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