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