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