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Tuesday, 08 April 14
TALKING ABOUT A ONE-HORSE RACE - GEORGE LAZARIDIS
 Ever since the onslaught of the financial crisis, China along with the other BRIICs, have played a pivotal role in supporting global economic growth. A couple of decades ago bulk shipping was mainly reliant on imports from the US, EU as well as other OECD members, whereas countries such as China have now taking top spot on the podium accounting for the lion’s share of seaborne trade, attracting raw materials from all over the world as their appetite for infrastructure development has followed an almost exponential path. Iron Ore, Coal and Crude Oil which together comprise the largest chunk of seaborne trade volumes all rely primarily on Chinese demand nowadays. Chinese imports now account for 38% of global seaborne trade volumes for the 5 major dry bulk commodities, while in some commodities, such iron ore, this percentage is over 69%.
Over the past couple of weeks how ever there has been a storm brewing in the distance, instigated by the growing concerns related to shadow banking in China and the problems it has caused in the real estate sector as well as on the performance of dollar denominated bonds. The non-bank lending that helped homebuilders and property developers fuel part of the nation’s double digit GDP growth over the past decade, is now under threat. What’s more is that this growing threat is more widely spread then just the small scale risky businesses that took up most of these loans, as several prominent companies and banks hold a stake and therefore exposure to any and all defaults that may take place. With the collapse of Zhejiang Xingrun Real Estate Co. earlier this month and Shanghai Chari Solar Energy Science & Technology Co’ s defaulting on its debt more recently, many see more of the around 18 bonds from Chinese developers, which are considered as distressed, taking a similar route. This may well end up being just a small rough patch, however there is a risk that due to these most recent developments we could be facing a considerable tightening of credit in the country and a slowdown of at least most of the small scale development projects. It is interesting to note that home prices in China have risen b y as much as 60% percent since the 4 trillion yuan of fiscal stimulus provided by the government in 2008 and as financial tightening starts to become more of a reality, more and more of the thousands of constructed apartment blocks across the country could start to sit empty, leaving little incentive for further construction and investment from at least the private sector.
All this adding to the already voiced concerns regarding the problems still being faced in the US and Europe, and many are starting to feel less confident as to the path of the global economy and subsequently the growth of international trade this year. There may well be other champions out there amongst the BRIICS, yet countries such as India, which many see as the next in line to take the reins as champions of economic development, are currently now here close to filling up any gap that could be left behind from any waning demand from China. As things stand, China still plays a pivotal role in the growth of seaborne trade and without its support we will likely face a short period of stagnation similar to that of the 90’s. With high hopes having been placed on the performance of the shipping industry this year, it now looks as though it’s may be time to reconsider. Although the order book for most segments has dropped dramatically over the past two years there is a very different threat that needs to be overcome now. The growth in demand that we have been accustomed to over the past years could possibly start to diminish and in the case of slower growth in the seaborne trade of dry bulk commodities such as Iron Ore and Co al, many of the recently placed orders would be entering service to cover a non-existent requirement for extra capacity despite being less of them then in the past.
They way things are for the time being, there seems to be little insight of major trouble surfacing and we are still on tracking for an overall better performance than that of 2013. There are still many who keep a bullish view as to the prospects of the Chinese economy and they may well be right. Nevertheless any “sneeze” like the one noted during early March and the dry bulk freight index takes a no table hit. The problems being faced might no t be of imminent concern but they are there on the horizon and very real. Growth and leverage are currently the main concerns for China and the shipping industry should keep a close eye on both of these as they could spell for considerable trouble down the line if not addressed properly.
Analysts:
Mr. George Lazaridis | g.lazaridis@intermodal.gr
Ms. Eva Tzima | e.tzima@intermodal.gr
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no re-producing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
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Thursday, 08 May 14
'TRIAL BY MEDIA, TRIAL BY LAW' - A REPORT FROM TRACK 1 OF BIMCO'S ANNUAL CONFERENCE DUBAI 2014
KNOWLEDGE TO ELEVATE
Aiming to bring a very different type of event into their annual conference, BIMCO presented ‘Double Jeopardy &n ...
Thursday, 08 May 14
INDONESIAN COAL PRICE REFERENCE IN MAY CRASHES THROUGH $74
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia has revised down again the coal bench mark price by US$ 1.21 / MT to ...
Wednesday, 07 May 14
THE DRY BULK MARKET HAS NOTED ANOTHER WEEKLY POSITIVE GAIN
Chartering (Wet: Softer- / Dry: Stable+)
The Dry Bulk market has noted another weekly positive gain, driven by the Capesize segment, but we ne ...
Wednesday, 07 May 14
SGX ENHANCES ITS COMMODITIES PRODUCT OFFERING
COALspot.com: SGX is building up its bulk commodity product offerings with 9 more derivative contracts over the next 2 months, subject to regula ...
Tuesday, 06 May 14
NEWCASTLE COAL EXPORT SLIPS 7.92% WEEK ON WEEK
COALspot.com: In the week ended 07:00 hours 5 May 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland ...
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- Bhushan Steel Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Attock Cement Pakistan Limited
- International Coal Ventures Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Eastern Coal Council - USA
- Cement Manufacturers Association - India
- PNOC Exploration Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
- The State Trading Corporation of India Ltd
- Minerals Council of Australia
- Indika Energy - Indonesia
- Siam City Cement PLC, Thailand
- Bharathi Cement Corporation - India
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Petron Corporation, Philippines
- Makarim & Taira - Indonesia
- Banpu Public Company Limited - Thailand
- Barasentosa Lestari - Indonesia
- Wilmar Investment Holdings
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- Indian Oil Corporation Limited
- Indonesian Coal Mining Association
- CNBM International Corporation - China
- Altura Mining Limited, Indonesia
- Commonwealth Bank - Australia
- New Zealand Coal & Carbon
- Videocon Industries ltd - India
- Port Waratah Coal Services - Australia
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Global Coal Blending Company Limited - Australia
- GMR Energy Limited - India
- Tata Chemicals Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Wood Mackenzie - Singapore
- White Energy Company Limited
- ICICI Bank Limited - India
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- TeaM Sual Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Malabar Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Kumho Petrochemical, South Korea
- Globalindo Alam Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- Binh Thuan Hamico - Vietnam
- Essar Steel Hazira Ltd - India
- Kideco Jaya Agung - Indonesia
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Merrill Lynch Commodities Europe
- Meenaskhi Energy Private Limited - India
- Riau Bara Harum - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Marubeni Corporation - India
- Coastal Gujarat Power Limited - India
- Tamil Nadu electricity Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Sidhee Cement - India
- Sree Jayajothi Cements Limited - India
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- Mercuria Energy - Indonesia
- Oldendorff Carriers - Singapore
- Romanian Commodities Exchange
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Mjunction Services Limited - India
- GVK Power & Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Edison Trading Spa - Italy
- Intertek Mineral Services - Indonesia
- Dalmia Cement Bharat India
- Ceylon Electricity Board - Sri Lanka
- Borneo Indobara - Indonesia
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Chamber of Mines of South Africa
- Indian Energy Exchange, India
- Thiess Contractors Indonesia
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- Power Finance Corporation Ltd., India
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- Bulk Trading Sa - Switzerland
- Kepco SPC Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kalimantan Lumbung Energi - Indonesia
- Parry Sugars Refinery, India
- Thai Mozambique Logistica
- ASAPP Information Group - India
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Anglo American - United Kingdom
- Posco Energy - South Korea
- The University of Queensland
- Sical Logistics Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Bukit Makmur.PT - Indonesia
- Planning Commission, India
- Uttam Galva Steels Limited - India
- Salva Resources Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Aditya Birla Group - India
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Global Business Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Meralco Power Generation, Philippines
- Interocean Group of Companies - India
- Toyota Tsusho Corporation, Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- Therma Luzon, Inc, Philippines
- Grasim Industreis Ltd - India
- McConnell Dowell - Australia
- Trasteel International SA, Italy
- Bukit Baiduri Energy - Indonesia
- Economic Council, Georgia
- Rio Tinto Coal - Australia
- Siam City Cement - Thailand
- The Treasury - Australian Government
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Agrawal Coal Company - India
- Directorate General of MIneral and Coal - Indonesia
- Latin American Coal - Colombia
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- TNB Fuel Sdn Bhd - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Kobexindo Tractors - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- Mercator Lines Limited - India
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Central Java Power - Indonesia
- Bhoruka Overseas - Indonesia
- Central Electricity Authority - India
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Ministry of Transport, Egypt
- Xindia Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Billiton Holdings Pty Ltd - Australia
- Baramulti Group, Indonesia
- Ambuja Cements Ltd - India
- Deloitte Consulting - India
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Australian Coal Association
- GAC Shipping (India) Pvt Ltd
- Semirara Mining and Power Corporation, Philippines
- Electricity Authority, New Zealand
- Price Waterhouse Coopers - Russia
- VISA Power Limited - India
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- Jindal Steel & Power Ltd - India
- Star Paper Mills Limited - India
- Medco Energi Mining Internasional
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- PTC India Limited - India
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Australian Commodity Traders Exchange
- Indogreen Group - Indonesia
- European Bulk Services B.V. - Netherlands
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Vedanta Resources Plc - India
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