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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, 30 May 16
BCI ENDING AT 830 POINTS, DOWN 4.6 PER CENT W/W
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities decline this week. The freight market was weak this past ...
Friday, 27 May 16
PET-COKE IMPORTS TO FACE PRESSURE IN INDIA
COALspot.com: An Indian environmental activist moved the National Green Tribunal seeking ban on the use of all forms of petroleum coke, also called ...
Friday, 27 May 16
US COAL PRODUCTION ROSE 2.9% WOW, ACCORDING TO EIA
COALspot.com – U.S the world’s second largest coal producer has produced approximately totaled an estimated 11.7 million short tons (mm ...
Thursday, 26 May 16
GIANT ORE CARRIERS SET TO PLAY A BIGGER ROLE IN THE GLOBAL SHIPPING FLEET: CHINA EMBRACES VALEMAXES - RICHARD SCOTT
Another phase of the giant ships era is approaching. Chinese shipowners placed orders recently for 30 huge ‘valemax’ ore carriers. Thes ...
Wednesday, 25 May 16
MEDIATION AS A WAY TO RESOLVE DISPUTES IN THE SHIPPING INDUSTRY - LANA JACOBS
KNOWLEDGE TO ELEVATE
The shipping market is currently experiencing a serious recession with the Baltic Dry Index and Baltic Capesize Index bot ...
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- Bukit Baiduri Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Edison Trading Spa - Italy
- VISA Power Limited - India
- Merrill Lynch Commodities Europe
- CIMB Investment Bank - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Sree Jayajothi Cements Limited - India
- Mercator Lines Limited - India
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- Oldendorff Carriers - Singapore
- Chamber of Mines of South Africa
- Deloitte Consulting - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Latin American Coal - Colombia
- Banpu Public Company Limited - Thailand
- Jindal Steel & Power Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Ministry of Transport, Egypt
- Rashtriya Ispat Nigam Limited - India
- Bangladesh Power Developement Board
- Savvy Resources Ltd - HongKong
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Mines - Canada
- Kalimantan Lumbung Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Straits Asia Resources Limited - Singapore
- Global Business Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Generating Authority of Thailand
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- GN Power Mariveles Coal Plant, Philippines
- Mjunction Services Limited - India
- South Luzon Thermal Energy Corporation
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- Borneo Indobara - Indonesia
- Trasteel International SA, Italy
- Power Finance Corporation Ltd., India
- GAC Shipping (India) Pvt Ltd
- Riau Bara Harum - Indonesia
- Bharathi Cement Corporation - India
- The Treasury - Australian Government
- SMG Consultants - Indonesia
- Kepco SPC Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Videocon Industries ltd - India
- Eastern Coal Council - USA
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- IHS Mccloskey Coal Group - USA
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- Romanian Commodities Exchange
- Ministry of Finance - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Lanco Infratech Ltd - India
- PNOC Exploration Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Aditya Birla Group - India
- Billiton Holdings Pty Ltd - Australia
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- Madhucon Powers Ltd - India
- Georgia Ports Authority, United States
- Goldman Sachs - Singapore
- Gujarat Sidhee Cement - India
- AsiaOL BioFuels Corp., Philippines
- Heidelberg Cement - Germany
- Coal and Oil Company - UAE
- Kaltim Prima Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Rio Tinto Coal - Australia
- ICICI Bank Limited - India
- Central Electricity Authority - India
- Mercuria Energy - Indonesia
- Wilmar Investment Holdings
- Electricity Authority, New Zealand
- Essar Steel Hazira Ltd - India
- GMR Energy Limited - India
- Bhatia International Limited - India
- MS Steel International - UAE
- Siam City Cement - Thailand
- Vizag Seaport Private Limited - India
- Kideco Jaya Agung - Indonesia
- Kobexindo Tractors - Indoneisa
- Antam Resourcindo - Indonesia
- Uttam Galva Steels Limited - India
- San Jose City I Power Corp, Philippines
- India Bulls Power Limited - India
- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- Globalindo Alam Lestari - Indonesia
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thiess Contractors Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tata Chemicals Ltd - India
- Renaissance Capital - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Africa Commodities Group - South Africa
- Carbofer General Trading SA - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Minerals Council of Australia
- Baramulti Group, Indonesia
- Medco Energi Mining Internasional
- Malabar Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Energy Development Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bhoruka Overseas - Indonesia
- Maheswari Brothers Coal Limited - India
- Metalloyd Limited - United Kingdom
- Indian Oil Corporation Limited
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- London Commodity Brokers - England
- ASAPP Information Group - India
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- Singapore Mercantile Exchange
- Sindya Power Generating Company Private Ltd
- Xindia Steels Limited - India
- Samtan Co., Ltd - South Korea
- SN Aboitiz Power Inc, Philippines
- Australian Coal Association
- Thai Mozambique Logistica
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- Formosa Plastics Group - Taiwan
- Parliament of New Zealand
- PowerSource Philippines DevCo
- Coalindo Energy - Indonesia
- Orica Australia Pty. Ltd.
- Simpson Spence & Young - Indonesia
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- White Energy Company Limited
- TeaM Sual Corporation - Philippines
- Sakthi Sugars Limited - India
- Australian Commodity Traders Exchange
- Kohat Cement Company Ltd. - Pakistan
- Interocean Group of Companies - India
- Pendopo Energi Batubara - Indonesia
- Central Java Power - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Meralco Power Generation, Philippines
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- Agrawal Coal Company - India
- Gujarat Mineral Development Corp Ltd - India
- Dalmia Cement Bharat India
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- McConnell Dowell - Australia
- Leighton Contractors Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Barasentosa Lestari - Indonesia
- GVK Power & Infra Limited - India
- Orica Mining Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Price Waterhouse Coopers - Russia
- Miang Besar Coal Terminal - Indonesia
- Tamil Nadu electricity Board
- Planning Commission, India
- PTC India Limited - India
- Larsen & Toubro Limited - India
- Marubeni Corporation - India
- Indo Tambangraya Megah - Indonesia
- Petron Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Star Paper Mills Limited - India
- Energy Link Ltd, New Zealand
- Bayan Resources Tbk. - Indonesia
- Mintek Dendrill Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kumho Petrochemical, South Korea
- The State Trading Corporation of India Ltd
- Bhushan Steel Limited - India
- Toyota Tsusho Corporation, Japan
- Karaikal Port Pvt Ltd - India
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- International Coal Ventures Pvt Ltd - India
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Altura Mining Limited, Indonesia
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