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Monday, 12 January 15
SHIPPING - CHALLENGES AND RESOLUTIONS - EVA TZIMA
 Last year has without a doubt been another challenging one both for both our industry and our country. As Greece is currently dominated by election fever, we cannot but wonder what sort of challenges we could be facing in 2015, while as the bitter sweet taste the performance of our industry left us with as 2014 ended is still strong, we look back to the activity of Greek owners last year together with what could be lying ahead for the different shipping markets this year.
Greek owners were reported as Buyers in 340 of the 2014 reported second-hand sales and as Sellers in 153 of them. This trend clearly shows that despite the volatility in the freight market, Greeks were still keen on snapping second-hand tonnage during the year. At the same time they have shown a clear preference on Japanese quality units, while the softening of asset prices that has been taking place since mid-year, has also helped SnP activity, which despite the challenging conditions of the market in 2014, remained pretty much at the same levels we saw back in 2013.
As far as the following months are concerned, and while the Dry Bulk market remains under pressure, we expect SnP activity for dry bulkers to considerably soften, as most owners will choose to sit on the sidelines until they have a more clear view of what’s coming ahead. On the tankers side, where things have been considerably more upbeat, we expect buying interest for crude carriers to remain stable overall at least for the first quarter of next year, while the recent popularity of MR and LR1 tonnage seems to be holding well, despite the fact that the long list of scheduled 2015 deliveries for the former are expected to weigh down on freight rates, fact which will most certainly scale back the current upside.
Out of the 2,874 newbuilding orders that were recorded during 2014, Greek owners were reported to be behind 127 of them, which is almost a 30% decrease compared to 2013 Greek orders. The new-building market has faced an extremely challenging year in terms of activity and this has been mostly attributed to the sharp fall in dry bulker orders compared to the previous year. Following the ordering spree of 2013, newbuilding prices remained on an upward trend for almost the entire first half of 2014 and despite the fact that the performance of the dry bulk freight market missed the expectations built up during the end of 2013. This has weighed down considerably on ordering interest for conventional vessels.
Prospects for next year remain dim. Despite the fact that prices currently stand well off the highs of January, most owners currently seem completely uninterested in revisiting the prospect of placing an order. On top of that, even in sectors that are currently enjoying some good earnings, the tonnage that is due to hit the water this year, is bound to put pressure on earnings and thus will further deter owners from heading back to the yards.
On the demolition front, 1,158 vessels in total were reported scrapped in 2014, a number significantly smaller compared to 2013. The percentage of Greek owned vessels that headed for scrapping remained stable nonetheless, showing that the mentality of getting rid of vintage tonnage and in most cases replacing it with modern one is still part of the Greek mentality. The demolition market was also under pressure last year. Following the intense scrapping activity of 2013, which in some cases created fairly “young fleets”, especially within size segments in the tanker sector, limited the volume of potential scrapping candidates. At the same time and despite the fact that demo prices were kept at significantly attractive levels during the first half of the year, most owners kept holding on to the hope of better freight rates during the last quarter of 2014, thus ruling out the demolition option. On top of that and even more importantly, as cheap Chinese scrap steel has been flooding the markets since the beginning of the summer, demo buyers in the Indian subcontinent were forced to lower their bids by more than $70/ldt in a very short period of time, making the demolition option even less attractive to owners of vintage tonnage. Despite the fact that steel demand remains overall healthy amongst breaker countries, we expect the negative trend of both demo volume and prices to resume next year, especially as any measures that could potentially set a floor on Chinese steel imports are being delayed.
At the beginning of every year, people make New Year’s resolutions. Perhaps the one for our industry should be to reinvent itself, which is always a task that requires hard work but in this case might be necessary in order to move ahead minimizing the extent to which our expectations are missed and the eventual disappointment to ourselves. Are we bound to witness rates achieved at the pick of last cycle for prolonged periods anytime soon? Probably not. But this doesn’t mean that there isn’t still value in operating ships today. I often hear that the entry of private equity in shipping in the past years has added to the often talked about oversupply of tonnage, but in my opinion this is not true. Private equity is actually behind a fairly small part of the funding that added the “extra” tonnage we are dealing with today. What non-traditional shipping players are responsible for though, is probably the change of mentality that made some in our industry eager to chase the quick asset play rather than operate a ship throughout its commercial life and gain from market conditions that could still bring along substantial profits. So let’s get back to the basics and hope that this won’t be a resolution that shares the same fate most New Year resolutions do...
Eva Tzima
Research Analyst
Compiled by:
Intermodal Research & Valuations
 About the Author
Eva Tzima has experience of more than a decade as a financial analyst and has focused on the shipping industry through private equity projects as well as maritime stock analysis. Since 2012 she has been working as a Research analyst at Intermodal Shipbrokers Co., where she currently holds the position of Head of Research, focusing in the specific analysis of the SnP, Newbuilding and Demolition markets across the Dry Bulk, Tanker, Container and Gas Carrier sectors.
Previous to her current post she worked as an investment manager for a privately owned portfolio and in Trafalgar Asset Managers Ltd in London, mainly focusing in Private Equity Projects in the shipping, energy and aircraft sectors, as well as in Primary and Secondary Debt investments. During her employment in Trafalgar she acted as a director across a number of boards of entities affiliated to Trafalgar.
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 re-producing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
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Thursday, 26 February 15
DRY BULK MARKET LOOKING FOR POSITIVE MOMENTUM, BUT PROSPECTS REMAIN DIM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As the Baltic Dry Index (BDI) inched a bit higher over the past couple of sessions and the Chinese are returning to the market after a week long hi ...
Wednesday, 25 February 15
PORT OF NEWCASTLE SHIPPED 13.16MT OF COAL IN JANUARY; DECLINED 16.70% FROM A MONTH AGO
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.15 billio ...
Wednesday, 25 February 15
BDI SLIPPING ONCE MORE TO FRESH HISTORICAL LOWS
COALspot.com: With the BDI slipping once more to fresh historical lows and the Chinese holidays underway, signs for a positive reversal in the Dry ...
Tuesday, 24 February 15
FOB INDONESIA COAL SWAP SET TO RALLY
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 rose week over week and month on month.
The Q2 swap increased US$ 3.30 (+7.30%) ...
Tuesday, 24 February 15
Q3' FOB RICHARDS BAY COAL SWAP CLOSED $59.80 W/E 20 FEB
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 surge month over month and decline week on week.
The Q2 swap has soar ...
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- Grasim Industreis Ltd - India
- SN Aboitiz Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- Semirara Mining and Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- Bhoruka Overseas - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Coal and Oil Company - UAE
- Aboitiz Power Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- GAC Shipping (India) Pvt Ltd
- Indonesian Coal Mining Association
- Trasteel International SA, Italy
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- The Treasury - Australian Government
- Orica Mining Services - Indonesia
- Australian Coal Association
- Pipit Mutiara Jaya. PT, Indonesia
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
- Simpson Spence & Young - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Energy Link Ltd, New Zealand
- Ministry of Transport, Egypt
- Thiess Contractors Indonesia
- Krishnapatnam Port Company Ltd. - India
- Mjunction Services Limited - India
- Electricity Authority, New Zealand
- MS Steel International - UAE
- Parry Sugars Refinery, India
- Videocon Industries ltd - India
- White Energy Company Limited
- Gujarat Sidhee Cement - India
- Interocean Group of Companies - India
- Energy Development Corp, Philippines
- Meralco Power Generation, Philippines
- Dalmia Cement Bharat India
- OPG Power Generation Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Vedanta Resources Plc - India
- Sakthi Sugars Limited - India
- Cigading International Bulk Terminal - Indonesia
- Australian Commodity Traders Exchange
- Planning Commission, India
- TNB Fuel Sdn Bhd - Malaysia
- Indo Tambangraya Megah - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Renaissance Capital - South Africa
- Orica Australia Pty. Ltd.
- VISA Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- AsiaOL BioFuels Corp., Philippines
- Asmin Koalindo Tuhup - Indonesia
- Oldendorff Carriers - Singapore
- Antam Resourcindo - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- Manunggal Multi Energi - Indonesia
- Electricity Generating Authority of Thailand
- Sree Jayajothi Cements Limited - India
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indogreen Group - Indonesia
- Kumho Petrochemical, South Korea
- PTC India Limited - India
- Aditya Birla Group - India
- McConnell Dowell - Australia
- Maheswari Brothers Coal Limited - India
- Xindia Steels Limited - India
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
- Global Coal Blending Company Limited - Australia
- Economic Council, Georgia
- New Zealand Coal & Carbon
- Barasentosa Lestari - Indonesia
- Sical Logistics Limited - India
- GVK Power & Infra Limited - India
- Merrill Lynch Commodities Europe
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Port Waratah Coal Services - Australia
- Rashtriya Ispat Nigam Limited - India
- Medco Energi Mining Internasional
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Independent Power Producers Association of India
- PNOC Exploration Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Attock Cement Pakistan Limited
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- Mercuria Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Altura Mining Limited, Indonesia
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
- Power Finance Corporation Ltd., India
- Kartika Selabumi Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- Ind-Barath Power Infra Limited - India
- San Jose City I Power Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Latin American Coal - Colombia
- London Commodity Brokers - England
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
- GN Power Mariveles Coal Plant, Philippines
- Wilmar Investment Holdings
- SMG Consultants - Indonesia
- Lanco Infratech Ltd - India
- Carbofer General Trading SA - India
- Anglo American - United Kingdom
- Timah Investasi Mineral - Indoneisa
- South Luzon Thermal Energy Corporation
- Jaiprakash Power Ventures ltd
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement - Thailand
- Bangladesh Power Developement Board
- IHS Mccloskey Coal Group - USA
- Gujarat Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Wood Mackenzie - Singapore
- Eastern Coal Council - USA
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Coalindo Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Bharathi Cement Corporation - India
- Semirara Mining Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Bukit Baiduri Energy - Indonesia
- Global Business Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Central Electricity Authority - India
- Holcim Trading Pte Ltd - Singapore
- Romanian Commodities Exchange
- Price Waterhouse Coopers - Russia
- Bulk Trading Sa - Switzerland
- Vijayanagar Sugar Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Sarangani Energy Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Commonwealth Bank - Australia
- Chamber of Mines of South Africa
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Samtan Co., Ltd - South Korea
- Metalloyd Limited - United Kingdom
- ICICI Bank Limited - India
- Tamil Nadu electricity Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ambuja Cements Ltd - India
- Minerals Council of Australia
- Bhatia International Limited - India
- India Bulls Power Limited - India
- LBH Netherlands Bv - Netherlands
- Central Java Power - Indonesia
- Posco Energy - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Baramulti Group, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Marubeni Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Siam City Cement PLC, Thailand
- IEA Clean Coal Centre - UK
- Iligan Light & Power Inc, Philippines
- Larsen & Toubro Limited - India
- Borneo Indobara - Indonesia
- Bhushan Steel Limited - India
- Indika Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Kaltim Prima Coal - Indonesia
- Mercator Lines Limited - India
- Sinarmas Energy and Mining - Indonesia
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Alfred C Toepfer International GmbH - Germany
- Global Green Power PLC Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- European Bulk Services B.V. - Netherlands
- Uttam Galva Steels Limited - India
- Intertek Mineral Services - Indonesia
- ASAPP Information Group - India
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Africa Commodities Group - South Africa
- Thai Mozambique Logistica
- GMR Energy Limited - India
- Georgia Ports Authority, United States
- CIMB Investment Bank - Malaysia
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
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