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