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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, 22 April 16
U.S WEEKLY DOMESTIC COAL OUTPUT UP 8.2 PER CENT - EIA
COALspot.com – U.S the world’s second largest coal producer has produced approximately totaled an estimated 11.1 million short tons (mm ...
Thursday, 21 April 16
PANAMAX: A VERY HEALTHY NORTH ATLANTIC FOR BOTH ROUNDS AND FRONTHAUL
Capesize
Correcting after last week's quadrupling.
This year's highest daily average of USD 8000 came on the back of substantial pro ...
Wednesday, 20 April 16
2017 IS EXPECTED TO BE A MUCH BETTER YEAR FOR THE SHIPPING INDUSTRY - INTERMODAL
Some months ago we noted that all projections anticipated 2016 to be a better year from a macroeconomic point of view when compared to 2015. As we ...
Tuesday, 19 April 16
STARS STILL SHINING? KEY IMPORTERS THROUGH THE TELESCOPE - CLARKSONS
As the pace of growth in Chinese seaborne imports has slowed, and prospects for a return to stronger rates of expansion appear to have diminished, ...
Monday, 18 April 16
INDONESIAN 5000 GAR COAL INDEX DECLINE 1.43 PERCENT WEEK OVER WEEK - CS (I) COAL INDEX
COALspot.com: Average 5000 GAR coal index of Indonesian origin fell 1.43 percent week over week to averaging $38.65 per ton on this past Friday, ac ...
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- Chamber of Mines of South Africa
- SN Aboitiz Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Interocean Group of Companies - India
- Bangladesh Power Developement Board
- Medco Energi Mining Internasional
- Savvy Resources Ltd - HongKong
- Bulk Trading Sa - Switzerland
- White Energy Company Limited
- MS Steel International - UAE
- Carbofer General Trading SA - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Oldendorff Carriers - Singapore
- Sinarmas Energy and Mining - Indonesia
- India Bulls Power Limited - India
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Attock Cement Pakistan Limited
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Jorong Barutama Greston.PT - Indonesia
- Sakthi Sugars Limited - India
- Ministry of Finance - Indonesia
- Jaiprakash Power Ventures ltd
- Karbindo Abesyapradhi - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Star Paper Mills Limited - India
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- GN Power Mariveles Coal Plant, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bhushan Steel Limited - India
- The State Trading Corporation of India Ltd
- European Bulk Services B.V. - Netherlands
- Iligan Light & Power Inc, Philippines
- Eastern Coal Council - USA
- Banpu Public Company Limited - Thailand
- Antam Resourcindo - Indonesia
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Indogreen Group - Indonesia
- Marubeni Corporation - India
- Binh Thuan Hamico - Vietnam
- International Coal Ventures Pvt Ltd - India
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- Petron Corporation, Philippines
- Mercuria Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- Intertek Mineral Services - Indonesia
- Mercator Lines Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Global Coal Blending Company Limited - Australia
- Agrawal Coal Company - India
- Energy Link Ltd, New Zealand
- Meenaskhi Energy Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Power Finance Corporation Ltd., India
- Bayan Resources Tbk. - Indonesia
- Bhatia International Limited - India
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- GMR Energy Limited - India
- Krishnapatnam Port Company Ltd. - India
- Tata Chemicals Ltd - India
- Manunggal Multi Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Global Business Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Semirara Mining Corp, Philippines
- Altura Mining Limited, Indonesia
- Lanco Infratech Ltd - India
- Standard Chartered Bank - UAE
- Wood Mackenzie - Singapore
- PTC India Limited - India
- The Treasury - Australian Government
- Salva Resources Pvt Ltd - India
- McConnell Dowell - Australia
- Xindia Steels Limited - India
- Parliament of New Zealand
- Mintek Dendrill Indonesia
- Bukit Baiduri Energy - Indonesia
- Ministry of Transport, Egypt
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The University of Queensland
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- Indonesian Coal Mining Association
- Kohat Cement Company Ltd. - Pakistan
- SMG Consultants - Indonesia
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Formosa Plastics Group - Taiwan
- Makarim & Taira - Indonesia
- Merrill Lynch Commodities Europe
- Indian Oil Corporation Limited
- Rashtriya Ispat Nigam Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- Holcim Trading Pte Ltd - Singapore
- Gujarat Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- IHS Mccloskey Coal Group - USA
- Madhucon Powers Ltd - India
- CNBM International Corporation - China
- Siam City Cement - Thailand
- Planning Commission, India
- Ceylon Electricity Board - Sri Lanka
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Metalloyd Limited - United Kingdom
- PowerSource Philippines DevCo
- Cigading International Bulk Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- Directorate Of Revenue Intelligence - India
- Energy Development Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- Indian Energy Exchange, India
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- Orica Australia Pty. Ltd.
- Miang Besar Coal Terminal - Indonesia
- Eastern Energy - Thailand
- Bhoruka Overseas - Indonesia
- Central Electricity Authority - India
- Indo Tambangraya Megah - Indonesia
- Borneo Indobara - Indonesia
- Economic Council, Georgia
- Romanian Commodities Exchange
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- Baramulti Group, Indonesia
- Africa Commodities Group - South Africa
- Thiess Contractors Indonesia
- Minerals Council of Australia
- Billiton Holdings Pty Ltd - Australia
- Aditya Birla Group - India
- Jindal Steel & Power Ltd - India
- Tamil Nadu electricity Board
- PetroVietnam Power Coal Import and Supply Company
- Kobexindo Tractors - Indoneisa
- Heidelberg Cement - Germany
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Ind-Barath Power Infra Limited - India
- Electricity Generating Authority of Thailand
- ASAPP Information Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- Therma Luzon, Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- New Zealand Coal & Carbon
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- Posco Energy - South Korea
- Essar Steel Hazira Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Australian Coal Association
- Directorate General of MIneral and Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Simpson Spence & Young - Indonesia
- Georgia Ports Authority, United States
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ICICI Bank Limited - India
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
- Port Waratah Coal Services - Australia
- Deloitte Consulting - India
- Sindya Power Generating Company Private Ltd
- Semirara Mining and Power Corporation, Philippines
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Vizag Seaport Private Limited - India
- Coal and Oil Company - UAE
- Uttam Galva Steels Limited - India
- Commonwealth Bank - Australia
- SMC Global Power, Philippines
- Indika Energy - Indonesia
- Cement Manufacturers Association - India
- Bharathi Cement Corporation - India
- South Luzon Thermal Energy Corporation
- Gujarat Sidhee Cement - India
- Wilmar Investment Holdings
- VISA Power Limited - India
- Thai Mozambique Logistica
- Siam City Cement PLC, Thailand
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