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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, 10 February 15
IRON ORE MARKET TO REMAIN OVERSUPPLIED IN 2015: PRICE FORECAST $70/T - WOOD MACKENZIE
COALspot.com: With January witnessing the price of iron ore falling to its lowest levels since May 2009, Roger Emslie, Principal Metals & ...
Tuesday, 10 February 15
SUB-BIT FOB INDONESIA COAL SWAP ADVANCES 3.79% WEEK ON WEEK
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 rose week over week and month on month.
The Q2 swap up US$ 0.85 (+1.81%) month o ...
Tuesday, 10 February 15
FOB NEWCASTLE COAL SWAPS SURGE WEEK OVER WEEK, RAISING HOPES?
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 0.95 per MT (+1.91%) week over week and declined US$ 0.06 (-0.12%) ...
Monday, 09 February 15
AUSTRALIAN COAL PRODUCERS BEST POSITIONED IN OVERSUPPLIED MARKET; US MINES MOST AT RISK - WOOD MACKENZIE
In a 2015 global coal outlook report, Wood Mackenzie says that Australia and Indonesian coal suppliers will see some upside in the difficult months ...
Monday, 09 February 15
FOB RICHARDS BAY COAL SWAP GAINS 3.65% TO ONE-MONTH HIGH
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 surge month over month and day on day.
The Q2 swap has soared US$ 2.1 ...
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- Meralco Power Generation, Philippines
- MS Steel International - UAE
- Maharashtra Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Ministry of Transport, Egypt
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining and Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Interocean Group of Companies - India
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Savvy Resources Ltd - HongKong
- Directorate Of Revenue Intelligence - India
- PNOC Exploration Corporation - Philippines
- Independent Power Producers Association of India
- Bhatia International Limited - India
- Global Green Power PLC Corporation, Philippines
- Electricity Generating Authority of Thailand
- Jindal Steel & Power Ltd - India
- Essar Steel Hazira Ltd - India
- Kideco Jaya Agung - Indonesia
- Planning Commission, India
- Cement Manufacturers Association - India
- Kepco SPC Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- White Energy Company Limited
- Indika Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Australia Pty. Ltd.
- Mintek Dendrill Indonesia
- Commonwealth Bank - Australia
- CIMB Investment Bank - Malaysia
- Price Waterhouse Coopers - Russia
- Marubeni Corporation - India
- Borneo Indobara - Indonesia
- Oldendorff Carriers - Singapore
- Sindya Power Generating Company Private Ltd
- Ministry of Finance - Indonesia
- Petron Corporation, Philippines
- Thai Mozambique Logistica
- Kartika Selabumi Mining - Indonesia
- SMG Consultants - Indonesia
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ASAPP Information Group - India
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Chamber of Mines of South Africa
- Electricity Authority, New Zealand
- Binh Thuan Hamico - Vietnam
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- Siam City Cement - Thailand
- Tata Chemicals Ltd - India
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- Baramulti Group, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Renaissance Capital - South Africa
- Sical Logistics Limited - India
- International Coal Ventures Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- Indonesian Coal Mining Association
- Mjunction Services Limited - India
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Australian Coal Association
- Alfred C Toepfer International GmbH - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- TeaM Sual Corporation - Philippines
- Goldman Sachs - Singapore
- Bhushan Steel Limited - India
- Cigading International Bulk Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- Economic Council, Georgia
- Sree Jayajothi Cements Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- PTC India Limited - India
- London Commodity Brokers - England
- Banpu Public Company Limited - Thailand
- Toyota Tsusho Corporation, Japan
- Semirara Mining Corp, Philippines
- Eastern Energy - Thailand
- Latin American Coal - Colombia
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Carbofer General Trading SA - India
- Anglo American - United Kingdom
- Dalmia Cement Bharat India
- Indogreen Group - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Thiess Contractors Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
- Star Paper Mills Limited - India
- Riau Bara Harum - Indonesia
- GVK Power & Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Bharathi Cement Corporation - India
- Timah Investasi Mineral - Indoneisa
- CNBM International Corporation - China
- Parry Sugars Refinery, India
- Ministry of Mines - Canada
- PetroVietnam Power Coal Import and Supply Company
- Aditya Birla Group - India
- Singapore Mercantile Exchange
- Georgia Ports Authority, United States
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
- South Luzon Thermal Energy Corporation
- Energy Development Corp, Philippines
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Rio Tinto Coal - Australia
- Merrill Lynch Commodities Europe
- Australian Commodity Traders Exchange
- Chettinad Cement Corporation Ltd - India
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- Malabar Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ICICI Bank Limited - India
- Ind-Barath Power Infra Limited - India
- The University of Queensland
- Kobexindo Tractors - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- VISA Power Limited - India
- Central Java Power - Indonesia
- Barasentosa Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Edison Trading Spa - Italy
- Indian Oil Corporation Limited
- PowerSource Philippines DevCo
- Kohat Cement Company Ltd. - Pakistan
- Indo Tambangraya Megah - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Xindia Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Bhoruka Overseas - Indonesia
- Sakthi Sugars Limited - India
- OPG Power Generation Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- Attock Cement Pakistan Limited
- Jorong Barutama Greston.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- Trasteel International SA, Italy
- Straits Asia Resources Limited - Singapore
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Africa Commodities Group - South Africa
- Meenaskhi Energy Private Limited - India
- SMC Global Power, Philippines
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- Bukit Baiduri Energy - Indonesia
- Minerals Council of Australia
- Central Electricity Authority - India
- Sojitz Corporation - Japan
- Coastal Gujarat Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Tamil Nadu electricity Board
- Holcim Trading Pte Ltd - Singapore
- The Treasury - Australian Government
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Makarim & Taira - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- New Zealand Coal & Carbon
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- Mercuria Energy - Indonesia
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- McConnell Dowell - Australia
- Intertek Mineral Services - Indonesia
- Medco Energi Mining Internasional
- Bayan Resources Tbk. - Indonesia
- Orica Mining Services - Indonesia
- Altura Mining Limited, Indonesia
- Bulk Trading Sa - Switzerland
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
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