We keep our recommendation plain and simple for group industry "Marine Transportation" specifically those relating to coal shipment worldwide. That said, we reminded our clients to stay away from a possible jump start of Buana Listya Tama initial trading day in the market on May 23, and immediately book profits when luck is still there and just run away. Our "sell" recommendation in general is applicable to all coal shipment-related marine transportation. BLTA (BULL's parent), TRAM, WINS and MBSS are among other.
Our "sell" view for coal shipment-related marine transportation is parallel to recent special coverage release by Bloomberg. While we are among those in the market, including Goldman Sachs, who maintain coal industry as long-term "attractive" and steadily holding a heavy loaded optimistic prospect over short-term commodities volatility, and a lot of mining companies may be making more money than ever, the shipping companies are contending with a glut rather than shortages. Coal is typically shipped on capesizes and panamaxes, rates for which have tumbled as fleet growth outpaced demand. About 90 percent of global trade moves by sea, according to the Round Table of International Shipping Associations. Returns for owners of capesizes, three times the size of the Statue of Liberty, slumped 71 percent this year to $5,829 a day, according to the Baltic Exchange. Rates for panamaxes, the largest commodity ships to pass through the Panama Canal, fell 8.7 percent to $13,434 a day, according to the London-based bourse, which publishes rates for more than 50 maritime routes. Carrying capacity excess worldwide has become a major issue for coal freight markets. Carrying capacity in dry bulk will rise 13 percent this year, compared with a 5 percent gain in trade, according to the research unit of Clarkson Plc, the world’s biggest shipbroker. The new ships were ordered in 2007 and 2008, when rates rose to about $234,000 a day for capesizes and $95,000 for panamaxes. “Increasing coal exports will aid freight rates but won’t necessarily make them higher,” said Jeffrey Landsberg, president of Commodore Research & Consultancy, a New-York based company specializing in bulk commodity shipping. “A massive amount of new ships were ordered and now they are being delivered, but the extra tons of coal won’t be enough to suck up all that extra capacity.” Forward freight agreements, traded by brokers and used to bet on future transport costs, anticipate panamax rates no higher than $13,603 through 2016. Capesize returns will advance to $18,061 by then. Owners of capesizes need about $25,000 to cover expenses such as crew and financing for ships valued at $60 million, according to HSBC Shipping Services Ltd. Shipping rates are volatile, with those for capesizes rising or falling 46 percent or more in nine of the last 10 years. Panamaxes fluctuated 48 percent or more in all except one of the last 10 years. We also noted that a group of foreign investors and traders has taken advantages in anticipation of Buana Listya Tama mood of initial listing by dumping BLTA stock in the market since May 09, 2011. We indicate a massive selling flare and glare will blaze the market in a couple of days ahead. Be cautious and do not let yourself feel enthusiastically overwhelmed. One of the bad signs as most seasoned investors and traders notice for an IPO is when Buana Listya downsizes the offered shares from 7,26 billion to 6,65 billion shares. That signify the ongoing concern of available demand. '+'
