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