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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, 26 April 16
INDONESIA BANNED COAL EXPORTS TO PHILIPPINES BY BARGES DUE TO SECURITY CONCERN
COALspot.com: The Ministry of Energy and Mineral Resources (ESDM) on behalf of the government of Indonesia has Freeze coal exports by barges to Phi ...
Tuesday, 26 April 16
NEWBUILDING DEMAND DOWN EVERYWHERE? - CLARKSONS
Newbuild activity provides one indication of an owner country’s likely future fleet growth, though secondhand sale and purchase and demolitio ...
Monday, 25 April 16
CHINESE STEEL PRICE SURGE NOT SUSTAINABLE - FITCH
The rapid increase in Chinese steel prices so far this year is not sustainable, as it is largely due to a seasonal pick-up in construction and elev ...
Monday, 25 April 16
WEEKLY CS (I) COAL INDICES END ALMOST FLAT
COALspot.com: Average 5000 GAR coal index of Indonesian origin up 0.05 percent week over week to averaging $38.67 per ton on this past Friday, acco ...
Monday, 25 April 16
BALTIC DRY INDEX ENDS WEEK ON A POSITIVE NOTE
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continued to rose this week.
The freight market was ...
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- Bharathi Cement Corporation - India
- The Treasury - Australian Government
- India Bulls Power Limited - India
- SMG Consultants - Indonesia
- Karaikal Port Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Thiess Contractors Indonesia
- Indian Oil Corporation Limited
- PNOC Exploration Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Coal and Oil Company - UAE
- Edison Trading Spa - Italy
- Anglo American - United Kingdom
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Leighton Contractors Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Star Paper Mills Limited - India
- SN Aboitiz Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Attock Cement Pakistan Limited
- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- GMR Energy Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Australian Coal Association
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Essar Steel Hazira Ltd - India
- Mintek Dendrill Indonesia
- Sinarmas Energy and Mining - Indonesia
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Directorate Of Revenue Intelligence - India
- SMC Global Power, Philippines
- Borneo Indobara - Indonesia
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Savvy Resources Ltd - HongKong
- Metalloyd Limited - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Singapore Mercantile Exchange
- Ministry of Mines - Canada
- Samtan Co., Ltd - South Korea
- Mjunction Services Limited - India
- Energy Development Corp, Philippines
- Marubeni Corporation - India
- Timah Investasi Mineral - Indoneisa
- Oldendorff Carriers - Singapore
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
- PTC India Limited - India
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- Sical Logistics Limited - India
- Indian Energy Exchange, India
- Bhoruka Overseas - Indonesia
- Bayan Resources Tbk. - Indonesia
- LBH Netherlands Bv - Netherlands
- Meralco Power Generation, Philippines
- CNBM International Corporation - China
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Central Java Power - Indonesia
- Altura Mining Limited, Indonesia
- Ministry of Transport, Egypt
- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Energy Link Ltd, New Zealand
- Jaiprakash Power Ventures ltd
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- Indika Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- VISA Power Limited - India
- Sree Jayajothi Cements Limited - India
- Mercator Lines Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Coal Council - USA
- Coastal Gujarat Power Limited - India
- Carbofer General Trading SA - India
- Riau Bara Harum - Indonesia
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Global Green Power PLC Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Deloitte Consulting - India
- Heidelberg Cement - Germany
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- Petron Corporation, Philippines
- Minerals Council of Australia
- Wilmar Investment Holdings
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bhushan Steel Limited - India
- Power Finance Corporation Ltd., India
- London Commodity Brokers - England
- Banpu Public Company Limited - Thailand
- Grasim Industreis Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Merrill Lynch Commodities Europe
- McConnell Dowell - Australia
- Straits Asia Resources Limited - Singapore
- Siam City Cement - Thailand
- Ministry of Finance - Indonesia
- Ambuja Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Electricity Authority, New Zealand
- Iligan Light & Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Lanco Infratech Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Goldman Sachs - Singapore
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- Renaissance Capital - South Africa
- Coalindo Energy - Indonesia
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- Therma Luzon, Inc, Philippines
- Uttam Galva Steels Limited - India
- Bulk Trading Sa - Switzerland
- Bhatia International Limited - India
- Standard Chartered Bank - UAE
- Holcim Trading Pte Ltd - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Antam Resourcindo - Indonesia
- Chettinad Cement Corporation Ltd - India
- Chamber of Mines of South Africa
- Kideco Jaya Agung - Indonesia
- IEA Clean Coal Centre - UK
- PetroVietnam Power Coal Import and Supply Company
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- Romanian Commodities Exchange
- Parliament of New Zealand
- Directorate General of MIneral and Coal - Indonesia
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- ICICI Bank Limited - India
- Sakthi Sugars Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Global Coal Blending Company Limited - Australia
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- Mercuria Energy - Indonesia
- Cement Manufacturers Association - India
- Simpson Spence & Young - Indonesia
- Commonwealth Bank - Australia
- Kapuas Tunggal Persada - Indonesia
- Indo Tambangraya Megah - Indonesia
- Posco Energy - South Korea
- Africa Commodities Group - South Africa
- White Energy Company Limited
- GN Power Mariveles Coal Plant, Philippines
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- Larsen & Toubro Limited - India
- AsiaOL BioFuels Corp., Philippines
- Central Electricity Authority - India
- Ind-Barath Power Infra Limited - India
- Makarim & Taira - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Videocon Industries ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Dalmia Cement Bharat India
- Siam City Cement PLC, Thailand
- Cigading International Bulk Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- New Zealand Coal & Carbon
- Australian Commodity Traders Exchange
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- Gujarat Mineral Development Corp Ltd - India
- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- TeaM Sual Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Aditya Birla Group - India
- The University of Queensland
- Indonesian Coal Mining Association
- Bukit Baiduri Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- Kaltim Prima Coal - Indonesia
- Planning Commission, India
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Rashtriya Ispat Nigam Limited - India
- Malabar Cements Ltd - India
- Tata Chemicals Ltd - India
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