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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.
Information contained within the website of COALspot.com is intended for informational purposes only and is not intended as professional counsel and should not be used as such.
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Tuesday, 24 February 15
IHS ENERGY COAL CONFERENCE OF THE AMERICAS
Attend the IHS Energy Coal Conference of the Americas 17-19 March in Cartagena, Colombia and learn about timely concerns in today's coal indust ...
Monday, 23 February 15
Q2' CFR SOUTH CHINA COAL SWAP FOR Q2 ROSE 3.39% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery rose US$ 1.90 (+3.39%) per MT month over month and declined US$ 0.08 ...
Monday, 23 February 15
Q2' API 5 FOB NEWCASTLE COAL SWAP CLOSED $1 HIGHER THAN Q3
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 3.12 per MT (+6.44%) month over month and fall US$ 0.43 (-0.83%) w ...
Sunday, 22 February 15
THE BALTIC DRY INDEX LOST ALMOST 3.2% OR 17 POINTS WEEK ON WEEK
COALspot.com: The Baltic Dry Index, one of the economic indicators that monitors the health of the world's economy by tracking the price of shi ...
Friday, 20 February 15
GOVT SET TO INCREASE COAL OUTPUT TARGET THIS YEAR - JAKARTA POST
The Energy and Mineral Resources Ministry is planning to increase its coal output target this year as the government seeks to offset the ongoing de ...
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- Petron Corporation, Philippines
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- LBH Netherlands Bv - Netherlands
- Parliament of New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Development Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
- Sical Logistics Limited - India
- Grasim Industreis Ltd - India
- Wilmar Investment Holdings
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- McConnell Dowell - Australia
- Interocean Group of Companies - India
- Sinarmas Energy and Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Bukit Baiduri Energy - Indonesia
- PowerSource Philippines DevCo
- Singapore Mercantile Exchange
- Maheswari Brothers Coal Limited - India
- Semirara Mining Corp, Philippines
- Star Paper Mills Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Tamil Nadu electricity Board
- VISA Power Limited - India
- Central Electricity Authority - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Barasentosa Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Gujarat Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Bukit Asam (Persero) Tbk - Indonesia
- Riau Bara Harum - Indonesia
- Economic Council, Georgia
- Kapuas Tunggal Persada - Indonesia
- Gujarat Sidhee Cement - India
- Metalloyd Limited - United Kingdom
- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Orica Mining Services - Indonesia
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- Karaikal Port Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- MS Steel International - UAE
- Antam Resourcindo - Indonesia
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- Medco Energi Mining Internasional
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Wood Mackenzie - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Alfred C Toepfer International GmbH - Germany
- Mercuria Energy - Indonesia
- Lanco Infratech Ltd - India
- Bangladesh Power Developement Board
- Agrawal Coal Company - India
- Salva Resources Pvt Ltd - India
- Sakthi Sugars Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Coal and Oil Company - UAE
- Semirara Mining and Power Corporation, Philippines
- Cement Manufacturers Association - India
- PTC India Limited - India
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Bukit Makmur.PT - Indonesia
- Sojitz Corporation - Japan
- Georgia Ports Authority, United States
- Timah Investasi Mineral - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Indian Oil Corporation Limited
- Bharathi Cement Corporation - India
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- Indonesian Coal Mining Association
- Thiess Contractors Indonesia
- Minerals Council of Australia
- Bhushan Steel Limited - India
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Indian Energy Exchange, India
- Kideco Jaya Agung - Indonesia
- Bhoruka Overseas - Indonesia
- The University of Queensland
- Australian Coal Association
- Australian Commodity Traders Exchange
- Toyota Tsusho Corporation, Japan
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- Indika Energy - Indonesia
- Baramulti Group, Indonesia
- South Luzon Thermal Energy Corporation
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Ind-Barath Power Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Maharashtra Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Port Waratah Coal Services - Australia
- GVK Power & Infra Limited - India
- GMR Energy Limited - India
- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Madhucon Powers Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- Formosa Plastics Group - Taiwan
- Xindia Steels Limited - India
- CNBM International Corporation - China
- SN Aboitiz Power Inc, Philippines
- Larsen & Toubro Limited - India
- Posco Energy - South Korea
- Holcim Trading Pte Ltd - Singapore
- Carbofer General Trading SA - India
- Heidelberg Cement - Germany
- PetroVietnam Power Coal Import and Supply Company
- San Jose City I Power Corp, Philippines
- Savvy Resources Ltd - HongKong
- Videocon Industries ltd - India
- Electricity Authority, New Zealand
- IEA Clean Coal Centre - UK
- ASAPP Information Group - India
- Banpu Public Company Limited - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Jindal Steel & Power Ltd - India
- Chamber of Mines of South Africa
- Deloitte Consulting - India
- Standard Chartered Bank - UAE
- Marubeni Corporation - India
- Vedanta Resources Plc - India
- Indo Tambangraya Megah - Indonesia
- Samtan Co., Ltd - South Korea
- Mintek Dendrill Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- CIMB Investment Bank - Malaysia
- London Commodity Brokers - England
- Siam City Cement PLC, Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- Borneo Indobara - Indonesia
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- SMG Consultants - Indonesia
- Straits Asia Resources Limited - Singapore
- Trasteel International SA, Italy
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Simpson Spence & Young - Indonesia
- Essar Steel Hazira Ltd - India
- Meenaskhi Energy Private Limited - India
- Siam City Cement - Thailand
- PNOC Exploration Corporation - Philippines
- Merrill Lynch Commodities Europe
- Kepco SPC Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Global Business Power Corporation, Philippines
- Ministry of Transport, Egypt
- Goldman Sachs - Singapore
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- Thai Mozambique Logistica
- Dalmia Cement Bharat India
- Parry Sugars Refinery, India
- Vizag Seaport Private Limited - India
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- Planning Commission, India
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- Billiton Holdings Pty Ltd - Australia
- Commonwealth Bank - Australia
- Intertek Mineral Services - Indonesia
- Romanian Commodities Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Link Ltd, New Zealand
- Manunggal Multi Energi - Indonesia
- Africa Commodities Group - South Africa
- Bhatia International Limited - India
- Global Coal Blending Company Limited - Australia
- Cigading International Bulk Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GN Power Mariveles Coal Plant, Philippines
- Electricity Generating Authority of Thailand
- Sindya Power Generating Company Private Ltd
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- ICICI Bank Limited - India
- Aboitiz Power Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Central Java Power - Indonesia
- Ministry of Mines - Canada
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