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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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Wednesday, 18 March 15
Q2 INDONESIAN COAL SWAP DROP 1.45% M-O-M; GAIN 0.63% W-O-W
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 drop month on month and gained week over week.
The Q2 swap fell US$ 0.70 (1.45%) ...
Tuesday, 17 March 15
GAS TO CHALLENGE COAL IN THE ASIAN POWER GENERATION MIX - WOOD MACKENZIE
KNOWLEDGE TO ELEVATE
Wood Mackenzie says that coal is facing increasing competition from gas in the power sector. Coal has dominated as the fu ...
Tuesday, 17 March 15
RIO TINTO PAID US$ 7.1 BILLION IN TAXES IN 2014
COALspot.com: Rio Tinto has published its latest Taxes paid report, detailing the US$7.1 billion in taxes paid by the company around the world in 2 ...
Tuesday, 17 March 15
NEARLY 17% OF US COAL PRODUCTION UNECONOMIC AT CURRENT MARKET PRICING - WOOD MACKENZIE
COALspot.com: Close to 17% of forecast 2015 US coal production is at risk of idling or closure, totalling 162 million short tons (Mst), as these mi ...
Tuesday, 17 March 15
Q3' SA COAL SWAP CLOSED $57.30 PMT W/E 13 MARCH
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 declined month over month and gained week on week.
The Q2 swap has fe ...
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- Bayan Resources Tbk. - Indonesia
- Bukit Makmur.PT - Indonesia
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- Thiess Contractors Indonesia
- Siam City Cement PLC, Thailand
- Power Finance Corporation Ltd., India
- LBH Netherlands Bv - Netherlands
- Renaissance Capital - South Africa
- Bhoruka Overseas - Indonesia
- Kartika Selabumi Mining - Indonesia
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mintek Dendrill Indonesia
- Barasentosa Lestari - Indonesia
- Chamber of Mines of South Africa
- South Luzon Thermal Energy Corporation
- GMR Energy Limited - India
- Standard Chartered Bank - UAE
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- GAC Shipping (India) Pvt Ltd
- International Coal Ventures Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Kobexindo Tractors - Indoneisa
- Romanian Commodities Exchange
- Sinarmas Energy and Mining - Indonesia
- Singapore Mercantile Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Essar Steel Hazira Ltd - India
- Anglo American - United Kingdom
- Videocon Industries ltd - India
- Jaiprakash Power Ventures ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Latin American Coal - Colombia
- Petrochimia International Co. Ltd.- Taiwan
- Kalimantan Lumbung Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- TeaM Sual Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Edison Trading Spa - Italy
- Kideco Jaya Agung - Indonesia
- Georgia Ports Authority, United States
- Global Business Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Aditya Birla Group - India
- Parry Sugars Refinery, India
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Indo Tambangraya Megah - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Energy Development Corp, Philippines
- Xindia Steels Limited - India
- Eastern Energy - Thailand
- Kaltim Prima Coal - Indonesia
- Mjunction Services Limited - India
- Simpson Spence & Young - Indonesia
- Makarim & Taira - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bulk Trading Sa - Switzerland
- Posco Energy - South Korea
- Dalmia Cement Bharat India
- Port Waratah Coal Services - Australia
- McConnell Dowell - Australia
- Aboitiz Power Corporation - Philippines
- Coalindo Energy - Indonesia
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Attock Cement Pakistan Limited
- Binh Thuan Hamico - Vietnam
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
- Agrawal Coal Company - India
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
- New Zealand Coal & Carbon
- ICICI Bank Limited - India
- Metalloyd Limited - United Kingdom
- Karaikal Port Pvt Ltd - India
- Tamil Nadu electricity Board
- Timah Investasi Mineral - Indoneisa
- Wilmar Investment Holdings
- Manunggal Multi Energi - Indonesia
- Central Electricity Authority - India
- Electricity Authority, New Zealand
- Mercuria Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Bhatia International Limited - India
- Bharathi Cement Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Alfred C Toepfer International GmbH - Germany
- Ministry of Transport, Egypt
- Holcim Trading Pte Ltd - Singapore
- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
- Australian Commodity Traders Exchange
- Uttam Galva Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Miang Besar Coal Terminal - Indonesia
- Minerals Council of Australia
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Merrill Lynch Commodities Europe
- ASAPP Information Group - India
- Orica Australia Pty. Ltd.
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Kumho Petrochemical, South Korea
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- Pipit Mutiara Jaya. PT, Indonesia
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- Bhushan Steel Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Cigading International Bulk Terminal - Indonesia
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- The Treasury - Australian Government
- Krishnapatnam Port Company Ltd. - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- PowerSource Philippines DevCo
- Star Paper Mills Limited - India
- Independent Power Producers Association of India
- Orica Mining Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Carbofer General Trading SA - India
- Economic Council, Georgia
- Kohat Cement Company Ltd. - Pakistan
- San Jose City I Power Corp, Philippines
- Larsen & Toubro Limited - India
- Australian Coal Association
- Antam Resourcindo - Indonesia
- Goldman Sachs - Singapore
- CIMB Investment Bank - Malaysia
- Oldendorff Carriers - Singapore
- Medco Energi Mining Internasional
- Vedanta Resources Plc - India
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- Meralco Power Generation, Philippines
- Global Green Power PLC Corporation, Philippines
- Parliament of New Zealand
- Sree Jayajothi Cements Limited - India
- Semirara Mining and Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- Indika Energy - Indonesia
- Coal and Oil Company - UAE
- Neyveli Lignite Corporation Ltd, - India
- GN Power Mariveles Coal Plant, Philippines
- European Bulk Services B.V. - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Asmin Koalindo Tuhup - Indonesia
- Samtan Co., Ltd - South Korea
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- Petron Corporation, Philippines
- CNBM International Corporation - China
- Pendopo Energi Batubara - Indonesia
- Wood Mackenzie - Singapore
- Ministry of Mines - Canada
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- Planning Commission, India
- MS Steel International - UAE
- Kapuas Tunggal Persada - Indonesia
- Coastal Gujarat Power Limited - India
- Ind-Barath Power Infra Limited - India
- PTC India Limited - India
- Indian Oil Corporation Limited
- Maharashtra Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Lanco Infratech Ltd - India
- Indonesian Coal Mining Association
- Globalindo Alam Lestari - Indonesia
- Siam City Cement - Thailand
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Leighton Contractors Pty Ltd - Australia
- Cement Manufacturers Association - India
- Marubeni Corporation - India
- Mercator Lines Limited - India
- Riau Bara Harum - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- The University of Queensland
- OPG Power Generation Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Bangladesh Power Developement Board
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