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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, 05 February 15
ULTRAMAX LEVELS FROM INDIA TO CHINA IN THE MID US$ 5000'S - FEARNLEYS AS
Handy
Despite the overall weak sentiment, there is a scent of optimism in the Atlantic market for ppt dates. Continent is still struggling with o ...
Wednesday, 04 February 15
MARKET INSIGHT - LINOS KOGEVINAS
It has been just about over 2 months since, in a move that surprised many and caused widespread apprehension, OPEC decided to maintain its producti ...
Tuesday, 03 February 15
Q1'15 FOB INDONESIA COAL SWAP CLOSED $ 3.29 HIGHER COMPARED TO Q4'15 DELIVERY PRICE
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 rose week over week and month on month.
The Q1 swap up US$ 0.68 (+1.41%) month o ...
Tuesday, 03 February 15
FOB NEWCASTLE COAL SWAP FOR Q4 DELIVERY CLOSED 5.86% LOWER THAN Q1 PRICE
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery rose US$ 0.26 per MT (+0.51%) week over week and declined US$ 0.02 (-0.04%) ...
Monday, 02 February 15
API 4 FOB RICHARDS BAY COAL SWAP ROSE WEEK OVER WEEK
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 declined month over month and day on day.
The Q1 swap has decli ...
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- MS Steel International - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Global Business Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Uttam Galva Steels Limited - India
- Coal and Oil Company - UAE
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- Grasim Industreis Ltd - India
- Intertek Mineral Services - Indonesia
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Kaltim Prima Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Salva Resources Pvt Ltd - India
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- Wilmar Investment Holdings
- Indo Tambangraya Megah - Indonesia
- Wood Mackenzie - Singapore
- The University of Queensland
- Indika Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Ministry of Finance - Indonesia
- Xindia Steels Limited - India
- Antam Resourcindo - Indonesia
- New Zealand Coal & Carbon
- Singapore Mercantile Exchange
- Bhatia International Limited - India
- Straits Asia Resources Limited - Singapore
- SMC Global Power, Philippines
- Simpson Spence & Young - Indonesia
- GMR Energy Limited - India
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- Heidelberg Cement - Germany
- Goldman Sachs - Singapore
- CIMB Investment Bank - Malaysia
- Chamber of Mines of South Africa
- Oldendorff Carriers - Singapore
- Economic Council, Georgia
- Thai Mozambique Logistica
- Neyveli Lignite Corporation Ltd, - India
- Baramulti Group, Indonesia
- Savvy Resources Ltd - HongKong
- Renaissance Capital - South Africa
- Indian Energy Exchange, India
- Bhoruka Overseas - Indonesia
- Central Java Power - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Ind-Barath Power Infra Limited - India
- Ministry of Transport, Egypt
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Bukit Makmur.PT - Indonesia
- Madhucon Powers Ltd - India
- Electricity Authority, New Zealand
- Iligan Light & Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Carbofer General Trading SA - India
- Banpu Public Company Limited - Thailand
- Ministry of Mines - Canada
- LBH Netherlands Bv - Netherlands
- Coalindo Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- GAC Shipping (India) Pvt Ltd
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- Cement Manufacturers Association - India
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- Mercator Lines Limited - India
- Edison Trading Spa - Italy
- Mercuria Energy - Indonesia
- Gujarat Sidhee Cement - India
- Australian Coal Association
- Vijayanagar Sugar Pvt Ltd - India
- Vedanta Resources Plc - India
- South Luzon Thermal Energy Corporation
- Parliament of New Zealand
- Meralco Power Generation, Philippines
- Kobexindo Tractors - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asmin Koalindo Tuhup - Indonesia
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- McConnell Dowell - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- Bulk Trading Sa - Switzerland
- Eastern Coal Council - USA
- Meenaskhi Energy Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Medco Energi Mining Internasional
- Barasentosa Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vizag Seaport Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- Electricity Generating Authority of Thailand
- Bayan Resources Tbk. - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
- Commonwealth Bank - Australia
- Bangladesh Power Developement Board
- ASAPP Information Group - India
- Kapuas Tunggal Persada - Indonesia
- Binh Thuan Hamico - Vietnam
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- PowerSource Philippines DevCo
- GN Power Mariveles Coal Plant, Philippines
- Independent Power Producers Association of India
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Miang Besar Coal Terminal - Indonesia
- Latin American Coal - Colombia
- Pendopo Energi Batubara - Indonesia
- Larsen & Toubro Limited - India
- Petron Corporation, Philippines
- Formosa Plastics Group - Taiwan
- VISA Power Limited - India
- Siam City Cement PLC, Thailand
- Gujarat Mineral Development Corp Ltd - India
- Bhushan Steel Limited - India
- Star Paper Mills Limited - India
- Posco Energy - South Korea
- Essar Steel Hazira Ltd - India
- IHS Mccloskey Coal Group - USA
- Aditya Birla Group - India
- Sindya Power Generating Company Private Ltd
- Deloitte Consulting - India
- Minerals Council of Australia
- Planning Commission, India
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- ICICI Bank Limited - India
- Maheswari Brothers Coal Limited - India
- Aboitiz Power Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Price Waterhouse Coopers - Russia
- Semirara Mining Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- Jindal Steel & Power Ltd - India
- Makarim & Taira - Indonesia
- Sojitz Corporation - Japan
- GVK Power & Infra Limited - India
- Bharathi Cement Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- Tamil Nadu electricity Board
- PetroVietnam Power Coal Import and Supply Company
- Standard Chartered Bank - UAE
- Africa Commodities Group - South Africa
- Directorate Of Revenue Intelligence - India
- White Energy Company Limited
- Energy Development Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Kartika Selabumi Mining - Indonesia
- Indonesian Coal Mining Association
- Marubeni Corporation - India
- San Jose City I Power Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Port Waratah Coal Services - Australia
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- Kalimantan Lumbung Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Electricity Authority - India
- Sakthi Sugars Limited - India
- Indogreen Group - Indonesia
- TeaM Sual Corporation - Philippines
- Sical Logistics Limited - India
- International Coal Ventures Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Thiess Contractors Indonesia
- Kepco SPC Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- Karaikal Port Pvt Ltd - India
- Mjunction Services Limited - India
- Orica Australia Pty. Ltd.
- Power Finance Corporation Ltd., India
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Kumho Petrochemical, South Korea
- India Bulls Power Limited - India
- Videocon Industries ltd - India
- Altura Mining Limited, Indonesia
- Interocean Group of Companies - India
- Orica Mining Services - Indonesia
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