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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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Monday, 23 March 15
CFR SOUTH CHINA COAL SWAP: Q3 DELIVERY HAS FALLEN 7.93% MONTH-ON-MONTH
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 4.09 (-7.06%) per MT month over month and US$ 2.00 (-3 ...
Monday, 23 March 15
SEABORNE WORLD COAL TRADE: GROWTH +5% - GERMAN COAL IMPORTER ASSOCIATION
Hard Coal Market 2014: Despite The Energy Turnaround, Hard Coal Imports To Germany Rise By More Than 6%, Although Hard Coal-Fired Power Generation ...
Sunday, 22 March 15
DRY BULK RATES CONTINUED TO RISE THIS WEEK
COALspot.com: The freight market was steady this week as all the segments increased after many weeks of weak trend.
The Baltic Dry Index (BDI) ...
Friday, 20 March 15
HARD COAL MARKET 2014: DESPITE THE ENERGY TURNAROUND, HARD COAL IMPORTS TO GERMANY RISE BY MORE THAN 6% (PART 1)
Hard Coal Market 2014: Despite The Energy Turnaround, Hard Coal Imports To Germany Rise By More Than 6%, Although Hard Coal-Fired Power Generation ...
Friday, 20 March 15
U.S. WEEKLY COAL PRODUCTION SHOWS 5.9% INCREASE WEEK OVER WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.5 million short tons (mmst) of coal ...
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- Bahari Cakrawala Sebuku - Indonesia
- Meralco Power Generation, Philippines
- Bulk Trading Sa - Switzerland
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Uttam Galva Steels Limited - India
- Orica Australia Pty. Ltd.
- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Maharashtra Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Dalmia Cement Bharat India
- CIMB Investment Bank - Malaysia
- Sojitz Corporation - Japan
- Global Business Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Bukit Makmur.PT - Indonesia
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- Karaikal Port Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Global Green Power PLC Corporation, Philippines
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- Planning Commission, India
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- Indian Energy Exchange, India
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Global Coal Blending Company Limited - Australia
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Ministry of Finance - Indonesia
- Anglo American - United Kingdom
- Indika Energy - Indonesia
- Borneo Indobara - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Siam City Cement PLC, Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- Gujarat Sidhee Cement - India
- South Luzon Thermal Energy Corporation
- Trasteel International SA, Italy
- Sree Jayajothi Cements Limited - India
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- Economic Council, Georgia
- Straits Asia Resources Limited - Singapore
- Electricity Authority, New Zealand
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Transport, Egypt
- Port Waratah Coal Services - Australia
- Videocon Industries ltd - India
- Kapuas Tunggal Persada - Indonesia
- GVK Power & Infra Limited - India
- IEA Clean Coal Centre - UK
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- SMG Consultants - Indonesia
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Marubeni Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Mercuria Energy - Indonesia
- San Jose City I Power Corp, Philippines
- London Commodity Brokers - England
- Makarim & Taira - Indonesia
- GMR Energy Limited - India
- Banpu Public Company Limited - Thailand
- MS Steel International - UAE
- Bangladesh Power Developement Board
- Agrawal Coal Company - India
- SN Aboitiz Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sical Logistics Limited - India
- Parry Sugars Refinery, India
- Latin American Coal - Colombia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Standard Chartered Bank - UAE
- Sakthi Sugars Limited - India
- The University of Queensland
- Goldman Sachs - Singapore
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Pendopo Energi Batubara - Indonesia
- Simpson Spence & Young - Indonesia
- The State Trading Corporation of India Ltd
- Baramulti Group, Indonesia
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- Petron Corporation, Philippines
- Salva Resources Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- New Zealand Coal & Carbon
- The Treasury - Australian Government
- Wilmar Investment Holdings
- Globalindo Alam Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- TNB Fuel Sdn Bhd - Malaysia
- Independent Power Producers Association of India
- PTC India Limited - India
- Minerals Council of Australia
- Kobexindo Tractors - Indoneisa
- Commonwealth Bank - Australia
- Bharathi Cement Corporation - India
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Medco Energi Mining Internasional
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Jaiprakash Power Ventures ltd
- Xindia Steels Limited - India
- Eastern Energy - Thailand
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- Heidelberg Cement - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Aditya Birla Group - India
- Coalindo Energy - Indonesia
- Mintek Dendrill Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Mines - Canada
- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
- Kepco SPC Power Corporation, Philippines
- Australian Coal Association
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- Binh Thuan Hamico - Vietnam
- Kumho Petrochemical, South Korea
- Siam City Cement - Thailand
- Bukit Baiduri Energy - Indonesia
- PowerSource Philippines DevCo
- Georgia Ports Authority, United States
- Neyveli Lignite Corporation Ltd, - India
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- Edison Trading Spa - Italy
- Singapore Mercantile Exchange
- Madhucon Powers Ltd - India
- Central Electricity Authority - India
- Vedanta Resources Plc - India
- Australian Commodity Traders Exchange
- Barasentosa Lestari - Indonesia
- Eastern Coal Council - USA
- VISA Power Limited - India
- Lanco Infratech Ltd - India
- European Bulk Services B.V. - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- Kartika Selabumi Mining - Indonesia
- Star Paper Mills Limited - India
- Thiess Contractors Indonesia
- Tata Chemicals Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Wood Mackenzie - Singapore
- Africa Commodities Group - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- Coal and Oil Company - UAE
- Merrill Lynch Commodities Europe
- Ind-Barath Power Infra Limited - India
- Formosa Plastics Group - Taiwan
- Maheswari Brothers Coal Limited - India
- Cigading International Bulk Terminal - Indonesia
- Central Java Power - Indonesia
- GAC Shipping (India) Pvt Ltd
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sindya Power Generating Company Private Ltd
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