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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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Sunday, 11 January 15
BDI DECLINED 8% ON WEEK; BCI LOST 31%
COALspot.com: The BDI continued its decline in the first week of this year or lost 8 pct week over week. The BDI was closed at 709 points whi ...
Friday, 09 January 15
U.S. EASTERN SPOT STEAM COAL PRICES FELL IN 2014; ROSE IN WEST - EIA
U.S. Eastern spot steam coal prices declined in 2014 compared to 2013 levels because of a decline in steam coal exports.
According to U.S. Ene ...
Friday, 09 January 15
WEEKLY U.S. COAL PRODUCTION UP AN ESTIMATED 2.2% Y-O-Y
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.6 million short tons (mmst) of coal ...
Thursday, 08 January 15
INDONESIA PRESSES ON WITH HIGHER COAL ROYALTY FEE TO BOOST STATE REVENUE - JG
The Indonesian government is pressing on with its plan to raise the royalty charged to coal miners in order to increase state revenue, but the move ...
Wednesday, 07 January 15
FUEL EFFICIENT SHIPS MAKE LESS SENSE IN LOWER BUNKER PRICE MARKET, BUT FUEL COSTS ARE BOUND TO RISE AGAIN
The shipping industry entered 2015 on mixed emotions, as a relatively buoyant tanker market is met by a rather lackluster dry bulk market. Still, a ...
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- VISA Power Limited - India
- Bhushan Steel Limited - India
- Medco Energi Mining Internasional
- Meralco Power Generation, Philippines
- Thiess Contractors Indonesia
- Petron Corporation, Philippines
- Electricity Authority, New Zealand
- Antam Resourcindo - Indonesia
- McConnell Dowell - Australia
- The University of Queensland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Heidelberg Cement - Germany
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- Standard Chartered Bank - UAE
- International Coal Ventures Pvt Ltd - India
- Chamber of Mines of South Africa
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- Minerals Council of Australia
- SN Aboitiz Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Star Paper Mills Limited - India
- Orica Mining Services - Indonesia
- Ministry of Transport, Egypt
- Kapuas Tunggal Persada - Indonesia
- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- Siam City Cement - Thailand
- Kobexindo Tractors - Indoneisa
- Coal and Oil Company - UAE
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Commonwealth Bank - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Africa Commodities Group - South Africa
- Metalloyd Limited - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- Tata Chemicals Ltd - India
- Simpson Spence & Young - Indonesia
- Bulk Trading Sa - Switzerland
- Lanco Infratech Ltd - India
- Sree Jayajothi Cements Limited - India
- Cement Manufacturers Association - India
- Indika Energy - Indonesia
- Xindia Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- Agrawal Coal Company - India
- MS Steel International - UAE
- Energy Link Ltd, New Zealand
- Deloitte Consulting - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- New Zealand Coal & Carbon
- Anglo American - United Kingdom
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- Altura Mining Limited, Indonesia
- Vedanta Resources Plc - India
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- London Commodity Brokers - England
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- Energy Development Corp, Philippines
- Attock Cement Pakistan Limited
- South Luzon Thermal Energy Corporation
- Power Finance Corporation Ltd., India
- Coalindo Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Bukit Makmur.PT - Indonesia
- Sical Logistics Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- White Energy Company Limited
- Samtan Co., Ltd - South Korea
- GMR Energy Limited - India
- Australian Coal Association
- Semirara Mining and Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Iligan Light & Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Sindya Power Generating Company Private Ltd
- Meenaskhi Energy Private Limited - India
- Bharathi Cement Corporation - India
- IEA Clean Coal Centre - UK
- Carbofer General Trading SA - India
- Mercator Lines Limited - India
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- Sojitz Corporation - Japan
- GN Power Mariveles Coal Plant, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- PowerSource Philippines DevCo
- Pendopo Energi Batubara - Indonesia
- Indogreen Group - Indonesia
- Orica Australia Pty. Ltd.
- Bahari Cakrawala Sebuku - Indonesia
- Australian Commodity Traders Exchange
- Madhucon Powers Ltd - India
- Latin American Coal - Colombia
- Borneo Indobara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Global Business Power Corporation, Philippines
- Georgia Ports Authority, United States
- Tamil Nadu electricity Board
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- Billiton Holdings Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Bhoruka Overseas - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bhatia International Limited - India
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- Karaikal Port Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Chettinad Cement Corporation Ltd - India
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- Maheswari Brothers Coal Limited - India
- ICICI Bank Limited - India
- Trasteel International SA, Italy
- Ambuja Cements Ltd - India
- Jaiprakash Power Ventures ltd
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- Mjunction Services Limited - India
- Oldendorff Carriers - Singapore
- Directorate Of Revenue Intelligence - India
- CIMB Investment Bank - Malaysia
- Manunggal Multi Energi - Indonesia
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- Riau Bara Harum - Indonesia
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Singapore Mercantile Exchange
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- LBH Netherlands Bv - Netherlands
- Electricity Generating Authority of Thailand
- Globalindo Alam Lestari - Indonesia
- The Treasury - Australian Government
- Kumho Petrochemical, South Korea
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- GVK Power & Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- PNOC Exploration Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- San Jose City I Power Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Aditya Birla Group - India
- Cigading International Bulk Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Renaissance Capital - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Makarim & Taira - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
- Banpu Public Company Limited - Thailand
- Intertek Mineral Services - Indonesia
- ASAPP Information Group - India
- Sakthi Sugars Limited - India
- Economic Council, Georgia
- Siam City Cement PLC, Thailand
- Kalimantan Lumbung Energi - Indonesia
- Romanian Commodities Exchange
- Mercuria Energy - Indonesia
- Ministry of Finance - Indonesia
- Posco Energy - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Interocean Group of Companies - India
- CNBM International Corporation - China
- Bayan Resources Tbk. - Indonesia
- Indian Oil Corporation Limited
- Kepco SPC Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Planning Commission, India
- Asmin Koalindo Tuhup - Indonesia
- SMG Consultants - Indonesia
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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