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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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- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Maheswari Brothers Coal Limited - India
- Ind-Barath Power Infra Limited - India
- Carbofer General Trading SA - India
- Kideco Jaya Agung - Indonesia
- Star Paper Mills Limited - India
- Electricity Generating Authority of Thailand
- Singapore Mercantile Exchange
- Indogreen Group - Indonesia
- Altura Mining Limited, Indonesia
- Global Green Power PLC Corporation, Philippines
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- Agrawal Coal Company - India
- SMG Consultants - Indonesia
- Mjunction Services Limited - India
- International Coal Ventures Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Manunggal Multi Energi - Indonesia
- Australian Commodity Traders Exchange
- Riau Bara Harum - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Central Electricity Authority - India
- Bulk Trading Sa - Switzerland
- The Treasury - Australian Government
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Coal Association
- Siam City Cement PLC, Thailand
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- Anglo American - United Kingdom
- Rio Tinto Coal - Australia
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- Simpson Spence & Young - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- TeaM Sual Corporation - Philippines
- McConnell Dowell - Australia
- Essar Steel Hazira Ltd - India
- Toyota Tsusho Corporation, Japan
- Straits Asia Resources Limited - Singapore
- Antam Resourcindo - Indonesia
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- Madhucon Powers Ltd - India
- Therma Luzon, Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- Sical Logistics Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Independent Power Producers Association of India
- Kalimantan Lumbung Energi - Indonesia
- GMR Energy Limited - India
- Kapuas Tunggal Persada - Indonesia
- Indika Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- South Luzon Thermal Energy Corporation
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Medco Energi Mining Internasional
- Globalindo Alam Lestari - Indonesia
- Eastern Coal Council - USA
- The University of Queensland
- Makarim & Taira - Indonesia
- Chamber of Mines of South Africa
- IEA Clean Coal Centre - UK
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- Oldendorff Carriers - Singapore
- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wilmar Investment Holdings
- Pendopo Energi Batubara - Indonesia
- Sree Jayajothi Cements Limited - India
- Economic Council, Georgia
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Directorate General of MIneral and Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- Ministry of Mines - Canada
- Iligan Light & Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- LBH Netherlands Bv - Netherlands
- Vedanta Resources Plc - India
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Interocean Group of Companies - India
- Xindia Steels Limited - India
- Parry Sugars Refinery, India
- Deloitte Consulting - India
- Salva Resources Pvt Ltd - India
- Larsen & Toubro Limited - India
- Aboitiz Power Corporation - Philippines
- Planning Commission, India
- Attock Cement Pakistan Limited
- Jindal Steel & Power Ltd - India
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- GN Power Mariveles Coal Plant, Philippines
- Formosa Plastics Group - Taiwan
- Sinarmas Energy and Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- Grasim Industreis Ltd - India
- GVK Power & Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- Posco Energy - South Korea
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- Indian Energy Exchange, India
- PowerSource Philippines DevCo
- OPG Power Generation Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Mercator Lines Limited - India
- Africa Commodities Group - South Africa
- Semirara Mining Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aditya Birla Group - India
- Global Business Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- Uttam Galva Steels Limited - India
- SMC Global Power, Philippines
- Ministry of Transport, Egypt
- Cigading International Bulk Terminal - Indonesia
- VISA Power Limited - India
- Lanco Infratech Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Commonwealth Bank - Australia
- Intertek Mineral Services - Indonesia
- IHS Mccloskey Coal Group - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kobexindo Tractors - Indoneisa
- Binh Thuan Hamico - Vietnam
- ASAPP Information Group - India
- Ambuja Cements Ltd - India
- Samtan Co., Ltd - South Korea
- SN Aboitiz Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- White Energy Company Limited
- Sarangani Energy Corporation, Philippines
- Bangladesh Power Developement Board
- Bhoruka Overseas - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- London Commodity Brokers - England
- Edison Trading Spa - Italy
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- ICICI Bank Limited - India
- Parliament of New Zealand
- Barasentosa Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kumho Petrochemical, South Korea
- Energy Development Corp, Philippines
- Renaissance Capital - South Africa
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Romanian Commodities Exchange
- Orica Mining Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Wood Mackenzie - Singapore
- Marubeni Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Bukit Baiduri Energy - Indonesia
- Bhushan Steel Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Oil Corporation Limited
- Karaikal Port Pvt Ltd - India
- Baramulti Group, Indonesia
- Port Waratah Coal Services - Australia
- Tata Chemicals Ltd - India
- Goldman Sachs - Singapore
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Vizag Seaport Private Limited - India
- Bhatia International Limited - India
- Electricity Authority, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- Mercuria Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Eastern Energy - Thailand
- Merrill Lynch Commodities Europe
- Latin American Coal - Colombia
- Coastal Gujarat Power Limited - India
- Bharathi Cement Corporation - India
- Directorate Of Revenue Intelligence - India
- Tamil Nadu electricity Board
- New Zealand Coal & Carbon
- Thai Mozambique Logistica
- Alfred C Toepfer International GmbH - Germany
- Trasteel International SA, Italy
- Metalloyd Limited - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Jaiprakash Power Ventures ltd
- PTC India Limited - India
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
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