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Wednesday, 11 March 15
MARKET INSIGHT : NEWBUILDINGS - PANOS TSILINGIRIS
 From a cost-based, buy-low perspective, there is currently a buying opportunity in the second-hand dry bulk market. I am an anti-cyclical (buy-low) investor as bulk shipping has been cyclical throughout its history because of the inherent delay in supplying and using up the underlying assets (ships). E.g., shipyards currently quote deliveries 2-3 years later while there is intrinsic uncertainty in the duration of the ‘useful life’ of a vessel; the overage trading vessels at the 2007-08 peak of the previous cycle contrast with the recent scrapping of the 2000-built Capesize ‘Cape Flora’.
The cost component is rather obscure. Theoretically, if demand and supply were always balanced, then shipbuilding prices would be the construction cost plus some realistic profit margin for the yard, thus, eventually converging to the true cost. If one knew this, he could determine whether he buys low or not. But having a transparent measure of shipbuilding cost is difficult because it is confidential information and depends on several factors.
We take a shortcut and concentrate on 1986, 1999 and 2012, when it is acknowledged that shipbuilding prices were low. We also resort to the U.S. Consumer Price Index as a proxy for the value of money over time. Then, some beautiful patterns emerge: the 1986 low of $13.5m for the construction of a Panamax Bulker corresponds to $20.45m in 1999 dollar terms, while the actual (nominal) low in 1999 was $19m. This, in turn, corresponds to $26.2m 2012 dollars, with the actual low in late 2012 being rgn $26m, or xs $27m in today’s terms.
This time is different from late 2012 when shipyards were desperate for orders as they were flirting with idleness. We have not this time hit bottom since yards have substantial orderbooks, the incentives for new orders are weaker (low fuel price, poor freight market) and cost components (weaker Yen, lower steel prices) result in a cheaper construction breakeven. Fortunately, although one cannot order today below cost, he can instead buy low a similar asset that already exists in the S&P market. Second-hand values are hovering close to 15-year lows, even in nominal terms, and only in the 1980s crash they were lower in today’s dollars. Meantime, the second-hand to newbuilding price ratios are today the lowest post-1980s.
To conclude, we identified certain points in history (1986, 1999, 2012) when shipbuilding prices were below cost and realized these lows converged to each other in same-year denominated dollars. We then implicitly inferred that ordering newbuildings today is sub-optimal due to the current depressed S&P values which are south of the respective lows in 1999 and 2012. To complete, a buy-low, sell-higher investment strategy, there needs to be substantial trading time ahead for the acquired tonnage. Given that shipping cycles generally do not last longer than 10 years and we have already entered the 7th year of the ongoing cycle, acquiring now modern second-hand tonnage offers the promise for asset play.
By Panos Tsilingiris
Newbuildings / SnP Broker
Compiled by:
Intermodal Research & Valuations
Analysts:
Ms. Eva Tzima
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, 19 March 15
HANDY: INDO COAL CARGOS DESTINED FOR INDIA BEING FIXED IN REGION OF $ 7-8K - FEARNLEYS
Handy
The Handy and Supra market has had a week with mixed signals. Although we see more activity in both hemispheres the rates are only up about ...
Thursday, 19 March 15
INDONESIAN COAL BENCHMARK SOAR 7.69% IN MARCH....!!!
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised up Indonesian coal benchmark prices to US$ 67.76 per MT in March ...
Wednesday, 18 March 15
AVERAGE RATE FOR CAPES MOVED TO BELOW $ 4K/DAY LAST WEEK - INTERMODAL
COALspot.com: The even heavier losses noted in the Capesize segment last week, denied the Dry Bulk market a third weekly positive, while the smalle ...
Wednesday, 18 March 15
PARKING THE CAPES - LINOS KOGEVINAS
It is no secret that recent times have been anything but kind towards shipping, and no sector has suffered more lately than the dry bulk one. While ...
Wednesday, 18 March 15
CHINA-OWNED SHIPS: A RAPID RISE TO BECOME ONE OF THE WORLD'S LARGEST FLEETS - RICHARD SCOTT
Ships operated by owners based in China have become increasingly prominent on the world’s sea routes. China-owned container ships, bulk carri ...
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- Karbindo Abesyapradhi - Indoneisa
- Maheswari Brothers Coal Limited - India
- Tata Chemicals Ltd - India
- Commonwealth Bank - Australia
- Baramulti Group, Indonesia
- Meralco Power Generation, Philippines
- New Zealand Coal & Carbon
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- Grasim Industreis Ltd - India
- Posco Energy - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Toyota Tsusho Corporation, Japan
- Latin American Coal - Colombia
- Energy Development Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Chettinad Cement Corporation Ltd - India
- Kepco SPC Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Eastern Energy - Thailand
- Minerals Council of Australia
- Oldendorff Carriers - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Aditya Birla Group - India
- VISA Power Limited - India
- Power Finance Corporation Ltd., India
- Australian Commodity Traders Exchange
- Rio Tinto Coal - Australia
- Sarangani Energy Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Ind-Barath Power Infra Limited - India
- Chamber of Mines of South Africa
- White Energy Company Limited
- IHS Mccloskey Coal Group - USA
- Makarim & Taira - Indonesia
- SN Aboitiz Power Inc, Philippines
- Edison Trading Spa - Italy
- Dalmia Cement Bharat India
- Petron Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Coal Association
- Coalindo Energy - Indonesia
- Indian Oil Corporation Limited
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- Riau Bara Harum - Indonesia
- Essar Steel Hazira Ltd - India
- SMG Consultants - Indonesia
- GMR Energy Limited - India
- Formosa Plastics Group - Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- Ceylon Electricity Board - Sri Lanka
- Pipit Mutiara Jaya. PT, Indonesia
- Kumho Petrochemical, South Korea
- Goldman Sachs - Singapore
- PTC India Limited - India
- Billiton Holdings Pty Ltd - Australia
- Cement Manufacturers Association - India
- Semirara Mining Corp, Philippines
- GVK Power & Infra Limited - India
- Planning Commission, India
- Directorate Of Revenue Intelligence - India
- Attock Cement Pakistan Limited
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Vedanta Resources Plc - India
- Bhoruka Overseas - Indonesia
- Medco Energi Mining Internasional
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- Heidelberg Cement - Germany
- Coal and Oil Company - UAE
- Sindya Power Generating Company Private Ltd
- Gujarat Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Siam City Cement - Thailand
- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- Kaltim Prima Coal - Indonesia
- London Commodity Brokers - England
- Ambuja Cements Ltd - India
- PowerSource Philippines DevCo
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Lanco Infratech Ltd - India
- Indian Energy Exchange, India
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- OPG Power Generation Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Bayan Resources Tbk. - Indonesia
- Carbofer General Trading SA - India
- IEA Clean Coal Centre - UK
- Pendopo Energi Batubara - Indonesia
- Wood Mackenzie - Singapore
- Thiess Contractors Indonesia
- Borneo Indobara - Indonesia
- Agrawal Coal Company - India
- Metalloyd Limited - United Kingdom
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
- Eastern Coal Council - USA
- Alfred C Toepfer International GmbH - Germany
- Kartika Selabumi Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- SMC Global Power, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- San Jose City I Power Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Global Business Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Singapore Mercantile Exchange
- Salva Resources Pvt Ltd - India
- Trasteel International SA, Italy
- Karaikal Port Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- Jaiprakash Power Ventures ltd
- Energy Link Ltd, New Zealand
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- Offshore Bulk Terminal Pte Ltd, Singapore
- European Bulk Services B.V. - Netherlands
- Kideco Jaya Agung - Indonesia
- Electricity Generating Authority of Thailand
- Parry Sugars Refinery, India
- Port Waratah Coal Services - Australia
- Electricity Authority, New Zealand
- Bharathi Cement Corporation - India
- Binh Thuan Hamico - Vietnam
- Indogreen Group - Indonesia
- Sree Jayajothi Cements Limited - India
- Timah Investasi Mineral - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Antam Resourcindo - Indonesia
- Iligan Light & Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- ASAPP Information Group - India
- Ministry of Transport, Egypt
- South Luzon Thermal Energy Corporation
- Bulk Trading Sa - Switzerland
- Directorate General of MIneral and Coal - Indonesia
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Orica Mining Services - Indonesia
- Economic Council, Georgia
- Siam City Cement PLC, Thailand
- Indonesian Coal Mining Association
- TeaM Sual Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Central Java Power - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- Interocean Group of Companies - India
- Jorong Barutama Greston.PT - Indonesia
- Sojitz Corporation - Japan
- Tamil Nadu electricity Board
- McConnell Dowell - Australia
- Videocon Industries ltd - India
- Altura Mining Limited, Indonesia
- Indika Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Meenaskhi Energy Private Limited - India
- Samtan Co., Ltd - South Korea
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- Malabar Cements Ltd - India
- Sical Logistics Limited - India
- Mjunction Services Limited - India
- Savvy Resources Ltd - HongKong
- Star Paper Mills Limited - India
- Independent Power Producers Association of India
- Mercuria Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- Bhushan Steel Limited - India
- Ministry of Finance - Indonesia
- The University of Queensland
- CIMB Investment Bank - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- MS Steel International - UAE
- Larsen & Toubro Limited - India
- Xindia Steels Limited - India
- Uttam Galva Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Africa Commodities Group - South Africa
- Central Electricity Authority - India
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