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