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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 $6,212/day in the first half. For the first time signs of real distress are apparent. After 8 years, dry bulk sentiment finally collapsed and bulker orders fell from 16m dwt in January 2014 to 0.05m dwt in June 2015. A helpful step towards market recovery, but it leaves the shipyards with a problem. Over the last 8 years bulkers were a third of shipyard workload (see inset pie chart). Although tankers and container ships are still being ordered, they show no sign of filling the gap left by bulkers.
Dance Macabre
So there you have it. Bulkers have finally made a meaningful move towards better times by cutting investment. But the game isn’t over yet. They still need a strong world economy and continued Chinese import growth. Meanwhile a new chess game with destiny is getting started, this time in the shipyards as they try to plug the bulker gap. Maybe the game’s not over yet. So if you want a nice relaxing summer, our advice is don’t watch The Seventh Seal.
Source: Clarksons | Hellenic Shipping News
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Monday, 01 June 15
API 5 FOB NEWCASTLE COAL SWAP; Q1'16 CLOSED LOWER COMPARED TO Q3'15
COALspot.com: API 5 FOB Newcastle Coal swap for Q3’ 2015 delivery gained US$ 0.36 per MT (0.80%) month over month. The swap was closed at US$ ...
Monday, 01 June 15
CFR SOUTH CHINA COAL SWAP: GAINED W-W, M-M; Q1'16 CLOSED HIGHER THAN Q3'15
COALspot.com: API 8 CFR South China Coal swap for Q3’ 2015 delivery up US$ 1.15 (2.26%) per MT month over month.
A commodity swap is a f ...
Sunday, 31 May 15
CAPE AND PANAMAX SEGMENTS SLIDE CONTINUES
COALspot.com: The BDI was up about 0.5 pct week on week and closed at 589 points while the cape index was fell 0.73 pct and closed at 810 po ...
Friday, 29 May 15
DRY BULK MARKET IS THE VICTIM OF A SHIFT IN DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The fall in dry bulk freight rates is attributed, in large part, to the substantial decrease of China’s thermal coal imports, a major commodi ...
Friday, 29 May 15
COAL PRODUCTION IN THE U.S. ALMOST FLAT THIS PAST WEEK
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 16.1 million short ...
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- Mercator Lines Limited - India
- Pendopo Energi Batubara - Indonesia
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- Romanian Commodities Exchange
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- Global Green Power PLC Corporation, Philippines
- Georgia Ports Authority, United States
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- Billiton Holdings Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- Planning Commission, India
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- London Commodity Brokers - England
- PowerSource Philippines DevCo
- Baramulti Group, Indonesia
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- Altura Mining Limited, Indonesia
- Tamil Nadu electricity Board
- Savvy Resources Ltd - HongKong
- GAC Shipping (India) Pvt Ltd
- TeaM Sual Corporation - Philippines
- Ministry of Mines - Canada
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- Global Business Power Corporation, Philippines
- Wilmar Investment Holdings
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- Malabar Cements Ltd - India
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- Latin American Coal - Colombia
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- Asia Pacific Energy Resources Ventures Inc, Philippines
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- AsiaOL BioFuels Corp., Philippines
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- GN Power Mariveles Coal Plant, Philippines
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- Simpson Spence & Young - Indonesia
- Edison Trading Spa - Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- SMC Global Power, Philippines
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- Heidelberg Cement - Germany
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- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
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- European Bulk Services B.V. - Netherlands
- Semirara Mining Corp, Philippines
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- The University of Queensland
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- Singapore Mercantile Exchange
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- Electricity Authority, New Zealand
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- Kideco Jaya Agung - Indonesia
- Chettinad Cement Corporation Ltd - India
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- Dalmia Cement Bharat India
- Tata Chemicals Ltd - India
- Orica Mining Services - Indonesia
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- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
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- Sical Logistics Limited - India
- Ministry of Finance - Indonesia
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- Kobexindo Tractors - Indoneisa
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- Parliament of New Zealand
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- Energy Development Corp, Philippines
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- Bharathi Cement Corporation - India
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