 |
|
INDIA GROWING INTO A SHIPPING MARKET |
|
|
|
|
Written by Administrator
|
|
Thursday, 13 May 2010 |
| India steadily growing into a shipping market heavyweight, affecting tanker and dry bulk rates | | |
| Monday, 10 May 2010 |  India and its growing economy is rapidly evolving into yet another major success story for the shipping industry, both in the dry bulk, but also in the tanker sectors. As a result, experts predict that in the course of the coming 3-5 years, India’s role in the maritime business could be a major factor affecting dry bulk and tanker rates almost to a similar – yet still inferior level as China does.
According to a new report by Gibson, when shipping gurus discuss prospects for the global tanker industry, there is a strong consensus that China’s rapid economic growth and its increasing dependence on the international crude markets will continue to be a key driving force for seaborne oil transportation. Yet, at the same time, quite a few seem to overlook if not to discount the huge potential of China’s largest neighbour – India”. With more than 5.7% GDP growth last year despite global recession and an expectation of 8.8% growth this year and around 8% per annum over the next five years, India is the second fastest-growing major economy in the world.
Commenting on India’s growth prospects, N.Cotzias Shipping Group said that according to IMF, India, on the back of strong domestic demand and robust business confidence, the Indian economy is projected to grow at 8.75 per cent in 2010 and 8.5 per cent in 2011. According to the World Economic Outlook report (2010) by the nowadays infamous in Greece, IMF, the Indian growth story will be supported by a resurgence in domestic demand that will strengthen as the labour market improves, and investment is expected to be boosted by strong profitability, rising business confidence and favourable financing conditions. It is evident that strong domestic demand in the economies of India and China is expected to have positive spillovers for other Asian economies, particularly exporters of commodities and capital goods. At the same time, the country’s oil needs, currently at 3.3 million b/d according the IEA, are largely met by imports, as domestic crude oil production is only 0.8 million b/d” said Gibson.
On a similar note, Cotzias’ latest monthly report for April stated that consumption of crude oil per capita per annum in China is 2 barrels, still well below the relative consumption of developed economies. “Compare this with Europe where the equivalent is 10.6 barrels per capita/annum, while USA's figure is 25 barrels per capital/annum. In India it’s only 1 barrel of crude oil per individual in a total population of 1.21 billion people”. This means that the prospects for growth in consumption of oil are enormous, but not without challenges.
“As recently admitted by the state, the poor government of domestic infrastructure remains a major obstacle to economic development and so gains in oil demand this year and next are projected to be much smaller than in China, at around 0.1-0.2 million b/d per annum. As a result, the Indian authorities have made building of roads, bridges, airports and power plants a high priority” said Gibson, while China estimates an increase of per capita consumption of oil to 2.3 barrels per annum for 2010.
But, in India further investment in refining capacity is planned, with an additional 0.65 million b/d crude distillation due on stream in 2010/11 and a further 0.3 million b/d in 2012.
With limited growth prospects for domestic crude oil production, this would indicate crude imports potentially rising by almost 1 million b/d over the next three years, from around 3 million b/d currently, according to Gibson’s reports. In addition to forecast increases in crude imports, we should not forget the likes of Reliance, with significant product exports to international markets both East and West. As refining capacity will grow much faster in the near term than oil demand, this suggests a further growth in product exports. Therefore, there will be more crude in and more products out. With this in mind, India undoubtedly will look very different in five years from now and its influence on both crude and products tanker markets will grow exponentially.
Nikos Roussanoglou, Hellenic Shipping News Worldwide |
|
|
Last Updated ( Thursday, 13 May 2010 )
|
|
|
