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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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Tuesday, 17 May 16
INDONESIAN COAL PRICE REFERENCE DECLINE AGAIN
COALspot.com: The Indonesia Coal Benchmark Price declined in May 2016.
The Director General of Mineral and Coal of Indonesia, the regulator of ...
Tuesday, 17 May 16
CHINA THERMAL-POWER OVERSUPPLY TO WORSEN - FITCH
COALspot.com: The overcapacity in thermal-power generation in China is likely to worsen in 2016 to 2017, Fitch Ratings says in a new report.
F ...
Tuesday, 17 May 16
ON YOUR MARKS: TRACKING CHINESE TRADE - CLARKSONS
One of the major drivers behind the challenges currently facing many of the shipping markets has been slower demand growth. World seaborne trade gr ...
Monday, 16 May 16
INDONESIAN WEEKLY COAL INDICES AT POSITIVE LEVELS - CS (I) COAL INDEX
COALspot.com: Average 5000 GAR coal index of Indonesian origin up 0.31 percent week over week to averaging $38.94 per ton this past week, shows CS ...
Monday, 16 May 16
OPEC SEES RIVAL OIL PRODUCTION DECLINING
Crude Oil Price Movements
The OPEC Reference Basket averaged $37.86/b in April, a gain of $3.21 or 9.3%. This was 40% higher than the lows reache ...
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- India Bulls Power Limited - India
- Uttam Galva Steels Limited - India
- Altura Mining Limited, Indonesia
- Bhatia International Limited - India
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ASAPP Information Group - India
- Coalindo Energy - Indonesia
- The Treasury - Australian Government
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- Parliament of New Zealand
- MS Steel International - UAE
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Transport, Egypt
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Port Waratah Coal Services - Australia
- Central Electricity Authority - India
- Mjunction Services Limited - India
- Price Waterhouse Coopers - Russia
- Singapore Mercantile Exchange
- Antam Resourcindo - Indonesia
- Trasteel International SA, Italy
- Ministry of Mines - Canada
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement - Thailand
- Australian Coal Association
- Timah Investasi Mineral - Indoneisa
- New Zealand Coal & Carbon
- Sakthi Sugars Limited - India
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- CIMB Investment Bank - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Star Paper Mills Limited - India
- Wilmar Investment Holdings
- Thiess Contractors Indonesia
- Sarangani Energy Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Lanco Infratech Ltd - India
- Bukit Baiduri Energy - Indonesia
- McConnell Dowell - Australia
- European Bulk Services B.V. - Netherlands
- Xindia Steels Limited - India
- Economic Council, Georgia
- Meenaskhi Energy Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Rio Tinto Coal - Australia
- Petron Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
- Cement Manufacturers Association - India
- The State Trading Corporation of India Ltd
- PTC India Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Grasim Industreis Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Coal and Oil Company - UAE
- Alfred C Toepfer International GmbH - Germany
- Therma Luzon, Inc, Philippines
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Romanian Commodities Exchange
- Dalmia Cement Bharat India
- OPG Power Generation Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Bharathi Cement Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Mintek Dendrill Indonesia
- London Commodity Brokers - England
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement PLC, Thailand
- Renaissance Capital - South Africa
- Bayan Resources Tbk. - Indonesia
- Heidelberg Cement - Germany
- Krishnapatnam Port Company Ltd. - India
- Jorong Barutama Greston.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- GN Power Mariveles Coal Plant, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Global Coal Blending Company Limited - Australia
- GAC Shipping (India) Pvt Ltd
- Marubeni Corporation - India
- GVK Power & Infra Limited - India
- Parry Sugars Refinery, India
- Tamil Nadu electricity Board
- Georgia Ports Authority, United States
- GMR Energy Limited - India
- PNOC Exploration Corporation - Philippines
- Kumho Petrochemical, South Korea
- Indika Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Oldendorff Carriers - Singapore
- Energy Link Ltd, New Zealand
- Manunggal Multi Energi - Indonesia
- Vizag Seaport Private Limited - India
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- Gujarat Sidhee Cement - India
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Attock Cement Pakistan Limited
- Wood Mackenzie - Singapore
- Coastal Gujarat Power Limited - India
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Madhucon Powers Ltd - India
- Aboitiz Power Corporation - Philippines
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Sinarmas Energy and Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- ICICI Bank Limited - India
- Karaikal Port Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Barasentosa Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- IHS Mccloskey Coal Group - USA
- Eastern Coal Council - USA
- International Coal Ventures Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- Semirara Mining Corp, Philippines
- Central Java Power - Indonesia
- Latin American Coal - Colombia
- Larsen & Toubro Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Posco Energy - South Korea
- Metalloyd Limited - United Kingdom
- Mercator Lines Limited - India
- The University of Queensland
- Pendopo Energi Batubara - Indonesia
- Deloitte Consulting - India
- Orica Mining Services - Indonesia
- Videocon Industries ltd - India
- Mercuria Energy - Indonesia
- VISA Power Limited - India
- Planning Commission, India
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Intertek Mineral Services - Indonesia
- Ministry of Finance - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bangladesh Power Developement Board
- Bhoruka Overseas - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMG Consultants - Indonesia
- CNBM International Corporation - China
- Kobexindo Tractors - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Global Green Power PLC Corporation, Philippines
- Tata Chemicals Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Directorate General of MIneral and Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Samtan Co., Ltd - South Korea
- Miang Besar Coal Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- PowerSource Philippines DevCo
- South Luzon Thermal Energy Corporation
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- Straits Asia Resources Limited - Singapore
- Chamber of Mines of South Africa
- Kepco SPC Power Corporation, Philippines
- Carbofer General Trading SA - India
- Malabar Cements Ltd - India
- Borneo Indobara - Indonesia
- Savvy Resources Ltd - HongKong
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Indogreen Group - Indonesia
- Edison Trading Spa - Italy
- Electricity Authority, New Zealand
- Sojitz Corporation - Japan
- Medco Energi Mining Internasional
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
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