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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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Wednesday, 21 January 15
PANAMAX MARKET MOVED SIDEWAYS OVERALL LAST WEEK - INTERMODAL
COALspot.com: The positive sentiment in which the week prior ended carried on through-out last week as well, the end of which marked the first posi ...
Wednesday, 21 January 15
SHIFT IN INTERNATIONAL COAL TRADE TO THE PACIFIC BASIN WILL CONTINUE - IMF
COALspot.com: The shift in international coal trade to the Pacific Basin will continue, IMF said in its latest Medium-Term Coal Market Report.
...
Wednesday, 21 January 15
MARKET INSIGHT - VASSILIS LOGOTHETIS, INTERMODAL
The World Bank has lowered its forecast for global growth in 2015 to 3% down from its previous level of 3.4% amid rising concerns over the economic ...
Wednesday, 21 January 15
THERMAL COAL PRICE OUTLOOK DEPENDENT ON INDIAN IMPORT DEMAND - MATTHEW BOYLE, CRU
COALspot.com: Supply and demand side developments in India will be an important determinant of future market dynamics and prices for thermal coal a ...
Wednesday, 21 January 15
PORT OF NEWCASTLE COAL EXPORTS JUMP 16.19% ON MONTH TO 15.80 MIL MT IN DECEMBER' 14
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.136 billi ...
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- IHS Mccloskey Coal Group - USA
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Attock Cement Pakistan Limited
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- Vizag Seaport Private Limited - India
- Uttam Galva Steels Limited - India
- Africa Commodities Group - South Africa
- Chettinad Cement Corporation Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMG Consultants - Indonesia
- Global Coal Blending Company Limited - Australia
- Central Electricity Authority - India
- Kartika Selabumi Mining - Indonesia
- London Commodity Brokers - England
- Romanian Commodities Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vedanta Resources Plc - India
- Electricity Generating Authority of Thailand
- Kobexindo Tractors - Indoneisa
- Rio Tinto Coal - Australia
- Salva Resources Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Wilmar Investment Holdings
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- Oldendorff Carriers - Singapore
- Merrill Lynch Commodities Europe
- TNB Fuel Sdn Bhd - Malaysia
- ASAPP Information Group - India
- Borneo Indobara - Indonesia
- Essar Steel Hazira Ltd - India
- Ministry of Transport, Egypt
- Edison Trading Spa - Italy
- Madhucon Powers Ltd - India
- Chamber of Mines of South Africa
- Ambuja Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Orica Australia Pty. Ltd.
- Tata Chemicals Ltd - India
- PTC India Limited - India
- Georgia Ports Authority, United States
- Samtan Co., Ltd - South Korea
- Standard Chartered Bank - UAE
- Kepco SPC Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Ind-Barath Power Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- Trasteel International SA, Italy
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meenaskhi Energy Private Limited - India
- San Jose City I Power Corp, Philippines
- Meralco Power Generation, Philippines
- Therma Luzon, Inc, Philippines
- TeaM Sual Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- South Luzon Thermal Energy Corporation
- Power Finance Corporation Ltd., India
- Maheswari Brothers Coal Limited - India
- The Treasury - Australian Government
- Renaissance Capital - South Africa
- Videocon Industries ltd - India
- MS Steel International - UAE
- Neyveli Lignite Corporation Ltd, - India
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Parry Sugars Refinery, India
- Manunggal Multi Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Planning Commission, India
- Electricity Authority, New Zealand
- Jaiprakash Power Ventures ltd
- CNBM International Corporation - China
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- GMR Energy Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Goldman Sachs - Singapore
- The University of Queensland
- Aboitiz Power Corporation - Philippines
- Agrawal Coal Company - India
- Mjunction Services Limited - India
- Minerals Council of Australia
- Maharashtra Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Sree Jayajothi Cements Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Malabar Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Directorate Of Revenue Intelligence - India
- Bangladesh Power Developement Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asmin Koalindo Tuhup - Indonesia
- Mercator Lines Limited - India
- Siam City Cement - Thailand
- Coastal Gujarat Power Limited - India
- Dalmia Cement Bharat India
- Ministry of Mines - Canada
- India Bulls Power Limited - India
- Indika Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Latin American Coal - Colombia
- Economic Council, Georgia
- Thai Mozambique Logistica
- Bhatia International Limited - India
- Timah Investasi Mineral - Indoneisa
- Binh Thuan Hamico - Vietnam
- VISA Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Coalindo Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- The State Trading Corporation of India Ltd
- Jindal Steel & Power Ltd - India
- Central Java Power - Indonesia
- Xindia Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- SMC Global Power, Philippines
- Leighton Contractors Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Formosa Plastics Group - Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- Star Paper Mills Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- IEA Clean Coal Centre - UK
- Global Business Power Corporation, Philippines
- Coal and Oil Company - UAE
- Marubeni Corporation - India
- Mercuria Energy - Indonesia
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Petron Corporation, Philippines
- Deloitte Consulting - India
- Eastern Coal Council - USA
- Cement Manufacturers Association - India
- Orica Mining Services - Indonesia
- Sakthi Sugars Limited - India
- Grasim Industreis Ltd - India
- Carbofer General Trading SA - India
- Price Waterhouse Coopers - Russia
- Altura Mining Limited, Indonesia
- Sical Logistics Limited - India
- Bulk Trading Sa - Switzerland
- LBH Netherlands Bv - Netherlands
- Karaikal Port Pvt Ltd - India
- Larsen & Toubro Limited - India
- Straits Asia Resources Limited - Singapore
- SN Aboitiz Power Inc, Philippines
- Indian Oil Corporation Limited
- Savvy Resources Ltd - HongKong
- Wood Mackenzie - Singapore
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Sarangani Energy Corporation, Philippines
- Indonesian Coal Mining Association
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- Eastern Energy - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- Parliament of New Zealand
- McConnell Dowell - Australia
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- Independent Power Producers Association of India
- Krishnapatnam Port Company Ltd. - India
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
- Makarim & Taira - Indonesia
- European Bulk Services B.V. - Netherlands
- Kaltim Prima Coal - Indonesia
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- Heidelberg Cement - Germany
- Aditya Birla Group - India
- Posco Energy - South Korea
- Australian Coal Association
- Holcim Trading Pte Ltd - Singapore
- Energy Link Ltd, New Zealand
- GN Power Mariveles Coal Plant, Philippines
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