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Wednesday, 27 April 16
THE OCEAN SHIPPING EXPERIENCED DRAMATIC VOLATILITY IN THE BEGINNING OF 2016 - PANOS TSILINGIRIS
 Shipping’s new (ab)normal
The global economy and ocean shipping experienced dramatic volatility in the beginning of 2016 and as the global economy undergoes structural changes, so does the derived ocean shipping activity, principally epitomized by the following abnormal trends:
(i) Constrained financing,
(ii) Deflation in asset prices, and
(iii) Shift in demand growth.
Constrained financing
First, ship financing in all of its forms is very restricted and will remain so in the years to come. There has been just one shipping IPO this year raising a mere $7m! Following the 2008 financial crisis, the excessively detailed banking legislation enacted, has forced bankers to spend more time filling out forms for regulators rather than understanding better their clients and the industry.
Despite monetary expansion, banks are not lending the excess supply of money but rather hoarding it. If you think this scarcity of financing is temporary and that the implications of Basel III have already been felt, you are simply wrong. In 2018 we also anticipate the IFRS 9 to take effect contributing to earlier recognition of credit losses, making it more expensive and difficult for banks to lend. So, via upcoming regulations, deleveraging will intensify both in the west and in emerging markets. Only the best buyers will receive money, good luck to smaller companies!
Deflation in asset prices
Second, the cost of creating new shipping assets, i.e., shipbuilding prices, are low, will get lower and will remain low for some time. Shipping deflation is due to vast manufacturing overcapacity from the previous cycle and technological change. We will experience newbuilding prices lower than the 2012 ones which at the time represented multi-year lows.
The Japanese shipbuilding prices, the premium in the sector, are correcting thanks also to the Yen now standing at 111 a dollar vs. 76 in 2012, while Chinese Builders, the floor of shipbuilding values, offer aggressive pricing assisted by the Yuan devaluations.
In S. Korea, we expect consolidation and further correction of prices following the recent elections. The abovementioned lack of financing will keep newbuilding appetite subdued for long. This will further drive prices down. And since newbuilding prices are in a sense an upper bound for second-hand prices in normal freight conditions, asset prices will stay deflated endangering the plans of opportunistic asset players.
Shift in demand growth
Third, there is a shift in growth as we transition from an industrial into a services and consumer economy. GDP growth per se, especially if anemic as it stands today, will not suffice to generate strong seaborne demand. However, with limited financing we can’t anticipate anything exciting on the physical side. The historical correlations and >1 multipliers between GDP and seaborne trade documented over several decades have been broken the last years and specifically last year seaborne trade growth was outnumbered by GDP growth. There are fears that outsourcing and globalization are reaching their limits and there are early signs of near sourcing and nationalization. Fighting pollution will remain a long-term driver, with its implications on coal, oil and regulations. Gas is coming catalyzed by shale developments!
We have indeed a new shipping abnormal -with constrained financing, assets deflation and shift in demand- and it is likely to stay with us for long. On the rosy side, the first two trends, will alleviate the two major causes of the ongoing crisis: exogenous money and excessive yard capacity.
By Panos Tsilingiris
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 reproducing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
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Monday, 13 June 16
BALTIC INDEX FLAT, INDEX FOR CAPE RISE
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities flat this past week. The freight market was almost same l ...
Friday, 10 June 16
INDONESIAN 6322 GAR COAL PRICE REFERENCE RISES TO $51.81 A TON
COALspot.com: The Indonesia Coal Benchmark Price increased in June 2016.
The Director General of Mineral and Coal of Indonesia, the regulator ...
Friday, 10 June 16
WEEKLY U.S. COAL PRODUCTION TOTALED AN ESTIMATED 12 MMST IN THE WEEK ENDED JUNE 4, UP 4% W/W - EIA
COALspot.com – U.S the world’s second largest coal producer has produced approximately totaled an estimated 12 million short tons (mmst ...
Wednesday, 08 June 16
BPI ACHIEVES FINANCIAL CLOSE FOR ITS 2000 MW POWER PROJECT IN CENTRAL JAVA
COALspot.com: PT Bhimasena Power Indonesia (BPI) on June 6th, 2016 Achieves financial close for its 2x1,000 MW power project in Batang Regency, Cen ...
Wednesday, 08 June 16
U.S COAL IMPORTS ARE PROJECTED TO BE 12 MMST IN 2016 AND 11 MMST IN 2017 - EIA
Coal Supply
U.S. coal production in May was 50 million short tons (MMst), a 4 MMst (10%) increase from the previous month but 19 MMst (28%) lower ...
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- Kalimantan Lumbung Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- The Treasury - Australian Government
- Barasentosa Lestari - Indonesia
- Planning Commission, India
- Ministry of Finance - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Central Electricity Authority - India
- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- Siam City Cement - Thailand
- Mintek Dendrill Indonesia
- IEA Clean Coal Centre - UK
- Thai Mozambique Logistica
- Karaikal Port Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Gujarat Mineral Development Corp Ltd - India
- Bhatia International Limited - India
- Central Java Power - Indonesia
- Commonwealth Bank - Australia
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Riau Bara Harum - Indonesia
- India Bulls Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Aboitiz Power Corporation - Philippines
- Rio Tinto Coal - Australia
- Alfred C Toepfer International GmbH - Germany
- LBH Netherlands Bv - Netherlands
- PowerSource Philippines DevCo
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Savvy Resources Ltd - HongKong
- Ministry of Transport, Egypt
- Carbofer General Trading SA - India
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- Energy Link Ltd, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Indian Energy Exchange, India
- The University of Queensland
- Gujarat Sidhee Cement - India
- Malabar Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- Intertek Mineral Services - Indonesia
- Parliament of New Zealand
- McConnell Dowell - Australia
- VISA Power Limited - India
- Star Paper Mills Limited - India
- Metalloyd Limited - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Mercuria Energy - Indonesia
- Bhushan Steel Limited - India
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Indian Oil Corporation Limited
- The State Trading Corporation of India Ltd
- Straits Asia Resources Limited - Singapore
- Petron Corporation, Philippines
- Coal and Oil Company - UAE
- Jindal Steel & Power Ltd - India
- Banpu Public Company Limited - Thailand
- Sinarmas Energy and Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- GMR Energy Limited - India
- Posco Energy - South Korea
- Rashtriya Ispat Nigam Limited - India
- Salva Resources Pvt Ltd - India
- White Energy Company Limited
- Kobexindo Tractors - Indoneisa
- Essar Steel Hazira Ltd - India
- ICICI Bank Limited - India
- Siam City Cement PLC, Thailand
- Thiess Contractors Indonesia
- Power Finance Corporation Ltd., India
- Formosa Plastics Group - Taiwan
- Xindia Steels Limited - India
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- Latin American Coal - Colombia
- Port Waratah Coal Services - Australia
- London Commodity Brokers - England
- Jaiprakash Power Ventures ltd
- Georgia Ports Authority, United States
- Billiton Holdings Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Australian Commodity Traders Exchange
- Sree Jayajothi Cements Limited - India
- Romanian Commodities Exchange
- Tata Chemicals Ltd - India
- GAC Shipping (India) Pvt Ltd
- Simpson Spence & Young - Indonesia
- Energy Development Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Renaissance Capital - South Africa
- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Energy - Thailand
- Semirara Mining and Power Corporation, Philippines
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- Kideco Jaya Agung - Indonesia
- Ministry of Mines - Canada
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Bukit Asam (Persero) Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- Iligan Light & Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Australian Coal Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sojitz Corporation - Japan
- Oldendorff Carriers - Singapore
- PNOC Exploration Corporation - Philippines
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- Eastern Coal Council - USA
- Asmin Koalindo Tuhup - Indonesia
- Maheswari Brothers Coal Limited - India
- Edison Trading Spa - Italy
- Videocon Industries ltd - India
- Indonesian Coal Mining Association
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- Vedanta Resources Plc - India
- Indika Energy - Indonesia
- CNBM International Corporation - China
- Globalindo Alam Lestari - Indonesia
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Holcim Trading Pte Ltd - Singapore
- Parry Sugars Refinery, India
- Medco Energi Mining Internasional
- Petrochimia International Co. Ltd.- Taiwan
- Krishnapatnam Port Company Ltd. - India
- Kumho Petrochemical, South Korea
- Borneo Indobara - Indonesia
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Anglo American - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Economic Council, Georgia
- SMG Consultants - Indonesia
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Meralco Power Generation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Bulk Trading Sa - Switzerland
- Pendopo Energi Batubara - Indonesia
- Bharathi Cement Corporation - India
- Cement Manufacturers Association - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coastal Gujarat Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Independent Power Producers Association of India
- Neyveli Lignite Corporation Ltd, - India
- South Luzon Thermal Energy Corporation
- Interocean Group of Companies - India
- Chettinad Cement Corporation Ltd - India
- Mercator Lines Limited - India
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Uttam Galva Steels Limited - India
- Wood Mackenzie - Singapore
- Singapore Mercantile Exchange
- Bhoruka Overseas - Indonesia
- Aditya Birla Group - India
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- Agrawal Coal Company - India
- International Coal Ventures Pvt Ltd - India
- Electricity Authority, New Zealand
- Sindya Power Generating Company Private Ltd
- Africa Commodities Group - South Africa
- ASAPP Information Group - India
- Directorate General of MIneral and Coal - Indonesia
- Electricity Generating Authority of Thailand
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Dalmia Cement Bharat India
- New Zealand Coal & Carbon
- Heidelberg Cement - Germany
- PTC India Limited - India
- TeaM Sual Corporation - Philippines
- Coalindo Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Mjunction Services Limited - India
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- Samtan Co., Ltd - South Korea
- Indogreen Group - Indonesia
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