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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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Monday, 09 February 15
Q2' CFR SOUTH CHINA COAL SWAP DECLINED 3.28% TO $ 56.92 W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 1.93 (-3.28%) per MT month over month and US$ 0.10 (-0 ...
Sunday, 08 February 15
BDI FELL CONTINUOUSLY HIT A THREE DECADES LOW
COALspot.com: This week Baltic Exchange Dry Freight Index (BDI) fell continuously hit a three decades low.
The BDI continuously fell and was d ...
Friday, 06 February 15
WEEKLY U.S. COAL PRODUCTION UP AN ESTIMATED 1.1% FROM LAST WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 20.1 million short tons (mmst) of coal ...
Friday, 06 February 15
SHIP DAMAGED BY FIRE CAUSED BY PIRATES FOUND TO BE CONSTRUCTIVE TOTAL LOSS - TAYLOR WESSING
KNOWLEDGE TO ELEVATE
The High Court was asked to determine a number of preliminary issues, including whether a vessel was a constructive total ...
Thursday, 05 February 15
BDI HAS NOW FALLEN A LEVEL CLOSE TO THE INDEX'S HISTORIC LOW - INTERMODAL
They say a picture is worth a thousand words and in this instance just one look at the tables above is enough to understand the great pressure the ...
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- McConnell Dowell - Australia
- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Renaissance Capital - South Africa
- New Zealand Coal & Carbon
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Edison Trading Spa - Italy
- Carbofer General Trading SA - India
- OPG Power Generation Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- Kumho Petrochemical, South Korea
- IEA Clean Coal Centre - UK
- Kepco SPC Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Globalindo Alam Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- PNOC Exploration Corporation - Philippines
- Eastern Coal Council - USA
- Semirara Mining Corp, Philippines
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- SN Aboitiz Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Sojitz Corporation - Japan
- Timah Investasi Mineral - Indoneisa
- The Treasury - Australian Government
- Aboitiz Power Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Larsen & Toubro Limited - India
- Deloitte Consulting - India
- Romanian Commodities Exchange
- Karaikal Port Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Binh Thuan Hamico - Vietnam
- Meralco Power Generation, Philippines
- Power Finance Corporation Ltd., India
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- PetroVietnam Power Coal Import and Supply Company
- Sical Logistics Limited - India
- Bhatia International Limited - India
- Eastern Energy - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Standard Chartered Bank - UAE
- Makarim & Taira - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Indogreen Group - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The University of Queensland
- Holcim Trading Pte Ltd - Singapore
- Antam Resourcindo - Indonesia
- Simpson Spence & Young - Indonesia
- Ministry of Finance - Indonesia
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
- Ind-Barath Power Infra Limited - India
- Electricity Generating Authority of Thailand
- Uttam Galva Steels Limited - India
- Bhushan Steel Limited - India
- Karbindo Abesyapradhi - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Bukit Asam (Persero) Tbk - Indonesia
- Posco Energy - South Korea
- VISA Power Limited - India
- Barasentosa Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- Georgia Ports Authority, United States
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ICICI Bank Limited - India
- Madhucon Powers Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Central Electricity Authority - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wood Mackenzie - Singapore
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- PowerSource Philippines DevCo
- Altura Mining Limited, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- South Luzon Thermal Energy Corporation
- Rio Tinto Coal - Australia
- GVK Power & Infra Limited - India
- Mintek Dendrill Indonesia
- Ceylon Electricity Board - Sri Lanka
- Ministry of Transport, Egypt
- Ambuja Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Therma Luzon, Inc, Philippines
- Ministry of Mines - Canada
- Indonesian Coal Mining Association
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- White Energy Company Limited
- Commonwealth Bank - Australia
- The State Trading Corporation of India Ltd
- Sarangani Energy Corporation, Philippines
- Borneo Indobara - Indonesia
- ASAPP Information Group - India
- Straits Asia Resources Limited - Singapore
- Bhoruka Overseas - Indonesia
- Marubeni Corporation - India
- Latin American Coal - Colombia
- GMR Energy Limited - India
- Parry Sugars Refinery, India
- TeaM Sual Corporation - Philippines
- Siam City Cement - Thailand
- Tata Chemicals Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Global Green Power PLC Corporation, Philippines
- Malabar Cements Ltd - India
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- CNBM International Corporation - China
- Electricity Authority, New Zealand
- Wilmar Investment Holdings
- LBH Netherlands Bv - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Energy Development Corp, Philippines
- Dalmia Cement Bharat India
- Bulk Trading Sa - Switzerland
- Riau Bara Harum - Indonesia
- Vedanta Resources Plc - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Interocean Group of Companies - India
- Parliament of New Zealand
- Trasteel International SA, Italy
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- AsiaOL BioFuels Corp., Philippines
- Economic Council, Georgia
- Xindia Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Formosa Plastics Group - Taiwan
- Banpu Public Company Limited - Thailand
- Manunggal Multi Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- London Commodity Brokers - England
- Planning Commission, India
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- Australian Commodity Traders Exchange
- SMG Consultants - Indonesia
- Sindya Power Generating Company Private Ltd
- MS Steel International - UAE
- Cement Manufacturers Association - India
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kaltim Prima Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- San Jose City I Power Corp, Philippines
- Essar Steel Hazira Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Star Paper Mills Limited - India
- Bharathi Cement Corporation - India
- Medco Energi Mining Internasional
- Maheswari Brothers Coal Limited - India
- Mercator Lines Limited - India
- Goldman Sachs - Singapore
- Semirara Mining and Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Pendopo Energi Batubara - Indonesia
- Chamber of Mines of South Africa
- Indian Energy Exchange, India
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- Global Business Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Sree Jayajothi Cements Limited - India
- IHS Mccloskey Coal Group - USA
- Thai Mozambique Logistica
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Energy Link Ltd, New Zealand
- India Bulls Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Indika Energy - Indonesia
- Africa Commodities Group - South Africa
- PTC India Limited - India
- Salva Resources Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Thiess Contractors Indonesia
- Australian Coal Association
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
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