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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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Sunday, 15 February 15
BALTIC DRY INDEX CONTINUALLY DIPPED IN RED
COALspot.com: The Baltic Dry Index continues its decline and fell 5.18 pct to 530 points week on week due to falling commodity prices and declining ...
Saturday, 14 February 15
SHALE GAS AND TIGHT OIL ARE COMMERCIALLY PRODUCED IN JUST FOUR COUNTRIES - EIA
KNOWLEDGE TO ELEVATE
The United States, Canada, China, and Argentina are currently the only four countries in the world that are producing com ...
Friday, 13 February 15
U.S. WEEKLY COAL PRODUCTION SHOWS 10% DECLINE
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.1 million short tons (mmst) of coal ...
Friday, 13 February 15
SMALL AND MEDIUM-SIZED SHIP OWNERS SQUEEZED OUT OF THE MARKET ON CRASHING DRY BULK MARKET AND EUROZONE CRISIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Financing issues have started to tighten the noose in the throats of small and medium-size ship owners, who were already facing problems over the p ...
Thursday, 12 February 15
CAPESIZE: THE BEST DESCRIPTION FOR THE MARKET IS, FLAT - FEARNRESEARCH
Handy
The handy and supra market is also being affected by the marginal volume of activity in the commodity sales. We see a small upturn in the T ...
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- Bukit Baiduri Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cement Manufacturers Association - India
- Banpu Public Company Limited - Thailand
- Bharathi Cement Corporation - India
- McConnell Dowell - Australia
- Asmin Koalindo Tuhup - Indonesia
- Carbofer General Trading SA - India
- Chettinad Cement Corporation Ltd - India
- Jindal Steel & Power Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Aditya Birla Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhatia International Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- Karaikal Port Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Metalloyd Limited - United Kingdom
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- Makarim & Taira - Indonesia
- Indogreen Group - Indonesia
- Attock Cement Pakistan Limited
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- India Bulls Power Limited - India
- Simpson Spence & Young - Indonesia
- Manunggal Multi Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Australian Coal Association
- Globalindo Alam Lestari - Indonesia
- Vedanta Resources Plc - India
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Price Waterhouse Coopers - Russia
- London Commodity Brokers - England
- Planning Commission, India
- SMC Global Power, Philippines
- Coalindo Energy - Indonesia
- Videocon Industries ltd - India
- GAC Shipping (India) Pvt Ltd
- Krishnapatnam Port Company Ltd. - India
- Chamber of Mines of South Africa
- IEA Clean Coal Centre - UK
- Singapore Mercantile Exchange
- Ambuja Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Larsen & Toubro Limited - India
- Anglo American - United Kingdom
- Ministry of Finance - Indonesia
- Bhoruka Overseas - Indonesia
- The Treasury - Australian Government
- Kaltim Prima Coal - Indonesia
- Georgia Ports Authority, United States
- Commonwealth Bank - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Oldendorff Carriers - Singapore
- Parry Sugars Refinery, India
- Timah Investasi Mineral - Indoneisa
- The University of Queensland
- Latin American Coal - Colombia
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- Grasim Industreis Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Barasentosa Lestari - Indonesia
- Energy Link Ltd, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Deloitte Consulting - India
- Kepco SPC Power Corporation, Philippines
- New Zealand Coal & Carbon
- Aboitiz Power Corporation - Philippines
- PTC India Limited - India
- Kideco Jaya Agung - Indonesia
- Africa Commodities Group - South Africa
- Billiton Holdings Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- Bhushan Steel Limited - India
- Siam City Cement - Thailand
- The State Trading Corporation of India Ltd
- Global Business Power Corporation, Philippines
- Indonesian Coal Mining Association
- Kumho Petrochemical, South Korea
- Mjunction Services Limited - India
- Energy Development Corp, Philippines
- Malabar Cements Ltd - India
- Eastern Energy - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rashtriya Ispat Nigam Limited - India
- Madhucon Powers Ltd - India
- Kobexindo Tractors - Indoneisa
- Gujarat Sidhee Cement - India
- Power Finance Corporation Ltd., India
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- International Coal Ventures Pvt Ltd - India
- Dalmia Cement Bharat India
- Sojitz Corporation - Japan
- PNOC Exploration Corporation - Philippines
- Bangladesh Power Developement Board
- Bahari Cakrawala Sebuku - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Rio Tinto Coal - Australia
- Global Green Power PLC Corporation, Philippines
- Port Waratah Coal Services - Australia
- Parliament of New Zealand
- Essar Steel Hazira Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Sakthi Sugars Limited - India
- MS Steel International - UAE
- Australian Commodity Traders Exchange
- South Luzon Thermal Energy Corporation
- Posco Energy - South Korea
- Lanco Infratech Ltd - India
- Straits Asia Resources Limited - Singapore
- Central Java Power - Indonesia
- White Energy Company Limited
- Xindia Steels Limited - India
- Economic Council, Georgia
- SMG Consultants - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Jaiprakash Power Ventures ltd
- Altura Mining Limited, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Petron Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- Central Electricity Authority - India
- Savvy Resources Ltd - HongKong
- Global Coal Blending Company Limited - Australia
- Mintek Dendrill Indonesia
- Interocean Group of Companies - India
- Kalimantan Lumbung Energi - Indonesia
- Orica Mining Services - Indonesia
- Tamil Nadu electricity Board
- Wilmar Investment Holdings
- Salva Resources Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Miang Besar Coal Terminal - Indonesia
- GMR Energy Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Merrill Lynch Commodities Europe
- Indo Tambangraya Megah - Indonesia
- Thiess Contractors Indonesia
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- VISA Power Limited - India
- LBH Netherlands Bv - Netherlands
- ASAPP Information Group - India
- Coastal Gujarat Power Limited - India
- Edison Trading Spa - Italy
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Directorate Of Revenue Intelligence - India
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- Riau Bara Harum - Indonesia
- Indian Energy Exchange, India
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- Bulk Trading Sa - Switzerland
- Renaissance Capital - South Africa
- Binh Thuan Hamico - Vietnam
- Thai Mozambique Logistica
- Toyota Tsusho Corporation, Japan
- Tata Chemicals Ltd - India
- PowerSource Philippines DevCo
- Star Paper Mills Limited - India
- Intertek Mineral Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- Sree Jayajothi Cements Limited - India
- Bayan Resources Tbk. - Indonesia
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Agrawal Coal Company - India
- Minerals Council of Australia
- Independent Power Producers Association of India
- Eastern Coal Council - USA
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- Vizag Seaport Private Limited - India
- Uttam Galva Steels Limited - India
- Trasteel International SA, Italy
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- Alfred C Toepfer International GmbH - Germany
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