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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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Wednesday, 30 March 16
MINISTRY OF ENERGY AND MINERAL RESOURCES OF INDONESIA TO REVISE METHODOLOGY TO DETERMINE THE SELLING PRICE OF COAL TO MINE-MOUTH POWER PLANTS
COALspot.com: Ministry of Energy and Mineral Resources (ESDM) of Indonesia to review to revise methodology to determine the selling price of co ...
Wednesday, 30 March 16
VALEMAXES: THE BIGGEST NIGHTMARE OF TODAY'S DRY BULK MARKET - INTERMODAL
At a time that Europe is still dealing with the aftermath of the terrorist attacks in Brussels our society is daily bombarded with news of terroris ...
Tuesday, 29 March 16
BULK CARRIER VENTILATION - CAPTAIN PAUL R. WALTON
KNOWLEDGE TO ELEVATE
Moisture damage is a source of many cargo claims. Claimants allege that it is brought about by the ship’s failure t ...
Monday, 28 March 16
INDONESIAN WEEKLY CS50 COAL INDEX CLOSED SLIGHTLY FIRM; CS 57 INDEX CLOSED WEAK
COALspot.com: Average 5000 GAR coal index of Indonesian origin rose 0.03 percent week over week to averaging $38.91 per ton on this past Thursday, ...
Monday, 28 March 16
THE SUPRAMAX INDEX WAS UP TWENTY-FOUR POINTS TO 473 POINTS
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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- Bank of Tokyo Mitsubishi UFJ Ltd
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Mercator Lines Limited - India
- Ambuja Cements Ltd - India
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- MS Steel International - UAE
- Miang Besar Coal Terminal - Indonesia
- Posco Energy - South Korea
- ASAPP Information Group - India
- Billiton Holdings Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Lanco Infratech Ltd - India
- Thiess Contractors Indonesia
- Xindia Steels Limited - India
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- Videocon Industries ltd - India
- Parliament of New Zealand
- TeaM Sual Corporation - Philippines
- Bhushan Steel Limited - India
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- Latin American Coal - Colombia
- Commonwealth Bank - Australia
- Chamber of Mines of South Africa
- Toyota Tsusho Corporation, Japan
- Bahari Cakrawala Sebuku - Indonesia
- Tamil Nadu electricity Board
- Kideco Jaya Agung - Indonesia
- Goldman Sachs - Singapore
- Kobexindo Tractors - Indoneisa
- Malabar Cements Ltd - India
- Minerals Council of Australia
- Essar Steel Hazira Ltd - India
- Sical Logistics Limited - India
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- South Luzon Thermal Energy Corporation
- Semirara Mining and Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- Heidelberg Cement - Germany
- Planning Commission, India
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- AsiaOL BioFuels Corp., Philippines
- Bayan Resources Tbk. - Indonesia
- Indogreen Group - Indonesia
- Larsen & Toubro Limited - India
- New Zealand Coal & Carbon
- Global Coal Blending Company Limited - Australia
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
- Medco Energi Mining Internasional
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- Sarangani Energy Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Indonesian Coal Mining Association
- Global Green Power PLC Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Maheswari Brothers Coal Limited - India
- Jindal Steel & Power Ltd - India
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- Mjunction Services Limited - India
- Deloitte Consulting - India
- White Energy Company Limited
- GVK Power & Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Coal Association
- Mercuria Energy - Indonesia
- Power Finance Corporation Ltd., India
- Chettinad Cement Corporation Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- CIMB Investment Bank - Malaysia
- Independent Power Producers Association of India
- Rio Tinto Coal - Australia
- Kohat Cement Company Ltd. - Pakistan
- Samtan Co., Ltd - South Korea
- Ind-Barath Power Infra Limited - India
- Formosa Plastics Group - Taiwan
- Sojitz Corporation - Japan
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Vizag Seaport Private Limited - India
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- Romanian Commodities Exchange
- Riau Bara Harum - Indonesia
- Indian Energy Exchange, India
- McConnell Dowell - Australia
- Oldendorff Carriers - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- Central Java Power - Indonesia
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Ministry of Mines - Canada
- Kumho Petrochemical, South Korea
- Wood Mackenzie - Singapore
- Energy Link Ltd, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Simpson Spence & Young - Indonesia
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- The University of Queensland
- Grasim Industreis Ltd - India
- Marubeni Corporation - India
- Central Electricity Authority - India
- Neyveli Lignite Corporation Ltd, - India
- Jorong Barutama Greston.PT - Indonesia
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Bhatia International Limited - India
- Uttam Galva Steels Limited - India
- Petron Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- International Coal Ventures Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Australia Pty. Ltd.
- The State Trading Corporation of India Ltd
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- Straits Asia Resources Limited - Singapore
- Directorate General of MIneral and Coal - Indonesia
- PTC India Limited - India
- Agrawal Coal Company - India
- Energy Development Corp, Philippines
- Madhucon Powers Ltd - India
- SN Aboitiz Power Inc, Philippines
- London Commodity Brokers - England
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- Electricity Generating Authority of Thailand
- Dalmia Cement Bharat India
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thai Mozambique Logistica
- Bharathi Cement Corporation - India
- Carbofer General Trading SA - India
- Meralco Power Generation, Philippines
- Interocean Group of Companies - India
- Anglo American - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement PLC, Thailand
- Kepco SPC Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Australian Commodity Traders Exchange
- Salva Resources Pvt Ltd - India
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- Cigading International Bulk Terminal - Indonesia
- Mintek Dendrill Indonesia
- Port Waratah Coal Services - Australia
- India Bulls Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Economic Council, Georgia
- Intertek Mineral Services - Indonesia
- Sindya Power Generating Company Private Ltd
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- Aditya Birla Group - India
- VISA Power Limited - India
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Coalindo Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Attock Cement Pakistan Limited
- Iligan Light & Power Inc, Philippines
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