India exim trade finally takes off
India’s exports rose 6 per cent Y-o-Y during 9M-FY14, thereby moderating the overall exim decline to 1 per cent as imports (net of oil, gold, silver & precious metals) declined 8 per cent.
Growth in cargo traffic
While the major ports´ total volume handling rose by a modest 2 per cent year-on-year (Y-o-Y) in this period, Mundra port grew at a faster pace of 26 per cent thereby overtaking the major ports and boosted total cargo growth to 5 per cent. Among the large major ports, only Paradip posted a positive and strong 25 per cent Y-o-Y growth in the nine month period. Mundra port has taken over Paradip port as the no. 1 coal handling port in India. POL, containers and coal dominate traffic share at major ports with 70 per cent market share. The major ports´ 2 per cent growth is driven primarily by 26 per cent rise in coal trade at these ports and 1 per cent higher POL. Containers´ handling declined 4.5 per cent Y-o-Y as cargo shifted to the private ports of Mundra and Pipavav.
Total container handling is up by 4 per cent Y-o-Y but major ports continue to decline. The JNPT and Chennai ports together handle 75-80 per cent of total exim containers among the major ports. These ports´ volume declined 4.5 per cent Y-o-Y thereby driving major ports´ 4 per cent decline. However, Mundra and Pipavav ports posted 33 per cent and 24 per cent Y-o-Y growth leading to total container (at port) growth of 4 per cent Y-o-Y. The sharp rise also led to Mundra taking over Chennai as the 2nd largest container port after JNPT and Pipavav as the 4th largest.
Container movement by the Indian Railways (by weight) rose 6 per cent Y-o-Y during 9M-FY14. Cargo handled by Indian Railways was up 5 per cent Y-o-Y during 9M-FY14: Coal movement (accounting for 50 per cent of total freight by Indian Railways) growth tapered off to 3.5 per cent impacted by heavy monsoon and strikes at Coal India plants leading to lower domestic coal movement. This year, iron ore and steel movement grew 10 per cent Y-o-Y benefiting from the partial lifting of ban on Karnataka mines during November 2013.
Rise in China´s iron ore imports and steel exports propelled dry bulk carriers´ recovery in CY13 as the Baltic Index trebled in CY13. Sharp reduction in new building order-book and faster scrapping of old ships also boosted the asset prices by 20-30 per cent.
CY14 should be another good year for dry carriers as commodity trade (in iron ore, grains and coal) is expected to grow by 10 per cent in CY14E as per ACM Shipping estimates (3rd largest listed shipbroker globally).
Oil tankers demand firmed up at end of CY13 as global crude oil surplus neared zero. This boosted the dirty and clean tanker day rates upwards by 20-40 per cent over the last three months.
Further, shrinking new asset supply boosted asset prices upwards by 40-50 per cent, primarily across the mid-sized assets.