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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, 16 March 15
MAKING THE WORLD GO ROUND - SEABORNE TRADE! - CLARKSONS
Money, or even love if you prefer, are claimed to make the world go round. For the shipping world, however, it’s trade that sets things spinn ...
Monday, 16 March 15
API 5 FOB NEWCASTLE COAL SWAPS: DECLINED
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 2.48 per MT (-4.77%) month over month and US$ 0.93 (-1.84%) we ...
Monday, 16 March 15
CFR SOUTH CHINA THERMAL COAL SWAP DECLINED 3.74% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 2.17 (-3.74%) per MT month over month and US$ 0.67 (-1 ...
Sunday, 15 March 15
BDI DECLINED LESSER THAN 1% WEEK OVER WEEK; INDO-INDIA FIRM
COALspot.com: The most of indices, including bulk dry index were falling this week. The BDI has been down by just 0.53 points and closing at 562 po ...
Saturday, 14 March 15
CAPESIZE DRY BULKERS TO AVERAGE BETWEEN $3,000 AND $9,000/DAY IN THE COMING WEEKS SAYS BIMCO
BIMCO issued its latest short-term estimates for the dry bulk market. For March/May: BIMCO assesses that the Capesize time charter (T/C) average ra ...
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- Global Green Power PLC Corporation, Philippines
- Rio Tinto Coal - Australia
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- Edison Trading Spa - Italy
- Larsen & Toubro Limited - India
- Latin American Coal - Colombia
- PTC India Limited - India
- Semirara Mining and Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- Electricity Authority, New Zealand
- Kartika Selabumi Mining - Indonesia
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- Bharathi Cement Corporation - India
- London Commodity Brokers - England
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- SMG Consultants - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Lanco Infratech Ltd - India
- Indonesian Coal Mining Association
- Electricity Generating Authority of Thailand
- Borneo Indobara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sakthi Sugars Limited - India
- SN Aboitiz Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Mineral Development Corp Ltd - India
- South Luzon Thermal Energy Corporation
- Karbindo Abesyapradhi - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Kapuas Tunggal Persada - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Indo Tambangraya Megah - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Ambuja Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Sojitz Corporation - Japan
- Deloitte Consulting - India
- Global Coal Blending Company Limited - Australia
- PowerSource Philippines DevCo
- Mercuria Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bhoruka Overseas - Indonesia
- Bukit Makmur.PT - Indonesia
- Meralco Power Generation, Philippines
- Dalmia Cement Bharat India
- Bhushan Steel Limited - India
- Videocon Industries ltd - India
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- Star Paper Mills Limited - India
- Orica Australia Pty. Ltd.
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Australian Commodity Traders Exchange
- Malabar Cements Ltd - India
- Cement Manufacturers Association - India
- Bukit Asam (Persero) Tbk - Indonesia
- Romanian Commodities Exchange
- Jaiprakash Power Ventures ltd
- Siam City Cement PLC, Thailand
- Essar Steel Hazira Ltd - India
- Bayan Resources Tbk. - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Georgia Ports Authority, United States
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- Antam Resourcindo - Indonesia
- The Treasury - Australian Government
- European Bulk Services B.V. - Netherlands
- Intertek Mineral Services - Indonesia
- Anglo American - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Planning Commission, India
- Ministry of Transport, Egypt
- Port Waratah Coal Services - Australia
- Iligan Light & Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Interocean Group of Companies - India
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- Oldendorff Carriers - Singapore
- Central Java Power - Indonesia
- Coal and Oil Company - UAE
- TNB Fuel Sdn Bhd - Malaysia
- GMR Energy Limited - India
- Bulk Trading Sa - Switzerland
- Kalimantan Lumbung Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Energy Development Corp, Philippines
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- Indogreen Group - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Trasteel International SA, Italy
- Eastern Energy - Thailand
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
- Xindia Steels Limited - India
- Singapore Mercantile Exchange
- Eastern Coal Council - USA
- Vedanta Resources Plc - India
- Straits Asia Resources Limited - Singapore
- Africa Commodities Group - South Africa
- Sinarmas Energy and Mining - Indonesia
- Orica Mining Services - Indonesia
- Mjunction Services Limited - India
- Australian Coal Association
- Indian Energy Exchange, India
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- Kepco SPC Power Corporation, Philippines
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- SMC Global Power, Philippines
- Carbofer General Trading SA - India
- Renaissance Capital - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercator Lines Limited - India
- New Zealand Coal & Carbon
- LBH Netherlands Bv - Netherlands
- Price Waterhouse Coopers - Russia
- Medco Energi Mining Internasional
- Heidelberg Cement - Germany
- The State Trading Corporation of India Ltd
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- Chamber of Mines of South Africa
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Kobexindo Tractors - Indoneisa
- Kaltim Prima Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- Baramulti Group, Indonesia
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Altura Mining Limited, Indonesia
- Toyota Tsusho Corporation, Japan
- San Jose City I Power Corp, Philippines
- Aditya Birla Group - India
- McConnell Dowell - Australia
- Tamil Nadu electricity Board
- PNOC Exploration Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Mintek Dendrill Indonesia
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- VISA Power Limited - India
- Thai Mozambique Logistica
- MS Steel International - UAE
- Metalloyd Limited - United Kingdom
- Jindal Steel & Power Ltd - India
- Barasentosa Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parry Sugars Refinery, India
- Wilmar Investment Holdings
- Petron Corporation, Philippines
- Gujarat Sidhee Cement - India
- Directorate Of Revenue Intelligence - India
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- GVK Power & Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Commonwealth Bank - Australia
- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- IEA Clean Coal Centre - UK
- Karaikal Port Pvt Ltd - India
- ASAPP Information Group - India
- India Bulls Power Limited - India
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