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