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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, 19 January 15
FOB RICHARDS BAY COAL SWAP FOR Q4 DELIVERY CLOSED 4% LOWER THAN Q1 DELIVERY PRICE
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 declined month over month and week over week.
The Q1 swap has f ...
Sunday, 18 January 15
INDONESIA TO INDIA SUPRAMAX FREIGHT RATES ARE EXPECTED TO REMAIN WEAK NEXT WEEK
COALspot.com: The BDI was up 4.51 pct week on week on Friday 16, January 2015. The BDI closed at 741 points on this Friday after gaining arou ...
Friday, 16 January 15
U.S. WEEKLY COAL PRODUCTION UP 7.3% W-O-W
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.9 million short tons (mmst) of coal ...
Thursday, 15 January 15
PANAMAX : MARKET CONTINUE ON LOW PACE - FEARNLEYS
Handy
On a general basis we can say that rates are softening in both hemispheres. Although for some specific trades we can see premiums being ach ...
Thursday, 15 January 15
LOW CASH COSTS, GOOD LIQUIDITY HELP ASIAN OIL COMPANIES IN PRICE ROUT - FITCH
Fitch Ratings says that rated oil and gas production companies in Asia can comfortably operate under low oil prices for some time given their gener ...
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- Global Coal Blending Company Limited - Australia
- PetroVietnam Power Coal Import and Supply Company
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Coal Association
- Jorong Barutama Greston.PT - Indonesia
- Sical Logistics Limited - India
- McConnell Dowell - Australia
- Maharashtra Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Australian Commodity Traders Exchange
- Edison Trading Spa - Italy
- Tata Chemicals Ltd - India
- CIMB Investment Bank - Malaysia
- Mercator Lines Limited - India
- Manunggal Multi Energi - Indonesia
- Parliament of New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- Metalloyd Limited - United Kingdom
- Latin American Coal - Colombia
- Binh Thuan Hamico - Vietnam
- Wood Mackenzie - Singapore
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement - Thailand
- Indian Energy Exchange, India
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Makmur.PT - Indonesia
- Africa Commodities Group - South Africa
- SN Aboitiz Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- International Coal Ventures Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Global Business Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- Billiton Holdings Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Kepco SPC Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Posco Energy - South Korea
- Energy Link Ltd, New Zealand
- Iligan Light & Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Sindya Power Generating Company Private Ltd
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- Therma Luzon, Inc, Philippines
- Ministry of Transport, Egypt
- Kohat Cement Company Ltd. - Pakistan
- VISA Power Limited - India
- Wilmar Investment Holdings
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- European Bulk Services B.V. - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- Oldendorff Carriers - Singapore
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- Alfred C Toepfer International GmbH - Germany
- Uttam Galva Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Altura Mining Limited, Indonesia
- Energy Development Corp, Philippines
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- India Bulls Power Limited - India
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Marubeni Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Barasentosa Lestari - Indonesia
- Indogreen Group - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Georgia Ports Authority, United States
- Antam Resourcindo - Indonesia
- Electricity Authority, New Zealand
- Singapore Mercantile Exchange
- Pendopo Energi Batubara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Dalmia Cement Bharat India
- Coal and Oil Company - UAE
- PTC India Limited - India
- Grasim Industreis Ltd - India
- South Luzon Thermal Energy Corporation
- Power Finance Corporation Ltd., India
- Tamil Nadu electricity Board
- IHS Mccloskey Coal Group - USA
- New Zealand Coal & Carbon
- Krishnapatnam Port Company Ltd. - India
- PowerSource Philippines DevCo
- Pipit Mutiara Jaya. PT, Indonesia
- Parry Sugars Refinery, India
- Savvy Resources Ltd - HongKong
- Central Electricity Authority - India
- Orica Mining Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cement Manufacturers Association - India
- Samtan Co., Ltd - South Korea
- Directorate Of Revenue Intelligence - India
- Indika Energy - Indonesia
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- Jindal Steel & Power Ltd - India
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- CNBM International Corporation - China
- Renaissance Capital - South Africa
- Kaltim Prima Coal - Indonesia
- The Treasury - Australian Government
- Coalindo Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Kapuas Tunggal Persada - Indonesia
- GMR Energy Limited - India
- Interocean Group of Companies - India
- Gujarat Sidhee Cement - India
- Maheswari Brothers Coal Limited - India
- Jaiprakash Power Ventures ltd
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Formosa Plastics Group - Taiwan
- Borneo Indobara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Asmin Koalindo Tuhup - Indonesia
- SMC Global Power, Philippines
- Sakthi Sugars Limited - India
- Simpson Spence & Young - Indonesia
- Ministry of Finance - Indonesia
- Kobexindo Tractors - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Vizag Seaport Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Aboitiz Power Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Ambuja Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- Bahari Cakrawala Sebuku - Indonesia
- Trasteel International SA, Italy
- White Energy Company Limited
- Sojitz Corporation - Japan
- Sarangani Energy Corporation, Philippines
- Medco Energi Mining Internasional
- Vedanta Resources Plc - India
- Siam City Cement PLC, Thailand
- Bangladesh Power Developement Board
- Xindia Steels Limited - India
- Attock Cement Pakistan Limited
- Sinarmas Energy and Mining - Indonesia
- Standard Chartered Bank - UAE
- Bhoruka Overseas - Indonesia
- GVK Power & Infra Limited - India
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- ASAPP Information Group - India
- Economic Council, Georgia
- Romanian Commodities Exchange
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- Electricity Generating Authority of Thailand
- Mercuria Energy - Indonesia
- Kumho Petrochemical, South Korea
- PNOC Exploration Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Independent Power Producers Association of India
- Deloitte Consulting - India
- Indo Tambangraya Megah - Indonesia
- Ministry of Mines - Canada
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- Globalindo Alam Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Baiduri Energy - Indonesia
- The University of Queensland
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
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