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