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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, 02 February 15
API 8 CFR SOUTH CHINA COAL SWAP PICKS UP W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined US$ 0.81 (-1.36%) per MT month over month and gained US$ 0.18&nb ...
Monday, 02 February 15
SOUTH KOREA'S KOMIPO INVITES BIDS FOR 280K MT OF SUB-BITUMINOUS COAL
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender to buy total 280,000 MT of Sub-bituminous coal coa ...
Sunday, 01 February 15
INDONESIA-TO-INDIA COAL FREIGHT RATES REMAIN WEAK NEXT WEEK
COALspot.com: The BDI continued its fall reached lowest levels since 1986 this week.
The BDI declined 15.55 pct to 608 points on Friday 30, Ja ...
Friday, 30 January 15
CONTANGO AND TANKERS - SKULD
KNOWLEDGE TO ELEVATE
Like an invitation to a dance, the word contango may have some people flustered, but for tanker owners this market phenome ...
Friday, 30 January 15
U.S. YEAR-TO-DATE COAL PRODUCTION REACHED 65.7 MMST
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.9 million short tons (mmst) of coal ...
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- Gujarat Mineral Development Corp Ltd - India
- PTC India Limited - India
- Parliament of New Zealand
- SMG Consultants - Indonesia
- Georgia Ports Authority, United States
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Jaiprakash Power Ventures ltd
- Videocon Industries ltd - India
- Renaissance Capital - South Africa
- Ceylon Electricity Board - Sri Lanka
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- Vizag Seaport Private Limited - India
- Energy Link Ltd, New Zealand
- Sree Jayajothi Cements Limited - India
- Simpson Spence & Young - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Mercuria Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Ambuja Cements Ltd - India
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- Standard Chartered Bank - UAE
- Tata Chemicals Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Straits Asia Resources Limited - Singapore
- IHS Mccloskey Coal Group - USA
- Antam Resourcindo - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Jindal Steel & Power Ltd - India
- Pendopo Energi Batubara - Indonesia
- White Energy Company Limited
- Orica Australia Pty. Ltd.
- New Zealand Coal & Carbon
- Globalindo Alam Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- Energy Development Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parry Sugars Refinery, India
- Rio Tinto Coal - Australia
- VISA Power Limited - India
- Thai Mozambique Logistica
- Pipit Mutiara Jaya. PT, Indonesia
- Meralco Power Generation, Philippines
- Indian Oil Corporation Limited
- Sinarmas Energy and Mining - Indonesia
- Larsen & Toubro Limited - India
- Samtan Co., Ltd - South Korea
- Wood Mackenzie - Singapore
- Coalindo Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Romanian Commodities Exchange
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- Mercator Lines Limited - India
- Manunggal Multi Energi - Indonesia
- Interocean Group of Companies - India
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- Kaltim Prima Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Planning Commission, India
- Kepco SPC Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Indian Energy Exchange, India
- Toyota Tsusho Corporation, Japan
- Ministry of Transport, Egypt
- Metalloyd Limited - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tamil Nadu electricity Board
- Directorate General of MIneral and Coal - Indonesia
- Petron Corporation, Philippines
- Agrawal Coal Company - India
- Dalmia Cement Bharat India
- Global Coal Blending Company Limited - Australia
- Orica Mining Services - Indonesia
- Sakthi Sugars Limited - India
- TeaM Sual Corporation - Philippines
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- Kalimantan Lumbung Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- MS Steel International - UAE
- SN Aboitiz Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- Bharathi Cement Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Edison Trading Spa - Italy
- Gujarat Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- IEA Clean Coal Centre - UK
- Global Green Power PLC Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- Sindya Power Generating Company Private Ltd
- Goldman Sachs - Singapore
- Ministry of Mines - Canada
- Central Java Power - Indonesia
- Essar Steel Hazira Ltd - India
- GVK Power & Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Bukit Asam (Persero) Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- LBH Netherlands Bv - Netherlands
- Indika Energy - Indonesia
- Semirara Mining Corp, Philippines
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Cigading International Bulk Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Eastern Coal Council - USA
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Merrill Lynch Commodities Europe
- Independent Power Producers Association of India
- Jorong Barutama Greston.PT - Indonesia
- Global Business Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Mintek Dendrill Indonesia
- Miang Besar Coal Terminal - Indonesia
- Economic Council, Georgia
- GAC Shipping (India) Pvt Ltd
- McConnell Dowell - Australia
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Borneo Indobara - Indonesia
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- CIMB Investment Bank - Malaysia
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- Marubeni Corporation - India
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- Intertek Mineral Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Baramulti Group, Indonesia
- Kobexindo Tractors - Indoneisa
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Generating Authority of Thailand
- Leighton Contractors Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- The Treasury - Australian Government
- Minerals Council of Australia
- Bukit Makmur.PT - Indonesia
- Malabar Cements Ltd - India
- Australian Coal Association
- Kohat Cement Company Ltd. - Pakistan
- PNOC Exploration Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Neyveli Lignite Corporation Ltd, - India
- Sical Logistics Limited - India
- Iligan Light & Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Eastern Energy - Thailand
- Cement Manufacturers Association - India
- Sojitz Corporation - Japan
- Maharashtra Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- GN Power Mariveles Coal Plant, Philippines
- Riau Bara Harum - Indonesia
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- International Coal Ventures Pvt Ltd - India
- Lanco Infratech Ltd - India
- Posco Energy - South Korea
- Altura Mining Limited, Indonesia
- Latin American Coal - Colombia
- PowerSource Philippines DevCo
- Thiess Contractors Indonesia
- India Bulls Power Limited - India
- Electricity Authority, New Zealand
- CNBM International Corporation - China
- Mjunction Services Limited - India
- Madhucon Powers Ltd - India
- Siam City Cement - Thailand
- Binh Thuan Hamico - Vietnam
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