy Link Ltd, New Zealand
- Mjunction Services Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The Treasury - Australian Government
- GN Power Mariveles Coal Plant, Philippines
- Bhushan Steel Limited - India
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