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Saturday, 05 January 13
THE SHIPPING MARKET IN 2012 AND LOOKING FORWARD - BIMCO
 Global Economy: Things will go up from here
The global economy continues to grow, albeit at a slower pace than previous years. The slower economic development has been difficult for ship owners who, with a severe overhang of tonnage, have struggled with a depressed freight market since the start of the financial crisis back in 2008. The good news is that both GDP and world trade currently are expected to go up at 3.6% and 4.5% respectively in 2013, which may bring some relief to the shipping industry. The distribution of the global economic recovery will be a decisive factor in how the recovery is going to impact the different shipping segments.
During the second half of 2012, strong political will from the major economies introducing fiscal and monetary policies underpinned the upturn in economic development. However, many of the sustainable growth indicators remain weak, clearly reflecting the fragility in the financial markets. In China, the HSBC/ Markit Manufacturing PMI has been South of the threshold level of 50 throughout the year, indicating a slowdown. However, the November flash report gave rise to some optimism, probably spurred on by yet another economic stimulus. Meanwhile, the Eurozone continues to bear signs of a stand-still, as demand and consumer confidence remain very weak, but there are more positive signals coming from the US that expect a growth beyond 2% also next year.
BIMCO believes that 2013 will be the turning point on the macroeconomic scene. Our baseline scenario is that global GDP will grow stronger in 2013. This is founded in generally easier access to capital led by central banks, positive advocacy vis-à-vis policymakers in e.g. US, EU, Japan and China. This development is welcome and may well be the recipe to more effectively deal with the present challenges. Consumer confidence hinges on the employment situation and will be the catalyst supporting this development, creating demand for goods, housing and energy. In other words, the macroeconomic development should be a positive factor in the shipping markets in 2013, with a key risk being the fragile financial markets, fiscal consolidation in the advanced economies as well as a slowdown in some major emerging economies.
Supply: Overhang of tonnage is a major concern
The collapse of the financial markets in 2008 has taken its toll on ship owners who, in their predictions of a continued high growth in world trade back then, had ordered newbuildings at an unprecedented level. The effects of this overly-optimistic market outlook continue to haunt ship owners, who are trying their best to manage the overhang of tonnage by slow-steaming, idling and recycling. It will be some time before the fundamental supply and demand ratio is balanced. The fleet expansion during 2012 has not improved the situation, as the dry bulk fleet grew by 70 million DWT and the containership fleet by 1.1 million TEU. Fleet expansion in the tanker segments was more moderate, as the products fleet increased by a bit more than 2% and the crude oil fleet by 5%. Looking forward, BIMCO expects that the fleet will grow at a lower rate than the 2012 level. The containership fleet is expected to grow by 7%, the dry bulk fleet by 6%, the crude oil tanker fleet by 4.5% and finally, the product tanker segment is expected to have a judicious growth of 2% for 2013.
The buzzword of the newbuilding market is the so-called ECO-ships, offering potentially large fuel savings compared with the standard ship in the market. The jury is still out regarding the magnitude of the savings, but if the ships are as energy efficient as advertised by the yards, ECO-ships could be a sound business case for ship owners. The deciding factor will be fuel costs, which are not expected to decline. Many of the new ships, especially within the product tanker segment that have been contracted for since mid-2011, have been ordered with an ECO-design.
It is, however, important to emphasise that any major new influx of ships will only create further problems for the industry, considering the already heavy overhang of tonnage. The real challenge is how to optimise the energy efficiency of the current fleet, which age-wise is the youngest ever.
Dry Bulk: Demand is good but is it enough to save the day?
Coming into 2012, freight rates declined significantly and earnings dropped. The Capesize vessels were hurt the most, with freight rates falling below all other segments despite offering much higher cargo capacity. The dip is obviously a direct consequence of the massive overhang of tonnage, coupled with weaker demand.
Towards the end of 2012, demand for iron ore in particular picked up again, as China introduced another large stimulus package with focus on infrastructural developments. Even though this positively impacted the rates, the unsustainable low freight rate levels during most of 2012 proved only sufficient to cover operating expenses, but hardly any capital cost. Going forward, the economic development in China and India will spur demand for power generation, which will lead to increased imports of thermal coal next year. China is likely to import more iron ore in 2013, considering the infrastructure plan coupled with the falling quality of domestically mined iron ore which, all things being equal, will positively affect the demand for tonnage. The supply side is, however, likely to curb the freight rate upturn due to the significant oversupply in the Capesize and Panamax segments.
Tanker: All eyes on the US!
The world’s largest oil consumer, the US, might put downward pressure on seaborne demand in the coming years as the domestic production of oil and natural gas is expected to increase immensely, according to the International Energy Agency. Looking at imports, the extraction of oil sands in Canada means that more than a quarter of US crude oil imports come from their northern neighbour. This trend is unfortunate for the tanker shipping industry, as the large majority of these imports are transported via pipelines rather than tankers. Meanwhile, the shale gas adventures may prompt a shift in the energy mix, not only in US but also globally, towards more natural gas. The threats come on top of a weak crude tanker market, where freight rates this summer reached the lowest point since the miserable days of 2009.
In the oil product tankers sector, freight rates have been depressed throughout most of the year, with the summer months being the low point, but rate hikes during the Autumn and early Winter indicate that a slowly improving market may be in the making, potentially already next year. Things are stirring below the surface, as trade patterns are changing, with traditional importers becoming exporters, notably the US, and also in the spec-trade volumes are going higher.
Looking forward, the prospects of a big-scale North American oil and gas production may favour niche segments such as the LNG tankers outright. LNG tankers make substantial profits at the moment from the arbitrage opportunities arising from the difference in prices of natural gas across the globe. But it will take its toll on the crude and product tanker segments, unless the US significantly increases exports of these products.
Container: Is cascading the solution?
The first half of 2012 developed in the right direction for the liner trades, with rates from Far East to US West Coast rising to USD 2,600 per FEU in June, up from USD 1,800 per FEU in January. Comparably, rates on Far East to Northern Europe climbed from USD 750 per TEU in January to a peak of 1,900 per TEU in June. While the demand side was able to hold rates up in the trans-Pacific trade, rates to Northern Europe fell to touch USD 1,000 per TEU in November, as demand succumbed in the shadow of the Eurozone crisis.
Going forward, the liner segment is about to settle for lower growth rates than those that were once the norm. Globalisation is expected to continue as the main driver, but stronger intra-Asian demand rather than a speedy return to high demand from Europa and US is on the cards for the coming years.
We have seen a steady main trading lane cascading where the Far East – Europe container trade is now largely conducted by Ultra Large Container Vessels (ULCV), a fleet segment that has increased by a staggering 43% so far in 2012, with more to come in 2013. Some segments are being squeezed by the general economy of scale movement in this sector, notably the sub-3,000 TEUs that have accounted for 75% of the overall containership demolition, testifying a cascading to larger ships.
While voyage and operating expenses may just be covered at current rates, they are unfortunately insufficient to fully cover the cost of capital. In an effort to establish reasonable returns on investment, liner companies resort to deactivating routes, laying-up and demolishing tonnage extensively. Going forward, the route to and perspective of recovery will greatly depend on the container trade’s ability to balance the supply side to demand.
Source: Bimco
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Monday, 24 December 12
CONSTITUTIONAL COURT DECISION MAY FURTHER DELAY THE ISSUANCE OF NEW MINING BUSINESS LICENCES - TJEN SHE SIUNG
COALspot.com - In November 2012 the Constitutional Court of Indonesia issued a decision on amendments to certain provisions under the Mining Law No. ...
Monday, 24 December 12
BUNKER PRICES TO CONTINUE RISING, ALBEIT IN A SLOWER MODE, DURING THE NEXT FEW YEARS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEW
In a recent report, US-based consulting firm Mcquilling Services attempted to forecast the course of bunker prices during the next few years, as thi ...
Sunday, 23 December 12
Q4' 2013 CFR SOUTH CHINA COAL SWAP, US$ 3.40 HIGHER COMPARED TO Q1' 2013 PRICE
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average Q1’ 2013 delivery gained 1.94 percent M-M and WoW by 1.57percent but lost 0.35 ...
Saturday, 22 December 12
SECOND HAND VESSELS ENJOY HIGH DEMAND AS PRICES ARE ATTRACTIVE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite the fact that the year is closing to its end, activity in the second hand vessel market has been more than high. Ship owners are looking to ...
Saturday, 22 December 12
FALL IN CAPE AND PANAMAX RATES DRAG BDI INDEX - VISTAAR
COALspot.com - The freight market further softened this week closing at 700 points (down by 10.71 pct). The cape index continued to fall and w ...
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- Wood Mackenzie - Singapore
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
- Aditya Birla Group - India
- Coal and Oil Company - UAE
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Barasentosa Lestari - Indonesia
- Petron Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Larsen & Toubro Limited - India
- Goldman Sachs - Singapore
- Economic Council, Georgia
- Posco Energy - South Korea
- Carbofer General Trading SA - India
- Renaissance Capital - South Africa
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Bukit Baiduri Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Bukit Makmur.PT - Indonesia
- Edison Trading Spa - Italy
- Energy Link Ltd, New Zealand
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Uttam Galva Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- South Luzon Thermal Energy Corporation
- Eastern Coal Council - USA
- Thai Mozambique Logistica
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- Price Waterhouse Coopers - Russia
- Manunggal Multi Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Jindal Steel & Power Ltd - India
- ASAPP Information Group - India
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Straits Asia Resources Limited - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Indian Oil Corporation Limited
- Parliament of New Zealand
- Gujarat Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Standard Chartered Bank - UAE
- Bangladesh Power Developement Board
- Mintek Dendrill Indonesia
- Central Electricity Authority - India
- Sinarmas Energy and Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Krishnapatnam Port Company Ltd. - India
- Xindia Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- Australian Commodity Traders Exchange
- SMC Global Power, Philippines
- Bhoruka Overseas - Indonesia
- Bulk Trading Sa - Switzerland
- Ambuja Cements Ltd - India
- Chamber of Mines of South Africa
- PNOC Exploration Corporation - Philippines
- Sical Logistics Limited - India
- Indonesian Coal Mining Association
- Attock Cement Pakistan Limited
- Sree Jayajothi Cements Limited - India
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- Grasim Industreis Ltd - India
- Meenaskhi Energy Private Limited - India
- GVK Power & Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Merrill Lynch Commodities Europe
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- PTC India Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GMR Energy Limited - India
- London Commodity Brokers - England
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- Bhatia International Limited - India
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- Medco Energi Mining Internasional
- Electricity Generating Authority of Thailand
- Mercator Lines Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- Meralco Power Generation, Philippines
- IEA Clean Coal Centre - UK
- Kumho Petrochemical, South Korea
- Banpu Public Company Limited - Thailand
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Directorate Of Revenue Intelligence - India
- Eastern Energy - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tamil Nadu electricity Board
- Leighton Contractors Pty Ltd - Australia
- Marubeni Corporation - India
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Planning Commission, India
- Ceylon Electricity Board - Sri Lanka
- Iligan Light & Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- Ministry of Finance - Indonesia
- Minerals Council of Australia
- Heidelberg Cement - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- MS Steel International - UAE
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Coalindo Energy - Indonesia
- Bharathi Cement Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Mjunction Services Limited - India
- Parry Sugars Refinery, India
- ICICI Bank Limited - India
- Altura Mining Limited, Indonesia
- Orica Mining Services - Indonesia
- Aboitiz Power Corporation - Philippines
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Binh Thuan Hamico - Vietnam
- SMG Consultants - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bayan Resources Tbk. - Indonesia
- LBH Netherlands Bv - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Indian Energy Exchange, India
- Bukit Asam (Persero) Tbk - Indonesia
- Cement Manufacturers Association - India
- White Energy Company Limited
- Kideco Jaya Agung - Indonesia
- Timah Investasi Mineral - Indoneisa
- Rio Tinto Coal - Australia
- India Bulls Power Limited - India
- Energy Development Corp, Philippines
- The State Trading Corporation of India Ltd
- Semirara Mining and Power Corporation, Philippines
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- Georgia Ports Authority, United States
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Commonwealth Bank - Australia
- Ministry of Mines - Canada
- Australian Coal Association
- Central Java Power - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Cigading International Bulk Terminal - Indonesia
- Lanco Infratech Ltd - India
- Vedanta Resources Plc - India
- Tata Chemicals Ltd - India
- Videocon Industries ltd - India
- SN Aboitiz Power Inc, Philippines
- Ministry of Transport, Egypt
- Kobexindo Tractors - Indoneisa
- Trasteel International SA, Italy
- Anglo American - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- Interocean Group of Companies - India
- New Zealand Coal & Carbon
- Billiton Holdings Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Mercuria Energy - Indonesia
- Power Finance Corporation Ltd., India
- Madhucon Powers Ltd - India
- Gujarat Sidhee Cement - India
- Vizag Seaport Private Limited - India
- Singapore Mercantile Exchange
- Therma Luzon, Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Electricity Authority, New Zealand
- European Bulk Services B.V. - Netherlands
- Riau Bara Harum - Indonesia
- Dalmia Cement Bharat India
- Orica Australia Pty. Ltd.
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