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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, 07 January 15
2015 IS RIDDLED WITH CHALLENGES FOR THE SHIPPING SECTOR, MOST NOTABLY THE DRY BULK MARKET - HELLENIC SHIPPING NEWS
As the new year has now set foot for real, many are still looking to detect what’s in store for the various shipping markets, with the first ...
Tuesday, 06 January 15
SHIPPING MUST ADOPT CAN-DO ATTITUDE IN 2015 - MOORE STEPHENS
Shipping needs to adopt a can-do attitude in order to successfully meet the challenges which are likely to come its way in 2015.
Shipping part ...
Tuesday, 06 January 15
Q4' 15 FOB INDONESIA COAL SWAP CLOSED 1.81% HIGHER COMPARED TO Q1' 15 CLOSING
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month and week over week.
The Q1 swap has lost US$ 0.74 (-1.51%) m ...
Tuesday, 06 January 15
FOB RICHARDS BAY COAL SWAPS LOST W-O-W AND M-O-M, SGX DATA SHOWS
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 lost month on month and week over week.
The Q1 swap has lost US$ 3.52 (-5. ...
Monday, 05 January 15
CFR SOUTH CHINA COAL SWAPS GAINED WEEK OVER WEEK, SGX DATA SHOWS
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased by US$ 2.50 (-4.02%) month over month and gained US$ 0.20 ( ...
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- Samtan Co., Ltd - South Korea
- Semirara Mining and Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- Anglo American - United Kingdom
- Merrill Lynch Commodities Europe
- Toyota Tsusho Corporation, Japan
- London Commodity Brokers - England
- Mercuria Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Savvy Resources Ltd - HongKong
- South Luzon Thermal Energy Corporation
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sical Logistics Limited - India
- Georgia Ports Authority, United States
- ICICI Bank Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ind-Barath Power Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Romanian Commodities Exchange
- Kobexindo Tractors - Indoneisa
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- ASAPP Information Group - India
- Ambuja Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- PetroVietnam Power Coal Import and Supply Company
- IEA Clean Coal Centre - UK
- Global Coal Blending Company Limited - Australia
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Aditya Birla Group - India
- Price Waterhouse Coopers - Russia
- Gujarat Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Tata Chemicals Ltd - India
- Minerals Council of Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Coastal Gujarat Power Limited - India
- Central Electricity Authority - India
- Kaltim Prima Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- CIMB Investment Bank - Malaysia
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- Riau Bara Harum - Indonesia
- Tamil Nadu electricity Board
- Planning Commission, India
- Coalindo Energy - Indonesia
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- Barasentosa Lestari - Indonesia
- VISA Power Limited - India
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Coal and Oil Company - UAE
- Orica Mining Services - Indonesia
- Baramulti Group, Indonesia
- Billiton Holdings Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- Latin American Coal - Colombia
- Global Business Power Corporation, Philippines
- Africa Commodities Group - South Africa
- International Coal Ventures Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- PTC India Limited - India
- Interocean Group of Companies - India
- GMR Energy Limited - India
- SMC Global Power, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Standard Chartered Bank - UAE
- Intertek Mineral Services - Indonesia
- McConnell Dowell - Australia
- European Bulk Services B.V. - Netherlands
- Singapore Mercantile Exchange
- CNBM International Corporation - China
- Lanco Infratech Ltd - India
- Salva Resources Pvt Ltd - India
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Makarim & Taira - Indonesia
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Indian Energy Exchange, India
- Trasteel International SA, Italy
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Electricity Generating Authority of Thailand
- LBH Netherlands Bv - Netherlands
- Economic Council, Georgia
- The University of Queensland
- Orica Australia Pty. Ltd.
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- Thiess Contractors Indonesia
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- Malabar Cements Ltd - India
- Indogreen Group - Indonesia
- Larsen & Toubro Limited - India
- Krishnapatnam Port Company Ltd. - India
- Directorate General of MIneral and Coal - Indonesia
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Thai Mozambique Logistica
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- Renaissance Capital - South Africa
- Xindia Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Parliament of New Zealand
- Grasim Industreis Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- Antam Resourcindo - Indonesia
- Dalmia Cement Bharat India
- Kapuas Tunggal Persada - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Power Finance Corporation Ltd., India
- Metalloyd Limited - United Kingdom
- Ministry of Transport, Egypt
- Madhucon Powers Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- Sakthi Sugars Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Bulk Trading Sa - Switzerland
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- Uttam Galva Steels Limited - India
- Mercator Lines Limited - India
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- GVK Power & Infra Limited - India
- Central Java Power - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kumho Petrochemical, South Korea
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- Oldendorff Carriers - Singapore
- Attock Cement Pakistan Limited
- Chamber of Mines of South Africa
- Maharashtra Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Kepco SPC Power Corporation, Philippines
- Star Paper Mills Limited - India
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- Eastern Coal Council - USA
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- Edison Trading Spa - Italy
- Goldman Sachs - Singapore
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- New Zealand Coal & Carbon
- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- Vijayanagar Sugar Pvt Ltd - India
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- White Energy Company Limited
- Marubeni Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- The Treasury - Australian Government
- Commonwealth Bank - Australia
- Maheswari Brothers Coal Limited - India
- OPG Power Generation Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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