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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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Thursday, 05 March 15
BUKIT ASAM BOOKED US$ 1 BILLION REVENUE IN 2014
COALspot.com: Indonesian publicly listed and state owned coal miner PT. Bukit Asam, has announced that, the revenue of the company for the period J ...
Wednesday, 04 March 15
AN AGENDA FOR CHANGE - FITCH INDONESIA CONFERENCE
Fitch Indonesia Conference - 5 March 2015
Fitch Ratings will host its annual Indonesia conference on 5 March 2015.
The theme of this year ...
Wednesday, 04 March 15
KEEP CALM AND INVEST IN DRY - THEODORE NTALAKOS
Keep Calm and Carry On was originally a motivational poster, intended to raise the morale of the British public, produced by the British government ...
Tuesday, 03 March 15
INDONESIAN COAL EXPORT VOLUME TO DECLINE 50% BY 2019
COALspot.com: The Indonesian government is planning to reduce coal export volume by 50% within the next five years while keeping its coal productio ...
Tuesday, 03 March 15
INDIAN THERMAL COAL IMPORTS: STEAMING FORWARD - CLARKSONS
Coal-fired power stations comprise around 60% of India’s power output, and with domestic supply issues and favourable international coal pric ...
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- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- India Bulls Power Limited - India
- Coalindo Energy - Indonesia
- Tamil Nadu electricity Board
- Goldman Sachs - Singapore
- LBH Netherlands Bv - Netherlands
- Toyota Tsusho Corporation, Japan
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Edison Trading Spa - Italy
- Baramulti Group, Indonesia
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- Economic Council, Georgia
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- Ind-Barath Power Infra Limited - India
- Merrill Lynch Commodities Europe
- Formosa Plastics Group - Taiwan
- Vizag Seaport Private Limited - India
- Chamber of Mines of South Africa
- Simpson Spence & Young - Indonesia
- Parry Sugars Refinery, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- White Energy Company Limited
- Georgia Ports Authority, United States
- Gujarat Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Malabar Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Binh Thuan Hamico - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Eastern Energy - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- Rio Tinto Coal - Australia
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- ICICI Bank Limited - India
- Australian Commodity Traders Exchange
- Cement Manufacturers Association - India
- Deloitte Consulting - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bharathi Cement Corporation - India
- Anglo American - United Kingdom
- Antam Resourcindo - Indonesia
- Gujarat Sidhee Cement - India
- Ministry of Finance - Indonesia
- Kartika Selabumi Mining - Indonesia
- Dalmia Cement Bharat India
- Samtan Co., Ltd - South Korea
- Indonesian Coal Mining Association
- ASAPP Information Group - India
- The Treasury - Australian Government
- Therma Luzon, Inc, Philippines
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Africa Commodities Group - South Africa
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- SMG Consultants - Indonesia
- Global Green Power PLC Corporation, Philippines
- Port Waratah Coal Services - Australia
- Makarim & Taira - Indonesia
- Bhushan Steel Limited - India
- McConnell Dowell - Australia
- Jindal Steel & Power Ltd - India
- PowerSource Philippines DevCo
- Oldendorff Carriers - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- New Zealand Coal & Carbon
- Pipit Mutiara Jaya. PT, Indonesia
- Grasim Industreis Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Timah Investasi Mineral - Indoneisa
- Central Electricity Authority - India
- CNBM International Corporation - China
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- Mercator Lines Limited - India
- Meralco Power Generation, Philippines
- Essar Steel Hazira Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Sarangani Energy Corporation, Philippines
- Vedanta Resources Plc - India
- Bahari Cakrawala Sebuku - Indonesia
- Global Coal Blending Company Limited - Australia
- Lanco Infratech Ltd - India
- The University of Queensland
- Maheswari Brothers Coal Limited - India
- TeaM Sual Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Globalindo Alam Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Gujarat Mineral Development Corp Ltd - India
- Petron Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Bangladesh Power Developement Board
- Vijayanagar Sugar Pvt Ltd - India
- Sical Logistics Limited - India
- Semirara Mining and Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- GVK Power & Infra Limited - India
- Mjunction Services Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Videocon Industries ltd - India
- Heidelberg Cement - Germany
- Maharashtra Electricity Regulatory Commission - India
- VISA Power Limited - India
- Renaissance Capital - South Africa
- Jaiprakash Power Ventures ltd
- Sindya Power Generating Company Private Ltd
- Wood Mackenzie - Singapore
- Attock Cement Pakistan Limited
- Neyveli Lignite Corporation Ltd, - India
- The State Trading Corporation of India Ltd
- Riau Bara Harum - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
- Power Finance Corporation Ltd., India
- Iligan Light & Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Larsen & Toubro Limited - India
- Minerals Council of Australia
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Savvy Resources Ltd - HongKong
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Planning Commission, India
- San Jose City I Power Corp, Philippines
- Madhucon Powers Ltd - India
- Indogreen Group - Indonesia
- Electricity Generating Authority of Thailand
- Straits Asia Resources Limited - Singapore
- Kepco SPC Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Chettinad Cement Corporation Ltd - India
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- TNB Fuel Sdn Bhd - Malaysia
- Carbofer General Trading SA - India
- OPG Power Generation Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- Tata Chemicals Ltd - India
- Posco Energy - South Korea
- Independent Power Producers Association of India
- Energy Development Corp, Philippines
- Electricity Authority, New Zealand
- Parliament of New Zealand
- Trasteel International SA, Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- London Commodity Brokers - England
- Mercuria Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- Sree Jayajothi Cements Limited - India
- Semirara Mining Corp, Philippines
- Ministry of Mines - Canada
- PetroVietnam Power Coal Import and Supply Company
- Pendopo Energi Batubara - Indonesia
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- Borneo Indobara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sakthi Sugars Limited - India
- Intertek Mineral Services - Indonesia
- Latin American Coal - Colombia
- PTC India Limited - India
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ambuja Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Indian Oil Corporation Limited
- Agrawal Coal Company - India
- Eastern Coal Council - USA
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- Medco Energi Mining Internasional
- IEA Clean Coal Centre - UK
- Salva Resources Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Holcim Trading Pte Ltd - Singapore
- Australian Coal Association
- CIMB Investment Bank - Malaysia
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