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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, 14 January 15
DRY BULK MARKET NOTED ANOTHER WEEKLY DECLINE - INTERMODAL
COALspot.com: The Dry bulk market noted another weekly decline on Friday, with the performance of the Capesize market still weighing down on the re ...
Wednesday, 14 January 15
MARKET INSIGHT - TIMOS PAPADIMITRIOU
In Oil we trust! The Barrel price has declined by almost a third in comparison to the 2014 January and has being on the downhill since early last s ...
Wednesday, 14 January 15
COMMODITIES AREN'T PRIMED FOR A REBOUND DURING 2015: SHIPPING COULD BENEFIT FROM LOWER PRICES - ROUSSANOGLOU, HELLENIC SHIPPING NEWS
In the recent past, higher commodity prices were driven by an increase in demand from developing countries, which spelled good news for ship owners ...
Wednesday, 14 January 15
SUB-BIT FOB INDONESIA COAL SWAP FOR Q1 DELIVERY CLOSED AT US$ 46.97 PMT
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 declined month on month and week over week.
The Q1 swap has fell US$ 1.53 (-3.15 ...
Wednesday, 14 January 15
Q4' 15 FOB NEWCASTLE COAL SWAP CLOSED 4.51% LOWER COMPARED TO Q1' 15 PRICE
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.56 per MT (-3.0%) month over month and US$ 1.03 (-2.0%) week ove ...
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- TNB Fuel Sdn Bhd - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Indogreen Group - Indonesia
- Indo Tambangraya Megah - Indonesia
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- Miang Besar Coal Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Indian Oil Corporation Limited
- Oldendorff Carriers - Singapore
- Barasentosa Lestari - Indonesia
- Lanco Infratech Ltd - India
- India Bulls Power Limited - India
- Goldman Sachs - Singapore
- Australian Commodity Traders Exchange
- Sical Logistics Limited - India
- Timah Investasi Mineral - Indoneisa
- SMC Global Power, Philippines
- Merrill Lynch Commodities Europe
- Savvy Resources Ltd - HongKong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parry Sugars Refinery, India
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- Agrawal Coal Company - India
- Sakthi Sugars Limited - India
- Trasteel International SA, Italy
- Cigading International Bulk Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Port Waratah Coal Services - Australia
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- GMR Energy Limited - India
- Sree Jayajothi Cements Limited - India
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- Iligan Light & Power Inc, Philippines
- Dalmia Cement Bharat India
- LBH Netherlands Bv - Netherlands
- The University of Queensland
- Riau Bara Harum - Indonesia
- CIMB Investment Bank - Malaysia
- Eastern Energy - Thailand
- Essar Steel Hazira Ltd - India
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
- Samtan Co., Ltd - South Korea
- Planning Commission, India
- Jindal Steel & Power Ltd - India
- Georgia Ports Authority, United States
- Electricity Generating Authority of Thailand
- Kalimantan Lumbung Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- New Zealand Coal & Carbon
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- Renaissance Capital - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Ministry of Transport, Egypt
- Africa Commodities Group - South Africa
- Kapuas Tunggal Persada - Indonesia
- Altura Mining Limited, Indonesia
- Wilmar Investment Holdings
- Price Waterhouse Coopers - Russia
- AsiaOL BioFuels Corp., Philippines
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Straits Asia Resources Limited - Singapore
- GVK Power & Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Wood Mackenzie - Singapore
- IEA Clean Coal Centre - UK
- OPG Power Generation Pvt Ltd - India
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- Intertek Mineral Services - Indonesia
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Indian Energy Exchange, India
- Krishnapatnam Port Company Ltd. - India
- Vedanta Resources Plc - India
- Coastal Gujarat Power Limited - India
- Minerals Council of Australia
- Toyota Tsusho Corporation, Japan
- Semirara Mining and Power Corporation, Philippines
- Tamil Nadu electricity Board
- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- Cement Manufacturers Association - India
- Kobexindo Tractors - Indoneisa
- Larsen & Toubro Limited - India
- Economic Council, Georgia
- Indika Energy - Indonesia
- Mintek Dendrill Indonesia
- Posco Energy - South Korea
- Bharathi Cement Corporation - India
- Aboitiz Power Corporation - Philippines
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- SMG Consultants - Indonesia
- SN Aboitiz Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Mining Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Simpson Spence & Young - Indonesia
- The Treasury - Australian Government
- Karbindo Abesyapradhi - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- South Luzon Thermal Energy Corporation
- Sarangani Energy Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- European Bulk Services B.V. - Netherlands
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- Power Finance Corporation Ltd., India
- Ambuja Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Kaltim Prima Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- Marubeni Corporation - India
- Pendopo Energi Batubara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Finance - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Energy Development Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- Karaikal Port Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- Uttam Galva Steels Limited - India
- CNBM International Corporation - China
- Bhushan Steel Limited - India
- Salva Resources Pvt Ltd - India
- Xindia Steels Limited - India
- White Energy Company Limited
- Orica Australia Pty. Ltd.
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- PowerSource Philippines DevCo
- Mercuria Energy - Indonesia
- Thiess Contractors Indonesia
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- Chettinad Cement Corporation Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Chamber of Mines of South Africa
- Heidelberg Cement - Germany
- Globalindo Alam Lestari - Indonesia
- Meralco Power Generation, Philippines
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bayan Resources Tbk. - Indonesia
- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- Australian Coal Association
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- Baramulti Group, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- Bangladesh Power Developement Board
- Bulk Trading Sa - Switzerland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Standard Chartered Bank - UAE
- Rashtriya Ispat Nigam Limited - India
- Eastern Coal Council - USA
- Formosa Plastics Group - Taiwan
- Bukit Baiduri Energy - Indonesia
- Romanian Commodities Exchange
- International Coal Ventures Pvt Ltd - India
- Thai Mozambique Logistica
- London Commodity Brokers - England
- Metalloyd Limited - United Kingdom
- Latin American Coal - Colombia
- Siam City Cement - Thailand
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- The State Trading Corporation of India Ltd
- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- Energy Link Ltd, New Zealand
- Mjunction Services Limited - India
- TeaM Sual Corporation - Philippines
- Anglo American - United Kingdom
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