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