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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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Thursday, 14 April 16
AUSTRALIAN MINING SERVICES SECTOR SQUEEZED BY MINERS' COST CUTS - FITCH RATINGS
Fitch Ratings says mining services companies' revenues and margins will remain under pressure as miners continue to focus on reducing costs ami ...
Thursday, 14 April 16
DRY BULKERS' PRICES COULD BE HEADING UPWARDS AS BUYERS' APPETITE INCREASES - HELLENIC SHIPPING NEWS
Investment sentiment is beginning to trend upwards in the market for second hand dry bulk carriers. According to the latest weekly report from ship ...
Wednesday, 13 April 16
U.S COAL PRODUCTION IS EXPECTED TO DECREASE BY 16 PER CENT IN 2016; THE LARGEST ANNUAL PERCENTAGE DECLINE SINCE 1958 - EIA
EIA estimates that U.S. coal production in March 2016 was 52 million short tons (MMst), a 2 MMst (4%) decrease from the previous month and 29 MMst ...
Tuesday, 12 April 16
INDONESIA COAL BENCHMARK PRICE INCREASES FOR SECOND STRAIGHT MONTH
COALspot.com: The Indonesia Coal Benchmark Price Increases For Second Straight Month in April 2016.
The Director General of Mine ...
Tuesday, 12 April 16
NO FURTHER SIGNIFICANT COAL PRICE DECLINES IN THE FUTURE - FITCH
COALspot.com: Fitch does not expect further significant coal price declines because producers sector-wide are suffering losses while China and Indo ...
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- Global Coal Blending Company Limited - Australia
- Tamil Nadu electricity Board
- New Zealand Coal & Carbon
- Ministry of Mines - Canada
- Power Finance Corporation Ltd., India
- Directorate Of Revenue Intelligence - India
- Wilmar Investment Holdings
- Marubeni Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- Kobexindo Tractors - Indoneisa
- Essar Steel Hazira Ltd - India
- Global Green Power PLC Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Indian Oil Corporation Limited
- PTC India Limited - India
- The State Trading Corporation of India Ltd
- Aboitiz Power Corporation - Philippines
- Cement Manufacturers Association - India
- Mjunction Services Limited - India
- Kumho Petrochemical, South Korea
- Sical Logistics Limited - India
- IEA Clean Coal Centre - UK
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bharathi Cement Corporation - India
- Australian Commodity Traders Exchange
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Sojitz Corporation - Japan
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Heidelberg Cement - Germany
- London Commodity Brokers - England
- Samtan Co., Ltd - South Korea
- Bhatia International Limited - India
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- Altura Mining Limited, Indonesia
- Orica Australia Pty. Ltd.
- Thiess Contractors Indonesia
- Indika Energy - Indonesia
- Ambuja Cements Ltd - India
- Thai Mozambique Logistica
- Australian Coal Association
- Attock Cement Pakistan Limited
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- South Luzon Thermal Energy Corporation
- Grasim Industreis Ltd - India
- SMC Global Power, Philippines
- Manunggal Multi Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- The Treasury - Australian Government
- Petron Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Mining Services - Indonesia
- Coalindo Energy - Indonesia
- Anglo American - United Kingdom
- Larsen & Toubro Limited - India
- Chamber of Mines of South Africa
- Salva Resources Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Simpson Spence & Young - Indonesia
- Singapore Mercantile Exchange
- Indogreen Group - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- India Bulls Power Limited - India
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- Antam Resourcindo - Indonesia
- Parliament of New Zealand
- Agrawal Coal Company - India
- Siam City Cement - Thailand
- Straits Asia Resources Limited - Singapore
- Sree Jayajothi Cements Limited - India
- Tata Chemicals Ltd - India
- Energy Link Ltd, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Madhucon Powers Ltd - India
- Savvy Resources Ltd - HongKong
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Indian Energy Exchange, India
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Dalmia Cement Bharat India
- Meenaskhi Energy Private Limited - India
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- Standard Chartered Bank - UAE
- Lanco Infratech Ltd - India
- Central Java Power - Indonesia
- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
- Makarim & Taira - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Parry Sugars Refinery, India
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining and Power Corporation, Philippines
- Trasteel International SA, Italy
- ASAPP Information Group - India
- Carbofer General Trading SA - India
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Barasentosa Lestari - Indonesia
- VISA Power Limited - India
- Edison Trading Spa - Italy
- Bukit Baiduri Energy - Indonesia
- Eastern Energy - Thailand
- Indonesian Coal Mining Association
- CNBM International Corporation - China
- Port Waratah Coal Services - Australia
- Goldman Sachs - Singapore
- Sakthi Sugars Limited - India
- Sindya Power Generating Company Private Ltd
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Binh Thuan Hamico - Vietnam
- Bhoruka Overseas - Indonesia
- MS Steel International - UAE
- Toyota Tsusho Corporation, Japan
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- Bangladesh Power Developement Board
- GMR Energy Limited - India
- Wood Mackenzie - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meralco Power Generation, Philippines
- Jindal Steel & Power Ltd - India
- Vizag Seaport Private Limited - India
- Independent Power Producers Association of India
- Jorong Barutama Greston.PT - Indonesia
- Energy Development Corp, Philippines
- Global Business Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Riau Bara Harum - Indonesia
- Minerals Council of Australia
- Vedanta Resources Plc - India
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- The University of Queensland
- Ceylon Electricity Board - Sri Lanka
- Videocon Industries ltd - India
- Baramulti Group, Indonesia
- Central Electricity Authority - India
- CIMB Investment Bank - Malaysia
- Indo Tambangraya Megah - Indonesia
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Miang Besar Coal Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Mintek Dendrill Indonesia
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- GVK Power & Infra Limited - India
- Interocean Group of Companies - India
- Rio Tinto Coal - Australia
- Commonwealth Bank - Australia
- San Jose City I Power Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Formosa Plastics Group - Taiwan
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Economic Council, Georgia
- Iligan Light & Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jaiprakash Power Ventures ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Medco Energi Mining Internasional
- Bulk Trading Sa - Switzerland
- Mercuria Energy - Indonesia
- Merrill Lynch Commodities Europe
- Kalimantan Lumbung Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Metalloyd Limited - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- Posco Energy - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Deloitte Consulting - India
- Africa Commodities Group - South Africa
- Ministry of Transport, Egypt
- PowerSource Philippines DevCo
- Leighton Contractors Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Maheswari Brothers Coal Limited - India
- Star Paper Mills Limited - India
- International Coal Ventures Pvt Ltd - India
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