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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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Friday, 30 January 15
U.S. YEAR-TO-DATE COAL PRODUCTION REACHED 65.7 MMST
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.9 million short tons (mmst) of coal ...
Friday, 30 January 15
CAN BULKER CONVERSIONS SPOIL THE TANKER MARKET'S PARTY? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Oversupply of tonnage has always been in the back of the head of ship owners when it comes to taking advantage of favorable market conditions. As s ...
Thursday, 29 January 15
CHINA ENERGY DEMAND MUST BE REVIEWED DUE TO FUNDAMENTAL ECONOMIC CHANGES - WOOD MACKENZIE
New patterns emerging as energy demand growth decoupled significantly from GDP growth for the first time in 2014
Wood Mackenzie says 2014 was ...
Thursday, 29 January 15
CAPE MARKET IS STILL STRUGGLING WITH LOW DEMAND AND LOW COMMODITY PRICES
Handy
Supramax rates are heading south with slipping rates all across the block. USG activity is slow with mid-week levels in the mid 8.000s, Fea ...
Wednesday, 28 January 15
MARKET INSIGHT - STELIOS KOLLINTZAS
With most traders having returned to action from year end festivities, we have already seen signs of activity in the specialized product markets. L ...
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- Coalindo Energy - Indonesia
- Petron Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Binh Thuan Hamico - Vietnam
- Savvy Resources Ltd - HongKong
- Ministry of Finance - Indonesia
- Eastern Energy - Thailand
- Siam City Cement PLC, Thailand
- PetroVietnam Power Coal Import and Supply Company
- Renaissance Capital - South Africa
- The University of Queensland
- Holcim Trading Pte Ltd - Singapore
- Uttam Galva Steels Limited - India
- Orica Mining Services - Indonesia
- MS Steel International - UAE
- Anglo American - United Kingdom
- Independent Power Producers Association of India
- Energy Development Corp, Philippines
- Edison Trading Spa - Italy
- Sarangani Energy Corporation, Philippines
- Baramulti Group, Indonesia
- Metalloyd Limited - United Kingdom
- Commonwealth Bank - Australia
- Orica Australia Pty. Ltd.
- Manunggal Multi Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Aboitiz Power Corporation - Philippines
- Rio Tinto Coal - Australia
- Sree Jayajothi Cements Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- London Commodity Brokers - England
- Krishnapatnam Port Company Ltd. - India
- Karbindo Abesyapradhi - Indoneisa
- Meenaskhi Energy Private Limited - India
- Heidelberg Cement - Germany
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Star Paper Mills Limited - India
- Ind-Barath Power Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Lanco Infratech Ltd - India
- Merrill Lynch Commodities Europe
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement - Thailand
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Xindia Steels Limited - India
- Altura Mining Limited, Indonesia
- Bharathi Cement Corporation - India
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Latin American Coal - Colombia
- Mercator Lines Limited - India
- Indika Energy - Indonesia
- Goldman Sachs - Singapore
- Central Java Power - Indonesia
- Videocon Industries ltd - India
- Trasteel International SA, Italy
- Economic Council, Georgia
- Simpson Spence & Young - Indonesia
- Oldendorff Carriers - Singapore
- PNOC Exploration Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
- Cigading International Bulk Terminal - Indonesia
- The Treasury - Australian Government
- Aditya Birla Group - India
- Central Electricity Authority - India
- Carbofer General Trading SA - India
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Minerals Council of Australia
- Coastal Gujarat Power Limited - India
- Interocean Group of Companies - India
- Chettinad Cement Corporation Ltd - India
- San Jose City I Power Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Australian Commodity Traders Exchange
- Australian Coal Association
- Bahari Cakrawala Sebuku - Indonesia
- Formosa Plastics Group - Taiwan
- Posco Energy - South Korea
- White Energy Company Limited
- Bangladesh Power Developement Board
- LBH Netherlands Bv - Netherlands
- VISA Power Limited - India
- Indian Energy Exchange, India
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rashtriya Ispat Nigam Limited - India
- Tamil Nadu electricity Board
- Bukit Baiduri Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Wood Mackenzie - Singapore
- South Luzon Thermal Energy Corporation
- TNB Fuel Sdn Bhd - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PTC India Limited - India
- Chamber of Mines of South Africa
- Tata Chemicals Ltd - India
- Electricity Authority, New Zealand
- Africa Commodities Group - South Africa
- Timah Investasi Mineral - Indoneisa
- Indo Tambangraya Megah - Indonesia
- India Bulls Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Kapuas Tunggal Persada - Indonesia
- Global Green Power PLC Corporation, Philippines
- Coal and Oil Company - UAE
- Vijayanagar Sugar Pvt Ltd - India
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Grasim Industreis Ltd - India
- Global Business Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Kartika Selabumi Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Singapore Mercantile Exchange
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Sakthi Sugars Limited - India
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- Vedanta Resources Plc - India
- Eastern Coal Council - USA
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bhushan Steel Limited - India
- Gujarat Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Energy Link Ltd, New Zealand
- Semirara Mining Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- Marubeni Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Bulk Trading Sa - Switzerland
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Makarim & Taira - Indonesia
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thiess Contractors Indonesia
- Ambuja Cements Ltd - India
- Wilmar Investment Holdings
- The State Trading Corporation of India Ltd
- Sical Logistics Limited - India
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Meralco Power Generation, Philippines
- Parliament of New Zealand
- Banpu Public Company Limited - Thailand
- Antam Resourcindo - Indonesia
- Salva Resources Pvt Ltd - India
- Ministry of Mines - Canada
- Kohat Cement Company Ltd. - Pakistan
- Riau Bara Harum - Indonesia
- IHS Mccloskey Coal Group - USA
- Power Finance Corporation Ltd., India
- Directorate Of Revenue Intelligence - India
- Maheswari Brothers Coal Limited - India
- Attock Cement Pakistan Limited
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- Therma Luzon, Inc, Philippines
- McConnell Dowell - Australia
- Madhucon Powers Ltd - India
- Cement Manufacturers Association - India
- Price Waterhouse Coopers - Russia
- Bhatia International Limited - India
- Agrawal Coal Company - India
- Parry Sugars Refinery, India
- Borneo Indobara - Indonesia
- Jindal Steel & Power Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Deloitte Consulting - India
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- Barasentosa Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Transport, Egypt
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- Kumho Petrochemical, South Korea
- Asmin Koalindo Tuhup - Indonesia
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