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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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Tuesday, 03 May 16
HOW TO AVOID THE LATEST CARGO FRAUDS - BIMCO
BIMCO receives regular reports from members around the world about cargo fraud. This week alone we have had two reports of cargoes being fixed (or ...
Monday, 02 May 16
INDIA'S GANGAVARAM PORT SETS ALL INDIA RECORD FOR NON-COKING COAL DISCHARGE
COALspot.com: Gangavaram Port, the deepest and the most modern port in India, has created yet another historical milestone record by discharging 15 ...
Monday, 02 May 16
CS (I) 5000 GAR COAL INDEX CLOSES 0.11% HIGHER, 5700 GAR COAL RISES 0.07% W/W
COALspot.com: Average 5000 GAR coal index of Indonesian origin up 0.28 percent week over week to averaging $38.78 per ton on this past Friday, acco ...
Monday, 02 May 16
FREIGHT RATES ARE EXPECTED TO BE FLAT TO SOFT THIS WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continued to rose this week.
The freight market was ...
Saturday, 30 April 16
40 YEARS OF HANDLING COAL AT THE BTW IN WILHELMSHAVEN UNDER THE RHENUS FLAG
Press Release: The first bulk carrier with coal on board docked at the Bulk Terminal Wilhelmshaven (BTW), which is operated by Rhenus Midgar ...
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- Ambuja Cements Ltd - India
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- Petron Corporation, Philippines
- Aditya Birla Group - India
- Interocean Group of Companies - India
- Ministry of Transport, Egypt
- Pipit Mutiara Jaya. PT, Indonesia
- Planning Commission, India
- Gujarat Mineral Development Corp Ltd - India
- Mintek Dendrill Indonesia
- Meenaskhi Energy Private Limited - India
- Electricity Generating Authority of Thailand
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- Bhushan Steel Limited - India
- CNBM International Corporation - China
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Parry Sugars Refinery, India
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Agrawal Coal Company - India
- Kalimantan Lumbung Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- Rio Tinto Coal - Australia
- Meralco Power Generation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Bhoruka Overseas - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- The Treasury - Australian Government
- Ministry of Finance - Indonesia
- Romanian Commodities Exchange
- Bharathi Cement Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- Globalindo Alam Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Madhucon Powers Ltd - India
- Jaiprakash Power Ventures ltd
- Coal and Oil Company - UAE
- The State Trading Corporation of India Ltd
- Bukit Makmur.PT - Indonesia
- The University of Queensland
- Thai Mozambique Logistica
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- Power Finance Corporation Ltd., India
- Kohat Cement Company Ltd. - Pakistan
- Standard Chartered Bank - UAE
- Kaltim Prima Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Maheswari Brothers Coal Limited - India
- Posco Energy - South Korea
- Formosa Plastics Group - Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Independent Power Producers Association of India
- IHS Mccloskey Coal Group - USA
- Thiess Contractors Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- Energy Link Ltd, New Zealand
- Xindia Steels Limited - India
- Central Java Power - Indonesia
- Commonwealth Bank - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vedanta Resources Plc - India
- Intertek Mineral Services - Indonesia
- Coastal Gujarat Power Limited - India
- CIMB Investment Bank - Malaysia
- Riau Bara Harum - Indonesia
- Attock Cement Pakistan Limited
- Siam City Cement PLC, Thailand
- Antam Resourcindo - Indonesia
- Vizag Seaport Private Limited - India
- Samtan Co., Ltd - South Korea
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- ICICI Bank Limited - India
- Rashtriya Ispat Nigam Limited - India
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- Indian Oil Corporation Limited
- Leighton Contractors Pty Ltd - Australia
- Medco Energi Mining Internasional
- SMC Global Power, Philippines
- Kepco SPC Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Sakthi Sugars Limited - India
- Central Electricity Authority - India
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Indogreen Group - Indonesia
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- LBH Netherlands Bv - Netherlands
- Cement Manufacturers Association - India
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- Latin American Coal - Colombia
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- Semirara Mining Corp, Philippines
- ASAPP Information Group - India
- Karbindo Abesyapradhi - Indoneisa
- OPG Power Generation Pvt Ltd - India
- McConnell Dowell - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Green Power PLC Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- Sojitz Corporation - Japan
- Energy Development Corp, Philippines
- Edison Trading Spa - Italy
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Mining Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Global Coal Blending Company Limited - Australia
- Deloitte Consulting - India
- TeaM Sual Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- PowerSource Philippines DevCo
- PTC India Limited - India
- Minerals Council of Australia
- Global Business Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- India Bulls Power Limited - India
- MS Steel International - UAE
- Savvy Resources Ltd - HongKong
- Iligan Light & Power Inc, Philippines
- Parliament of New Zealand
- Toyota Tsusho Corporation, Japan
- Mercator Lines Limited - India
- VISA Power Limited - India
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- Uttam Galva Steels Limited - India
- Star Paper Mills Limited - India
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- Manunggal Multi Energi - Indonesia
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- Carbofer General Trading SA - India
- South Luzon Thermal Energy Corporation
- Salva Resources Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Grasim Industreis Ltd - India
- Malabar Cements Ltd - India
- Port Waratah Coal Services - Australia
- Indian Energy Exchange, India
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tamil Nadu electricity Board
- Kideco Jaya Agung - Indonesia
- Georgia Ports Authority, United States
- Metalloyd Limited - United Kingdom
- London Commodity Brokers - England
- Heidelberg Cement - Germany
- Karaikal Port Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Dalmia Cement Bharat India
- GMR Energy Limited - India
- Neyveli Lignite Corporation Ltd, - India
- AsiaOL BioFuels Corp., Philippines
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement - Thailand
- Africa Commodities Group - South Africa
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- Indika Energy - Indonesia
- New Zealand Coal & Carbon
- Wilmar Investment Holdings
- Economic Council, Georgia
- Baramulti Group, Indonesia
- Gujarat Sidhee Cement - India
- Sical Logistics Limited - India
- Mercuria Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Altura Mining Limited, Indonesia
- Bayan Resources Tbk. - Indonesia
- International Coal Ventures Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Miang Besar Coal Terminal - Indonesia
- Marubeni Corporation - India
- Videocon Industries ltd - India
- Price Waterhouse Coopers - Russia
- Renaissance Capital - South Africa
- Vijayanagar Sugar Pvt Ltd - India
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