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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, 26 January 15
API 8 CFR SOUTH CHINA COAL SWAP CONTINUE TO SLIDE M-O-M; ROSE W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined US$ 0.79 (-1.33%) per MT month over month and gained US$ 2.10&nb ...
Sunday, 25 January 15
PANAMAX FREIGHT RATES STILL FALLING
COALspot.com: The BDI was slightly down this week to 720 points. The BDI lost 2.83 pct week on week.
The cape index continued its upward trend ...
Friday, 23 January 15
U.S. WEEKLY COAL PRODUCTION FOR WEEK ENDING JAN. 17 UP 2.5%
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.4 million short tons (mmst) of coal ...
Thursday, 22 January 15
PANAMAX: A SOFTER TONE AND OVERALL A SLUGGISH MARKET - FEARNLEYS
Handy
The handy and supra market has experienced yet another week with slow activity and softening rates in both hemispheres, broker Fearnleys AS ...
Thursday, 22 January 15
BUMI RESOURCES POSTS NET INCOME OF $13.3 MILLION 9M-2014
COALspot.com: Bumi Resources, Indonesia’s largest coal miner, reported today that, the company has recorded a net income of $13.3 million for ...
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- Star Paper Mills Limited - India
- Uttam Galva Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Aditya Birla Group - India
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Wood Mackenzie - Singapore
- Planning Commission, India
- OPG Power Generation Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Thiess Contractors Indonesia
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- Minerals Council of Australia
- Sojitz Corporation - Japan
- Independent Power Producers Association of India
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Attock Cement Pakistan Limited
- Kumho Petrochemical, South Korea
- Bulk Trading Sa - Switzerland
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Medco Energi Mining Internasional
- Billiton Holdings Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- Ministry of Transport, Egypt
- Chamber of Mines of South Africa
- Wilmar Investment Holdings
- Vijayanagar Sugar Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Mjunction Services Limited - India
- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- LBH Netherlands Bv - Netherlands
- Riau Bara Harum - Indonesia
- SMC Global Power, Philippines
- Kideco Jaya Agung - Indonesia
- Electricity Generating Authority of Thailand
- Rashtriya Ispat Nigam Limited - India
- AsiaOL BioFuels Corp., Philippines
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- Grasim Industreis Ltd - India
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- Parry Sugars Refinery, India
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- IHS Mccloskey Coal Group - USA
- Kapuas Tunggal Persada - Indonesia
- Carbofer General Trading SA - India
- MS Steel International - UAE
- Banpu Public Company Limited - Thailand
- Petron Corporation, Philippines
- Electricity Authority, New Zealand
- Sindya Power Generating Company Private Ltd
- Bhoruka Overseas - Indonesia
- Latin American Coal - Colombia
- Bharathi Cement Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Posco Energy - South Korea
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Samtan Co., Ltd - South Korea
- Global Green Power PLC Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Vedanta Resources Plc - India
- Sree Jayajothi Cements Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Gujarat Sidhee Cement - India
- Tata Chemicals Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Savvy Resources Ltd - HongKong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TeaM Sual Corporation - Philippines
- Energy Development Corp, Philippines
- Standard Chartered Bank - UAE
- Kaltim Prima Coal - Indonesia
- Madhucon Powers Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- VISA Power Limited - India
- Australian Commodity Traders Exchange
- ICICI Bank Limited - India
- CNBM International Corporation - China
- Indian Oil Corporation Limited
- Kohat Cement Company Ltd. - Pakistan
- London Commodity Brokers - England
- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
- Essar Steel Hazira Ltd - India
- Bhushan Steel Limited - India
- Sical Logistics Limited - India
- Heidelberg Cement - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Trasteel International SA, Italy
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- PowerSource Philippines DevCo
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- Commonwealth Bank - Australia
- Merrill Lynch Commodities Europe
- Alfred C Toepfer International GmbH - Germany
- Asmin Koalindo Tuhup - Indonesia
- San Jose City I Power Corp, Philippines
- Bhatia International Limited - India
- The University of Queensland
- Australian Coal Association
- PetroVietnam Power Coal Import and Supply Company
- Cigading International Bulk Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- Parliament of New Zealand
- Xindia Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- India Bulls Power Limited - India
- Videocon Industries ltd - India
- Pendopo Energi Batubara - Indonesia
- Siam City Cement - Thailand
- Thai Mozambique Logistica
- Altura Mining Limited, Indonesia
- Mercuria Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Romanian Commodities Exchange
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Cement Manufacturers Association - India
- Coal and Oil Company - UAE
- Price Waterhouse Coopers - Russia
- Metalloyd Limited - United Kingdom
- Meralco Power Generation, Philippines
- Bangladesh Power Developement Board
- Tamil Nadu electricity Board
- Straits Asia Resources Limited - Singapore
- Edison Trading Spa - Italy
- Borneo Indobara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Ambuja Cements Ltd - India
- Antam Resourcindo - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Jindal Steel & Power Ltd - India
- Makarim & Taira - Indonesia
- Lanco Infratech Ltd - India
- Sarangani Energy Corporation, Philippines
- PTC India Limited - India
- Indogreen Group - Indonesia
- Baramulti Group, Indonesia
- ASAPP Information Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Georgia Ports Authority, United States
- Central Java Power - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Indo Tambangraya Megah - Indonesia
- Mintek Dendrill Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- Rio Tinto Coal - Australia
- Coastal Gujarat Power Limited - India
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- The Treasury - Australian Government
- Coalindo Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- New Zealand Coal & Carbon
- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- Interocean Group of Companies - India
- GMR Energy Limited - India
- Global Business Power Corporation, Philippines
- Indika Energy - Indonesia
- Economic Council, Georgia
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- Indonesian Coal Mining Association
- Renaissance Capital - South Africa
- Kalimantan Lumbung Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Marubeni Corporation - India
- Malabar Cements Ltd - India
- Barasentosa Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercator Lines Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Orica Australia Pty. Ltd.
- Africa Commodities Group - South Africa
- Globalindo Alam Lestari - Indonesia
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