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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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Friday, 21 February 14
INDONESIA PLAN TO CAP COAL OUTPUT AND HIKE ROYALTY; START MUSIC
COALspot.com: Energy and Mineral Resources Ministy of Indonesia is planning to increase the royalty for coal miners particularly for Mining Business ...
Friday, 21 February 14
THE WORLD'S SECOND LARGEST COAL MINER MINED 19.2 MMST OF COAL IN A WEEK, EIA SAYS
COALspot.com – United States the world’s second largest coal producer, mined approximately 19.2 million short tons (mmst) of coal in a w ...
Friday, 21 February 14
DRY BULK MARKET SHOWS SIGNS OF LIFE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has slowly started to emerge from the downfall it's been since the start of the year, as rates have began to pick up over the c ...
Friday, 21 February 14
INDONESIA COAL OUTPUT CAP TO HURT MINERS RELIANT ON VOLUME GROWTH, FITCH SAYS
Fitch Ratings says that the credit profiles of mining sub-contractors and miners highly reliant on increasing volumes to support high debt servicing w ...
Thursday, 20 February 14
LENGTHY DELAYS TO PANAMA CANAL EXPANSION POSE GLOBAL TRADE RISKS; US COAL PRODUCERS TO GREATLY BENEFIT ONCE COMPLETE, SAYS WOOD MACKENZIE
Wood Mackenzie expects the recent cost overrun disputes around the Panama Canal expansion to be resolved with limited disruption due to the signific ...
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- AsiaOL BioFuels Corp., Philippines
- Coastal Gujarat Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- Bhushan Steel Limited - India
- Commonwealth Bank - Australia
- Salva Resources Pvt Ltd - India
- Indian Oil Corporation Limited
- Grasim Industreis Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PowerSource Philippines DevCo
- Energy Link Ltd, New Zealand
- Standard Chartered Bank - UAE
- Maheswari Brothers Coal Limited - India
- Edison Trading Spa - Italy
- Global Coal Blending Company Limited - Australia
- Interocean Group of Companies - India
- Asmin Koalindo Tuhup - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- GMR Energy Limited - India
- Bangladesh Power Developement Board
- TeaM Sual Corporation - Philippines
- Sakthi Sugars Limited - India
- ASAPP Information Group - India
- Kapuas Tunggal Persada - Indonesia
- Latin American Coal - Colombia
- Attock Cement Pakistan Limited
- Sinarmas Energy and Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Minerals Council of Australia
- Mercator Lines Limited - India
- Planning Commission, India
- Romanian Commodities Exchange
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Indika Energy - Indonesia
- VISA Power Limited - India
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- Australian Coal Association
- Dalmia Cement Bharat India
- Ministry of Mines - Canada
- Banpu Public Company Limited - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Rio Tinto Coal - Australia
- Directorate Of Revenue Intelligence - India
- Sical Logistics Limited - India
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- Posco Energy - South Korea
- Mercuria Energy - Indonesia
- Trasteel International SA, Italy
- Essar Steel Hazira Ltd - India
- McConnell Dowell - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Transport, Egypt
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- Mintek Dendrill Indonesia
- Thiess Contractors Indonesia
- Central Java Power - Indonesia
- Alfred C Toepfer International GmbH - Germany
- LBH Netherlands Bv - Netherlands
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- SMG Consultants - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- PNOC Exploration Corporation - Philippines
- The University of Queensland
- Australian Commodity Traders Exchange
- Baramulti Group, Indonesia
- Makarim & Taira - Indonesia
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- Chamber of Mines of South Africa
- Jorong Barutama Greston.PT - Indonesia
- Vizag Seaport Private Limited - India
- Bukit Makmur.PT - Indonesia
- Semirara Mining Corp, Philippines
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Indian Energy Exchange, India
- PTC India Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Marubeni Corporation - India
- Orica Mining Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- Larsen & Toubro Limited - India
- Siam City Cement - Thailand
- Madhucon Powers Ltd - India
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- Petron Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- CNBM International Corporation - China
- Port Waratah Coal Services - Australia
- Bharathi Cement Corporation - India
- India Bulls Power Limited - India
- Kaltim Prima Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- Intertek Mineral Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Ministry of Finance - Indonesia
- Sindya Power Generating Company Private Ltd
- PetroVietnam Power Coal Import and Supply Company
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Bulk Trading Sa - Switzerland
- Samtan Co., Ltd - South Korea
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- White Energy Company Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jaiprakash Power Ventures ltd
- Timah Investasi Mineral - Indoneisa
- Xindia Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Malabar Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Barasentosa Lestari - Indonesia
- Electricity Authority, New Zealand
- Deloitte Consulting - India
- Pendopo Energi Batubara - Indonesia
- Merrill Lynch Commodities Europe
- OPG Power Generation Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhoruka Overseas - Indonesia
- Anglo American - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- European Bulk Services B.V. - Netherlands
- Agrawal Coal Company - India
- Renaissance Capital - South Africa
- New Zealand Coal & Carbon
- The Treasury - Australian Government
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement PLC, Thailand
- Karaikal Port Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Coal and Oil Company - UAE
- Aditya Birla Group - India
- Sojitz Corporation - Japan
- Singapore Mercantile Exchange
- ICICI Bank Limited - India
- Bayan Resources Tbk. - Indonesia
- Indonesian Coal Mining Association
- Jindal Steel & Power Ltd - India
- San Jose City I Power Corp, Philippines
- London Commodity Brokers - England
- Price Waterhouse Coopers - Russia
- Global Green Power PLC Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Parry Sugars Refinery, India
- Miang Besar Coal Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Georgia Ports Authority, United States
- Electricity Generating Authority of Thailand
- Bukit Baiduri Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- Ind-Barath Power Infra Limited - India
- Ambuja Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- Coalindo Energy - Indonesia
- Independent Power Producers Association of India
- The State Trading Corporation of India Ltd
- Economic Council, Georgia
- Formosa Plastics Group - Taiwan
- IHS Mccloskey Coal Group - USA
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Central Electricity Authority - India
- Kumho Petrochemical, South Korea
- Savvy Resources Ltd - HongKong
- Maharashtra Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Antam Resourcindo - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- Cement Manufacturers Association - India
- Rashtriya Ispat Nigam Limited - India
- GVK Power & Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Thai Mozambique Logistica
- Billiton Holdings Pty Ltd - Australia
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