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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, 03 May 16
HOW TO AVOID THE LATEST CARGO FRAUDS - BIMCO
BIMCO receives regular reports from members around the world about cargo fraud. This week alone we have had two reports of cargoes being fixed (or ...
Monday, 02 May 16
INDIA'S GANGAVARAM PORT SETS ALL INDIA RECORD FOR NON-COKING COAL DISCHARGE
COALspot.com: Gangavaram Port, the deepest and the most modern port in India, has created yet another historical milestone record by discharging 15 ...
Monday, 02 May 16
CS (I) 5000 GAR COAL INDEX CLOSES 0.11% HIGHER, 5700 GAR COAL RISES 0.07% W/W
COALspot.com: Average 5000 GAR coal index of Indonesian origin up 0.28 percent week over week to averaging $38.78 per ton on this past Friday, acco ...
Monday, 02 May 16
FREIGHT RATES ARE EXPECTED TO BE FLAT TO SOFT THIS WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continued to rose this week.
The freight market was ...
Saturday, 30 April 16
40 YEARS OF HANDLING COAL AT THE BTW IN WILHELMSHAVEN UNDER THE RHENUS FLAG
Press Release: The first bulk carrier with coal on board docked at the Bulk Terminal Wilhelmshaven (BTW), which is operated by Rhenus Midgar ...
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- The University of Queensland
- Bahari Cakrawala Sebuku - Indonesia
- Intertek Mineral Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Star Paper Mills Limited - India
- Heidelberg Cement - Germany
- Planning Commission, India
- Toyota Tsusho Corporation, Japan
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- Australian Coal Association
- Gujarat Sidhee Cement - India
- Kumho Petrochemical, South Korea
- Sindya Power Generating Company Private Ltd
- McConnell Dowell - Australia
- India Bulls Power Limited - India
- Tata Chemicals Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- GMR Energy Limited - India
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Central Electricity Authority - India
- Standard Chartered Bank - UAE
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- International Coal Ventures Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Ministry of Finance - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- Petron Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Grasim Industreis Ltd - India
- CIMB Investment Bank - Malaysia
- Aditya Birla Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mjunction Services Limited - India
- Eastern Coal Council - USA
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Georgia Ports Authority, United States
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- Ministry of Transport, Egypt
- Banpu Public Company Limited - Thailand
- Miang Besar Coal Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Parliament of New Zealand
- Metalloyd Limited - United Kingdom
- Bharathi Cement Corporation - India
- The Treasury - Australian Government
- Posco Energy - South Korea
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- PTC India Limited - India
- Carbofer General Trading SA - India
- Merrill Lynch Commodities Europe
- AsiaOL BioFuels Corp., Philippines
- IHS Mccloskey Coal Group - USA
- Bulk Trading Sa - Switzerland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- London Commodity Brokers - England
- New Zealand Coal & Carbon
- Parry Sugars Refinery, India
- Mintek Dendrill Indonesia
- OPG Power Generation Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Malabar Cements Ltd - India
- Central Java Power - Indonesia
- ASAPP Information Group - India
- Orica Mining Services - Indonesia
- Samtan Co., Ltd - South Korea
- Altura Mining Limited, Indonesia
- Electricity Authority, New Zealand
- Deloitte Consulting - India
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Madhucon Powers Ltd - India
- Romanian Commodities Exchange
- Singapore Mercantile Exchange
- Mercuria Energy - Indonesia
- Rio Tinto Coal - Australia
- CNBM International Corporation - China
- Larsen & Toubro Limited - India
- Bukit Baiduri Energy - Indonesia
- GVK Power & Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Therma Luzon, Inc, Philippines
- Vedanta Resources Plc - India
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Timah Investasi Mineral - Indoneisa
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- Coal and Oil Company - UAE
- Binh Thuan Hamico - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Meralco Power Generation, Philippines
- Indogreen Group - Indonesia
- Ministry of Mines - Canada
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining and Power Corporation, Philippines
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Thiess Contractors Indonesia
- VISA Power Limited - India
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- White Energy Company Limited
- Cement Manufacturers Association - India
- Makarim & Taira - Indonesia
- Bhushan Steel Limited - India
- Medco Energi Mining Internasional
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- MS Steel International - UAE
- Tamil Nadu electricity Board
- Karbindo Abesyapradhi - Indoneisa
- Anglo American - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Goldman Sachs - Singapore
- Indian Oil Corporation Limited
- PNOC Exploration Corporation - Philippines
- Oldendorff Carriers - Singapore
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- Kepco SPC Power Corporation, Philippines
- Africa Commodities Group - South Africa
- LBH Netherlands Bv - Netherlands
- Meenaskhi Energy Private Limited - India
- Jindal Steel & Power Ltd - India
- Energy Development Corp, Philippines
- Bhoruka Overseas - Indonesia
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Iligan Light & Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- The State Trading Corporation of India Ltd
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- PetroVietnam Power Coal Import and Supply Company
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- Formosa Plastics Group - Taiwan
- GAC Shipping (India) Pvt Ltd
- Kaltim Prima Coal - Indonesia
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- Sinarmas Energy and Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Maheswari Brothers Coal Limited - India
- Interocean Group of Companies - India
- Bukit Makmur.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Chettinad Cement Corporation Ltd - India
- PowerSource Philippines DevCo
- Latin American Coal - Colombia
- Edison Trading Spa - Italy
- TNB Fuel Sdn Bhd - Malaysia
- Wood Mackenzie - Singapore
- Leighton Contractors Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- Chamber of Mines of South Africa
- Economic Council, Georgia
- Xindia Steels Limited - India
- Lanco Infratech Ltd - India
- Attock Cement Pakistan Limited
- Gujarat Mineral Development Corp Ltd - India
- Bangladesh Power Developement Board
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- Australian Commodity Traders Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Riau Bara Harum - Indonesia
- Trasteel International SA, Italy
- Kartika Selabumi Mining - Indonesia
- Orica Australia Pty. Ltd.
- GN Power Mariveles Coal Plant, Philippines
- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
- Bukit Asam (Persero) Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Bayan Resources Tbk. - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
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