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