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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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Friday, 13 March 15
U.S. COAL PRODUCTION UP 2.3% WEEK OVER WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.5 million short tons (mmst) of coal ...
Friday, 13 March 15
ADARO RECORDED A 7% INCREASE IN EBITDA OF $877 MILLION IN 2014
“Coal market continues to be difficult and challenging” – Adaro Energy
The world’s Top 5 thermal coal exporter, ...
Thursday, 12 March 15
CAPESIZE : ACTIVITY IS LOW; PANAMAX: BIT MORE ACTIVITY; HANDY: A FIRMING WEEK
Handy
It has been a firming week in both hemispheres this week and especially in the Pacific, says Fearnleys AS in its week's week report.
...
Thursday, 12 March 15
COAL MINERS REMAIN UNDER PRESSURE AS GLUT CONTINUES - THE JAKARTA POST
Indonesia’s major coal miners reported a significant drop in their earnings last year as the sharp drop in the global demand, mainly from Chi ...
Thursday, 12 March 15
FOB INDONESIA COAL SWAP DROP TO $47.33 A TON IN THE WEEK ENDED MAR.6
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 drop month on month and week over week.
The Q2 swap fell US$ 0.37 (0.78%) month ...
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- OPG Power Generation Pvt Ltd - India
- Grasim Industreis Ltd - India
- Power Finance Corporation Ltd., India
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- Parliament of New Zealand
- PowerSource Philippines DevCo
- Oldendorff Carriers - Singapore
- Siam City Cement - Thailand
- Ind-Barath Power Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coal and Oil Company - UAE
- Australian Coal Association
- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Renaissance Capital - South Africa
- Price Waterhouse Coopers - Russia
- Kumho Petrochemical, South Korea
- Petron Corporation, Philippines
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Maharashtra Electricity Regulatory Commission - India
- AsiaOL BioFuels Corp., Philippines
- Indogreen Group - Indonesia
- Timah Investasi Mineral - Indoneisa
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- Antam Resourcindo - Indonesia
- Heidelberg Cement - Germany
- Deloitte Consulting - India
- Edison Trading Spa - Italy
- Orica Mining Services - Indonesia
- GVK Power & Infra Limited - India
- Xindia Steels Limited - India
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- Vizag Seaport Private Limited - India
- Tamil Nadu electricity Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- India Bulls Power Limited - India
- Mercuria Energy - Indonesia
- Aditya Birla Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Banpu Public Company Limited - Thailand
- Directorate Of Revenue Intelligence - India
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Authority, New Zealand
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
- Uttam Galva Steels Limited - India
- Borneo Indobara - Indonesia
- Minerals Council of Australia
- Agrawal Coal Company - India
- Siam City Cement PLC, Thailand
- Global Business Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Samtan Co., Ltd - South Korea
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- Makarim & Taira - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Intertek Mineral Services - Indonesia
- Ministry of Transport, Egypt
- Tata Chemicals Ltd - India
- Energy Development Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Pendopo Energi Batubara - Indonesia
- Posco Energy - South Korea
- Standard Chartered Bank - UAE
- Gujarat Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Iligan Light & Power Inc, Philippines
- VISA Power Limited - India
- Central Electricity Authority - India
- Vijayanagar Sugar Pvt Ltd - India
- Madhucon Powers Ltd - India
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
- Latin American Coal - Colombia
- Cigading International Bulk Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Bharathi Cement Corporation - India
- Bhoruka Overseas - Indonesia
- Dalmia Cement Bharat India
- Indo Tambangraya Megah - Indonesia
- Sojitz Corporation - Japan
- PTC India Limited - India
- Indika Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- Krishnapatnam Port Company Ltd. - India
- Kalimantan Lumbung Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Wood Mackenzie - Singapore
- Star Paper Mills Limited - India
- The State Trading Corporation of India Ltd
- Malabar Cements Ltd - India
- Coalindo Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- Manunggal Multi Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- Videocon Industries ltd - India
- Wilmar Investment Holdings
- Interocean Group of Companies - India
- Formosa Plastics Group - Taiwan
- ASAPP Information Group - India
- Therma Luzon, Inc, Philippines
- Singapore Mercantile Exchange
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Finance - Indonesia
- Port Waratah Coal Services - Australia
- CNBM International Corporation - China
- Cement Manufacturers Association - India
- South Luzon Thermal Energy Corporation
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- IHS Mccloskey Coal Group - USA
- Miang Besar Coal Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- PetroVietnam Power Coal Import and Supply Company
- Jorong Barutama Greston.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Attock Cement Pakistan Limited
- Barasentosa Lestari - Indonesia
- SMC Global Power, Philippines
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- PNOC Exploration Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Carbofer General Trading SA - India
- Bukit Asam (Persero) Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- Kobexindo Tractors - Indoneisa
- The Treasury - Australian Government
- TNB Fuel Sdn Bhd - Malaysia
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Global Coal Blending Company Limited - Australia
- Bhatia International Limited - India
- Ambuja Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Eastern Coal Council - USA
- Asmin Koalindo Tuhup - Indonesia
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Energy Link Ltd, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Commonwealth Bank - Australia
- Indian Energy Exchange, India
- Economic Council, Georgia
- Mintek Dendrill Indonesia
- London Commodity Brokers - England
- Directorate General of MIneral and Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Indonesian Coal Mining Association
- Sindya Power Generating Company Private Ltd
- Kohat Cement Company Ltd. - Pakistan
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- GMR Energy Limited - India
- Kapuas Tunggal Persada - Indonesia
- Indian Oil Corporation Limited
- Meralco Power Generation, Philippines
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- Aboitiz Power Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Sakthi Sugars Limited - India
- MS Steel International - UAE
- Sree Jayajothi Cements Limited - India
- Orica Australia Pty. Ltd.
- International Coal Ventures Pvt Ltd - India
- Thiess Contractors Indonesia
- The University of Queensland
- Bhushan Steel Limited - India
- SMG Consultants - Indonesia
- Romanian Commodities Exchange
- Mjunction Services Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
- Essar Steel Hazira Ltd - India
- Georgia Ports Authority, United States
- Sical Logistics Limited - India
- White Energy Company Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IEA Clean Coal Centre - UK
- Coastal Gujarat Power Limited - India
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