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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, 27 January 15
Q1 FOB INDONESIA COAL SWAP CLOSED AT $ 47.87 FOR WEEK ENDING JAN. 23
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 gain week over week and declined month on month.
The Q1 swap has decline US$ 0.9 ...
Tuesday, 27 January 15
Q2 FOB NEWCASTLE COAL SWAP UP 4.5% W-O-W
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery declined US$ 0.28 per MT (-0.54%) month over month and increased US$ 1.23 ( ...
Monday, 26 January 15
OVERSUPPLY, AMPLE STOCKPILES, AND LACKLUSTER UNDERLYING STEEL DEMAND KEPT COKING COAL PRICES LOW IN 2014
COALspot.com: Coking coal prices (FOB & CFR) fell 15% and 18% respectively during the year, amidst persistent oversupply, ample inventory and s ...
Monday, 26 January 15
FOB RICHARDS BAY Q2 COAL SWAP CLOSED LOWER THAN Q1 CLOSING
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 fell ...
Monday, 26 January 15
API 8 CFR SOUTH CHINA COAL SWAP CONTINUE TO SLIDE M-O-M; ROSE W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined US$ 0.79 (-1.33%) per MT month over month and gained US$ 2.10&nb ...
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- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Lanco Infratech Ltd - India
- Australian Commodity Traders Exchange
- Electricity Authority, New Zealand
- Deloitte Consulting - India
- Bhatia International Limited - India
- Parry Sugars Refinery, India
- New Zealand Coal & Carbon
- Heidelberg Cement - Germany
- Makarim & Taira - Indonesia
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- Semirara Mining Corp, Philippines
- VISA Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Global Coal Blending Company Limited - Australia
- Kalimantan Lumbung Energi - Indonesia
- Electricity Generating Authority of Thailand
- Intertek Mineral Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Agrawal Coal Company - India
- CNBM International Corporation - China
- Uttam Galva Steels Limited - India
- Star Paper Mills Limited - India
- Larsen & Toubro Limited - India
- Pendopo Energi Batubara - Indonesia
- Sree Jayajothi Cements Limited - India
- Karbindo Abesyapradhi - Indoneisa
- CIMB Investment Bank - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- Carbofer General Trading SA - India
- TeaM Sual Corporation - Philippines
- Indian Oil Corporation Limited
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- Xindia Steels Limited - India
- Global Business Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- PTC India Limited - India
- Thiess Contractors Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Energy Exchange, India
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- Bhushan Steel Limited - India
- Eastern Energy - Thailand
- Borneo Indobara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Port Waratah Coal Services - Australia
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- IEA Clean Coal Centre - UK
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- Central Electricity Authority - India
- Minerals Council of Australia
- Mjunction Services Limited - India
- AsiaOL BioFuels Corp., Philippines
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- GMR Energy Limited - India
- Chamber of Mines of South Africa
- Romanian Commodities Exchange
- Madhucon Powers Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- Bhoruka Overseas - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- Global Green Power PLC Corporation, Philippines
- Coalindo Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Indogreen Group - Indonesia
- Siam City Cement PLC, Thailand
- Vizag Seaport Private Limited - India
- Aboitiz Power Corporation - Philippines
- Wood Mackenzie - Singapore
- Globalindo Alam Lestari - Indonesia
- Parliament of New Zealand
- London Commodity Brokers - England
- Mercator Lines Limited - India
- Iligan Light & Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Bayan Resources Tbk. - Indonesia
- SMC Global Power, Philippines
- Trasteel International SA, Italy
- Barasentosa Lestari - Indonesia
- White Energy Company Limited
- Petron Corporation, Philippines
- Latin American Coal - Colombia
- Binh Thuan Hamico - Vietnam
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- Planning Commission, India
- Indika Energy - Indonesia
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Standard Chartered Bank - UAE
- Bukit Baiduri Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Posco Energy - South Korea
- Tamil Nadu electricity Board
- Altura Mining Limited, Indonesia
- Oldendorff Carriers - Singapore
- GAC Shipping (India) Pvt Ltd
- Cement Manufacturers Association - India
- Energy Development Corp, Philippines
- Essar Steel Hazira Ltd - India
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Orica Mining Services - Indonesia
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- Kumho Petrochemical, South Korea
- PowerSource Philippines DevCo
- Jaiprakash Power Ventures ltd
- Formosa Plastics Group - Taiwan
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- India Bulls Power Limited - India
- Grasim Industreis Ltd - India
- OPG Power Generation Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Malabar Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Wilmar Investment Holdings
- Bahari Cakrawala Sebuku - Indonesia
- Tata Chemicals Ltd - India
- ICICI Bank Limited - India
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Directorate Of Revenue Intelligence - India
- Ambuja Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Economic Council, Georgia
- Straits Asia Resources Limited - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Rashtriya Ispat Nigam Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Dalmia Cement Bharat India
- Jindal Steel & Power Ltd - India
- Maheswari Brothers Coal Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- Riau Bara Harum - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Mines - Canada
- Vedanta Resources Plc - India
- Price Waterhouse Coopers - Russia
- Australian Coal Association
- Cigading International Bulk Terminal - Indonesia
- Bharathi Cement Corporation - India
- Rio Tinto Coal - Australia
- Indo Tambangraya Megah - Indonesia
- Indonesian Coal Mining Association
- European Bulk Services B.V. - Netherlands
- Sakthi Sugars Limited - India
- Edison Trading Spa - Italy
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kaltim Prima Coal - Indonesia
- Videocon Industries ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Eastern Coal Council - USA
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- Miang Besar Coal Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Anglo American - United Kingdom
- Siam City Cement - Thailand
- Bangladesh Power Developement Board
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