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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, 11 March 15
RICHARDS BAY COAL SWAPS DROP $ 3.65 - 4.0/T W-O-W
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 declined month over month and week on week.
The Q2 swap has fell US$ ...
Wednesday, 11 March 15
DRY BULK MARKET CLOSED OFF ON THE GREEN FOR A SECOND WEEK IN A ROW - INTERMODAL
COALspot.com: The Dry Bulk market closed off on the green for a second week in a row, while the performance of Capesizes hindered a more substantia ...
Wednesday, 11 March 15
DRY BULK MARKET: ALL IS NOT LOST FOR A RECOVERY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The low cost of commodities across the board could trigger an increase of trade among many countries, which in turn could lead to a recovery of the ...
Wednesday, 11 March 15
U.S. ELECTRIC GENERATING COMPANIES TO ADD MORE THAN 20 GW OF GENERATING CAPACITY IN 2015; 16 GW OF GENERATING CAPACITY IS EXPECTED TO RETIRE IN 2015
COALspot.com: In 2015, electric generating companies in U.S. expect to add more than 20 gigawatts (GW) of utility-scale generating capacity to the ...
Tuesday, 10 March 15
OIL PRICE FORECASTING - IGNORE THE EXPERTS: COLIN MARSHALL
KNOWLEDGE TO ELEVATE
Experts put themselves on a pedestal, making claims to have special forecasting abilities for oil price trends. They, too ...
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- GMR Energy Limited - India
- Mercuria Energy - Indonesia
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Tata Chemicals Ltd - India
- Intertek Mineral Services - Indonesia
- Videocon Industries ltd - India
- Independent Power Producers Association of India
- Africa Commodities Group - South Africa
- ICICI Bank Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Antam Resourcindo - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jorong Barutama Greston.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Samtan Co., Ltd - South Korea
- Australian Commodity Traders Exchange
- PetroVietnam Power Coal Import and Supply Company
- Madhucon Powers Ltd - India
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Manunggal Multi Energi - Indonesia
- Georgia Ports Authority, United States
- Formosa Plastics Group - Taiwan
- Australian Coal Association
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Riau Bara Harum - Indonesia
- Indian Oil Corporation Limited
- Economic Council, Georgia
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- Minerals Council of Australia
- Rashtriya Ispat Nigam Limited - India
- Billiton Holdings Pty Ltd - Australia
- Heidelberg Cement - Germany
- The Treasury - Australian Government
- Meralco Power Generation, Philippines
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Central Electricity Authority - India
- Sakthi Sugars Limited - India
- Indonesian Coal Mining Association
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Vedanta Resources Plc - India
- Bhoruka Overseas - Indonesia
- GAC Shipping (India) Pvt Ltd
- New Zealand Coal & Carbon
- The State Trading Corporation of India Ltd
- South Luzon Thermal Energy Corporation
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
- Alfred C Toepfer International GmbH - Germany
- Savvy Resources Ltd - HongKong
- Leighton Contractors Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Rio Tinto Coal - Australia
- Wilmar Investment Holdings
- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- Posco Energy - South Korea
- Coastal Gujarat Power Limited - India
- Chettinad Cement Corporation Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Port Waratah Coal Services - Australia
- AsiaOL BioFuels Corp., Philippines
- Toyota Tsusho Corporation, Japan
- Ceylon Electricity Board - Sri Lanka
- Malabar Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- MS Steel International - UAE
- Energy Link Ltd, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- Jindal Steel & Power Ltd - India
- Renaissance Capital - South Africa
- Bayan Resources Tbk. - Indonesia
- Electricity Generating Authority of Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- Parry Sugars Refinery, India
- Borneo Indobara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- Central Java Power - Indonesia
- Thiess Contractors Indonesia
- Simpson Spence & Young - Indonesia
- ASAPP Information Group - India
- Bangladesh Power Developement Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Authority, New Zealand
- VISA Power Limited - India
- Kideco Jaya Agung - Indonesia
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Global Business Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Sical Logistics Limited - India
- Iligan Light & Power Inc, Philippines
- Eastern Coal Council - USA
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- Goldman Sachs - Singapore
- Bukit Baiduri Energy - Indonesia
- Attock Cement Pakistan Limited
- Orica Australia Pty. Ltd.
- Uttam Galva Steels Limited - India
- GVK Power & Infra Limited - India
- Orica Mining Services - Indonesia
- Siam City Cement PLC, Thailand
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- Vizag Seaport Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Makarim & Taira - Indonesia
- Therma Luzon, Inc, Philippines
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Indika Energy - Indonesia
- Larsen & Toubro Limited - India
- Semirara Mining and Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Eastern Energy - Thailand
- Bhatia International Limited - India
- Marubeni Corporation - India
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- Star Paper Mills Limited - India
- Aditya Birla Group - India
- Globalindo Alam Lestari - Indonesia
- Ministry of Transport, Egypt
- Coal and Oil Company - UAE
- Ministry of Finance - Indonesia
- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- Indo Tambangraya Megah - Indonesia
- CNBM International Corporation - China
- Tamil Nadu electricity Board
- Sindya Power Generating Company Private Ltd
- Medco Energi Mining Internasional
- Bukit Makmur.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- Edison Trading Spa - Italy
- PTC India Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Thai Mozambique Logistica
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- OPG Power Generation Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Dalmia Cement Bharat India
- Carbofer General Trading SA - India
- Mercator Lines Limited - India
- Trasteel International SA, Italy
- Planning Commission, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kumho Petrochemical, South Korea
- Sinarmas Energy and Mining - Indonesia
- Parliament of New Zealand
- Barasentosa Lestari - Indonesia
- Agrawal Coal Company - India
- Sarangani Energy Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Timah Investasi Mineral - Indoneisa
- White Energy Company Limited
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Directorate Of Revenue Intelligence - India
- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- SN Aboitiz Power Inc, Philippines
- Lanco Infratech Ltd - India
- SMC Global Power, Philippines
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