The cement trade “can no longer be considered a maverick one. The market is developing and is also becoming a more realistic one as today the operation of ships demands much more," Intercem ceo, Malcolm Shelbourne, ceo of Intercem, the cement shipping industry’s representative body.
"The shipping of cement is becoming ever more efficient. The market is in a better position than it has been. The oversupply was a difficult period, but we are coming out of it and shippers are making some money. China is coming back but not as before, and perhaps this is good for the market," Shelbourne, told the Intercem Shipping Forum in Athens, last week.
Simon Cox, of Howe Robinson Partners (UK) Ltd, told Intercem delegates from 25 countries the world cement fleet is upgrading, with a new wave of vessels. January 1, 2018 the fleet stood at 366 vessels, its largest number since 2010 and at 2.77m dwt its highest capacity in the same period. He said the growth has come after a period of scrapping due to the Arab Spring, with owners investing in new tonnage and in conversions.
"Of the seagoing ships of an average 8,000 dwt, able to carry 7,500-tons of cargo, 21% of the exiting fleet arrived in the past five years," said Cox. He said the new ships have mainly been deployed in Asia – Japan, Indonesia, South Korea, India, Vietnam and the Philippines -- where demand for cement has grown due to disasters inflicted by nature.
This year and next, more ships are due to join the fleet, "including 28,000 dwt and 35,000 dwt conversions from bulkers". Presently, tonnage of some 412,000 dwt is deployed in domestic trades, mainly in Asia, while just under 200,000 dwt is partly deployed in domestic trade again mainly in Japan / Southeast Asia.
Cox noted another trend. Most of the newer ships are fuel efficient and employed on long-term deals. Further, their arrival has "reduced freight levels in many markets, making it more difficult for inefficient ships to cover opex".
Reviewing the market, Bimco’s Peter Sand, reported a 3.7% drop in demand in 2017, after a difficult end to the year, but said it looks better for 2018, though China is the key. Bimco's forecast is for a 2% increase in demand with a 1% increase in supply.
Indeed, "China is the key" was a phrase, or a version of it, heard many times during the forum, because of its importance to the dry bulk trade generally.
Sand said dry bulk shipping in general, “is in for an interesting year". The analyst said the situation "is now less gloomy than in the past" and saw a "cautious optimistic mood as long as owners don't act recklessly" fearing however, that as things improve "in the end it comes down to human nature".
"In 2018 we have to be careful, demand and supply is now looking at a positive development, but China is still the elephant in the room," said Sand. He said indicators point to an estimated dry fleet growth of 1% in 2018, but "if demolition falls short by say 4m dwt, fleet growth will be 1.5%" he said, adding "2018 holds the key to opportunities for 2019".
Regulations will impact shipping, but will not impact trade, said Sand. They will be felt regarding costs and profitability "if we don't get the balance right" and for this to happen there "needs to be a political will across the globe to deal with challenges at source".
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