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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, 11 April 16
ON THE TIGHTROPE, IT CAN BE HARD TO KEEP YOUR BALANCE.... - CLARKSONS
Today’s headlines often point towards the impact of the demand side on the state of health of the shipping markets. But despite the fact that ...
Monday, 11 April 16
WEEKLY CS (I) COAL INDEX FOR 5700 GAR COAL UP 0.03 CENTS, OR ABOUT 0.06 PERCENT, TO $48.21 A TON
COALspot.com: Average 5000 GAR coal index of Indonesian origin fell 0.15 percent week over week to averaging $38.82 per ton on this past Friday, ac ...
Monday, 11 April 16
COAL IS NOT THE ENEMY TO FIGHT - ANDREA CLAVARINO, ASSOCARBONI
COALspot.com: “Coal is not the enemy to fight and electricity production from coal has an environmental impact in its lifecycle similar to na ...
Monday, 11 April 16
FORTY INDIAN COAL IMPORTERS UNDER THE DRI SCANNER FOR OVER-INVOICING : HINDU BUSINESS LINE
The Finance Ministry and the Directorate of Revenue Intelligence (DRI) of India are said to have stepped up investigations into the alleged over-in ...
Monday, 11 April 16
BDI ROSE TO ITS HIGHEST LEVEL IN FOUR MONTHS
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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- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- Banpu Public Company Limited - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Indogreen Group - Indonesia
- Romanian Commodities Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- Meenaskhi Energy Private Limited - India
- Wood Mackenzie - Singapore
- Sojitz Corporation - Japan
- Kepco SPC Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Grasim Industreis Ltd - India
- Siam City Cement - Thailand
- Agrawal Coal Company - India
- Bulk Trading Sa - Switzerland
- Antam Resourcindo - Indonesia
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- Heidelberg Cement - Germany
- Trasteel International SA, Italy
- Cement Manufacturers Association - India
- Uttam Galva Steels Limited - India
- Therma Luzon, Inc, Philippines
- Economic Council, Georgia
- Alfred C Toepfer International GmbH - Germany
- Global Business Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Ministry of Transport, Egypt
- Carbofer General Trading SA - India
- PNOC Exploration Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Indo Tambangraya Megah - Indonesia
- Essar Steel Hazira Ltd - India
- Indika Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Port Waratah Coal Services - Australia
- Kohat Cement Company Ltd. - Pakistan
- Miang Besar Coal Terminal - Indonesia
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- Posco Energy - South Korea
- CIMB Investment Bank - Malaysia
- Coastal Gujarat Power Limited - India
- Iligan Light & Power Inc, Philippines
- SMC Global Power, Philippines
- Africa Commodities Group - South Africa
- The Treasury - Australian Government
- Ceylon Electricity Board - Sri Lanka
- Borneo Indobara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Xindia Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- PowerSource Philippines DevCo
- Billiton Holdings Pty Ltd - Australia
- Electricity Authority, New Zealand
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- Mercuria Energy - Indonesia
- Malabar Cements Ltd - India
- Vizag Seaport Private Limited - India
- India Bulls Power Limited - India
- ICICI Bank Limited - India
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- Baramulti Group, Indonesia
- Thiess Contractors Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- Marubeni Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Energy Development Corp, Philippines
- Bhoruka Overseas - Indonesia
- Jaiprakash Power Ventures ltd
- Independent Power Producers Association of India
- Sakthi Sugars Limited - India
- Ind-Barath Power Infra Limited - India
- SMG Consultants - Indonesia
- MS Steel International - UAE
- Bhatia International Limited - India
- Timah Investasi Mineral - Indoneisa
- GMR Energy Limited - India
- Deloitte Consulting - India
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- CNBM International Corporation - China
- Coalindo Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- Sical Logistics Limited - India
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- Central Java Power - Indonesia
- Commonwealth Bank - Australia
- Videocon Industries ltd - India
- Renaissance Capital - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Edison Trading Spa - Italy
- Anglo American - United Kingdom
- Cigading International Bulk Terminal - Indonesia
- Bangladesh Power Developement Board
- Chamber of Mines of South Africa
- Power Finance Corporation Ltd., India
- Planning Commission, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- London Commodity Brokers - England
- Petron Corporation, Philippines
- Indian Oil Corporation Limited
- San Jose City I Power Corp, Philippines
- Lanco Infratech Ltd - India
- Kaltim Prima Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- Formosa Plastics Group - Taiwan
- Medco Energi Mining Internasional
- Sree Jayajothi Cements Limited - India
- Electricity Generating Authority of Thailand
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Coal and Oil Company - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Link Ltd, New Zealand
- PTC India Limited - India
- Gujarat Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- Goldman Sachs - Singapore
- Aboitiz Power Corporation - Philippines
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- Siam City Cement PLC, Thailand
- European Bulk Services B.V. - Netherlands
- LBH Netherlands Bv - Netherlands
- Tata Chemicals Ltd - India
- Sindya Power Generating Company Private Ltd
- Georgia Ports Authority, United States
- Orica Mining Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Meralco Power Generation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aditya Birla Group - India
- Ministry of Mines - Canada
- Intertek Mineral Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- VISA Power Limited - India
- Barasentosa Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- Bhushan Steel Limited - India
- Kobexindo Tractors - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- IEA Clean Coal Centre - UK
- Maheswari Brothers Coal Limited - India
- The State Trading Corporation of India Ltd
- Neyveli Lignite Corporation Ltd, - India
- The University of Queensland
- Karaikal Port Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Latin American Coal - Colombia
- McConnell Dowell - Australia
- Krishnapatnam Port Company Ltd. - India
- Rio Tinto Coal - Australia
- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
- Binh Thuan Hamico - Vietnam
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Central Electricity Authority - India
- Global Green Power PLC Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- AsiaOL BioFuels Corp., Philippines
- White Energy Company Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Makarim & Taira - Indonesia
- Semirara Mining and Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Directorate Of Revenue Intelligence - India
- Thai Mozambique Logistica
- Bharathi Cement Corporation - India
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