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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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Friday, 06 May 16
U.S. WEEKLY COAL PRODUCTION UP 9 PERCENT W/W; DOWN 35.3 PERCENT Y/Y - EIA
COALspot.com – U.S the world’s second largest coal producer has produced approximately totaled an estimated 11.3 million short to ...
Thursday, 05 May 16
DRY BULK MARKET ON REVERSE MODE, AS HOLIDAYS AROUND THE WORLD HURT DEMAND - HELLENIC SHIPPING NEWS
The dry bulk market’s recent rally has been put on a temporary hold, as various holidays around the world have put a stop in it. In its lates ...
Wednesday, 04 May 16
COAL IMPORTS: A VOLATILE MATTER OR STILL POWERING DOWN? - CLARKSONS
Chinese coal imports decreased significantly in 2014-15, and so far in 2016 the pace of decline appears to have slowed, with imports even recording ...
Wednesday, 04 May 16
IS THE DRY BULK MARKET OUT OF THE WOODS YET, OR NOT? - HELLENIC SHIPPING NEWS
Things are beginning to brighten up in the beleaguered dry bulk market, which is riding on a multi-week rally to find itself around the “psyc ...
Wednesday, 04 May 16
POWER - WEEK: REAL EXAMPLES AND CASE STUDIES
POWER WEEK
7 - 11 November 2016, PARKROYAL on Beach Road Hotel, Singapore
www.power-week.com
Overview
Designed for the global e ...
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- Rio Tinto Coal - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- Essar Steel Hazira Ltd - India
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- Grasim Industreis Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Parliament of New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- Coastal Gujarat Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Georgia Ports Authority, United States
- Port Waratah Coal Services - Australia
- Heidelberg Cement - Germany
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Kepco SPC Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Kumho Petrochemical, South Korea
- Vizag Seaport Private Limited - India
- Sojitz Corporation - Japan
- White Energy Company Limited
- Mercuria Energy - Indonesia
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- Straits Asia Resources Limited - Singapore
- Ministry of Finance - Indonesia
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Business Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Sical Logistics Limited - India
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Electricity Generating Authority of Thailand
- McConnell Dowell - Australia
- Latin American Coal - Colombia
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- Oldendorff Carriers - Singapore
- Deloitte Consulting - India
- Sinarmas Energy and Mining - Indonesia
- Star Paper Mills Limited - India
- Parry Sugars Refinery, India
- Minerals Council of Australia
- Simpson Spence & Young - Indonesia
- CNBM International Corporation - China
- Cigading International Bulk Terminal - Indonesia
- Posco Energy - South Korea
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Coal Council - USA
- PNOC Exploration Corporation - Philippines
- Energy Link Ltd, New Zealand
- Meenaskhi Energy Private Limited - India
- Makarim & Taira - Indonesia
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- Vedanta Resources Plc - India
- Standard Chartered Bank - UAE
- Altura Mining Limited, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Jindal Steel & Power Ltd - India
- Australian Commodity Traders Exchange
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- Merrill Lynch Commodities Europe
- South Luzon Thermal Energy Corporation
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Mercator Lines Limited - India
- Agrawal Coal Company - India
- Antam Resourcindo - Indonesia
- TeaM Sual Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Bhoruka Overseas - Indonesia
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- Wood Mackenzie - Singapore
- Borneo Indobara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Lanco Infratech Ltd - India
- Edison Trading Spa - Italy
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- Renaissance Capital - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- Thiess Contractors Indonesia
- Economic Council, Georgia
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Sree Jayajothi Cements Limited - India
- Price Waterhouse Coopers - Russia
- Therma Luzon, Inc, Philippines
- The Treasury - Australian Government
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Siam City Cement PLC, Thailand
- Gujarat Sidhee Cement - India
- PowerSource Philippines DevCo
- Kobexindo Tractors - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Indika Energy - Indonesia
- India Bulls Power Limited - India
- Medco Energi Mining Internasional
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- Romanian Commodities Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Bharathi Cement Corporation - India
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- Bhatia International Limited - India
- GMR Energy Limited - India
- AsiaOL BioFuels Corp., Philippines
- Sarangani Energy Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- PTC India Limited - India
- Jaiprakash Power Ventures ltd
- Vijayanagar Sugar Pvt Ltd - India
- Planning Commission, India
- Goldman Sachs - Singapore
- Global Green Power PLC Corporation, Philippines
- The State Trading Corporation of India Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Indo Tambangraya Megah - Indonesia
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Karaikal Port Pvt Ltd - India
- The University of Queensland
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Anglo American - United Kingdom
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Meralco Power Generation, Philippines
- Ceylon Electricity Board - Sri Lanka
- ASAPP Information Group - India
- Dalmia Cement Bharat India
- Indonesian Coal Mining Association
- Indian Oil Corporation Limited
- Videocon Industries ltd - India
- Carbofer General Trading SA - India
- Toyota Tsusho Corporation, Japan
- Eastern Energy - Thailand
- SMC Global Power, Philippines
- Wilmar Investment Holdings
- Cement Manufacturers Association - India
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Pendopo Energi Batubara - Indonesia
- Ministry of Transport, Egypt
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- Power Finance Corporation Ltd., India
- IEA Clean Coal Centre - UK
- Larsen & Toubro Limited - India
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- MS Steel International - UAE
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Ministry of Mines - Canada
- Directorate Of Revenue Intelligence - India
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- Bangladesh Power Developement Board
- Australian Coal Association
- Central Electricity Authority - India
- Ind-Barath Power Infra Limited - India
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