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