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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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Friday, 20 February 15
U.S. PRODUCED AROUND 19.2 MILLION SHORT TONS OF COAL WEEK ON WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.2 million short tons (mmst) of coal ...
Thursday, 19 February 15
PANAMAX: NOPAC AND AUSSIE ROUNDS ARE DONE IN LOW/MID $ 4000; TRIPS VIA INDONESIA TO INDIA CLOSER TO THE $5000 MARK - FEARNLEYS
Handy
The handy and supra market has not seen any firming rates in front of the Chinese New Year and still suffering on low activity in both hemi ...
Wednesday, 18 February 15
DRY BULK SHIPPING TO RECOVER IN LATE 2015 - DREWRY MARITIME RESEARCH
Strong trade growth, moderating fleet development and deployment of new fuel efficient vessels are expected to lead to a recovery in dry bulk shipp ...
Tuesday, 17 February 15
WHO PAYS THE SUEZ CANAL FEES? - INCE & CO
KNOWLEDGE TO ELEVATE
This was an appeal from an arbitration award on a point of construction in relation to the wording of an addendum to a ch ...
Tuesday, 17 February 15
BUOYANT WAVES IN RECENT YEARS: GLOBAL SHIP INVESTMENT SINCE THE CRASH - HELLENIC SHIPPING NEWS
Anxiety about fleet expansion is a recurring feature of world shipping markets. Within the global maritime community, worries about the vast amount ...
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- Australian Commodity Traders Exchange
- Sical Logistics Limited - India
- Kumho Petrochemical, South Korea
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thai Mozambique Logistica
- Directorate General of MIneral and Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Grasim Industreis Ltd - India
- Eastern Coal Council - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Minerals Council of Australia
- Edison Trading Spa - Italy
- Siam City Cement - Thailand
- Electricity Generating Authority of Thailand
- Asmin Koalindo Tuhup - Indonesia
- Chettinad Cement Corporation Ltd - India
- Kobexindo Tractors - Indoneisa
- Renaissance Capital - South Africa
- CNBM International Corporation - China
- Ceylon Electricity Board - Sri Lanka
- CIMB Investment Bank - Malaysia
- Karaikal Port Pvt Ltd - India
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Xindia Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- GVK Power & Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Kalimantan Lumbung Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Semirara Mining Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- Australian Coal Association
- Agrawal Coal Company - India
- Pendopo Energi Batubara - Indonesia
- Ministry of Transport, Egypt
- Vijayanagar Sugar Pvt Ltd - India
- The Treasury - Australian Government
- Carbofer General Trading SA - India
- Central Electricity Authority - India
- AsiaOL BioFuels Corp., Philippines
- Energy Development Corp, Philippines
- Tamil Nadu electricity Board
- Vedanta Resources Plc - India
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- Lanco Infratech Ltd - India
- Kartika Selabumi Mining - Indonesia
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Global Coal Blending Company Limited - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Indian Energy Exchange, India
- India Bulls Power Limited - India
- TeaM Sual Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- SMG Consultants - Indonesia
- Bhatia International Limited - India
- Bangladesh Power Developement Board
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- Maharashtra Electricity Regulatory Commission - India
- The University of Queensland
- Heidelberg Cement - Germany
- Africa Commodities Group - South Africa
- Makarim & Taira - Indonesia
- Binh Thuan Hamico - Vietnam
- Banpu Public Company Limited - Thailand
- Indika Energy - Indonesia
- Bhushan Steel Limited - India
- Planning Commission, India
- Medco Energi Mining Internasional
- Semirara Mining and Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Petron Corporation, Philippines
- Merrill Lynch Commodities Europe
- GN Power Mariveles Coal Plant, Philippines
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- Therma Luzon, Inc, Philippines
- Power Finance Corporation Ltd., India
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- Posco Energy - South Korea
- Meralco Power Generation, Philippines
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- LBH Netherlands Bv - Netherlands
- Economic Council, Georgia
- Krishnapatnam Port Company Ltd. - India
- Globalindo Alam Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parliament of New Zealand
- Baramulti Group, Indonesia
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- IHS Mccloskey Coal Group - USA
- Global Business Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Timah Investasi Mineral - Indoneisa
- Gujarat Sidhee Cement - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mintek Dendrill Indonesia
- Indogreen Group - Indonesia
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- Ind-Barath Power Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- ICICI Bank Limited - India
- International Coal Ventures Pvt Ltd - India
- Electricity Authority, New Zealand
- Thiess Contractors Indonesia
- Dalmia Cement Bharat India
- Global Green Power PLC Corporation, Philippines
- Borneo Indobara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Larsen & Toubro Limited - India
- Mercuria Energy - Indonesia
- VISA Power Limited - India
- Jindal Steel & Power Ltd - India
- Maheswari Brothers Coal Limited - India
- Orica Australia Pty. Ltd.
- Videocon Industries ltd - India
- Kideco Jaya Agung - Indonesia
- San Jose City I Power Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Antam Resourcindo - Indonesia
- Malabar Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- Karbindo Abesyapradhi - Indoneisa
- Indian Oil Corporation Limited
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Bulk Trading Sa - Switzerland
- Sindya Power Generating Company Private Ltd
- GAC Shipping (India) Pvt Ltd
- Kaltim Prima Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Interocean Group of Companies - India
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Altura Mining Limited, Indonesia
- Oldendorff Carriers - Singapore
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Aditya Birla Group - India
- South Luzon Thermal Energy Corporation
- Coal and Oil Company - UAE
- Eastern Energy - Thailand
- Georgia Ports Authority, United States
- Latin American Coal - Colombia
- Riau Bara Harum - Indonesia
- White Energy Company Limited
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Cigading International Bulk Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- Deloitte Consulting - India
- Barasentosa Lestari - Indonesia
- Mjunction Services Limited - India
- Samtan Co., Ltd - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Ministry of Finance - Indonesia
- Romanian Commodities Exchange
- Port Waratah Coal Services - Australia
- Coalindo Energy - Indonesia
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Mercator Lines Limited - India
- Wood Mackenzie - Singapore
- Siam City Cement PLC, Thailand
- Orica Mining Services - Indonesia
- Anglo American - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- PowerSource Philippines DevCo
- New Zealand Coal & Carbon
- Coastal Gujarat Power Limited - India
- Meenaskhi Energy Private Limited - India
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- Rio Tinto Coal - Australia
- Trasteel International SA, Italy
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