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