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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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Tuesday, 20 January 15
INDIA TO SURPASS THE UNITED STATES AND BECOME THE SECOND-LARGEST COAL CONSUMER IN THE WORLD BY 2019 - IMF
COALspot.com: In 2013, coal added more primary energy than any other fuel and was the fastest-growing fossil fuel, enhancing its position as the se ...
Tuesday, 20 January 15
INDONESIAN COAL OUTPUT SEEN RISING, DESPITE FALL IN ITS PRICE
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 declined month on month and week over week, but Indonesian Coal Output Seen Rising. T ...
Tuesday, 20 January 15
NEWCASTLE COAL SWAP FOR Q1' 2015 DELIVERY DECLINED 2.83% M-O-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery declined US$ 1.45 per MT (-2.83%) month over month and US$ 0.50 (-0.99%) we ...
Monday, 19 January 15
HBA FALL TO FRESH LOWS; COAL OVERSUPPLY WILL CONTINUE TO PUSH PRICE DOWN
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down Indonesian coal bench mark price this month to US$ 63.84. T ...
Monday, 19 January 15
CFR SOUTH CHINA COAL SWAPS REMAIN WEAK
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined US$ 3.37 (-5.63%) per MT month over month and US$ 0.74 (-1.29%) ...
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- Jindal Steel & Power Ltd - India
- Kartika Selabumi Mining - Indonesia
- PTC India Limited - India
- Goldman Sachs - Singapore
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Power Finance Corporation Ltd., India
- Orica Australia Pty. Ltd.
- Holcim Trading Pte Ltd - Singapore
- Parry Sugars Refinery, India
- Kalimantan Lumbung Energi - Indonesia
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Altura Mining Limited, Indonesia
- Simpson Spence & Young - Indonesia
- Bhoruka Overseas - Indonesia
- New Zealand Coal & Carbon
- The Treasury - Australian Government
- Gujarat Sidhee Cement - India
- Bahari Cakrawala Sebuku - Indonesia
- Meenaskhi Energy Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kepco SPC Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Uttam Galva Steels Limited - India
- Electricity Generating Authority of Thailand
- IEA Clean Coal Centre - UK
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- CNBM International Corporation - China
- Minerals Council of Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Savvy Resources Ltd - HongKong
- San Jose City I Power Corp, Philippines
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- TeaM Sual Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Mercator Lines Limited - India
- GVK Power & Infra Limited - India
- Bhatia International Limited - India
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- Directorate Of Revenue Intelligence - India
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Indo Tambangraya Megah - Indonesia
- Chettinad Cement Corporation Ltd - India
- Kumho Petrochemical, South Korea
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- Wilmar Investment Holdings
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- ASAPP Information Group - India
- India Bulls Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- Eastern Energy - Thailand
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- The State Trading Corporation of India Ltd
- Jorong Barutama Greston.PT - Indonesia
- Romanian Commodities Exchange
- VISA Power Limited - India
- Meralco Power Generation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Medco Energi Mining Internasional
- MS Steel International - UAE
- Carbofer General Trading SA - India
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- Port Waratah Coal Services - Australia
- PowerSource Philippines DevCo
- Siam City Cement - Thailand
- McConnell Dowell - Australia
- Aditya Birla Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Attock Cement Pakistan Limited
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Therma Luzon, Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Coalindo Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Baramulti Group, Indonesia
- Borneo Indobara - Indonesia
- Interocean Group of Companies - India
- Global Business Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Ministry of Mines - Canada
- Xindia Steels Limited - India
- GMR Energy Limited - India
- Intertek Mineral Services - Indonesia
- Central Java Power - Indonesia
- CIMB Investment Bank - Malaysia
- Singapore Mercantile Exchange
- Agrawal Coal Company - India
- Jaiprakash Power Ventures ltd
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- Parliament of New Zealand
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- Anglo American - United Kingdom
- Bangladesh Power Developement Board
- Vizag Seaport Private Limited - India
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- Ministry of Finance - Indonesia
- LBH Netherlands Bv - Netherlands
- Kideco Jaya Agung - Indonesia
- Cement Manufacturers Association - India
- Sarangani Energy Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Barasentosa Lestari - Indonesia
- Edison Trading Spa - Italy
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- Alfred C Toepfer International GmbH - Germany
- Ind-Barath Power Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Billiton Holdings Pty Ltd - Australia
- London Commodity Brokers - England
- Global Green Power PLC Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- Australian Commodity Traders Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Larsen & Toubro Limited - India
- Tamil Nadu electricity Board
- Ambuja Cements Ltd - India
- Samtan Co., Ltd - South Korea
- SMC Global Power, Philippines
- Siam City Cement PLC, Thailand
- SMG Consultants - Indonesia
- Toyota Tsusho Corporation, Japan
- Electricity Authority, New Zealand
- ICICI Bank Limited - India
- Sree Jayajothi Cements Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sakthi Sugars Limited - India
- Energy Development Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Tata Chemicals Ltd - India
- The University of Queensland
- Australian Coal Association
- Malabar Cements Ltd - India
- Ministry of Transport, Egypt
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Dalmia Cement Bharat India
- Bukit Baiduri Energy - Indonesia
- Commonwealth Bank - Australia
- Chamber of Mines of South Africa
- Gujarat Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Formosa Plastics Group - Taiwan
- Timah Investasi Mineral - Indoneisa
- Bhushan Steel Limited - India
- Deloitte Consulting - India
- White Energy Company Limited
- Planning Commission, India
- Marubeni Corporation - India
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- European Bulk Services B.V. - Netherlands
- Central Electricity Authority - India
- Posco Energy - South Korea
- Petron Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Makmur.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- Renaissance Capital - South Africa
- Sinarmas Energy and Mining - Indonesia
- Lanco Infratech Ltd - India
- Standard Chartered Bank - UAE
- Mercuria Energy - Indonesia
- Madhucon Powers Ltd - India
- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Coal Council - USA
- Trasteel International SA, Italy
- Thai Mozambique Logistica
- Binh Thuan Hamico - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maharashtra Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Heidelberg Cement - Germany
- Global Coal Blending Company Limited - Australia
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