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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, 08 April 16
COASTAL ENERGEN CROSSES GENERATION OF 1068 MW AND EXPORT OF 1004 MW FROM ITS 1200 MW IPP
COALspot.com: Coal & Oil (C&O) Group, an India centric Energy & Infrastructure company announced that their Coastal Energen' ...
Friday, 08 April 16
WEEKLY US COAL PRODUCTION ESTIMATES DIP 5.4% TO 11 MMST
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 11 million short ...
Friday, 08 April 16
MINISTER OF ENERGY AND MINERAL RESOURCES OF INDONESIA TO ISSUE REGULATION TO GUARANTEE THE COAL SUPPLY TO ITS 35K POWER PLANT PROJECTS
COALspot.com: In order to guarantee the supply of coal for 35,000 megawatt (mw) coal based power plants ( still in planning stage), the Minister of ...
Thursday, 07 April 16
CHINA STEEL CAPACITY CUTS FACE SOCIAL, FINANCIAL HURDLES - FITCH RATINGS
Fitch Ratings says today that the Chinese government's supply-side reform of the steel sector faces immense social and financial challenges. Th ...
Thursday, 07 April 16
PANAMAX RATES ARE FIRMING IN BOTH HEMISHEPHERES - FEARNLEYS
Capesize
With a great volume our of west Australia, rates were finally moving to upper 3's. and stabilizing towards the middle of the week in ...
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Malabar Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Central Electricity Authority - India
- Lanco Infratech Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- MS Steel International - UAE
- Karbindo Abesyapradhi - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- Global Coal Blending Company Limited - Australia
- Price Waterhouse Coopers - Russia
- Singapore Mercantile Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Edison Trading Spa - Italy
- Mercator Lines Limited - India
- CIMB Investment Bank - Malaysia
- Grasim Industreis Ltd - India
- Vedanta Resources Plc - India
- McConnell Dowell - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- Formosa Plastics Group - Taiwan
- Orica Mining Services - Indonesia
- Bangladesh Power Developement Board
- Binh Thuan Hamico - Vietnam
- Bukit Baiduri Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- Marubeni Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Posco Energy - South Korea
- The University of Queensland
- Rio Tinto Coal - Australia
- Madhucon Powers Ltd - India
- Vizag Seaport Private Limited - India
- Aboitiz Power Corporation - Philippines
- Cement Manufacturers Association - India
- Karaikal Port Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Standard Chartered Bank - UAE
- Toyota Tsusho Corporation, Japan
- TNB Fuel Sdn Bhd - Malaysia
- Georgia Ports Authority, United States
- SMG Consultants - Indonesia
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Economic Council, Georgia
- Eastern Energy - Thailand
- Maheswari Brothers Coal Limited - India
- Mjunction Services Limited - India
- VISA Power Limited - India
- Planning Commission, India
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- Gujarat Mineral Development Corp Ltd - India
- Sarangani Energy Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Indogreen Group - Indonesia
- Central Java Power - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Energy Development Corp, Philippines
- White Energy Company Limited
- Global Business Power Corporation, Philippines
- Agrawal Coal Company - India
- TeaM Sual Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- Coastal Gujarat Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Ministry of Transport, Egypt
- Heidelberg Cement - Germany
- Simpson Spence & Young - Indonesia
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- New Zealand Coal & Carbon
- PTC India Limited - India
- Parliament of New Zealand
- Indika Energy - Indonesia
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- Jorong Barutama Greston.PT - Indonesia
- Bhoruka Overseas - Indonesia
- Anglo American - United Kingdom
- CNBM International Corporation - China
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- LBH Netherlands Bv - Netherlands
- Latin American Coal - Colombia
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Barasentosa Lestari - Indonesia
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Uttam Galva Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Indian Energy Exchange, India
- Bulk Trading Sa - Switzerland
- Petrochimia International Co. Ltd.- Taiwan
- Mercuria Energy - Indonesia
- GVK Power & Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PetroVietnam Power Coal Import and Supply Company
- IEA Clean Coal Centre - UK
- Chamber of Mines of South Africa
- Petron Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- South Luzon Thermal Energy Corporation
- Semirara Mining and Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Kartika Selabumi Mining - Indonesia
- Wilmar Investment Holdings
- Deloitte Consulting - India
- GMR Energy Limited - India
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- Aditya Birla Group - India
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- Parry Sugars Refinery, India
- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- Goldman Sachs - Singapore
- Videocon Industries ltd - India
- Wood Mackenzie - Singapore
- Commonwealth Bank - Australia
- Sinarmas Energy and Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Globalindo Alam Lestari - Indonesia
- Electricity Authority, New Zealand
- Timah Investasi Mineral - Indoneisa
- Metalloyd Limited - United Kingdom
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement - Thailand
- London Commodity Brokers - England
- Essar Steel Hazira Ltd - India
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- Romanian Commodities Exchange
- Riau Bara Harum - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Altura Mining Limited, Indonesia
- Straits Asia Resources Limited - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- Ministry of Finance - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Salva Resources Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Australian Coal Association
- SN Aboitiz Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Sindya Power Generating Company Private Ltd
- Leighton Contractors Pty Ltd - Australia
- Bhatia International Limited - India
- Kepco SPC Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- International Coal Ventures Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Banpu Public Company Limited - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement PLC, Thailand
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
- PowerSource Philippines DevCo
- Baramulti Group, Indonesia
- Antam Resourcindo - Indonesia
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Medco Energi Mining Internasional
- Sree Jayajothi Cements Limited - India
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Port Waratah Coal Services - Australia
- SMC Global Power, Philippines
- Bharathi Cement Corporation - India
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- Energy Link Ltd, New Zealand
- European Bulk Services B.V. - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Ministry of Mines - Canada
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