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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, 06 May 16
U.S. WEEKLY COAL PRODUCTION UP 9 PERCENT W/W; DOWN 35.3 PERCENT Y/Y - EIA
COALspot.com – U.S the world’s second largest coal producer has produced approximately totaled an estimated 11.3 million short to ...
Thursday, 05 May 16
DRY BULK MARKET ON REVERSE MODE, AS HOLIDAYS AROUND THE WORLD HURT DEMAND - HELLENIC SHIPPING NEWS
The dry bulk market’s recent rally has been put on a temporary hold, as various holidays around the world have put a stop in it. In its lates ...
Wednesday, 04 May 16
COAL IMPORTS: A VOLATILE MATTER OR STILL POWERING DOWN? - CLARKSONS
Chinese coal imports decreased significantly in 2014-15, and so far in 2016 the pace of decline appears to have slowed, with imports even recording ...
Wednesday, 04 May 16
IS THE DRY BULK MARKET OUT OF THE WOODS YET, OR NOT? - HELLENIC SHIPPING NEWS
Things are beginning to brighten up in the beleaguered dry bulk market, which is riding on a multi-week rally to find itself around the “psyc ...
Wednesday, 04 May 16
POWER - WEEK: REAL EXAMPLES AND CASE STUDIES
POWER WEEK
7 - 11 November 2016, PARKROYAL on Beach Road Hotel, Singapore
www.power-week.com
Overview
Designed for the global e ...
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- Globalindo Alam Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Binh Thuan Hamico - Vietnam
- GAC Shipping (India) Pvt Ltd
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- India Bulls Power Limited - India
- Heidelberg Cement - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- The State Trading Corporation of India Ltd
- Indian Oil Corporation Limited
- CIMB Investment Bank - Malaysia
- Barasentosa Lestari - Indonesia
- Lanco Infratech Ltd - India
- Merrill Lynch Commodities Europe
- Electricity Authority, New Zealand
- VISA Power Limited - India
- MS Steel International - UAE
- Meralco Power Generation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Alfred C Toepfer International GmbH - Germany
- Directorate General of MIneral and Coal - Indonesia
- Goldman Sachs - Singapore
- Directorate Of Revenue Intelligence - India
- Kapuas Tunggal Persada - Indonesia
- Latin American Coal - Colombia
- Star Paper Mills Limited - India
- Samtan Co., Ltd - South Korea
- Indogreen Group - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- Jindal Steel & Power Ltd - India
- Ind-Barath Power Infra Limited - India
- Altura Mining Limited, Indonesia
- European Bulk Services B.V. - Netherlands
- London Commodity Brokers - England
- The University of Queensland
- Carbofer General Trading SA - India
- Kartika Selabumi Mining - Indonesia
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- Singapore Mercantile Exchange
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Georgia Ports Authority, United States
- Orica Mining Services - Indonesia
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Bharathi Cement Corporation - India
- Jaiprakash Power Ventures ltd
- Global Business Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Siam City Cement PLC, Thailand
- Karaikal Port Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ceylon Electricity Board - Sri Lanka
- Salva Resources Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- ASAPP Information Group - India
- Cement Manufacturers Association - India
- Ministry of Mines - Canada
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- Xindia Steels Limited - India
- PTC India Limited - India
- Baramulti Group, Indonesia
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Edison Trading Spa - Italy
- Medco Energi Mining Internasional
- Sical Logistics Limited - India
- Deloitte Consulting - India
- Essar Steel Hazira Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- Rio Tinto Coal - Australia
- Kalimantan Lumbung Energi - Indonesia
- Kumho Petrochemical, South Korea
- Iligan Light & Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Riau Bara Harum - Indonesia
- Australian Coal Association
- CNBM International Corporation - China
- Sree Jayajothi Cements Limited - India
- Interocean Group of Companies - India
- Vizag Seaport Private Limited - India
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- Standard Chartered Bank - UAE
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- Semirara Mining and Power Corporation, Philippines
- Wilmar Investment Holdings
- Bhatia International Limited - India
- Thai Mozambique Logistica
- Metalloyd Limited - United Kingdom
- Madhucon Powers Ltd - India
- Sakthi Sugars Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Wood Mackenzie - Singapore
- White Energy Company Limited
- Makarim & Taira - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- Asmin Koalindo Tuhup - Indonesia
- Bangladesh Power Developement Board
- Vedanta Resources Plc - India
- Kepco SPC Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- Mjunction Services Limited - India
- Bhushan Steel Limited - India
- Marubeni Corporation - India
- Central Electricity Authority - India
- Posco Energy - South Korea
- Economic Council, Georgia
- Chettinad Cement Corporation Ltd - India
- Agrawal Coal Company - India
- Ambuja Cements Ltd - India
- Siam City Cement - Thailand
- Thiess Contractors Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- Grasim Industreis Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- Parliament of New Zealand
- Semirara Mining Corp, Philippines
- Sojitz Corporation - Japan
- McConnell Dowell - Australia
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Borneo Indobara - Indonesia
- Energy Link Ltd, New Zealand
- Global Green Power PLC Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Banpu Public Company Limited - Thailand
- Malabar Cements Ltd - India
- Eastern Coal Council - USA
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Anglo American - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Attock Cement Pakistan Limited
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Miang Besar Coal Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Oldendorff Carriers - Singapore
- Coal and Oil Company - UAE
- IEA Clean Coal Centre - UK
- OPG Power Generation Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Tamil Nadu electricity Board
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- Mintek Dendrill Indonesia
- Dalmia Cement Bharat India
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Gujarat Mineral Development Corp Ltd - India
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- The Treasury - Australian Government
- IHS Mccloskey Coal Group - USA
- Vijayanagar Sugar Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Timah Investasi Mineral - Indoneisa
- Videocon Industries ltd - India
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- Larsen & Toubro Limited - India
- Ministry of Finance - Indonesia
- Bayan Resources Tbk. - Indonesia
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