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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, 25 May 16
DRY BULK SNP MARKET DISPLAYS SIGNS OF STRENGTH - GEORGE ILIOPOULOS
Only a couple of weeks away from the world’s most prominent maritime event, the market for tankers displays an evident lack of confidence in ...
Tuesday, 24 May 16
WEEKLY CS COAL INDICES NEGATIVE FOR ALL TYPES OF COAL EXCEPT 3800 GAR COAL
COALspot.com: Average 5000 GAR coal index of Indonesian origin was down 0.10 percent week over week to averaging $38.90 per ton this past week, sho ...
Monday, 23 May 16
A PERFECT STORM FOR INDONESIAN STEAM COAL EXPORTS - CLARKSON RESEARCH
Indonesia is the world’s leading steam coal exporter, accounting for over 40% of global seaborne steam coal exports since 2010. However in 20 ...
Monday, 23 May 16
THE PANAMAX INDEX WAS UP 17 POINTS W/W
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose this week.
The freight market was firm and all ...
Friday, 20 May 16
SHIPBUILDING CONTRACTS: CAN I CANCEL? SHOULD I CANCEL? - THE SHIPOWNER CLUB
KNOWLEDGE TO ELEVATE
There are many circumstances in which a buyer of a new-build vessel might want to terminate or cancel their contract with ...
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- Ceylon Electricity Board - Sri Lanka
- Coal and Oil Company - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Commonwealth Bank - Australia
- Mintek Dendrill Indonesia
- Oldendorff Carriers - Singapore
- Goldman Sachs - Singapore
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- Jaiprakash Power Ventures ltd
- Kartika Selabumi Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bhushan Steel Limited - India
- Electricity Authority, New Zealand
- Kaltim Prima Coal - Indonesia
- The University of Queensland
- Intertek Mineral Services - Indonesia
- Tata Chemicals Ltd - India
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Madhucon Powers Ltd - India
- Straits Asia Resources Limited - Singapore
- Videocon Industries ltd - India
- Pendopo Energi Batubara - Indonesia
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Trasteel International SA, Italy
- Therma Luzon, Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Manunggal Multi Energi - Indonesia
- Petron Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- Central Electricity Authority - India
- CIMB Investment Bank - Malaysia
- Tamil Nadu electricity Board
- International Coal Ventures Pvt Ltd - India
- MS Steel International - UAE
- GMR Energy Limited - India
- Krishnapatnam Port Company Ltd. - India
- Kobexindo Tractors - Indoneisa
- India Bulls Power Limited - India
- Thai Mozambique Logistica
- Sarangani Energy Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Parry Sugars Refinery, India
- Gujarat Sidhee Cement - India
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- Port Waratah Coal Services - Australia
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- Parliament of New Zealand
- Economic Council, Georgia
- Vedanta Resources Plc - India
- Kumho Petrochemical, South Korea
- Meenaskhi Energy Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement - Thailand
- IEA Clean Coal Centre - UK
- Coastal Gujarat Power Limited - India
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- McConnell Dowell - Australia
- Globalindo Alam Lestari - Indonesia
- Latin American Coal - Colombia
- Mjunction Services Limited - India
- AsiaOL BioFuels Corp., Philippines
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Central Java Power - Indonesia
- Agrawal Coal Company - India
- Georgia Ports Authority, United States
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ambuja Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- Formosa Plastics Group - Taiwan
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- Kideco Jaya Agung - Indonesia
- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- Star Paper Mills Limited - India
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- Salva Resources Pvt Ltd - India
- Marubeni Corporation - India
- Wood Mackenzie - Singapore
- GN Power Mariveles Coal Plant, Philippines
- San Jose City I Power Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Indogreen Group - Indonesia
- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Bangladesh Power Developement Board
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- CNBM International Corporation - China
- Thiess Contractors Indonesia
- Posco Energy - South Korea
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Altura Mining Limited, Indonesia
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Jindal Steel & Power Ltd - India
- Riau Bara Harum - Indonesia
- ASAPP Information Group - India
- VISA Power Limited - India
- Ministry of Transport, Egypt
- Iligan Light & Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Cigading International Bulk Terminal - Indonesia
- Mercator Lines Limited - India
- Bukit Baiduri Energy - Indonesia
- Rio Tinto Coal - Australia
- Mercuria Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Vizag Seaport Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Edison Trading Spa - Italy
- Siam City Cement PLC, Thailand
- Meralco Power Generation, Philippines
- Sakthi Sugars Limited - India
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- Rashtriya Ispat Nigam Limited - India
- LBH Netherlands Bv - Netherlands
- Energy Link Ltd, New Zealand
- Indian Oil Corporation Limited
- Karbindo Abesyapradhi - Indoneisa
- Aditya Birla Group - India
- Minerals Council of Australia
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- Interocean Group of Companies - India
- Bulk Trading Sa - Switzerland
- Banpu Public Company Limited - Thailand
- The Treasury - Australian Government
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- London Commodity Brokers - England
- Global Green Power PLC Corporation, Philippines
- Power Finance Corporation Ltd., India
- Renaissance Capital - South Africa
- Borneo Indobara - Indonesia
- Cement Manufacturers Association - India
- PowerSource Philippines DevCo
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- Ind-Barath Power Infra Limited - India
- Malabar Cements Ltd - India
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- Australian Commodity Traders Exchange
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- GVK Power & Infra Limited - India
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- Energy Development Corp, Philippines
- Larsen & Toubro Limited - India
- Lanco Infratech Ltd - India
- Timah Investasi Mineral - Indoneisa
- Independent Power Producers Association of India
- Ministry of Mines - Canada
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- New Zealand Coal & Carbon
- Semirara Mining and Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Africa Commodities Group - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Romanian Commodities Exchange
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Carbofer General Trading SA - India
- Baramulti Group, Indonesia
- The State Trading Corporation of India Ltd
- Kohat Cement Company Ltd. - Pakistan
- Anglo American - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- Antam Resourcindo - Indonesia
- Leighton Contractors Pty Ltd - Australia
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