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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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Sunday, 23 March 14
THE COAL FREIGHT RATES SEEN SLIGHTLY FIRMING UP THIS WEEK - REDDY
COALspot.com: The freight market firmed up this week. BDI was up 8.26 pct week on week and index was closed at 1599 points. The Cape index was u ...
Saturday, 22 March 14
SHIP OWNERS INVEST $15 BILLION FOR NEWBUILDINGS AND SECONDHAND VESSELS DURING FEBRUARY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Ship owners have kept on their aggressive stance in the investment scene both for newbuildings, as well as for secondhand vessels globally durin ...
Friday, 21 March 14
DRY BULK MARKET STAYS ON RECOVERY MODE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has reached new year heighs, as a result of renewed Capesize demand. The Baltic Dry Index (BDI) ended yesterday's sessio ...
Friday, 21 March 14
US COAL PRODUCTION UP 1.5%; WEST MISSISSIPPI COAL PRODUCTION DOWN 1.85% WEEK ON WEEK
COALspot.com – United States the world's second largest coal producer, produced approximately 19.0 million short tons (mmst) of coal i ...
Friday, 21 March 14
MERCURIA ANNOUNCES ACQUISITION OF J.P. MORGAN PHYSICAL COMMODITIES BUSINESS
COALspot.com: Mercuria Energy Group announced that it has reached a definitive agreement with J.P. Morgan Chase & Co. to acquire its physica ...
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- Mjunction Services Limited - India
- Vizag Seaport Private Limited - India
- Rio Tinto Coal - Australia
- Global Business Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Electricity Authority, New Zealand
- Bharathi Cement Corporation - India
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Vedanta Resources Plc - India
- Coal and Oil Company - UAE
- Straits Asia Resources Limited - Singapore
- Interocean Group of Companies - India
- Iligan Light & Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- Indogreen Group - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Karaikal Port Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement - Thailand
- Independent Power Producers Association of India
- ICICI Bank Limited - India
- Directorate Of Revenue Intelligence - India
- Kumho Petrochemical, South Korea
- Mercator Lines Limited - India
- Edison Trading Spa - Italy
- The Treasury - Australian Government
- New Zealand Coal & Carbon
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- Gujarat Mineral Development Corp Ltd - India
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- LBH Netherlands Bv - Netherlands
- Bhoruka Overseas - Indonesia
- SN Aboitiz Power Inc, Philippines
- GMR Energy Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chamber of Mines of South Africa
- Billiton Holdings Pty Ltd - Australia
- Singapore Mercantile Exchange
- Kohat Cement Company Ltd. - Pakistan
- Ambuja Cements Ltd - India
- The State Trading Corporation of India Ltd
- Power Finance Corporation Ltd., India
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Africa Commodities Group - South Africa
- Makarim & Taira - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Georgia Ports Authority, United States
- Global Green Power PLC Corporation, Philippines
- Medco Energi Mining Internasional
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- Indian Energy Exchange, India
- Lanco Infratech Ltd - India
- Wilmar Investment Holdings
- Port Waratah Coal Services - Australia
- Kartika Selabumi Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Samtan Co., Ltd - South Korea
- Minerals Council of Australia
- Salva Resources Pvt Ltd - India
- VISA Power Limited - India
- PowerSource Philippines DevCo
- India Bulls Power Limited - India
- Economic Council, Georgia
- Grasim Industreis Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Malabar Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- Ministry of Transport, Egypt
- Australian Commodity Traders Exchange
- Timah Investasi Mineral - Indoneisa
- CNBM International Corporation - China
- Globalindo Alam Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- Trasteel International SA, Italy
- Carbofer General Trading SA - India
- White Energy Company Limited
- Ceylon Electricity Board - Sri Lanka
- SMC Global Power, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Barasentosa Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Xindia Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Madhucon Powers Ltd - India
- Renaissance Capital - South Africa
- Global Coal Blending Company Limited - Australia
- Energy Development Corp, Philippines
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Altura Mining Limited, Indonesia
- Dalmia Cement Bharat India
- Bukit Asam (Persero) Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- Semirara Mining Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Attock Cement Pakistan Limited
- Cigading International Bulk Terminal - Indonesia
- Latin American Coal - Colombia
- Pendopo Energi Batubara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Central Electricity Authority - India
- Simpson Spence & Young - Indonesia
- Sarangani Energy Corporation, Philippines
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Larsen & Toubro Limited - India
- Kideco Jaya Agung - Indonesia
- Toyota Tsusho Corporation, Japan
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- Orica Australia Pty. Ltd.
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Mercuria Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- Energy Link Ltd, New Zealand
- Parliament of New Zealand
- Banpu Public Company Limited - Thailand
- Gujarat Sidhee Cement - India
- Cement Manufacturers Association - India
- Chettinad Cement Corporation Ltd - India
- Price Waterhouse Coopers - Russia
- Rashtriya Ispat Nigam Limited - India
- Borneo Indobara - Indonesia
- Oldendorff Carriers - Singapore
- PTC India Limited - India
- Maharashtra Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- McConnell Dowell - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- OPG Power Generation Pvt Ltd - India
- Meralco Power Generation, Philippines
- Uttam Galva Steels Limited - India
- Romanian Commodities Exchange
- IEA Clean Coal Centre - UK
- Bangladesh Power Developement Board
- MS Steel International - UAE
- Kobexindo Tractors - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
- The University of Queensland
- Coastal Gujarat Power Limited - India
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
- Australian Coal Association
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Heidelberg Cement - Germany
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- Anglo American - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Eastern Coal Council - USA
- Kepco SPC Power Corporation, Philippines
- Ministry of Mines - Canada
- Deloitte Consulting - India
- Karbindo Abesyapradhi - Indoneisa
- Orica Mining Services - Indonesia
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- PNOC Exploration Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- Aboitiz Power Corporation - Philippines
- Marubeni Corporation - India
- Eastern Energy - Thailand
- Bhushan Steel Limited - India
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