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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, 22 April 16
U.S WEEKLY DOMESTIC COAL OUTPUT UP 8.2 PER CENT - EIA
COALspot.com – U.S the world’s second largest coal producer has produced approximately totaled an estimated 11.1 million short tons (mm ...
Thursday, 21 April 16
PANAMAX: A VERY HEALTHY NORTH ATLANTIC FOR BOTH ROUNDS AND FRONTHAUL
Capesize
Correcting after last week's quadrupling.
This year's highest daily average of USD 8000 came on the back of substantial pro ...
Wednesday, 20 April 16
2017 IS EXPECTED TO BE A MUCH BETTER YEAR FOR THE SHIPPING INDUSTRY - INTERMODAL
Some months ago we noted that all projections anticipated 2016 to be a better year from a macroeconomic point of view when compared to 2015. As we ...
Tuesday, 19 April 16
STARS STILL SHINING? KEY IMPORTERS THROUGH THE TELESCOPE - CLARKSONS
As the pace of growth in Chinese seaborne imports has slowed, and prospects for a return to stronger rates of expansion appear to have diminished, ...
Monday, 18 April 16
INDONESIAN 5000 GAR COAL INDEX DECLINE 1.43 PERCENT WEEK OVER WEEK - CS (I) COAL INDEX
COALspot.com: Average 5000 GAR coal index of Indonesian origin fell 1.43 percent week over week to averaging $38.65 per ton on this past Friday, ac ...
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- SMC Global Power, Philippines
- Dalmia Cement Bharat India
- Port Waratah Coal Services - Australia
- Gujarat Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Neyveli Lignite Corporation Ltd, - India
- GVK Power & Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Holcim Trading Pte Ltd - Singapore
- Krishnapatnam Port Company Ltd. - India
- Indo Tambangraya Megah - Indonesia
- Mjunction Services Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Indogreen Group - Indonesia
- Gujarat Sidhee Cement - India
- Siam City Cement - Thailand
- McConnell Dowell - Australia
- Ministry of Mines - Canada
- Kohat Cement Company Ltd. - Pakistan
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- Parry Sugars Refinery, India
- Kobexindo Tractors - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Oldendorff Carriers - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- Salva Resources Pvt Ltd - India
- Ambuja Cements Ltd - India
- Carbofer General Trading SA - India
- Coalindo Energy - Indonesia
- Latin American Coal - Colombia
- Maheswari Brothers Coal Limited - India
- White Energy Company Limited
- Energy Development Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Independent Power Producers Association of India
- Antam Resourcindo - Indonesia
- Indian Energy Exchange, India
- New Zealand Coal & Carbon
- Petron Corporation, Philippines
- Bharathi Cement Corporation - India
- Eastern Energy - Thailand
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Borneo Indobara - Indonesia
- South Luzon Thermal Energy Corporation
- Jindal Steel & Power Ltd - India
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Interocean Group of Companies - India
- Ceylon Electricity Board - Sri Lanka
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- CIMB Investment Bank - Malaysia
- Samtan Co., Ltd - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Economic Council, Georgia
- TNB Fuel Sdn Bhd - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- PTC India Limited - India
- Ind-Barath Power Infra Limited - India
- Mintek Dendrill Indonesia
- Bhoruka Overseas - Indonesia
- Star Paper Mills Limited - India
- Energy Link Ltd, New Zealand
- Banpu Public Company Limited - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Finance - Indonesia
- Vedanta Resources Plc - India
- Romanian Commodities Exchange
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- Posco Energy - South Korea
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Savvy Resources Ltd - HongKong
- Merrill Lynch Commodities Europe
- PetroVietnam Power Coal Import and Supply Company
- Price Waterhouse Coopers - Russia
- OPG Power Generation Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- LBH Netherlands Bv - Netherlands
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- MS Steel International - UAE
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Orica Mining Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Barasentosa Lestari - Indonesia
- Standard Chartered Bank - UAE
- Sakthi Sugars Limited - India
- Sree Jayajothi Cements Limited - India
- Semirara Mining Corp, Philippines
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- Indian Oil Corporation Limited
- Thai Mozambique Logistica
- ASAPP Information Group - India
- Global Green Power PLC Corporation, Philippines
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Agrawal Coal Company - India
- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Power Finance Corporation Ltd., India
- Africa Commodities Group - South Africa
- Timah Investasi Mineral - Indoneisa
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- Aboitiz Power Corporation - Philippines
- PowerSource Philippines DevCo
- Sinarmas Energy and Mining - Indonesia
- Grasim Industreis Ltd - India
- Makarim & Taira - Indonesia
- Minerals Council of Australia
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Binh Thuan Hamico - Vietnam
- Jaiprakash Power Ventures ltd
- Coastal Gujarat Power Limited - India
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Georgia Ports Authority, United States
- London Commodity Brokers - England
- Kepco SPC Power Corporation, Philippines
- India Bulls Power Limited - India
- IHS Mccloskey Coal Group - USA
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- Parliament of New Zealand
- Trasteel International SA, Italy
- Central Java Power - Indonesia
- Baramulti Group, Indonesia
- Heidelberg Cement - Germany
- TeaM Sual Corporation - Philippines
- Deloitte Consulting - India
- The State Trading Corporation of India Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Manunggal Multi Energi - Indonesia
- Altura Mining Limited, Indonesia
- SMG Consultants - Indonesia
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Goldman Sachs - Singapore
- The University of Queensland
- Riau Bara Harum - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Edison Trading Spa - Italy
- Eastern Coal Council - USA
- Mercator Lines Limited - India
- IEA Clean Coal Centre - UK
- Petrochimia International Co. Ltd.- Taiwan
- Billiton Holdings Pty Ltd - Australia
- Singapore Mercantile Exchange
- PNOC Exploration Corporation - Philippines
- Cement Manufacturers Association - India
- CNBM International Corporation - China
- Medco Energi Mining Internasional
- Australian Coal Association
- GAC Shipping (India) Pvt Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- Australian Commodity Traders Exchange
- Formosa Plastics Group - Taiwan
- Central Electricity Authority - India
- Kapuas Tunggal Persada - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Pendopo Energi Batubara - Indonesia
- Vizag Seaport Private Limited - India
- Kumho Petrochemical, South Korea
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
- Planning Commission, India
- Chettinad Cement Corporation Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- VISA Power Limited - India
- GMR Energy Limited - India
- Orica Australia Pty. Ltd.
- Indika Energy - Indonesia
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