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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, 17 February 15
FOB SUB-BIT INDONESIA COAL SWAP UP 8% MONTH OVER MONTH
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 rose week over week and month on month.
The Q2 swap up US$ 3.58 (+8.00%) month o ...
Tuesday, 17 February 15
Q2' FOB RICHARDS BAY COAL SWAP CLOSED AT $63.45; $ 1.85 HIGHER COMPARED TO Q4 CLOSING
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 surge month over month, week on week and day on day.
The Q2 swap has ...
Monday, 16 February 15
COAL MINING SLUMP A BLESSING IN DISGUISE - THE JAKARTA POST
The growth of the coal-mining industry, which has diminished in the last two years, is expected to slump even further this year following weakening ...
Monday, 16 February 15
FOB NEWCASTLE COAL SWAPS SURGE WEEK ON WEEK
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 1.31 per MT (+2.59%) week over week and US$ 4.35 (+9.13%) month on ...
Monday, 16 February 15
Q2' 15 - CFR SOUTH CHINA COAL SWAP ROSE 5.22% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery rose US$ 2.88 (+5.22%) per MT month over month and US$ 1.08 (+1.90% ...
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- Kepco SPC Power Corporation, Philippines
- Sojitz Corporation - Japan
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Dalmia Cement Bharat India
- Indo Tambangraya Megah - Indonesia
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- Timah Investasi Mineral - Indoneisa
- Aditya Birla Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- Eastern Coal Council - USA
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- Thiess Contractors Indonesia
- Iligan Light & Power Inc, Philippines
- Carbofer General Trading SA - India
- Kumho Petrochemical, South Korea
- GVK Power & Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Anglo American - United Kingdom
- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
- Electricity Authority, New Zealand
- Attock Cement Pakistan Limited
- TNB Fuel Sdn Bhd - Malaysia
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- ASAPP Information Group - India
- SMG Consultants - Indonesia
- Kideco Jaya Agung - Indonesia
- White Energy Company Limited
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- The University of Queensland
- Bhushan Steel Limited - India
- Ministry of Transport, Egypt
- Tata Chemicals Ltd - India
- Australian Coal Association
- GMR Energy Limited - India
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Port Waratah Coal Services - Australia
- Parliament of New Zealand
- Australian Commodity Traders Exchange
- Borneo Indobara - Indonesia
- Ambuja Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Electricity Generating Authority of Thailand
- Grasim Industreis Ltd - India
- Globalindo Alam Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Kartika Selabumi Mining - Indonesia
- MS Steel International - UAE
- Sree Jayajothi Cements Limited - India
- Cement Manufacturers Association - India
- Barasentosa Lestari - Indonesia
- Merrill Lynch Commodities Europe
- London Commodity Brokers - England
- Madhucon Powers Ltd - India
- Bhoruka Overseas - Indonesia
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- Renaissance Capital - South Africa
- Binh Thuan Hamico - Vietnam
- Coalindo Energy - Indonesia
- The Treasury - Australian Government
- Jaiprakash Power Ventures ltd
- Petron Corporation, Philippines
- Indogreen Group - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- TeaM Sual Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Altura Mining Limited, Indonesia
- VISA Power Limited - India
- Aboitiz Power Corporation - Philippines
- New Zealand Coal & Carbon
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- Ind-Barath Power Infra Limited - India
- Singapore Mercantile Exchange
- Toyota Tsusho Corporation, Japan
- Neyveli Lignite Corporation Ltd, - India
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Thai Mozambique Logistica
- Malabar Cements Ltd - India
- Tamil Nadu electricity Board
- Bukit Baiduri Energy - Indonesia
- Commonwealth Bank - Australia
- Sinarmas Energy and Mining - Indonesia
- Eastern Energy - Thailand
- Siam City Cement PLC, Thailand
- Metalloyd Limited - United Kingdom
- Global Coal Blending Company Limited - Australia
- Simpson Spence & Young - Indonesia
- Orica Mining Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Edison Trading Spa - Italy
- Kobexindo Tractors - Indoneisa
- South Luzon Thermal Energy Corporation
- Sarangani Energy Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- Orica Australia Pty. Ltd.
- Agrawal Coal Company - India
- Gujarat Sidhee Cement - India
- Gujarat Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CNBM International Corporation - China
- Makarim & Taira - Indonesia
- Marubeni Corporation - India
- Star Paper Mills Limited - India
- Romanian Commodities Exchange
- SN Aboitiz Power Inc, Philippines
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- Power Finance Corporation Ltd., India
- San Jose City I Power Corp, Philippines
- Trasteel International SA, Italy
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Indian Energy Exchange, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Central Java Power - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bharathi Cement Corporation - India
- Vedanta Resources Plc - India
- Mercator Lines Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Siam City Cement - Thailand
- Lanco Infratech Ltd - India
- Salva Resources Pvt Ltd - India
- Antam Resourcindo - Indonesia
- McConnell Dowell - Australia
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- Indika Energy - Indonesia
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- PowerSource Philippines DevCo
- Wilmar Investment Holdings
- Indian Oil Corporation Limited
- Directorate General of MIneral and Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- ICICI Bank Limited - India
- Independent Power Producers Association of India
- Minerals Council of Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kohat Cement Company Ltd. - Pakistan
- Banpu Public Company Limited - Thailand
- Straits Asia Resources Limited - Singapore
- Wood Mackenzie - Singapore
- Cigading International Bulk Terminal - Indonesia
- Central Electricity Authority - India
- Baramulti Group, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Global Business Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- Mercuria Energy - Indonesia
- Africa Commodities Group - South Africa
- Vizag Seaport Private Limited - India
- Interocean Group of Companies - India
- Leighton Contractors Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Mintek Dendrill Indonesia
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