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Monday, 05 January 15
THE SHIPPING MARKET IN 2014 AND LOOKING FORWARD - BIMCO
 2014 started with plenty of optimism for a considerably better global economy and an improved shipping market. Things turned out somewhat differently. Adverse weather conditions in the US during winter were the dominant factor, creating a difficult first half of the year for the global economy. The developing and emerging markets continued on a downward trend, while a sunnier outlook from the US and Europe had the effect of moving the already more advanced economies forward.
The quantitative easing programme of the US Central Bank has now ended. This is a landmark in terms of recovery. Following a quadrupling of the US monetary base, unemployment has come down, the stock market has gone up and economic growth has become more robust. The UK has followed the same path as the US, with similar results. This is outstanding in the otherwise sluggish European economic development.
In Japan, “Abenomics” is facing headwinds caused by a hike in sales taxes and a subsequent return to recession. Japan’s economy has been stagnating for decades, and it is unlikely to move much further forward from this in 2015.
The slowing of the Chinese economy is adding uncertainty to the level of shipping demand generated in the Far East. Its soft landing seems to incur turbulence, with some indicators suggesting the official GDP data may not give us the full story.
Growth in emerging markets and developing economies is set for a comeback in 2015, with GDP-growth improving from 4.4% in 2014 to 5.0% in 2015. The advanced economies are likely to stay on the recovery track, and improve their GDP-growth to 2.3% in 2015 (1.8% in 2014). The common challenges remain poor inflation expectations, a lack of structural reforms and lack of job creation. There is clearly room for more political initiatives in 2015 to support the global economy.
Supply: A stalling orderbook means reality has hit home
The total orderbook remained unchanged during 2014. This signals that the industry is now realising that more new orders may not be the right thing to do after all.
The fundamental oversupply of capacity in all of the major shipping segments has not changed much over the past year. A higher level of demand has only just matched the net supply of new tonnage coming on stream.
Crude oil tankers are the only exception to the general status quo in the balance of freight markets. A multi-year low inflow of new crude oil tankers has stimulated earnings growth of some 20% compared to 2013. Meanwhile, the growing supply pressure in product tankers neutralised most of the growing demand side, with earnings coming in just a little shy of 2013.
Container ships keep getting bigger, breaking previous size records for both individual ships and the average size across the fleet. The CSCL Globe, with a capacity of 19,000 TEU, was launched in November, and the average TEU capacity of a 2014-newbuild increased to 7,400 TEU, up from 6,600 TEU in 2013. Next year the scheduled average is 8,000 TEU.
Looking forward to 2015, BIMCO expects the dry bulk fleet to have found a new “normal” level of supply side growth, expanding by 5.1% (5.5% in 2014). Regrettably, the level is still too high to reduce the glut of ships in the market. For tankers, BIMCO expects the dirty segment to grow by 1.7% (1.3% in 2014). Three years of low supply growth has led to more positive short-term prospects for crude oil tankers. In the clean segment, the estimated supply growth for 2015 is 4.6% (4.3% in 2014). Supply growth in the container ship segment is expected to drop to 5.8% in 2015 (6.2% in 2014).
Dry Bulk: New challenges await as demand slows down
BIMCO expects dry bulk demand to slow in 2015 to a rate of 4-5%. Iron ore demand will again be the centre of attention. In recent years, demand growth has been biased heavily towards the Capesize segment. In 2014, 70% of the total volume growth came from increased iron ore demand driven by China. BIMCO expects this trend to continue, with Capesizes outperforming the smaller sizes relatively.
The strong iron ore demand in 2014 was somewhat neutralised by weaker coal demand from China. Meanwhile, the Indonesian ban on exports of unprocessed bauxite and nickel ore resulted in a weak Supramax market in the Far East.
Towards the end of the year, the late arrival of strong exports of iron ore out of Brazil proved to be insufficient to deliver on the promise of 2013, when rates for all segments went up. While earnings had hit the floor in 2012, BIMCO expected 2014 to build on the optimism of 2013 and continue on the road to recovery. That did not materialise.
Tanker: what is the “new normal” demand level?
The crude oil tanker market started 2014 on a very positive note, with a five-year-high for earnings in the first quarter. The market’s strength showed clearly in early autumn and in the current winter market. The export of crude oil from West Africa has shifted from West to East as the US has reduced its imports to almost zero. This has given the demand side momentum, as West Africa now export more to the Far East, creating many more ton-miles.
For product tankers, the final quarter of 2014 contrasts greatly with the dull and flat market we have seen for most of the year. Despite US oil product export growth slowing down, it remains a positive story overall. Demand growth just managed to match supply growth, as the positive events arrived late in the year for the shipping market as well as in global economics.
Falling oil prices stirred some positive unrest in the tanker market, with rising tonnage demand in their wake. In spite of the price drop arising from weak oil demand and oversupply in the market, the current low and volatile commodity price is good for trading and shipping.
With a dramatic fall in bunker prices, it is vital for a continued industry recovery that all shipping segments resist higher speeds. Failure to do so may compromise improvement of the fundamental balance, which is essential to bring prosperity back.
Container: Will strong demand and slow steaming remain?
Strong demand growth on the large-volume trades from Far East to US and Europe has brought lower volatility in freight rates on key trades while re-activating most of the previously idle ships.
However, during peak season, the steep drop in freight rates on the Far East to Europe trade lane made it clear that the utmost care is constantly required for the supply side, while the introduction of ever-larger ships continues.
Improved industry earnings currently rest on one central requirement: slow steaming and defence of individual market share. This highly competitive market only returns a positive margin if the cost base is extremely low.
BIMCO expects containership supply to continue to grow at its “new normal” level of around 6%, making the demand side a focal point. European demand has been stronger than private consumption figures indicated, and we may well see further improvement for US demand. The US East Coast could build further on a remarkable year as the ports prepare for the imminent arrival of ultra-large container ships. Enlargement projects in the Panama Canal and Suez Canal will further influence the deployment of ships.
Source: BIMCO | Hellenic Shipping
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Tuesday, 30 December 14
U.S WEEKLY COAL PRODUCTION ALMOST FLAT AT -0.2%
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.8 million short tons (mmst) of coal ...
Monday, 29 December 14
CHINESE COAL IMPORTS: REGULATORY RISKS? - CLARKSONS
In recent years, Chinese seaborne coal imports have surged, registering average growth of 67% p.a. between 2009 and 2013 to total 265mt. However, t ...
Monday, 29 December 14
BULK MARKET ENDS YEAR ON SOUR NOTE, SHIPBROKER SEES 'BUMPY ROAD AHEAD' - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
2014 was supposed to be the year that the dry bulk market would stage a comeback and a sustainable one for that matter. However, while for the most ...
Monday, 29 December 14
Q1'15 CFR SOUTH CHINA COAL SWAP CLOSED AT $59.42
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased by US$ 3.51 (-5.58%) month over month and US$ 0.08 (-0.13%) ...
Monday, 29 December 14
SGX'S FOB NEWCASTLE COAL SWAPS IMPROVED W-O-W, LOST M-O-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.44 per MT (-2.73%) month over month and gained US$ 0.36 (+0.71%) ...
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- Ceylon Electricity Board - Sri Lanka
- Electricity Authority, New Zealand
- Maheswari Brothers Coal Limited - India
- Vedanta Resources Plc - India
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Interocean Group of Companies - India
- Meralco Power Generation, Philippines
- GVK Power & Infra Limited - India
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- Mercuria Energy - Indonesia
- SMC Global Power, Philippines
- Straits Asia Resources Limited - Singapore
- Standard Chartered Bank - UAE
- Kartika Selabumi Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Gujarat Sidhee Cement - India
- Coastal Gujarat Power Limited - India
- Posco Energy - South Korea
- Chettinad Cement Corporation Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Miang Besar Coal Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Therma Luzon, Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Larsen & Toubro Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- Ministry of Mines - Canada
- SMG Consultants - Indonesia
- Samtan Co., Ltd - South Korea
- Attock Cement Pakistan Limited
- San Jose City I Power Corp, Philippines
- Salva Resources Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Ministry of Finance - Indonesia
- Central Electricity Authority - India
- Baramulti Group, Indonesia
- Malabar Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Chamber of Mines of South Africa
- Indika Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PTC India Limited - India
- Thiess Contractors Indonesia
- Leighton Contractors Pty Ltd - Australia
- Romanian Commodities Exchange
- Bayan Resources Tbk. - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
- Kalimantan Lumbung Energi - Indonesia
- Madhucon Powers Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Medco Energi Mining Internasional
- Independent Power Producers Association of India
- Commonwealth Bank - Australia
- Videocon Industries ltd - India
- Goldman Sachs - Singapore
- Edison Trading Spa - Italy
- Africa Commodities Group - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Georgia Ports Authority, United States
- Bhushan Steel Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Intertek Mineral Services - Indonesia
- McConnell Dowell - Australia
- Ind-Barath Power Infra Limited - India
- The University of Queensland
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- Simpson Spence & Young - Indonesia
- Singapore Mercantile Exchange
- Sakthi Sugars Limited - India
- Kepco SPC Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Indogreen Group - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Trasteel International SA, Italy
- London Commodity Brokers - England
- Vizag Seaport Private Limited - India
- Cement Manufacturers Association - India
- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- Global Coal Blending Company Limited - Australia
- Pendopo Energi Batubara - Indonesia
- Barasentosa Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- MS Steel International - UAE
- Directorate General of MIneral and Coal - Indonesia
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- Parry Sugars Refinery, India
- Toyota Tsusho Corporation, Japan
- Merrill Lynch Commodities Europe
- India Bulls Power Limited - India
- Orica Mining Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Orica Australia Pty. Ltd.
- Bhatia International Limited - India
- Sarangani Energy Corporation, Philippines
- Port Waratah Coal Services - Australia
- New Zealand Coal & Carbon
- Vijayanagar Sugar Pvt Ltd - India
- Carbofer General Trading SA - India
- Central Java Power - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ambuja Cements Ltd - India
- Bangladesh Power Developement Board
- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- Bhoruka Overseas - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Price Waterhouse Coopers - Russia
- Aditya Birla Group - India
- International Coal Ventures Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- TNB Fuel Sdn Bhd - Malaysia
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- Semirara Mining Corp, Philippines
- South Luzon Thermal Energy Corporation
- Lanco Infratech Ltd - India
- Anglo American - United Kingdom
- Marubeni Corporation - India
- Jaiprakash Power Ventures ltd
- Minerals Council of Australia
- IEA Clean Coal Centre - UK
- Holcim Trading Pte Ltd - Singapore
- Oldendorff Carriers - Singapore
- Coalindo Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Petron Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Indian Energy Exchange, India
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- Sinarmas Energy and Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Formosa Plastics Group - Taiwan
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Australian Commodity Traders Exchange
- Borneo Indobara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Parliament of New Zealand
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- Siam City Cement - Thailand
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- Billiton Holdings Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Planning Commission, India
- Coal and Oil Company - UAE
- White Energy Company Limited
- Mjunction Services Limited - India
- Essar Steel Hazira Ltd - India
- Sindya Power Generating Company Private Ltd
- GN Power Mariveles Coal Plant, Philippines
- Savvy Resources Ltd - HongKong
- OPG Power Generation Pvt Ltd - India
- Thai Mozambique Logistica
- Bukit Baiduri Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Energy Development Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Eastern Coal Council - USA
- Metalloyd Limited - United Kingdom
- Sree Jayajothi Cements Limited - India
- Tamil Nadu electricity Board
- Sojitz Corporation - Japan
- Electricity Generating Authority of Thailand
- Global Green Power PLC Corporation, Philippines
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- SN Aboitiz Power Inc, Philippines
- CNBM International Corporation - China
- Latin American Coal - Colombia
- Siam City Cement PLC, Thailand
- Australian Coal Association
- Mercator Lines Limited - India
- Globalindo Alam Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- Eastern Energy - Thailand
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