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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, 12 February 15
DRY BULK OWNERS SCRAP MORE VESSELS, AS MARKET REACHES HISTORICAL LOWS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has reached historical lows this week, with the Baltic Dry Index (BDI) now trading at levels below operating expense levels for ...
Thursday, 12 February 15
INDONESIAN COAL PRICE REFERENCE INCHED DOWN 1.44% IN FEBRUARY
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down Indonesian coal bench mark price this month to US$ 62.92 pe ...
Thursday, 12 February 15
NEWBUILDING ORDERING ACTIVITY DRAGS ON, AS OWNERS ARE LOOKING FOR LOWER PRICES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Ship owners appear to be waiting for lower prices in their dealings with Asian shipyards, as the dry bulk market is at historical lows. According t ...
Wednesday, 11 February 15
DRY BULK MARKET REMAINED UNDER PRESSURE : STABILIZING CAPE MARKET HARDLY HELPED SENTIMENT
COALspot.com: The Dry Bulk market remained under pressure last week, while the stabilizing Cape market hardly helped sentiment.
Greece based s ...
Wednesday, 11 February 15
BDI HITTING THE ALL-TIME LOW; FFA MARKETS NOT SHOWING ANY POSITIVE SIGNS
With the BDI hitting the all-time low and with FFA markets not showing any positive signs for a possible recovery in the near future, pessimism is ...
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- OPG Power Generation Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Bukit Baiduri Energy - Indonesia
- The University of Queensland
- Medco Energi Mining Internasional
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- South Luzon Thermal Energy Corporation
- Central Electricity Authority - India
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Australian Coal Association
- Chettinad Cement Corporation Ltd - India
- Wilmar Investment Holdings
- Maheswari Brothers Coal Limited - India
- Kepco SPC Power Corporation, Philippines
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- Commonwealth Bank - Australia
- European Bulk Services B.V. - Netherlands
- Essar Steel Hazira Ltd - India
- Latin American Coal - Colombia
- Ceylon Electricity Board - Sri Lanka
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- Leighton Contractors Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- AsiaOL BioFuels Corp., Philippines
- International Coal Ventures Pvt Ltd - India
- GMR Energy Limited - India
- Altura Mining Limited, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Metalloyd Limited - United Kingdom
- PNOC Exploration Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Indika Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Borneo Indobara - Indonesia
- Ministry of Finance - Indonesia
- Vizag Seaport Private Limited - India
- Bulk Trading Sa - Switzerland
- Coastal Gujarat Power Limited - India
- Thai Mozambique Logistica
- Kobexindo Tractors - Indoneisa
- Antam Resourcindo - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Bhatia International Limited - India
- PowerSource Philippines DevCo
- Bhoruka Overseas - Indonesia
- Sical Logistics Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Kapuas Tunggal Persada - Indonesia
- Karaikal Port Pvt Ltd - India
- SMC Global Power, Philippines
- Pendopo Energi Batubara - Indonesia
- Power Finance Corporation Ltd., India
- Renaissance Capital - South Africa
- Bayan Resources Tbk. - Indonesia
- IHS Mccloskey Coal Group - USA
- Indogreen Group - Indonesia
- Manunggal Multi Energi - Indonesia
- The Treasury - Australian Government
- Wood Mackenzie - Singapore
- Parliament of New Zealand
- Price Waterhouse Coopers - Russia
- MS Steel International - UAE
- Cigading International Bulk Terminal - Indonesia
- Makarim & Taira - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Indian Energy Exchange, India
- Posco Energy - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- Straits Asia Resources Limited - Singapore
- Rio Tinto Coal - Australia
- ICICI Bank Limited - India
- Minerals Council of Australia
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Romanian Commodities Exchange
- Jaiprakash Power Ventures ltd
- PetroVietnam Power Coal Import and Supply Company
- Intertek Mineral Services - Indonesia
- McConnell Dowell - Australia
- Directorate Of Revenue Intelligence - India
- Malabar Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Interocean Group of Companies - India
- Meralco Power Generation, Philippines
- Eastern Coal Council - USA
- Karbindo Abesyapradhi - Indoneisa
- CIMB Investment Bank - Malaysia
- GVK Power & Infra Limited - India
- Edison Trading Spa - Italy
- Mercator Lines Limited - India
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- Heidelberg Cement - Germany
- Rashtriya Ispat Nigam Limited - India
- Bhushan Steel Limited - India
- London Commodity Brokers - England
- Sindya Power Generating Company Private Ltd
- Deloitte Consulting - India
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- The State Trading Corporation of India Ltd
- Port Waratah Coal Services - Australia
- Semirara Mining and Power Corporation, Philippines
- Xindia Steels Limited - India
- Energy Link Ltd, New Zealand
- Toyota Tsusho Corporation, Japan
- Timah Investasi Mineral - Indoneisa
- Chamber of Mines of South Africa
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- Bharathi Cement Corporation - India
- GAC Shipping (India) Pvt Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Sarangani Energy Corporation, Philippines
- Global Business Power Corporation, Philippines
- Thiess Contractors Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indonesian Coal Mining Association
- Sojitz Corporation - Japan
- Grasim Industreis Ltd - India
- Ministry of Transport, Egypt
- Parry Sugars Refinery, India
- Bangladesh Power Developement Board
- TeaM Sual Corporation - Philippines
- White Energy Company Limited
- Oldendorff Carriers - Singapore
- Ind-Barath Power Infra Limited - India
- IEA Clean Coal Centre - UK
- Asmin Koalindo Tuhup - Indonesia
- Star Paper Mills Limited - India
- Kartika Selabumi Mining - Indonesia
- Tamil Nadu electricity Board
- Meenaskhi Energy Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Dalmia Cement Bharat India
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- Siam City Cement - Thailand
- Mjunction Services Limited - India
- Standard Chartered Bank - UAE
- Baramulti Group, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- Siam City Cement PLC, Thailand
- Ministry of Mines - Canada
- Singapore Mercantile Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- Holcim Trading Pte Ltd - Singapore
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- Aditya Birla Group - India
- Ambuja Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- Petron Corporation, Philippines
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- SMG Consultants - Indonesia
- Goldman Sachs - Singapore
- Videocon Industries ltd - India
- SN Aboitiz Power Inc, Philippines
- CNBM International Corporation - China
- Carbofer General Trading SA - India
- Kalimantan Lumbung Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Savvy Resources Ltd - HongKong
- Samtan Co., Ltd - South Korea
- Energy Development Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Planning Commission, India
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- Sree Jayajothi Cements Limited - India
- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- Iligan Light & Power Inc, Philippines
- Larsen & Toubro Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Kaltim Prima Coal - Indonesia
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