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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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Monday, 02 February 15
INDONESIA'S ADARO ENERGY PRODUCED 56.21 MILLION TONNES OF COAL IN 2014; UP 8% Y-O-Y
COALspot.com: PT. Adaro Energy, Indonesia’s largest coal producer, has increased coal production by 8% to 56.21 million tonnes (Mt) from both ...
Monday, 02 February 15
API 8 CFR SOUTH CHINA COAL SWAP PICKS UP W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined US$ 0.81 (-1.36%) per MT month over month and gained US$ 0.18&nb ...
Monday, 02 February 15
SOUTH KOREA'S KOMIPO INVITES BIDS FOR 280K MT OF SUB-BITUMINOUS COAL
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender to buy total 280,000 MT of Sub-bituminous coal coa ...
Sunday, 01 February 15
INDONESIA-TO-INDIA COAL FREIGHT RATES REMAIN WEAK NEXT WEEK
COALspot.com: The BDI continued its fall reached lowest levels since 1986 this week.
The BDI declined 15.55 pct to 608 points on Friday 30, Ja ...
Friday, 30 January 15
CONTANGO AND TANKERS - SKULD
KNOWLEDGE TO ELEVATE
Like an invitation to a dance, the word contango may have some people flustered, but for tanker owners this market phenome ...
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- Ministry of Finance - Indonesia
- The Treasury - Australian Government
- Videocon Industries ltd - India
- Alfred C Toepfer International GmbH - Germany
- Kobexindo Tractors - Indoneisa
- New Zealand Coal & Carbon
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- OPG Power Generation Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Coastal Gujarat Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Orica Mining Services - Indonesia
- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMC Global Power, Philippines
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Agrawal Coal Company - India
- Georgia Ports Authority, United States
- Marubeni Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Vizag Seaport Private Limited - India
- Kaltim Prima Coal - Indonesia
- White Energy Company Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meralco Power Generation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- Romanian Commodities Exchange
- ASAPP Information Group - India
- Bhoruka Overseas - Indonesia
- Riau Bara Harum - Indonesia
- Eastern Energy - Thailand
- Sinarmas Energy and Mining - Indonesia
- ICICI Bank Limited - India
- The State Trading Corporation of India Ltd
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- Anglo American - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Medco Energi Mining Internasional
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- Chamber of Mines of South Africa
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- Billiton Holdings Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Electricity Authority, New Zealand
- Commonwealth Bank - Australia
- Sree Jayajothi Cements Limited - India
- TeaM Sual Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Intertek Mineral Services - Indonesia
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Sarangani Energy Corporation, Philippines
- Thiess Contractors Indonesia
- International Coal Ventures Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Ambuja Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coal and Oil Company - UAE
- Carbofer General Trading SA - India
- Parry Sugars Refinery, India
- Globalindo Alam Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Australian Coal Association
- Orica Australia Pty. Ltd.
- AsiaOL BioFuels Corp., Philippines
- Bukit Baiduri Energy - Indonesia
- Coalindo Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Goldman Sachs - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Mintek Dendrill Indonesia
- Wilmar Investment Holdings
- GAC Shipping (India) Pvt Ltd
- Jindal Steel & Power Ltd - India
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- Interocean Group of Companies - India
- Vedanta Resources Plc - India
- Energy Development Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- Savvy Resources Ltd - HongKong
- Leighton Contractors Pty Ltd - Australia
- Petron Corporation, Philippines
- Lanco Infratech Ltd - India
- Global Green Power PLC Corporation, Philippines
- Ministry of Transport, Egypt
- Indian Oil Corporation Limited
- Bangladesh Power Developement Board
- Price Waterhouse Coopers - Russia
- Madhucon Powers Ltd - India
- Maheswari Brothers Coal Limited - India
- Thai Mozambique Logistica
- Independent Power Producers Association of India
- Iligan Light & Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Dalmia Cement Bharat India
- Formosa Plastics Group - Taiwan
- PTC India Limited - India
- Latin American Coal - Colombia
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Binh Thuan Hamico - Vietnam
- GVK Power & Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
- Kideco Jaya Agung - Indonesia
- CNBM International Corporation - China
- Star Paper Mills Limited - India
- GMR Energy Limited - India
- VISA Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- San Jose City I Power Corp, Philippines
- Standard Chartered Bank - UAE
- Bayan Resources Tbk. - Indonesia
- Port Waratah Coal Services - Australia
- Parliament of New Zealand
- Oldendorff Carriers - Singapore
- Altura Mining Limited, Indonesia
- Central Electricity Authority - India
- Indian Energy Exchange, India
- Kumho Petrochemical, South Korea
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Australian Commodity Traders Exchange
- Wood Mackenzie - Singapore
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Minerals Council of Australia
- Heidelberg Cement - Germany
- Tamil Nadu electricity Board
- Posco Energy - South Korea
- Siam City Cement - Thailand
- IHS Mccloskey Coal Group - USA
- Ministry of Mines - Canada
- Indonesian Coal Mining Association
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- MS Steel International - UAE
- PetroVietnam Power Coal Import and Supply Company
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Malabar Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- Grasim Industreis Ltd - India
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Jaiprakash Power Ventures ltd
- Indika Energy - Indonesia
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- Larsen & Toubro Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- The University of Queensland
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Planning Commission, India
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Baramulti Group, Indonesia
- Borneo Indobara - Indonesia
- Salva Resources Pvt Ltd - India
- Gujarat Sidhee Cement - India
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- Semirara Mining Corp, Philippines
- Merrill Lynch Commodities Europe
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Electricity Generating Authority of Thailand
- Barasentosa Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Neyveli Lignite Corporation Ltd, - India
- Ind-Barath Power Infra Limited - India
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- Bhushan Steel Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Bhatia International Limited - India
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