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Tuesday, 04 August 15
SHIPPING CYCLES - A CHESS GAME YOU DON'T WANT TO LOSE - CLARKSONS
 Ingmar Bergman’s classic movie The Seventh Seal is about a knight who, during the Black Death, challenges Death to a chess match, in the hope that while the game continues he can put off his demise. This grim epic could be seen as a metaphor for the daunting progress through long shipping cycles, as one risk-laden move in the toxic chess game follows another.
August 2007 – The Game Starts
Today’s cycle started eight years ago in 2007. It was an epic year. Capesize earnings averaged over $110,000/day and merchant shipbuilding investment reached a record $229 billion (excluding offshore). But there was good reason to be apprehensive. In August the first signs of the financial crisis hit Europe, as interbank investors grew paranoid about the vulnerability of their counterparties to CDO exposure, bringing Eurodollar trading to a halt. Meanwhile analysts were worried that the Chinese super-boom would peak out after the Olympic Games in 2008. So although dry bulk investors were still making money and ordering ships, the solitary chess game with destiny had already started.
Mounting A Comeback
Seven years later the chess game is still going on. The financial crisis got off to a more dramatic start than anyone anticipated. In 2008 as panic swept through financial markets and trade credit became almost unobtainable, the world economy, including China, came precariously close to meltdown. But fortunately this time the politicians eased through the crisis successfully. China mounted a heroic infrastructure programme which gave bulkers a very decent boom in 2009-10. Following this the market fluctuated, but reached decent levels in late 2011 and again in late 2013.
Not Deadly Or Distressed?
As recessions go so far the game with destiny has gone quite well. Since the end of 2007 Capesize earnings have averaged $32,300/day and the market has soaked up 490m dwt of new bulkers. In 2013, 104m dwt of bulkers were ordered. So someone in the industry believed bulkers would win their chess game.
But in 2015 the game changed. Capesize earnings averaged only $6,212/day in the first half. For the first time signs of real distress are apparent. After 8 years, dry bulk sentiment finally collapsed and bulker orders fell from 16m dwt in January 2014 to 0.05m dwt in June 2015. A helpful step towards market recovery, but it leaves the shipyards with a problem. Over the last 8 years bulkers were a third of shipyard workload (see inset pie chart). Although tankers and container ships are still being ordered, they show no sign of filling the gap left by bulkers.
Dance Macabre
So there you have it. Bulkers have finally made a meaningful move towards better times by cutting investment. But the game isn’t over yet. They still need a strong world economy and continued Chinese import growth. Meanwhile a new chess game with destiny is getting started, this time in the shipyards as they try to plug the bulker gap. Maybe the game’s not over yet. So if you want a nice relaxing summer, our advice is don’t watch The Seventh Seal.
Source: Clarksons | Hellenic Shipping News
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Friday, 28 August 15
DRY BULK SHIP OWNER OPTIMISTIC ABOUT FUTURE PROSPECTS OF THE MARKET: NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Dry bulk ship owner Golden Ocean appeared optimistic on the long term prospects of the dry bulk market, mainly thanks to an expected resolution of ...
Friday, 28 August 15
COAL PRODUCTION IN THE U.S. FOR THE WEEK ENDING AUGUST 22 ROSE FOR THE THIRD STRAIGHT WEEK
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 18.5 million shor ...
Friday, 28 August 15
BANPU STRENGTHENS GROWTH PLAN
Coal Business: Asia-Pacific Synergies Increase Competitiveness for Premium Export Market.
Banpu Public Company Limited (BANPU) strengthens its ...
Thursday, 27 August 15
RATES FOR CAPES REMAINED ON A FREE FALL LAST WEEK - INTERMODAL
COALspot.com: Keeping everyone on their toes with the volatility seen in August, the Dry Bulk market undoubtedly remains a steady provider of chall ...
Wednesday, 26 August 15
MARKET INSIGHT - STRATOS TINIAKOS
It’s always interesting to comment on the market when big economies around the world are facing troubling times. Following the collapse of th ...
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- Maharashtra Electricity Regulatory Commission - India
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- Economic Council, Georgia
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- Bulk Trading Sa - Switzerland
- The University of Queensland
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- Commonwealth Bank - Australia
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- Wilmar Investment Holdings
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- Eastern Coal Council - USA
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- Ministry of Transport, Egypt
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- Romanian Commodities Exchange
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- Singapore Mercantile Exchange
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- Krishnapatnam Port Company Ltd. - India
- Attock Cement Pakistan Limited
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- India Bulls Power Limited - India
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- New Zealand Coal & Carbon
- Pipit Mutiara Jaya. PT, Indonesia
- Petron Corporation, Philippines
- Siam City Cement - Thailand
- Agrawal Coal Company - India
- Indo Tambangraya Megah - Indonesia
- Orica Mining Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Indonesian Coal Mining Association
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- The State Trading Corporation of India Ltd
- Bukit Asam (Persero) Tbk - Indonesia
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- Manunggal Multi Energi - Indonesia
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- GAC Shipping (India) Pvt Ltd
- Madhucon Powers Ltd - India
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bhatia International Limited - India
- Energy Link Ltd, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Borneo Indobara - Indonesia
- Coal and Oil Company - UAE
- Timah Investasi Mineral - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Eastern Energy - Thailand
- Global Green Power PLC Corporation, Philippines
- The Treasury - Australian Government
- Indogreen Group - Indonesia
- Jaiprakash Power Ventures ltd
- Samtan Co., Ltd - South Korea
- Bangladesh Power Developement Board
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- Cement Manufacturers Association - India
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
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- Heidelberg Cement - Germany
- Africa Commodities Group - South Africa
- Toyota Tsusho Corporation, Japan
- Lanco Infratech Ltd - India
- Miang Besar Coal Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- SMG Consultants - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- European Bulk Services B.V. - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Global Coal Blending Company Limited - Australia
- Kumho Petrochemical, South Korea
- Karbindo Abesyapradhi - Indoneisa
- Videocon Industries ltd - India
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- Directorate General of MIneral and Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Minerals Council of Australia
- Chettinad Cement Corporation Ltd - India
- San Jose City I Power Corp, Philippines
- Planning Commission, India
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