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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, 03 November 21
MARKET INSIGHT - INTERMODAL
November is here and soon the all time seasonal favorite “all I want or Christmas is you” by Mariah Carey will be played in radio stati ...
Monday, 01 November 21
COAL PRICES HAVE FURTHER ROOM TO DROP: TOP ECONOMIC PLANNER - GLOBAL TIMES
China’s top economic planner said coal prices have further room to drop on Friday, as the most traded coal futures dropped to below 1,000 yua ...
Saturday, 30 October 21
CHINA'S COAL PRICES SEE BIGGEST WEEKLY FALL IN MORE THAN 5 YEARS - REUTERS
China’s coal futures prices saw their biggest fall in more than five years after the powerful state planner said there is still room to adjus ...
Saturday, 30 October 21
G-20 LEADERS PREPARE STATEMENT TO STOP FUNDING FOREIGN COAL PLANTS - BLOOMBERG
Leaders of the Group of 20 wealthy economies are preparing to pledge to stop funding foreign coal-fired plants, but are still wrangling over climat ...
Friday, 29 October 21
APAC THERMAL COAL SUPPLY TO REMAIN TIGHT AS WINTER LOOMS - FITCH RATINGS
APAC thermal coal prices have surged, hitting historically high levels. The benchmark Newcastle 6,000kcal/kg grade coal reached USD228/tonne in mid ...
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- Banpu Public Company Limited - Thailand
- Kapuas Tunggal Persada - Indonesia
- Bukit Makmur.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Orica Australia Pty. Ltd.
- Sarangani Energy Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Global Coal Blending Company Limited - Australia
- Petron Corporation, Philippines
- Meralco Power Generation, Philippines
- Grasim Industreis Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Ceylon Electricity Board - Sri Lanka
- Standard Chartered Bank - UAE
- Binh Thuan Hamico - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Ambuja Cements Ltd - India
- Edison Trading Spa - Italy
- Carbofer General Trading SA - India
- Rashtriya Ispat Nigam Limited - India
- Intertek Mineral Services - Indonesia
- Makarim & Taira - Indonesia
- Chamber of Mines of South Africa
- IHS Mccloskey Coal Group - USA
- Price Waterhouse Coopers - Russia
- Timah Investasi Mineral - Indoneisa
- Australian Commodity Traders Exchange
- Formosa Plastics Group - Taiwan
- Billiton Holdings Pty Ltd - Australia
- Ministry of Transport, Egypt
- Medco Energi Mining Internasional
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- The State Trading Corporation of India Ltd
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- New Zealand Coal & Carbon
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Altura Mining Limited, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- Indika Energy - Indonesia
- Thai Mozambique Logistica
- Gujarat Sidhee Cement - India
- Tamil Nadu electricity Board
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Eastern Energy - Thailand
- Dalmia Cement Bharat India
- Karaikal Port Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Lanco Infratech Ltd - India
- Essar Steel Hazira Ltd - India
- LBH Netherlands Bv - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Maheswari Brothers Coal Limited - India
- Vedanta Resources Plc - India
- Parry Sugars Refinery, India
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- Videocon Industries ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- GN Power Mariveles Coal Plant, Philippines
- McConnell Dowell - Australia
- Kepco SPC Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- European Bulk Services B.V. - Netherlands
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- Kumho Petrochemical, South Korea
- Romanian Commodities Exchange
- London Commodity Brokers - England
- CIMB Investment Bank - Malaysia
- Indonesian Coal Mining Association
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- Sical Logistics Limited - India
- Uttam Galva Steels Limited - India
- Siam City Cement - Thailand
- Kideco Jaya Agung - Indonesia
- Bharathi Cement Corporation - India
- Australian Coal Association
- Metalloyd Limited - United Kingdom
- CNBM International Corporation - China
- Kalimantan Lumbung Energi - Indonesia
- Central Electricity Authority - India
- Antam Resourcindo - Indonesia
- Energy Link Ltd, New Zealand
- Interocean Group of Companies - India
- Savvy Resources Ltd - HongKong
- Georgia Ports Authority, United States
- Bhatia International Limited - India
- Central Java Power - Indonesia
- Bukit Baiduri Energy - Indonesia
- Madhucon Powers Ltd - India
- IEA Clean Coal Centre - UK
- Singapore Mercantile Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Economic Council, Georgia
- MS Steel International - UAE
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- Riau Bara Harum - Indonesia
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- Manunggal Multi Energi - Indonesia
- Ministry of Mines - Canada
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Coastal Gujarat Power Limited - India
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- The Treasury - Australian Government
- Wilmar Investment Holdings
- Mercator Lines Limited - India
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- Rio Tinto Coal - Australia
- GAC Shipping (India) Pvt Ltd
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- The University of Queensland
- Cement Manufacturers Association - India
- Planning Commission, India
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- India Bulls Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- Thiess Contractors Indonesia
- Baramulti Group, Indonesia
- Alfred C Toepfer International GmbH - Germany
- TeaM Sual Corporation - Philippines
- Global Business Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Simpson Spence & Young - Indonesia
- Eastern Coal Council - USA
- Goldman Sachs - Singapore
- Xindia Steels Limited - India
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
- Marubeni Corporation - India
- Latin American Coal - Colombia
- SMC Global Power, Philippines
- Tata Chemicals Ltd - India
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- Cigading International Bulk Terminal - Indonesia
- Mercuria Energy - Indonesia
- Agrawal Coal Company - India
- Leighton Contractors Pty Ltd - Australia
- Bhushan Steel Limited - India
- PTC India Limited - India
- Mintek Dendrill Indonesia
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Kartika Selabumi Mining - Indonesia
- Oldendorff Carriers - Singapore
- VISA Power Limited - India
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- Borneo Indobara - Indonesia
- Iligan Light & Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Heidelberg Cement - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Energy Exchange, India
- Global Green Power PLC Corporation, Philippines
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
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