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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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Wednesday, 08 June 16
THE DRY BULK MARKET KEPT MOVING SIDEWAYS LAST WEEK; SECOND HAND PURCHASES MOVING NORTH - INTERMODAL
Once again its Posidonia time and the biannual exhibition takes place during a very warm June here in Athens, as if the performance of the dry bulk ...
Tuesday, 07 June 16
CS COAL INDEX ROSE FOR SECOND STRAIGHT WEEK
COALspot.com: Average 5000 GAR coal index of Indonesian origin was up 0.38 percent week over week to averaging $39.16 per ton this past week, shows ...
Monday, 06 June 16
BDI GAINED ON A STRONGER DEMAND FOR CAPESIZE SHIPS
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose this past week on a stronger demand for Capesize ves ...
Friday, 03 June 16
DRY BULK VESSEL DELIVERIES COULD BE LESS THAN 50 MILLION DWT IN 2016, AS OWNERS DELAY OR CANCEL NEWBUILDING ORDERS
The dry bulk market has been caught between a rock and a hard place over the course of the past couple of years, as on one hand demand has plunged, ...
Friday, 03 June 16
U.S WEEKLY COAL PRODUCTION SLIDES 1.3% - EIA
COALspot.com – U.S the world’s second largest coal producer has produced approximately totaled an estimated 11.5 million short tons (mm ...
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- Simpson Spence & Young - Indonesia
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- AsiaOL BioFuels Corp., Philippines
- Directorate Of Revenue Intelligence - India
- Heidelberg Cement - Germany
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- Iligan Light & Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Deloitte Consulting - India
- Price Waterhouse Coopers - Russia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Posco Energy - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- Sojitz Corporation - Japan
- CIMB Investment Bank - Malaysia
- ASAPP Information Group - India
- Uttam Galva Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
- IHS Mccloskey Coal Group - USA
- Trasteel International SA, Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Tata Chemicals Ltd - India
- Aditya Birla Group - India
- Anglo American - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coal and Oil Company - UAE
- Indogreen Group - Indonesia
- Tamil Nadu electricity Board
- Ministry of Mines - Canada
- Romanian Commodities Exchange
- SMG Consultants - Indonesia
- Bharathi Cement Corporation - India
- Antam Resourcindo - Indonesia
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- Ministry of Transport, Egypt
- Metalloyd Limited - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Rio Tinto Coal - Australia
- Sical Logistics Limited - India
- Agrawal Coal Company - India
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Eastern Energy - Thailand
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Carbofer General Trading SA - India
- Orica Mining Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Electricity Authority, New Zealand
- Ambuja Cements Ltd - India
- Parliament of New Zealand
- Intertek Mineral Services - Indonesia
- Goldman Sachs - Singapore
- Videocon Industries ltd - India
- TeaM Sual Corporation - Philippines
- Minerals Council of Australia
- Kumho Petrochemical, South Korea
- Meralco Power Generation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Attock Cement Pakistan Limited
- Larsen & Toubro Limited - India
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Africa Commodities Group - South Africa
- Central Electricity Authority - India
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Electricity Generating Authority of Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- McConnell Dowell - Australia
- Altura Mining Limited, Indonesia
- Cement Manufacturers Association - India
- Ind-Barath Power Infra Limited - India
- Eastern Coal Council - USA
- Coastal Gujarat Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement PLC, Thailand
- Indonesian Coal Mining Association
- GMR Energy Limited - India
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- Makarim & Taira - Indonesia
- Bukit Makmur.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement - Thailand
- Sarangani Energy Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Kideco Jaya Agung - Indonesia
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- Sakthi Sugars Limited - India
- Karaikal Port Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Vizag Seaport Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- VISA Power Limited - India
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- PTC India Limited - India
- Indo Tambangraya Megah - Indonesia
- Planning Commission, India
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- Georgia Ports Authority, United States
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
- India Bulls Power Limited - India
- Marubeni Corporation - India
- Power Finance Corporation Ltd., India
- Renaissance Capital - South Africa
- Wood Mackenzie - Singapore
- SN Aboitiz Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Timah Investasi Mineral - Indoneisa
- Thai Mozambique Logistica
- New Zealand Coal & Carbon
- Barasentosa Lestari - Indonesia
- SMC Global Power, Philippines
- Gujarat Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- PowerSource Philippines DevCo
- Central Java Power - Indonesia
- Sree Jayajothi Cements Limited - India
- International Coal Ventures Pvt Ltd - India
- Mercuria Energy - Indonesia
- Oldendorff Carriers - Singapore
- Australian Commodity Traders Exchange
- South Luzon Thermal Energy Corporation
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- Latin American Coal - Colombia
- Independent Power Producers Association of India
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Rashtriya Ispat Nigam Limited - India
- The State Trading Corporation of India Ltd
- Wilmar Investment Holdings
- MS Steel International - UAE
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- Thiess Contractors Indonesia
- Kapuas Tunggal Persada - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Indika Energy - Indonesia
- GVK Power & Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Xindia Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Riau Bara Harum - Indonesia
- Global Coal Blending Company Limited - Australia
- Singapore Mercantile Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Standard Chartered Bank - UAE
- Essar Steel Hazira Ltd - India
- Coalindo Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- White Energy Company Limited
- Jorong Barutama Greston.PT - Indonesia
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- The Treasury - Australian Government
- San Jose City I Power Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Merrill Lynch Commodities Europe
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- Bangladesh Power Developement Board
- Bhatia International Limited - India
- Global Business Power Corporation, Philippines
- Australian Coal Association
- Ministry of Finance - Indonesia
- The University of Queensland
- GAC Shipping (India) Pvt Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Kobexindo Tractors - Indoneisa
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