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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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Friday, 30 January 15
CAN BULKER CONVERSIONS SPOIL THE TANKER MARKET'S PARTY? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Oversupply of tonnage has always been in the back of the head of ship owners when it comes to taking advantage of favorable market conditions. As s ...
Thursday, 29 January 15
CHINA ENERGY DEMAND MUST BE REVIEWED DUE TO FUNDAMENTAL ECONOMIC CHANGES - WOOD MACKENZIE
New patterns emerging as energy demand growth decoupled significantly from GDP growth for the first time in 2014
Wood Mackenzie says 2014 was ...
Thursday, 29 January 15
CAPE MARKET IS STILL STRUGGLING WITH LOW DEMAND AND LOW COMMODITY PRICES
Handy
Supramax rates are heading south with slipping rates all across the block. USG activity is slow with mid-week levels in the mid 8.000s, Fea ...
Wednesday, 28 January 15
MARKET INSIGHT - STELIOS KOLLINTZAS
With most traders having returned to action from year end festivities, we have already seen signs of activity in the specialized product markets. L ...
Wednesday, 28 January 15
CAPES CONTINUED THEIR UPWARD MOVEMENT LAST WEEK - INTERMODAL
COALspot.com: The Dry Bulk market displayed a mirror performance of that of the week prior, with the Capesize market correcting further upwards and ...
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- Singapore Mercantile Exchange
- Iligan Light & Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Sarangani Energy Corporation, Philippines
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- Dalmia Cement Bharat India
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- Cigading International Bulk Terminal - Indonesia
- Madhucon Powers Ltd - India
- International Coal Ventures Pvt Ltd - India
- Star Paper Mills Limited - India
- GAC Shipping (India) Pvt Ltd
- Planning Commission, India
- Rio Tinto Coal - Australia
- Minerals Council of Australia
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- VISA Power Limited - India
- Wood Mackenzie - Singapore
- Latin American Coal - Colombia
- Indonesian Coal Mining Association
- Marubeni Corporation - India
- Bhushan Steel Limited - India
- Uttam Galva Steels Limited - India
- Carbofer General Trading SA - India
- Parry Sugars Refinery, India
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- The University of Queensland
- Parliament of New Zealand
- Vedanta Resources Plc - India
- Australian Commodity Traders Exchange
- Timah Investasi Mineral - Indoneisa
- Bharathi Cement Corporation - India
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Miang Besar Coal Terminal - Indonesia
- India Bulls Power Limited - India
- PTC India Limited - India
- Baramulti Group, Indonesia
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- Thai Mozambique Logistica
- IEA Clean Coal Centre - UK
- Energy Development Corp, Philippines
- Antam Resourcindo - Indonesia
- PowerSource Philippines DevCo
- Toyota Tsusho Corporation, Japan
- European Bulk Services B.V. - Netherlands
- Xindia Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coal and Oil Company - UAE
- McConnell Dowell - Australia
- Renaissance Capital - South Africa
- New Zealand Coal & Carbon
- AsiaOL BioFuels Corp., Philippines
- Bangladesh Power Developement Board
- Power Finance Corporation Ltd., India
- Anglo American - United Kingdom
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Africa Commodities Group - South Africa
- White Energy Company Limited
- Electricity Generating Authority of Thailand
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- Bukit Baiduri Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Port Waratah Coal Services - Australia
- Pendopo Energi Batubara - Indonesia
- Coalindo Energy - Indonesia
- Mintek Dendrill Indonesia
- GMR Energy Limited - India
- Independent Power Producers Association of India
- Vizag Seaport Private Limited - India
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- MS Steel International - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- Sree Jayajothi Cements Limited - India
- Central Java Power - Indonesia
- Aditya Birla Group - India
- Chettinad Cement Corporation Ltd - India
- London Commodity Brokers - England
- Kideco Jaya Agung - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Trasteel International SA, Italy
- Central Electricity Authority - India
- Semirara Mining and Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Petron Corporation, Philippines
- Agrawal Coal Company - India
- Australian Coal Association
- Kartika Selabumi Mining - Indonesia
- Gujarat Sidhee Cement - India
- Romanian Commodities Exchange
- Globalindo Alam Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- OPG Power Generation Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Gujarat Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Indian Oil Corporation Limited
- Coastal Gujarat Power Limited - India
- Oldendorff Carriers - Singapore
- Larsen & Toubro Limited - India
- Bayan Resources Tbk. - Indonesia
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Ministry of Transport, Egypt
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Borneo Indobara - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement PLC, Thailand
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- Heidelberg Cement - Germany
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- Mjunction Services Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Deloitte Consulting - India
- Videocon Industries ltd - India
- Orica Mining Services - Indonesia
- The Treasury - Australian Government
- Indika Energy - Indonesia
- Attock Cement Pakistan Limited
- South Luzon Thermal Energy Corporation
- Metalloyd Limited - United Kingdom
- GVK Power & Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Ambuja Cements Ltd - India
- Ministry of Mines - Canada
- PetroVietnam Power Coal Import and Supply Company
- Holcim Trading Pte Ltd - Singapore
- TeaM Sual Corporation - Philippines
- Electricity Authority, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Binh Thuan Hamico - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Bhoruka Overseas - Indonesia
- CNBM International Corporation - China
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- SMG Consultants - Indonesia
- Tamil Nadu electricity Board
- Interocean Group of Companies - India
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- Maheswari Brothers Coal Limited - India
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Barasentosa Lestari - Indonesia
- Georgia Ports Authority, United States
- Edison Trading Spa - Italy
- Global Green Power PLC Corporation, Philippines
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Makarim & Taira - Indonesia
- CIMB Investment Bank - Malaysia
- Medco Energi Mining Internasional
- Banpu Public Company Limited - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Posco Energy - South Korea
- Jaiprakash Power Ventures ltd
- Samtan Co., Ltd - South Korea
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
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