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Friday, 06 July 18
HOW FLEET SIZE, CORPORATE PROFILE AND STRATEGY ARE DECIDING FACTORS IN SELECTING AN APPROPRIATE FINANCING STRATEGY - PWC
 KNOWLEDGE TO ELEVATE
The challenges that shipping companies are facing when selecting an appropriate financing strategy during the current period of volatile global markets, renewed fears of protectionism and trade wars and the possibility of new technologies disrupting traditional industries, such as shipping, were some of the issues discussed with shipowners and shipping finance experts during the Shipping Industry Briefing organised recently by PwC at the Yacht Club of Greece, entitled ‘Navigating through new challenges in the global markets’.
While interest in accessing the US capital markets remains high for a number of private shipping companies, the ability to do so is becoming increasingly difficult for companies with smaller sized fleets. “During 2018, the US capital markets started out strong and have maintained momentum despite the volatility in the market. IPO themes continue to be strong – top line growth, differentiation, dependable cash flow and predictable revenue. More specifically, shipping companies that are interested in accessing the US markets will need to focus on segment, volume and differentiation”, says Santos Equitz, Director responsible for Capital Markets at PwC Greece.
To be on US capital markets radar requires the combination of a large market capitalisation and a strong prospect of recovery in the shipping markets, which may be a difficult combination to meet for private shipping companies. The limited access to the US markets and the decline in traditional bank lending, has led to alternative sources of finance to emerge to fill the gap. Leasing finance and Nordic Bonds have proven to be viable alternatives to fill the debt gap left from the traditional shipping banks reducing their exposure to the sector. Additionally, when it comes to raising equity, the Norwegian market has been effective, utilising the unregulated over-the-counter market (N-OTC) and Merkur Market for smaller companies or the regulated stock exchanges Oslo Axess and Oslo Stock Exchange for larger companies.
Socrates Leptos-Bourgi, Global Shipping & Ports Leader at PwC, opened the floor to a panel of experts to discuss these alternative sources of finance, mentioning that to go public in the US capital markets is a significant transformation for any company and more so for smaller, family owned companies. As discussed on the panel, some alternatives are available in the Norwegian markets, which have recently provided companies with the ability to raise finance through either equity issuance or high yield bonds. Andreas Aamodt Kilde, Partner at Pareto Securities, explained: “With the traditional shipping banks continuing to reduce their exposure to the global shipping industry, shipowners have to explore other alternatives to finance their vessels. Fortunately, the options are many and the opportunity in today’s market lies in taking advantage of the attractive non-bank financing solutions available. With every fleet, employment profile and capital structure being unique, my best advice to shipowners is to explore the alternatives out there in a structured and competitive process – financing is available, but one needs to know where to look”.
Although some interest had been shown by private equity funds in the past, this is not a trend that seems to continue and investors are looking for ways to exit. Nevertheless, this activity has positively influenced the interest in M&As, said Anthony Argyropoulos, Managing Director at Seaborne Capital. Although the scope for further M&As does not seem to be prevalent due to the lack of synergies in shipping, Argyropoulos believes we should expect a few more, possibly with public-private partnerships as the driving force behind them.
Chinese lease finance is also growing. With 12 out of 25 largest and active financing institutions coming from China, there’s a large appetite for investment, however the size and reputation of shipping companies are still major contributors to the final decision, explained Nick Daskalakis on the panel, Director at Smarine Advisors Limited. “Leasing finance has matured, providing flexibility on ship age, type, origin of built, employment, tenor, pre-delivery, day to day operational requirements, competitive terms and fast execution and drawdown timeframes. It is ideal for capital intensive projects, boosts liquidity and strategically diversifies lending risk for shipping groups, offering synergy opportunities with Chinese yards and charterers. Large holding structure groups with excellent reputation, transparency and strong cashflow are the prime candidates albeit competition is cascading interest towards mid-size groups nowadays”, he continues.
The role of China in global trade and the shipping industry was further analysed by Mr Feng Li, Commercial Counsellor of the Chinese Embassy in Greece. The Commercial Counsellor explained how China’s economic growth and shipping are linked and the wellbeing of the shipping sector is dependent on ensuring an open market and competitive free trade. He also added that the Cosco developments at Piraeus port are a commitment to develop the largest container port in Europe for the establishment of new channels to global trade. China and Greece have complementary strengths when it comes to shipbuilding, and the relationship between the two has been growing stronger over the past decade.
When it comes to the overall prospects of the main shipping markets, Henriette Brent-Petersen, Managing Director of Shipping and Offshore Research at DVB Bank SE, commented that “Despite the continuing ‘deleveraging’ process both in the Chinese and Korean shipbuilding industry, we do not expect the significant idle yard capacity to completely disappear in the short term”. “The data show a decrease in the nominal yard capacity, but do they reflect the truth? We are living in a world with new disruptive technologies that change the way we used to do business, and the same applies for the traditional shipbuilding industry. By leveraging on innovative automation technologies such as the use of robots, sensor systems and artificial intelligence, shipbuilders will be able to achieve a higher productivity and low-cost construction, high-quality products and on-time delivery. As a consequence, the conventional ship construction process could be transformed into what we call a ‘smart yard system”, she explains. The overall impact on shipping will likely be shorter cycles and hire rates to be volatile within a much narrower range.
Digitisation in the shipping sector is one of the most disruptive developments since the industrial revolution, and should not be ignored by any stakeholder – not just ship owners, but also ports and logistics service providers- which will ultimately lead to optimized operations in the whole maritime logistics chain. Referring to digital strategies in the industry, Burkhard D. Sommer, Deputy Head of the Maritime Competence Centre of PwC Germany, comments: “Digitisation is unavoidable; it will cause disruptive changes to the current business models. Digital strategies and implementation of technologies and processes shall be based on a holistic approach to improve the current way of working as well as ensure the success of any company in the future. Digitisation is importantly about using data from various sources to optimise operations. “It is not an option – in a quick changing world it is a necessity to be successful in the future but most of the players in the maritime industry still have a long way to go. It is time to move”, he said.
Shipping has been increasingly operating in a challenging economic environment, posing challenges as well as opportunities to operate and innovate for sustainable business operations. Although tradition has been a driving force in the industry’s success in the past, this is the time for ship owners to move away from traditional operating models and start thinking of alternative ways to grow their businesses.
Source: PwC
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Friday, 10 August 18
U.S. COAL PRODUCTION TO DECLINE BY 1.8% IN 2019 BECAUSE COAL EXPORTS AND COAL CONSUMPTION ARE BOTH FORECAST TO DECREASE - EIA
EIA forecasts U.S. coal production will decline by 1.1% to 766 million short tons (MMst) in 2018 despite a 5.7% (6 MMst) increase in coal exports.
...
Thursday, 09 August 18
RIO TINTO COMPLETES SALE OF REMAINING COAL ASSETS
Rio Tinto has completed the sale of its remaining coal assets in Queensland, Australia, for $3.95 billion.
According to a noted post ...
Wednesday, 08 August 18
CHINA DEMANDS PREMIUM IRON ORE, COAL; MINERS MIXED IMPACT - FITCH RATINGS
China’s stricter environmental regulations and structural changes in its steelmaking industry boosts ongoing demand for high-quality iron ore ...
Wednesday, 08 August 18
SHIPPING MARKET INSIGHT - CHRISTOPHER WHITTY
Singapore's shipyard business has evolved over the decades, from shipbuilding and repairs to rig building. It's now evolving again, to cate ...
Friday, 03 August 18
PHEW! ASIA, EUROPE HEATWAVE PUSHES AUSTRALIA COAL PRICES TO 6-YEAR HIGH: REUTERS
Australian thermal coal prices have hit fresh six-year highs as a heatwave across the northern hemisphere has triggered a spike in demand for coal- ...
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- Miang Besar Coal Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Borneo Indobara - Indonesia
- Kartika Selabumi Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Xindia Steels Limited - India
- Planning Commission, India
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Iligan Light & Power Inc, Philippines
- Bhushan Steel Limited - India
- Sojitz Corporation - Japan
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- Jindal Steel & Power Ltd - India
- Parliament of New Zealand
- Bukit Baiduri Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Trasteel International SA, Italy
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- Malabar Cements Ltd - India
- Wilmar Investment Holdings
- Karbindo Abesyapradhi - Indoneisa
- Central Electricity Authority - India
- Tata Chemicals Ltd - India
- The Treasury - Australian Government
- Eastern Coal Council - USA
- Ministry of Transport, Egypt
- Mjunction Services Limited - India
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
- Sarangani Energy Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Goldman Sachs - Singapore
- Baramulti Group, Indonesia
- Eastern Energy - Thailand
- Merrill Lynch Commodities Europe
- Asmin Koalindo Tuhup - Indonesia
- Vedanta Resources Plc - India
- Global Green Power PLC Corporation, Philippines
- Riau Bara Harum - Indonesia
- VISA Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- Formosa Plastics Group - Taiwan
- Leighton Contractors Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Minerals Council of Australia
- Kepco SPC Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- New Zealand Coal & Carbon
- European Bulk Services B.V. - Netherlands
- White Energy Company Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Coal Blending Company Limited - Australia
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- India Bulls Power Limited - India
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- SMC Global Power, Philippines
- Binh Thuan Hamico - Vietnam
- Globalindo Alam Lestari - Indonesia
- Energy Link Ltd, New Zealand
- Banpu Public Company Limited - Thailand
- Meralco Power Generation, Philippines
- Global Business Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Lanco Infratech Ltd - India
- Thiess Contractors Indonesia
- Australian Coal Association
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- Bangladesh Power Developement Board
- Electricity Generating Authority of Thailand
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Alfred C Toepfer International GmbH - Germany
- Bulk Trading Sa - Switzerland
- Oldendorff Carriers - Singapore
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- Semirara Mining and Power Corporation, Philippines
- Petron Corporation, Philippines
- Heidelberg Cement - Germany
- Posco Energy - South Korea
- Coal and Oil Company - UAE
- London Commodity Brokers - England
- IEA Clean Coal Centre - UK
- Parry Sugars Refinery, India
- Power Finance Corporation Ltd., India
- Sinarmas Energy and Mining - Indonesia
- Renaissance Capital - South Africa
- PowerSource Philippines DevCo
- Rio Tinto Coal - Australia
- Indian Oil Corporation Limited
- Larsen & Toubro Limited - India
- Indogreen Group - Indonesia
- Karaikal Port Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Chamber of Mines of South Africa
- Edison Trading Spa - Italy
- Mintek Dendrill Indonesia
- LBH Netherlands Bv - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Makarim & Taira - Indonesia
- Kobexindo Tractors - Indoneisa
- Metalloyd Limited - United Kingdom
- Maheswari Brothers Coal Limited - India
- Essar Steel Hazira Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Therma Luzon, Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Siam City Cement - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Anglo American - United Kingdom
- Kumho Petrochemical, South Korea
- Aditya Birla Group - India
- Billiton Holdings Pty Ltd - Australia
- Ministry of Mines - Canada
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Aboitiz Power Corporation - Philippines
- Mercuria Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- ASAPP Information Group - India
- The University of Queensland
- Altura Mining Limited, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- Pendopo Energi Batubara - Indonesia
- Central Java Power - Indonesia
- Interocean Group of Companies - India
- Pipit Mutiara Jaya. PT, Indonesia
- Latin American Coal - Colombia
- Directorate General of MIneral and Coal - Indonesia
- Electricity Authority, New Zealand
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
- Manunggal Multi Energi - Indonesia
- Antam Resourcindo - Indonesia
- Marubeni Corporation - India
- Price Waterhouse Coopers - Russia
- Gujarat Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- Indian Energy Exchange, India
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- Independent Power Producers Association of India
- Star Paper Mills Limited - India
- Gujarat Sidhee Cement - India
- Vizag Seaport Private Limited - India
- Africa Commodities Group - South Africa
- Bhatia International Limited - India
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- Sakthi Sugars Limited - India
- Cement Manufacturers Association - India
- Barasentosa Lestari - Indonesia
- Attock Cement Pakistan Limited
- Orica Mining Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Indonesian Coal Mining Association
- Bhoruka Overseas - Indonesia
- ICICI Bank Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Madhucon Powers Ltd - India
- Thai Mozambique Logistica
- MS Steel International - UAE
- Kohat Cement Company Ltd. - Pakistan
- Intertek Mineral Services - Indonesia
- Port Waratah Coal Services - Australia
- Jaiprakash Power Ventures ltd
- Indika Energy - Indonesia
- CNBM International Corporation - China
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