MESSAGE FROM
THE CHAIRMAN
“Going forward in such uncertain times, it is very important for us not to lose
sight of managing risks more effectively. We are taking an even more cautious
approach as we enter the new financial year and will continue to work harder for
our customers to prepare ourselves for the market recovery.”
Looking ahead, we expect global economic activity
to remain subdued. The International Monetary
Fund (IMF) in its update report on World Economic
Outlook released on 19 January 2016 estimated
global economic growth to be at 3.1 per cent in
2015. It projected that the global economy would
grow at 3.4 per cent in 2016 and 3.6 per cent in
2017. However, it also cautioned that recovery
in global economies could be “frustrated by new
economic and political shocks”
Oil prices were weighed down heavily to scratch
12-year lows of below US$30 per barrel in mid-
January 2016, by poor economic outlook, high
inventories and oversupply; forcing major oil
producers to continue reducing exploration and
production capital expenditure around the world.
In the offshore marine business, sentiments
continued to be clouded by overcapacity of the rig
fleet amidst a sharp decline in utilisation. The IHS
Petrodata Weekly Rig Count on 19 February 2016
put global supply at 849 compared to 869 a year
ago, with market utilisation at 75.7 per cent, down
from 87.9 per cent.
During the year under review, the dry bulk shipping
trade was badly hit by the slump in demand for
commodities such as coal, iron ore and steel
products resulting from the slower growth in the
emerging economies. In September 2015, the
World Trade Organisation had forecasted global
trade to grow to 3.9 per cent in 2016, down slightly
from its last estimate of 4.0 per cent, which is still
below the average of 5 per cent over the last 20
years since 1995.
For 2016, Clarksons projected that demand for
dry bulk trade tonnage would grow by 1.1 per
cent and that dry bulk fleet would increase at an
even higher pace of 3.6 per cent, contributing to
the persistent overcapacity. The weak data will
continue to threaten the viability of the shipping
sector, and consequently the shipbuilding sector.
For our Group, the global economic turbulence
caused by the anaemic demand and overcapacity
in the oil exploration markets and dry bulk shipping
are of great concern.
STREAMLINING INTERNAL EFFICIENCY,
TIDING OVER TOUGH TIMES
We are continuously monitoring, addressing and
adapting to the rapidly changing circumstances.
Over the years, COSCO has built up a highly trained
and experienced team that is well supported by a
comprehensive range of facilities in our six modern
shipyards in Guangdong, Zhoushan, Shanghai,
Nantong, Qidong and Dalian. The Group’s decade
long transformation fromship repair to shipbuilding,
and more recently to offshore exploration,
production and support products has allowed us to
market a wider range of offerings. We have further
built on our strengths and made much progress in
the offshore marine segment to construct higher
specification products. We have also maintained
our shipbuilding capability to cater to more wide
ranging maritime needs. Recent additions of
specialised vessels like containerships, research
vessels and cargo transfer vessels to our portfolio
have been a tremendous encouragement.
Key Messages
16
COSCO Corporation (Singapore) Limited
Annual Report 2015
