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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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Monday, 18 April 16
SOUTH KOREA STATE-OWNED UTILITY KOMIPO INVITES COAL BIDS FOR BORYEONG POWER PLANT
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a new tender for 70,000 Metric Tons of 4,600 kcal/kg NAR coal for ...
Monday, 18 April 16
SOUTH AFRICA RB1 COAL HAS LOST GROUND IN INDIA; RB2 MAY LOSE GRIP IF THE PRICE CROSSES US$ 50 A TON - TRADERS
COALspot.com: Indian coal consumers preferred to buy South Africa RB2 coal instead of RB1 coal recent months due to RB2's low CFR price level. ...
Monday, 18 April 16
CAPESIZE INDEX ROSE 44.66 PER CENT WEEK OVER WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continued to rose this week.
The freight market was ...
Friday, 15 April 16
PANAMAX MARKET CONTINUES TO FIRM - FEARNLEYS
Cape
It has been a positive freight market for the past few weeks, however, this week the market is taking a small breather, says Fearnleys in it ...
Friday, 15 April 16
U.S WEEKLY COAL OUTPUT FALLS ACROSS ALL BASINS - EIA
COALspot.com – U.S the world’s second largest coal producer has produced approximately totaled an estimated 10.2 million short tons (mm ...
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- Star Paper Mills Limited - India
- OPG Power Generation Pvt Ltd - India
- Ministry of Finance - Indonesia
- Central Java Power - Indonesia
- San Jose City I Power Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- White Energy Company Limited
- Ceylon Electricity Board - Sri Lanka
- Posco Energy - South Korea
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- Borneo Indobara - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Sinarmas Energy and Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Xindia Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Ind-Barath Power Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Cigading International Bulk Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Bhoruka Overseas - Indonesia
- Economic Council, Georgia
- The Treasury - Australian Government
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- Globalindo Alam Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Minerals Council of Australia
- Petrochimia International Co. Ltd.- Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Sarangani Energy Corporation, Philippines
- India Bulls Power Limited - India
- Renaissance Capital - South Africa
- Oldendorff Carriers - Singapore
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Sojitz Corporation - Japan
- South Luzon Thermal Energy Corporation
- Port Waratah Coal Services - Australia
- Simpson Spence & Young - Indonesia
- Dalmia Cement Bharat India
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Indo Tambangraya Megah - Indonesia
- Ambuja Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Power Finance Corporation Ltd., India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Tata Chemicals Ltd - India
- Orica Mining Services - Indonesia
- Mintek Dendrill Indonesia
- Commonwealth Bank - Australia
- Anglo American - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- PTC India Limited - India
- LBH Netherlands Bv - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Chamber of Mines of South Africa
- Latin American Coal - Colombia
- Karaikal Port Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Riau Bara Harum - Indonesia
- Banpu Public Company Limited - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Heidelberg Cement - Germany
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Aditya Birla Group - India
- Rio Tinto Coal - Australia
- Meralco Power Generation, Philippines
- International Coal Ventures Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Thiess Contractors Indonesia
- CIMB Investment Bank - Malaysia
- MS Steel International - UAE
- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Petron Corporation, Philippines
- Metalloyd Limited - United Kingdom
- VISA Power Limited - India
- TeaM Sual Corporation - Philippines
- Madhucon Powers Ltd - India
- GMR Energy Limited - India
- Rashtriya Ispat Nigam Limited - India
- Independent Power Producers Association of India
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Energy Development Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- New Zealand Coal & Carbon
- Gujarat Mineral Development Corp Ltd - India
- Trasteel International SA, Italy
- Interocean Group of Companies - India
- Ministry of Transport, Egypt
- Carbofer General Trading SA - India
- Indian Energy Exchange, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Energy - Thailand
- Lanco Infratech Ltd - India
- Tamil Nadu electricity Board
- Price Waterhouse Coopers - Russia
- Miang Besar Coal Terminal - Indonesia
- The University of Queensland
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Romanian Commodities Exchange
- Coalindo Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Planning Commission, India
- Global Business Power Corporation, Philippines
- Eastern Coal Council - USA
- Kohat Cement Company Ltd. - Pakistan
- Jindal Steel & Power Ltd - India
- Ministry of Mines - Canada
- Parry Sugars Refinery, India
- Global Green Power PLC Corporation, Philippines
- Australian Commodity Traders Exchange
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Maheswari Brothers Coal Limited - India
- Indogreen Group - Indonesia
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- Timah Investasi Mineral - Indoneisa
- Medco Energi Mining Internasional
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Australian Coal Association
- Standard Chartered Bank - UAE
- Coastal Gujarat Power Limited - India
- Samtan Co., Ltd - South Korea
- Attock Cement Pakistan Limited
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Antam Resourcindo - Indonesia
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- Bhushan Steel Limited - India
- Mercator Lines Limited - India
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- Deloitte Consulting - India
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- IHS Mccloskey Coal Group - USA
- CNBM International Corporation - China
- Sical Logistics Limited - India
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Semirara Mining Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Pendopo Energi Batubara - Indonesia
- Straits Asia Resources Limited - Singapore
- Bayan Resources Tbk. - Indonesia
- PNOC Exploration Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ICICI Bank Limited - India
- PowerSource Philippines DevCo
- Uttam Galva Steels Limited - India
- Bulk Trading Sa - Switzerland
- Aboitiz Power Corporation - Philippines
- ASAPP Information Group - India
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- Indika Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Georgia Ports Authority, United States
- Kobexindo Tractors - Indoneisa
- Siam City Cement - Thailand
- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- Salva Resources Pvt Ltd - India
- London Commodity Brokers - England
- Formosa Plastics Group - Taiwan
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Gujarat Sidhee Cement - India
- Savvy Resources Ltd - HongKong
- Grasim Industreis Ltd - India
- Binh Thuan Hamico - Vietnam
- IEA Clean Coal Centre - UK
- GAC Shipping (India) Pvt Ltd
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