Tuesday, 15 December 2015

India could offer silver lining for shipping field

The escalation of India as being a global player within the shipping market could well be just a few years away, since the country has the possibility to develop into a secondary “China”, concerning triggering seaborne requirement for materials, for the most part coal and iron ore, along with energy-related products. If one takes a closer look at the most recent country focus from the International Energy Agency (IEA), they will find that India is shifting onto the center stage of international energy taking top spot in terms of coal use, oil demand progression and also solar PV output. As you can rapidly realize it is the initial two that happen to be of particular interest to the international shipping market, with coal consumption very necessary for the dry bulk industry as well as oil demand advancement for the tanker sector.

Within the latest weekly report, shipbroker Allied Shipbroking observed that “the reason behind almost all of this is actually quick rise in energy ingestion anticipated to transpire amongst its 1.3 billion population, something that is comparatively effortless to feed for such surprising growth values over the next few years considering that 240 million of them are now living in rural locations without having a source of electricity, when at the same time it has got one of the largest growth ranges in new car possession. These two will prove as influential factors propelling a close to 30% boost in coal as well as oil usage by 2020”.

Allied’s George Lazaridis, Head of Market Research & Asset Valuations, declared “coal is India’s fundamental source of energy that represents 40% of its energy mix while taking its positioning as third most significant developer and buyer internationally. Provided that India is predicted to keep its coal-cantered energy approach inspite of the global “green” pres-sure and taking into consideration the enhanced desire it will have for power capacity and electricity generation it will be appealing to watch whereby it will turn to serve its needs seeing as eventually it is going to find its internal production and reserves insufficient to keep pace with its increasing appetite. It means that despite the fact that its impact on seaborne coal trade may perhaps stay capped as it takes on efforts to boost its inner production, if its surge in high demand keeps on track with what it is now it will not be too long before it takes up and holds the lion share in the market. It is also worth bringing up this year up to now it has already surpassed Chinese imports taking up 20% of the coal business this current year, as a result of more supple desire from the earlier industry leader, particularly China”, he documented.

In the mean time, “things however are pretty different in terms of oil, as India is dependent predominantly on imports to cover both its consumer and industrial needs. With more than 260m passenger cars anticipated to be added to its up-to-date car possession across the next 25 years and with its trade set to take a more prominent role in the world stage, presumptions are for a similarly favorable surge in need for both crude oil along with, if not more so in oil products. The only problem with this is its prime area, stationed much closer to the main Middle Eastern suppliers then any one of the OECD members or China. Which means that the benefiting tonne-miles will likely be much less, though at the end of the day any improvement in demand is definitely welcome”, Lazaridis mentioned.

So, exactly what are the probable dampeners to such constructive situations? “Well for starters you are still confronted by the danger of policy control which may be brought about by global environmental worries. This is particularly a worry for coal, that might manifest either through a demand for India to decrease it reliance or perhaps through other main consumers moving away from their reliance on this “dirty fuel”. On the side of oil it appears to be the most significant dampener might be technologies, with existing developments heading in direction of much more eco-friendly modes of transport. Nonetheless, it looks as if there is still something to keep us positive for the future”, Allied’s analyst concluded.

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