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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, 04 April 16
CAPE INDEX JUMPED 70% WEEK ON WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continued to rose this week.
The freight market was ...
Friday, 01 April 16
ASSESSING THE DRY BULK MARKET AT ROCK BOTTOM - CLARKSONS
While the opening months of the year are typically a weak period for the dry bulk market, the downturn so far this year has been severe. Earnings h ...
Friday, 01 April 16
NINE AM - TIME TO GET AN INDONESIAN LANGUAGE VERSION OF YOUR CHARTERPARTIES - CLYDE & CO
KNOWLEDGE TO ELEVATE
For several years, Indonesian law (Article 31, Law Number 24 of 2009) has required that memoranda of understanding (" ...
Friday, 01 April 16
U.S. COAL PRODUCTION UP SLIGHTLY WEEK OVER WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 11.6 million shor ...
Thursday, 31 March 16
CAPE: ANOTHER UNEVENTFUL WEEK WITH FIXTURES CONCLUDED AT LAST DONE LEVELS - FEARNLEYS
Cape
Another uneventful week with fixtures concluded at last done levels, CS levels remain around the USD 3 mark, whilst C3 is still just short o ...
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- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Economic Council, Georgia
- Posco Energy - South Korea
- Jindal Steel & Power Ltd - India
- Indian Energy Exchange, India
- Uttam Galva Steels Limited - India
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- GMR Energy Limited - India
- AsiaOL BioFuels Corp., Philippines
- Thiess Contractors Indonesia
- Dalmia Cement Bharat India
- Sical Logistics Limited - India
- Miang Besar Coal Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Coastal Gujarat Power Limited - India
- Bhoruka Overseas - Indonesia
- Timah Investasi Mineral - Indoneisa
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Mines - Canada
- LBH Netherlands Bv - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Australian Commodity Traders Exchange
- MS Steel International - UAE
- Billiton Holdings Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Orica Australia Pty. Ltd.
- SN Aboitiz Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Mintek Dendrill Indonesia
- Bayan Resources Tbk. - Indonesia
- Siam City Cement PLC, Thailand
- Parry Sugars Refinery, India
- CIMB Investment Bank - Malaysia
- Barasentosa Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Singapore Mercantile Exchange
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- Oldendorff Carriers - Singapore
- Ambuja Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Riau Bara Harum - Indonesia
- Energy Link Ltd, New Zealand
- Savvy Resources Ltd - HongKong
- Kohat Cement Company Ltd. - Pakistan
- Baramulti Group, Indonesia
- Orica Mining Services - Indonesia
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- Binh Thuan Hamico - Vietnam
- Tata Chemicals Ltd - India
- Kideco Jaya Agung - Indonesia
- Africa Commodities Group - South Africa
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- Mercuria Energy - Indonesia
- Mjunction Services Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Carbofer General Trading SA - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- GAC Shipping (India) Pvt Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Georgia Ports Authority, United States
- Price Waterhouse Coopers - Russia
- Bulk Trading Sa - Switzerland
- Sree Jayajothi Cements Limited - India
- Aditya Birla Group - India
- Pendopo Energi Batubara - Indonesia
- Indogreen Group - Indonesia
- Standard Chartered Bank - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- Grasim Industreis Ltd - India
- Indian Oil Corporation Limited
- Ministry of Finance - Indonesia
- Vedanta Resources Plc - India
- Directorate Of Revenue Intelligence - India
- Agrawal Coal Company - India
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Kartika Selabumi Mining - Indonesia
- PowerSource Philippines DevCo
- Heidelberg Cement - Germany
- White Energy Company Limited
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Chettinad Cement Corporation Ltd - India
- Petron Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Antam Resourcindo - Indonesia
- Trasteel International SA, Italy
- Gujarat Sidhee Cement - India
- Kumho Petrochemical, South Korea
- CNBM International Corporation - China
- Kobexindo Tractors - Indoneisa
- Essar Steel Hazira Ltd - India
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Alfred C Toepfer International GmbH - Germany
- Xindia Steels Limited - India
- TeaM Sual Corporation - Philippines
- Indika Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Goldman Sachs - Singapore
- VISA Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- PNOC Exploration Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Merrill Lynch Commodities Europe
- Simpson Spence & Young - Indonesia
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Vizag Seaport Private Limited - India
- Siam City Cement - Thailand
- Minerals Council of Australia
- Interocean Group of Companies - India
- IEA Clean Coal Centre - UK
- Offshore Bulk Terminal Pte Ltd, Singapore
- Renaissance Capital - South Africa
- Karaikal Port Pvt Ltd - India
- Eastern Energy - Thailand
- India Bulls Power Limited - India
- ASAPP Information Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IHS Mccloskey Coal Group - USA
- Manunggal Multi Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Central Electricity Authority - India
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Central Java Power - Indonesia
- Sakthi Sugars Limited - India
- Sojitz Corporation - Japan
- Attock Cement Pakistan Limited
- Romanian Commodities Exchange
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- Ministry of Transport, Egypt
- Tamil Nadu electricity Board
- Ind-Barath Power Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Bharathi Cement Corporation - India
- Latin American Coal - Colombia
- Chamber of Mines of South Africa
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- Videocon Industries ltd - India
- Planning Commission, India
- Altura Mining Limited, Indonesia
- Wilmar Investment Holdings
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Sinarmas Energy and Mining - Indonesia
- Cement Manufacturers Association - India
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- Energy Development Corp, Philippines
- Independent Power Producers Association of India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thai Mozambique Logistica
- GVK Power & Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- Edison Trading Spa - Italy
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- New Zealand Coal & Carbon
- ICICI Bank Limited - India
- Kaltim Prima Coal - Indonesia
- Australian Coal Association
- Gujarat Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Intertek Mineral Services - Indonesia
- Indonesian Coal Mining Association
- London Commodity Brokers - England
- Metalloyd Limited - United Kingdom
- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- Holcim Trading Pte Ltd - Singapore
- Sindya Power Generating Company Private Ltd
- SMC Global Power, Philippines
- Global Coal Blending Company Limited - Australia
- Bangladesh Power Developement Board
- European Bulk Services B.V. - Netherlands
- Borneo Indobara - Indonesia
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Parliament of New Zealand
- South Luzon Thermal Energy Corporation
- Samtan Co., Ltd - South Korea
- The University of Queensland
- Bhushan Steel Limited - India
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