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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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Tuesday, 10 March 15
FOB NEWCASTLE COAL SWAPS HEADING SOUTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 0.24 per MT (-0.47%) month over month and US$ 1.52 (-2.93%) we ...
Tuesday, 10 March 15
CFR SOUTH CHINA POWER-STATION COAL SWAPS DECLINE
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery fell US$ 0.42 (-0.74%) per MT month over month and declined US$ 1.00 &nbs ...
Monday, 09 March 15
INDONESIA GREETS INDIA RATE CUT AS GOOD FOR EXPORTS - GLOBEASIA
Indonesian commodity producers and economists have hailed the Indian central bank’s rate cut as good for boosting exports from Southeast Asia ...
Monday, 09 March 15
CHINA'S SUPREME COURT ISSUES NEW JUDICIAL INTERPRETATION ON SHIP ARREST AND JUDICIAL SALE OF SHIPS - GARD
KNOWLEDGE TO ELEVATE
China is not traditionally a popular jurisdiction for ship arrest. However, Members and clients with ships calling at por ...
Monday, 09 March 15
CHINA'S IMPORTS - NEVER MORE IMPORTANT TO SHIPPING? - CLARKSONS
Over the last 15 years China has led maritime forecasters a right old dance. In 2002, rumours that Chinese iron ore imports were about to take off ...
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- Jindal Steel & Power Ltd - India
- GAC Shipping (India) Pvt Ltd
- Australian Commodity Traders Exchange
- Aboitiz Power Corporation - Philippines
- Petron Corporation, Philippines
- Vizag Seaport Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Bharathi Cement Corporation - India
- Jaiprakash Power Ventures ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Globalindo Alam Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Electricity Generating Authority of Thailand
- Eastern Coal Council - USA
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- Samtan Co., Ltd - South Korea
- Bulk Trading Sa - Switzerland
- Larsen & Toubro Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Africa Commodities Group - South Africa
- Parry Sugars Refinery, India
- Sojitz Corporation - Japan
- Malabar Cements Ltd - India
- Coal and Oil Company - UAE
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
- MS Steel International - UAE
- Coastal Gujarat Power Limited - India
- Electricity Authority, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Holcim Trading Pte Ltd - Singapore
- Orica Australia Pty. Ltd.
- TeaM Sual Corporation - Philippines
- Gujarat Sidhee Cement - India
- Toyota Tsusho Corporation, Japan
- Kalimantan Lumbung Energi - Indonesia
- Mintek Dendrill Indonesia
- Independent Power Producers Association of India
- VISA Power Limited - India
- Port Waratah Coal Services - Australia
- Aditya Birla Group - India
- Savvy Resources Ltd - HongKong
- Kaltim Prima Coal - Indonesia
- Energy Development Corp, Philippines
- Antam Resourcindo - Indonesia
- Karaikal Port Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Electricity Authority - India
- Siam City Cement PLC, Thailand
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Madhucon Powers Ltd - India
- Thai Mozambique Logistica
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- Formosa Plastics Group - Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Coalindo Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- GMR Energy Limited - India
- European Bulk Services B.V. - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Romanian Commodities Exchange
- Oldendorff Carriers - Singapore
- Therma Luzon, Inc, Philippines
- Mjunction Services Limited - India
- Kumho Petrochemical, South Korea
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Indian Energy Exchange, India
- Tamil Nadu electricity Board
- Directorate Of Revenue Intelligence - India
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Baramulti Group, Indonesia
- Timah Investasi Mineral - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- Orica Mining Services - Indonesia
- Parliament of New Zealand
- Tata Chemicals Ltd - India
- Bangladesh Power Developement Board
- Sakthi Sugars Limited - India
- Indian Oil Corporation Limited
- Straits Asia Resources Limited - Singapore
- ICICI Bank Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Power Finance Corporation Ltd., India
- Deloitte Consulting - India
- Bhushan Steel Limited - India
- Sinarmas Energy and Mining - Indonesia
- Commonwealth Bank - Australia
- White Energy Company Limited
- Altura Mining Limited, Indonesia
- Posco Energy - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- ASAPP Information Group - India
- Sindya Power Generating Company Private Ltd
- Karbindo Abesyapradhi - Indoneisa
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maharashtra Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- PTC India Limited - India
- Chamber of Mines of South Africa
- Star Paper Mills Limited - India
- The State Trading Corporation of India Ltd
- Indika Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Renaissance Capital - South Africa
- Trasteel International SA, Italy
- Anglo American - United Kingdom
- Carbofer General Trading SA - India
- Medco Energi Mining Internasional
- Gujarat Electricity Regulatory Commission - India
- Planning Commission, India
- Latin American Coal - Colombia
- Ministry of Transport, Egypt
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Sical Logistics Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- AsiaOL BioFuels Corp., Philippines
- Cement Manufacturers Association - India
- Banpu Public Company Limited - Thailand
- Global Green Power PLC Corporation, Philippines
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Ministry of Mines - Canada
- Singapore Mercantile Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- Salva Resources Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Australian Coal Association
- Wilmar Investment Holdings
- Economic Council, Georgia
- Metalloyd Limited - United Kingdom
- Dalmia Cement Bharat India
- Grasim Industreis Ltd - India
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- Bukit Makmur.PT - Indonesia
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- OPG Power Generation Pvt Ltd - India
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- McConnell Dowell - Australia
- Georgia Ports Authority, United States
- Riau Bara Harum - Indonesia
- Mercator Lines Limited - India
- Manunggal Multi Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- IEA Clean Coal Centre - UK
- Maheswari Brothers Coal Limited - India
- London Commodity Brokers - England
- Semirara Mining Corp, Philippines
- Goldman Sachs - Singapore
- The University of Queensland
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The Treasury - Australian Government
- Marubeni Corporation - India
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Agrawal Coal Company - India
- Bhatia International Limited - India
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
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