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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, 16 May 16
THE FREIGHT MARKET WAS WEAK AND ALL SEGMENTS EXCEPT PANAMAX WERE DOWN
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities decline this week.
The freight market was weak and a ...
Friday, 13 May 16
COAL CARGOES - SOME RECENT DEVELOPMENTS: SWEDISH CLUB
KNOWLEDGE TO ELEVATE
Indonesia continues to be amongst the world’s major exporters of coal, some 426Mt being traded in 2013 mostly to In ...
Friday, 13 May 16
US WEEKLY COAL PRODUCTION IS RUNNING 33% BELOW THE SAME PERIOD IN 2015 - EIA
COALspot.com – U.S the world’s second largest coal producer has produced approximately totaled an estimated 10.9 million short tons (mm ...
Friday, 13 May 16
DRY BULK SHIPPING MARKET RECOVERY WILL BE A LONG, HARD-FOUGHT BATTLE - HELLENIC SHIPPING NEWS
Anyone who expects a strong rally in dry bulk market rates to end the industry’s downturn will be bitterly disappointed. By contrast – ...
Wednesday, 11 May 16
U.S. FORECAST COAL PRODUCTION IS EXPECTED TO DECLINED BY 150 MMST IN 2016; THE LARGEST DECLINE SINCE 1949 - EIA
COALspot.com: EIA estimates that U.S. coal production in April was 46 million short tons (MMst), a 6 MMst (12%) decrease from the previous month an ...
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- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Directorate General of MIneral and Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
- Parry Sugars Refinery, India
- Sakthi Sugars Limited - India
- Indogreen Group - Indonesia
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Merrill Lynch Commodities Europe
- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
- Eastern Energy - Thailand
- Binh Thuan Hamico - Vietnam
- Intertek Mineral Services - Indonesia
- Coal and Oil Company - UAE
- Trasteel International SA, Italy
- Carbofer General Trading SA - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Central Java Power - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bhatia International Limited - India
- Siam City Cement - Thailand
- Dalmia Cement Bharat India
- Mjunction Services Limited - India
- Price Waterhouse Coopers - Russia
- Marubeni Corporation - India
- Bhushan Steel Limited - India
- TeaM Sual Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Baramulti Group, Indonesia
- Agrawal Coal Company - India
- Banpu Public Company Limited - Thailand
- Kapuas Tunggal Persada - Indonesia
- Xindia Steels Limited - India
- Georgia Ports Authority, United States
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- Planning Commission, India
- Oldendorff Carriers - Singapore
- Bayan Resources Tbk. - Indonesia
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Sical Logistics Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Orica Australia Pty. Ltd.
- Karbindo Abesyapradhi - Indoneisa
- Eastern Coal Council - USA
- Power Finance Corporation Ltd., India
- IHS Mccloskey Coal Group - USA
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- CNBM International Corporation - China
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Interocean Group of Companies - India
- Uttam Galva Steels Limited - India
- Minerals Council of Australia
- McConnell Dowell - Australia
- Bulk Trading Sa - Switzerland
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Attock Cement Pakistan Limited
- Kideco Jaya Agung - Indonesia
- Madhucon Powers Ltd - India
- Kumho Petrochemical, South Korea
- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Straits Asia Resources Limited - Singapore
- White Energy Company Limited
- Wilmar Investment Holdings
- Rashtriya Ispat Nigam Limited - India
- Indo Tambangraya Megah - Indonesia
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- Gujarat Sidhee Cement - India
- PetroVietnam Power Coal Import and Supply Company
- Economic Council, Georgia
- Vedanta Resources Plc - India
- Aboitiz Power Corporation - Philippines
- Ministry of Mines - Canada
- Semirara Mining Corp, Philippines
- Wood Mackenzie - Singapore
- Jaiprakash Power Ventures ltd
- Leighton Contractors Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- New Zealand Coal & Carbon
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- Bukit Makmur.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Parliament of New Zealand
- Renaissance Capital - South Africa
- SMG Consultants - Indonesia
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- Altura Mining Limited, Indonesia
- PNOC Exploration Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- Aditya Birla Group - India
- PTC India Limited - India
- Electricity Authority, New Zealand
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
- Bukit Baiduri Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vizag Seaport Private Limited - India
- Samtan Co., Ltd - South Korea
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- Holcim Trading Pte Ltd - Singapore
- Bharathi Cement Corporation - India
- MS Steel International - UAE
- Goldman Sachs - Singapore
- Ind-Barath Power Infra Limited - India
- Indian Oil Corporation Limited
- The University of Queensland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- Miang Besar Coal Terminal - Indonesia
- Deloitte Consulting - India
- Essar Steel Hazira Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- Malabar Cements Ltd - India
- Tamil Nadu electricity Board
- European Bulk Services B.V. - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Ambuja Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Central Electricity Authority - India
- Mercator Lines Limited - India
- Anglo American - United Kingdom
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Edison Trading Spa - Italy
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- GMR Energy Limited - India
- Thiess Contractors Indonesia
- Alfred C Toepfer International GmbH - Germany
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Romanian Commodities Exchange
- Meenaskhi Energy Private Limited - India
- Formosa Plastics Group - Taiwan
- Africa Commodities Group - South Africa
- Globalindo Alam Lestari - Indonesia
- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- Borneo Indobara - Indonesia
- Singapore Mercantile Exchange
- AsiaOL BioFuels Corp., Philippines
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- Latin American Coal - Colombia
- Vijayanagar Sugar Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Iligan Light & Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- IEA Clean Coal Centre - UK
- CIMB Investment Bank - Malaysia
- Sindya Power Generating Company Private Ltd
- Ministry of Transport, Egypt
- Ceylon Electricity Board - Sri Lanka
- Antam Resourcindo - Indonesia
- Simpson Spence & Young - Indonesia
- Riau Bara Harum - Indonesia
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- LBH Netherlands Bv - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Global Coal Blending Company Limited - Australia
- Lanco Infratech Ltd - India
- Indian Energy Exchange, India
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- Bhoruka Overseas - Indonesia
- SMC Global Power, Philippines
- San Jose City I Power Corp, Philippines
- Mintek Dendrill Indonesia
- Australian Coal Association
- Orica Mining Services - Indonesia
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- Independent Power Producers Association of India
- Barasentosa Lestari - Indonesia
- Sojitz Corporation - Japan
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
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