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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, 11 May 16
MARKET INSIGHT - KATERINA RESTIS
On Saturday 7th May, Riyadh replaced the long-serving oil minister of more than two decades, Ali-Al-Naimi, as part of a major government overhaul, ...
Tuesday, 10 May 16
VOLATILITY? VARIATION NO ENIGMA TO SHIPPING..... - CLARKSONS
Along with cyclicality, the other characteristic of the shipping markets which receives frequent mention is volatility. This is so evident that the ...
Monday, 09 May 16
INDONESIAN CS COAL INDICES UP CONTINUES; POSITIVE DIRECTION
COALspot.com: Average 5000 GAR coal index of Indonesian origin up 0.10 percent week over week to averaging $38.82 per ton on this past Wednesday, a ...
Monday, 09 May 16
DRY BULK SHIPPING TO WITNESS STEADY PROGRESS MOVING FORWARD ON THE BACK OF GROWING TRADE VOLUMES - BIMCO
In its latest short-term analysis of the shipping markets, BIMCO reiterated its optimism on the prospects of the dry bulk market moving forward. Ac ...
Monday, 09 May 16
BALTIC DRY INDEX ENDS WEEK ON A NEGATIVE NOTE
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities decline this week.
The freight market was weak and a ...
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- Thiess Contractors Indonesia
- Thai Mozambique Logistica
- Minerals Council of Australia
- Gujarat Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- PTC India Limited - India
- Cement Manufacturers Association - India
- Kideco Jaya Agung - Indonesia
- Trasteel International SA, Italy
- Carbofer General Trading SA - India
- Siam City Cement - Thailand
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- CIMB Investment Bank - Malaysia
- Georgia Ports Authority, United States
- Mercator Lines Limited - India
- Madhucon Powers Ltd - India
- GAC Shipping (India) Pvt Ltd
- Kobexindo Tractors - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Interocean Group of Companies - India
- Petron Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Bharathi Cement Corporation - India
- Standard Chartered Bank - UAE
- GN Power Mariveles Coal Plant, Philippines
- Holcim Trading Pte Ltd - Singapore
- The University of Queensland
- Medco Energi Mining Internasional
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- White Energy Company Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The State Trading Corporation of India Ltd
- Ambuja Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining and Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Oldendorff Carriers - Singapore
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Barasentosa Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Kepco SPC Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Cigading International Bulk Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Energy Development Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- GMR Energy Limited - India
- European Bulk Services B.V. - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- VISA Power Limited - India
- Mjunction Services Limited - India
- GVK Power & Infra Limited - India
- Port Waratah Coal Services - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Lanco Infratech Ltd - India
- Wilmar Investment Holdings
- Manunggal Multi Energi - Indonesia
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- Jindal Steel & Power Ltd - India
- Parliament of New Zealand
- Savvy Resources Ltd - HongKong
- Chamber of Mines of South Africa
- Kapuas Tunggal Persada - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Grasim Industreis Ltd - India
- Semirara Mining Corp, Philippines
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- Timah Investasi Mineral - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- London Commodity Brokers - England
- Kohat Cement Company Ltd. - Pakistan
- Bhatia International Limited - India
- ICICI Bank Limited - India
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Larsen & Toubro Limited - India
- Intertek Mineral Services - Indonesia
- Sojitz Corporation - Japan
- Riau Bara Harum - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Therma Luzon, Inc, Philippines
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Tamil Nadu electricity Board
- Coal and Oil Company - UAE
- Deloitte Consulting - India
- Vedanta Resources Plc - India
- Australian Commodity Traders Exchange
- Gujarat Sidhee Cement - India
- The Treasury - Australian Government
- Videocon Industries ltd - India
- Altura Mining Limited, Indonesia
- Orica Australia Pty. Ltd.
- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Singapore Mercantile Exchange
- Aboitiz Power Corporation - Philippines
- Aditya Birla Group - India
- Vizag Seaport Private Limited - India
- Salva Resources Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Eastern Coal Council - USA
- PowerSource Philippines DevCo
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- International Coal Ventures Pvt Ltd - India
- Ministry of Finance - Indonesia
- Commonwealth Bank - Australia
- Merrill Lynch Commodities Europe
- Goldman Sachs - Singapore
- Star Paper Mills Limited - India
- Chettinad Cement Corporation Ltd - India
- Malabar Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Sindya Power Generating Company Private Ltd
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- Bhushan Steel Limited - India
- Eastern Energy - Thailand
- Latin American Coal - Colombia
- Indian Oil Corporation Limited
- Bangladesh Power Developement Board
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Makarim & Taira - Indonesia
- Planning Commission, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- Edison Trading Spa - Italy
- OPG Power Generation Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- SMC Global Power, Philippines
- San Jose City I Power Corp, Philippines
- Power Finance Corporation Ltd., India
- Coastal Gujarat Power Limited - India
- Marubeni Corporation - India
- Bulk Trading Sa - Switzerland
- Electricity Generating Authority of Thailand
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- Billiton Holdings Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Economic Council, Georgia
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- McConnell Dowell - Australia
- Antam Resourcindo - Indonesia
- Sical Logistics Limited - India
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Central Java Power - Indonesia
- New Zealand Coal & Carbon
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Sakthi Sugars Limited - India
- TeaM Sual Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Africa Commodities Group - South Africa
- Electricity Authority, New Zealand
- Borneo Indobara - Indonesia
- Australian Coal Association
- Kartika Selabumi Mining - Indonesia
- Rio Tinto Coal - Australia
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Mercuria Energy - Indonesia
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