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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, 13 January 15
MORE PITFALLS FOR OWNERS LOOKING TO TERMINATE FOR UNPAID HIRE - INCE & CO
KNOWLEDGE TO ELEVATE
It is a debatable point whether or not the obligation to pay hire under a time charter is a condition of the contract or ...
Tuesday, 13 January 15
Q2 CFR SOUTH CHINA COAL SWAP DECLINED 8.66% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined by US$ 3.48 (-5.73%) month over month and US$ 2.35 (-3.94%) week ...
Tuesday, 13 January 15
Q1' 2015 RICHARDS BAY COAL SWAP SLIGHTLY HIGHER THAN Q2 & Q4 2015 SWAPS
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 lost month on month and week over week.
The Q1 swap has lost US$ 7.21 ...
Monday, 12 January 15
COAL: LOW PRICES ARE EXPECTED TO DRIVE A SUPPLY-DRIVEN RECOVERY IN THE MEDIUM TERM - SGX
COALspot.com: Thermal coal prices dropped to six-year lows in 2014 driven by persistent oversupply, SGX says in its “ Commodities 2014 - A ye ...
Monday, 12 January 15
FREIGHT MARKET: 2015 FLEET SUPPLY GROWTH IS EXPECTED TO REMAIN SLIGHTLY AHEAD OF CARGO GROWTH - SGX
COALspot.com: The dry bulk freight market was forced to digest a number of negatives in 2014 leading the Baltic Dry Index to fall 66% through the y ...
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- Globalindo Alam Lestari - Indonesia
- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Karaikal Port Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Eastern Coal Council - USA
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- OPG Power Generation Pvt Ltd - India
- MS Steel International - UAE
- Indika Energy - Indonesia
- Bhatia International Limited - India
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- Interocean Group of Companies - India
- Latin American Coal - Colombia
- Semirara Mining Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Bayan Resources Tbk. - Indonesia
- Directorate Of Revenue Intelligence - India
- Manunggal Multi Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Goldman Sachs - Singapore
- Africa Commodities Group - South Africa
- Kartika Selabumi Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- Kaltim Prima Coal - Indonesia
- Romanian Commodities Exchange
- Miang Besar Coal Terminal - Indonesia
- Star Paper Mills Limited - India
- European Bulk Services B.V. - Netherlands
- Madhucon Powers Ltd - India
- Parliament of New Zealand
- Samtan Co., Ltd - South Korea
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Sical Logistics Limited - India
- Thiess Contractors Indonesia
- Iligan Light & Power Inc, Philippines
- Malabar Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Borneo Indobara - Indonesia
- Oldendorff Carriers - Singapore
- Semirara Mining and Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Commonwealth Bank - Australia
- Australian Commodity Traders Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Generating Authority of Thailand
- SN Aboitiz Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Barasentosa Lestari - Indonesia
- Heidelberg Cement - Germany
- Planning Commission, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Independent Power Producers Association of India
- Gujarat Sidhee Cement - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- PNOC Exploration Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Georgia Ports Authority, United States
- Ministry of Mines - Canada
- Mintek Dendrill Indonesia
- Sindya Power Generating Company Private Ltd
- Price Waterhouse Coopers - Russia
- PTC India Limited - India
- Economic Council, Georgia
- Sinarmas Energy and Mining - Indonesia
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Asmin Koalindo Tuhup - Indonesia
- Riau Bara Harum - Indonesia
- Kumho Petrochemical, South Korea
- Rashtriya Ispat Nigam Limited - India
- Banpu Public Company Limited - Thailand
- Power Finance Corporation Ltd., India
- Wood Mackenzie - Singapore
- Port Waratah Coal Services - Australia
- Bhushan Steel Limited - India
- Bharathi Cement Corporation - India
- Anglo American - United Kingdom
- Bangladesh Power Developement Board
- Renaissance Capital - South Africa
- Edison Trading Spa - Italy
- Essar Steel Hazira Ltd - India
- Bukit Baiduri Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Mercuria Energy - Indonesia
- Cement Manufacturers Association - India
- New Zealand Coal & Carbon
- Lanco Infratech Ltd - India
- Metalloyd Limited - United Kingdom
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- VISA Power Limited - India
- Therma Luzon, Inc, Philippines
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- ICICI Bank Limited - India
- Medco Energi Mining Internasional
- Bukit Makmur.PT - Indonesia
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- Deloitte Consulting - India
- Grasim Industreis Ltd - India
- Straits Asia Resources Limited - Singapore
- Ambuja Cements Ltd - India
- McConnell Dowell - Australia
- Siam City Cement PLC, Thailand
- Singapore Mercantile Exchange
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- Savvy Resources Ltd - HongKong
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
- Central Electricity Authority - India
- Bahari Cakrawala Sebuku - Indonesia
- Sakthi Sugars Limited - India
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- White Energy Company Limited
- Tamil Nadu electricity Board
- Directorate General of MIneral and Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- CNBM International Corporation - China
- Coal and Oil Company - UAE
- Energy Link Ltd, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indogreen Group - Indonesia
- Cigading International Bulk Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- Ministry of Transport, Egypt
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sarangani Energy Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- Ceylon Electricity Board - Sri Lanka
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Thai Mozambique Logistica
- The Treasury - Australian Government
- Parry Sugars Refinery, India
- Salva Resources Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Orica Mining Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chamber of Mines of South Africa
- Ministry of Finance - Indonesia
- Xindia Steels Limited - India
- Vedanta Resources Plc - India
- Indian Energy Exchange, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- South Luzon Thermal Energy Corporation
- Bulk Trading Sa - Switzerland
- Kepco SPC Power Corporation, Philippines
- Trasteel International SA, Italy
- Uttam Galva Steels Limited - India
- SMG Consultants - Indonesia
- Maheswari Brothers Coal Limited - India
- Antam Resourcindo - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- TeaM Sual Corporation - Philippines
- Attock Cement Pakistan Limited
- Jindal Steel & Power Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Sree Jayajothi Cements Limited - India
- India Bulls Power Limited - India
- Larsen & Toubro Limited - India
- Mjunction Services Limited - India
- Eastern Energy - Thailand
- Bhoruka Overseas - Indonesia
- Tata Chemicals Ltd - India
- Vizag Seaport Private Limited - India
- Coalindo Energy - Indonesia
- Global Business Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- LBH Netherlands Bv - Netherlands
- International Coal Ventures Pvt Ltd - India
- SMC Global Power, Philippines
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- Formosa Plastics Group - Taiwan
- Minerals Council of Australia
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Pendopo Energi Batubara - Indonesia
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