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