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