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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, 25 March 16
DRY BULK SHIPPING FLEET WILL GROW BY 1.3% DURING 2016 - BIMCO | HELLENIC SHIPPING NEWS
The dry bulk market will keep on suffering, at least until the start of 2017 and possibly well after that, should the current balance of supply and ...
Friday, 25 March 16
U.S COAL PRODUCTION DECLINED 9.1% W/W - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 11.3 million shor ...
Thursday, 24 March 16
PERSISTENT OVERCAPACITY TO PROLONG CHINA'S COAL SECTOR DOWNTURN - FITCH
China's coal sector is likely to remain under pressure in the short to medium term as structural weaknesses in demand and overcapacity persist, ...
Thursday, 24 March 16
SEABORNE TRADE: CHECKING UP ON THE TRENDS - CLARKSON RESEARCH
Following a decline in 2009, seaborne trade grew on average by 4.9% p.a. in 2010-13, reflecting booming import demand in a number of key importing ...
Thursday, 24 March 16
NEWBUILDINGS' PRICES HAVE STARTED TO COME DOWN - ALLIED | HELLENIC SHIPPING NEWS
Newbuildings’ prices have started to come down, as demand has remained subdued for quite some time now. In its latest weekly report, shipbrok ...
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- San Jose City I Power Corp, Philippines
- Africa Commodities Group - South Africa
- Ministry of Mines - Canada
- Bukit Asam (Persero) Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sarangani Energy Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Videocon Industries ltd - India
- Tamil Nadu electricity Board
- Thiess Contractors Indonesia
- Bhushan Steel Limited - India
- Bukit Makmur.PT - Indonesia
- India Bulls Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Makarim & Taira - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- IEA Clean Coal Centre - UK
- Economic Council, Georgia
- Standard Chartered Bank - UAE
- Meenaskhi Energy Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Attock Cement Pakistan Limited
- Goldman Sachs - Singapore
- Coalindo Energy - Indonesia
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Heidelberg Cement - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Maharashtra Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- GN Power Mariveles Coal Plant, Philippines
- Riau Bara Harum - Indonesia
- Romanian Commodities Exchange
- Formosa Plastics Group - Taiwan
- Xindia Steels Limited - India
- Sical Logistics Limited - India
- Savvy Resources Ltd - HongKong
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Essar Steel Hazira Ltd - India
- London Commodity Brokers - England
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Orica Mining Services - Indonesia
- Bhoruka Overseas - Indonesia
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- CNBM International Corporation - China
- The University of Queensland
- ICICI Bank Limited - India
- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- Sojitz Corporation - Japan
- PNOC Exploration Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Vedanta Resources Plc - India
- Sakthi Sugars Limited - India
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Petrochimia International Co. Ltd.- Taiwan
- Deloitte Consulting - India
- Aditya Birla Group - India
- LBH Netherlands Bv - Netherlands
- International Coal Ventures Pvt Ltd - India
- SMC Global Power, Philippines
- Oldendorff Carriers - Singapore
- Billiton Holdings Pty Ltd - Australia
- Dalmia Cement Bharat India
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Kalimantan Lumbung Energi - Indonesia
- Bulk Trading Sa - Switzerland
- PTC India Limited - India
- Wood Mackenzie - Singapore
- Siam City Cement PLC, Thailand
- Bangladesh Power Developement Board
- Carbofer General Trading SA - India
- Barasentosa Lestari - Indonesia
- The Treasury - Australian Government
- Thai Mozambique Logistica
- Aboitiz Power Corporation - Philippines
- New Zealand Coal & Carbon
- McConnell Dowell - Australia
- Uttam Galva Steels Limited - India
- GVK Power & Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Eastern Coal Council - USA
- Energy Link Ltd, New Zealand
- Coal and Oil Company - UAE
- Banpu Public Company Limited - Thailand
- Indogreen Group - Indonesia
- Simpson Spence & Young - Indonesia
- Central Java Power - Indonesia
- Timah Investasi Mineral - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Siam City Cement - Thailand
- Bukit Baiduri Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Global Business Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- European Bulk Services B.V. - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indika Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Grasim Industreis Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Star Paper Mills Limited - India
- Indian Oil Corporation Limited
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining Corp, Philippines
- Mercator Lines Limited - India
- Planning Commission, India
- Wilmar Investment Holdings
- Indian Energy Exchange, India
- Leighton Contractors Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Medco Energi Mining Internasional
- Sree Jayajothi Cements Limited - India
- Minerals Council of Australia
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- Kobexindo Tractors - Indoneisa
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Commonwealth Bank - Australia
- Trasteel International SA, Italy
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- Jindal Steel & Power Ltd - India
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- Vijayanagar Sugar Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Ministry of Transport, Egypt
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- Ambuja Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Posco Energy - South Korea
- Mjunction Services Limited - India
- Parry Sugars Refinery, India
- Latin American Coal - Colombia
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Finance - Indonesia
- Central Electricity Authority - India
- Lanco Infratech Ltd - India
- Parliament of New Zealand
- Semirara Mining and Power Corporation, Philippines
- Madhucon Powers Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- Borneo Indobara - Indonesia
- White Energy Company Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tata Chemicals Ltd - India
- Merrill Lynch Commodities Europe
- Pendopo Energi Batubara - Indonesia
- Binh Thuan Hamico - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Petron Corporation, Philippines
- Singapore Mercantile Exchange
- Bharathi Cement Corporation - India
- Chamber of Mines of South Africa
- PowerSource Philippines DevCo
- Altura Mining Limited, Indonesia
- Jaiprakash Power Ventures ltd
- Global Coal Blending Company Limited - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meralco Power Generation, Philippines
- Intertek Mineral Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Larsen & Toubro Limited - India
- MS Steel International - UAE
- Mintek Dendrill Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- GMR Energy Limited - India
- Anglo American - United Kingdom
- Indonesian Coal Mining Association
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