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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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- Mjunction Services Limited - India
- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- Bayan Resources Tbk. - Indonesia
- Baramulti Group, Indonesia
- The Treasury - Australian Government
- Coal and Oil Company - UAE
- Directorate Of Revenue Intelligence - India
- Wilmar Investment Holdings
- Petrochimia International Co. Ltd.- Taiwan
- Orica Australia Pty. Ltd.
- Essar Steel Hazira Ltd - India
- Bangladesh Power Developement Board
- The State Trading Corporation of India Ltd
- Xindia Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- PowerSource Philippines DevCo
- Binh Thuan Hamico - Vietnam
- Manunggal Multi Energi - Indonesia
- Samtan Co., Ltd - South Korea
- SN Aboitiz Power Inc, Philippines
- New Zealand Coal & Carbon
- Metalloyd Limited - United Kingdom
- PNOC Exploration Corporation - Philippines
- India Bulls Power Limited - India
- Indonesian Coal Mining Association
- Timah Investasi Mineral - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sinarmas Energy and Mining - Indonesia
- Petron Corporation, Philippines
- Marubeni Corporation - India
- Tamil Nadu electricity Board
- Karaikal Port Pvt Ltd - India
- SMC Global Power, Philippines
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- Pendopo Energi Batubara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
- Kobexindo Tractors - Indoneisa
- Global Business Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- ASAPP Information Group - India
- Independent Power Producers Association of India
- Parliament of New Zealand
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- International Coal Ventures Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Lanco Infratech Ltd - India
- Orica Mining Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Tata Chemicals Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Uttam Galva Steels Limited - India
- White Energy Company Limited
- Asmin Koalindo Tuhup - Indonesia
- Aditya Birla Group - India
- Directorate General of MIneral and Coal - Indonesia
- Oldendorff Carriers - Singapore
- Mercuria Energy - Indonesia
- GVK Power & Infra Limited - India
- Economic Council, Georgia
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Indogreen Group - Indonesia
- Rio Tinto Coal - Australia
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- Sindya Power Generating Company Private Ltd
- Krishnapatnam Port Company Ltd. - India
- Vijayanagar Sugar Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- OPG Power Generation Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- European Bulk Services B.V. - Netherlands
- Interocean Group of Companies - India
- Goldman Sachs - Singapore
- Aboitiz Power Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Planning Commission, India
- Antam Resourcindo - Indonesia
- Bukit Makmur.PT - Indonesia
- Thiess Contractors Indonesia
- VISA Power Limited - India
- Ministry of Transport, Egypt
- Banpu Public Company Limited - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Indian Energy Exchange, India
- Energy Link Ltd, New Zealand
- Agrawal Coal Company - India
- Gujarat Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Ceylon Electricity Board - Sri Lanka
- Energy Development Corp, Philippines
- Thai Mozambique Logistica
- Leighton Contractors Pty Ltd - Australia
- Electricity Authority, New Zealand
- Indika Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- Savvy Resources Ltd - HongKong
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- Kartika Selabumi Mining - Indonesia
- Bhatia International Limited - India
- Ministry of Finance - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Latin American Coal - Colombia
- CNBM International Corporation - China
- Miang Besar Coal Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Siam City Cement PLC, Thailand
- Grasim Industreis Ltd - India
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Sarangani Energy Corporation, Philippines
- Mintek Dendrill Indonesia
- Mercator Lines Limited - India
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Barasentosa Lestari - Indonesia
- Larsen & Toubro Limited - India
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Salva Resources Pvt Ltd - India
- Merrill Lynch Commodities Europe
- LBH Netherlands Bv - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Commodity Traders Exchange
- Australian Coal Association
- Alfred C Toepfer International GmbH - Germany
- Global Green Power PLC Corporation, Philippines
- Port Waratah Coal Services - Australia
- Vedanta Resources Plc - India
- Electricity Generating Authority of Thailand
- Sree Jayajothi Cements Limited - India
- Globalindo Alam Lestari - Indonesia
- Edison Trading Spa - Italy
- Iligan Light & Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Power Finance Corporation Ltd., India
- Sical Logistics Limited - India
- Sakthi Sugars Limited - India
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- Renaissance Capital - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Oil Corporation Limited
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Anglo American - United Kingdom
- McConnell Dowell - Australia
- Star Paper Mills Limited - India
- Jindal Steel & Power Ltd - India
- Chamber of Mines of South Africa
- Minerals Council of Australia
- Malabar Cements Ltd - India
- Eastern Energy - Thailand
- Romanian Commodities Exchange
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- Africa Commodities Group - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Sojitz Corporation - Japan
- Ambuja Cements Ltd - India
- Bharathi Cement Corporation - India
- Wood Mackenzie - Singapore
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
- Heidelberg Cement - Germany
- Altura Mining Limited, Indonesia
- Attock Cement Pakistan Limited
- GAC Shipping (India) Pvt Ltd
- Georgia Ports Authority, United States
- Dalmia Cement Bharat India
- Global Coal Blending Company Limited - Australia
- SMG Consultants - Indonesia
- Chettinad Cement Corporation Ltd - India
- Carbofer General Trading SA - India
- AsiaOL BioFuels Corp., Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Baiduri Energy - Indonesia
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TeaM Sual Corporation - Philippines
- Posco Energy - South Korea
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
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