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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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Thursday, 01 January 15
FOB RICHARDS BAY COAL SWAPS CLOSED AT $63.47 PMT ON 26 DEC, SGX DATA SHOWS
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 lost month on month and week over week.
The Q1 swap has lost US$ 3.37 (-4. ...
Wednesday, 31 December 14
COASTAL ENERGEN (C&O) COMMENCES 1ST UNIT OF 1200 MW POWER PLANT IN INDIA
COALspot.com: Coastal Energen, part of the Coal & Oil Group, announced last week the commissioning and commencement of power production at the ...
Wednesday, 31 December 14
SUB-BIT INDONESIA COAL Q2' 15 DELIVERY SWAP CLOSED 1.03% LOWER COMPARED TO AVERAGE Q1' 15 DELIVERY PRICE - SGX
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month and gained week over week.
The Q1 swap has lost US$ 1.35 (-2 ...
Tuesday, 30 December 14
SHIP PRICES KEEP ON FALLING, SALES COME EARLY FOR SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Ship prices keep on falling on the back of low freight rates. According to the latest report from shipbroker Allied Shipbroking, January sales seem ...
Tuesday, 30 December 14
INDIA INC TO BENEFIT AS IMPORTED COAL PRICES SET TO FALL - RAHUL PRITHIANI
The Hindu: India‘s coal import volumes are set to rise by over 30 per cent over the next two years to 214 million tonnes in 2015-16, as domes ...
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- South Luzon Thermal Energy Corporation
- AsiaOL BioFuels Corp., Philippines
- Barasentosa Lestari - Indonesia
- Power Finance Corporation Ltd., India
- ASAPP Information Group - India
- Kaltim Prima Coal - Indonesia
- Uttam Galva Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Eastern Coal Council - USA
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Rio Tinto Coal - Australia
- Attock Cement Pakistan Limited
- Ind-Barath Power Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- Ministry of Transport, Egypt
- Bank of Tokyo Mitsubishi UFJ Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Meenaskhi Energy Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Kapuas Tunggal Persada - Indonesia
- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
- Ministry of Finance - Indonesia
- Heidelberg Cement - Germany
- Bayan Resources Tbk. - Indonesia
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Samtan Co., Ltd - South Korea
- Price Waterhouse Coopers - Russia
- Chettinad Cement Corporation Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Ambuja Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- Singapore Mercantile Exchange
- Indian Oil Corporation Limited
- The State Trading Corporation of India Ltd
- Miang Besar Coal Terminal - Indonesia
- Renaissance Capital - South Africa
- Indian Energy Exchange, India
- Orica Australia Pty. Ltd.
- India Bulls Power Limited - India
- Bhatia International Limited - India
- Videocon Industries ltd - India
- Vedanta Resources Plc - India
- LBH Netherlands Bv - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- ICICI Bank Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Mercator Lines Limited - India
- Standard Chartered Bank - UAE
- White Energy Company Limited
- SN Aboitiz Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Aboitiz Power Corporation - Philippines
- New Zealand Coal & Carbon
- Global Coal Blending Company Limited - Australia
- Maharashtra Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Pendopo Energi Batubara - Indonesia
- Indika Energy - Indonesia
- PTC India Limited - India
- Essar Steel Hazira Ltd - India
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karaikal Port Pvt Ltd - India
- CNBM International Corporation - China
- Tata Chemicals Ltd - India
- The University of Queensland
- Interocean Group of Companies - India
- Kepco SPC Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Semirara Mining Corp, Philippines
- Kumho Petrochemical, South Korea
- Electricity Generating Authority of Thailand
- Chamber of Mines of South Africa
- Sree Jayajothi Cements Limited - India
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- Romanian Commodities Exchange
- Wood Mackenzie - Singapore
- Aditya Birla Group - India
- Posco Energy - South Korea
- Meralco Power Generation, Philippines
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Port Waratah Coal Services - Australia
- The Treasury - Australian Government
- Bangladesh Power Developement Board
- Indonesian Coal Mining Association
- VISA Power Limited - India
- Central Java Power - Indonesia
- Anglo American - United Kingdom
- Minerals Council of Australia
- OPG Power Generation Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- GAC Shipping (India) Pvt Ltd
- McConnell Dowell - Australia
- Jindal Steel & Power Ltd - India
- MS Steel International - UAE
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Eastern Energy - Thailand
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Madhucon Powers Ltd - India
- Medco Energi Mining Internasional
- Parry Sugars Refinery, India
- Banpu Public Company Limited - Thailand
- Goldman Sachs - Singapore
- Australian Coal Association
- Sarangani Energy Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Malabar Cements Ltd - India
- Coal and Oil Company - UAE
- Metalloyd Limited - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coalindo Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Africa Commodities Group - South Africa
- Thiess Contractors Indonesia
- Indo Tambangraya Megah - Indonesia
- Tamil Nadu electricity Board
- Savvy Resources Ltd - HongKong
- Gujarat Mineral Development Corp Ltd - India
- International Coal Ventures Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Economic Council, Georgia
- Gujarat Sidhee Cement - India
- Borneo Indobara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- GMR Energy Limited - India
- Marubeni Corporation - India
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- Mintek Dendrill Indonesia
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Ministry of Mines - Canada
- Asmin Koalindo Tuhup - Indonesia
- SMC Global Power, Philippines
- Riau Bara Harum - Indonesia
- SMG Consultants - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Petron Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Antam Resourcindo - Indonesia
- Global Green Power PLC Corporation, Philippines
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- Dalmia Cement Bharat India
- GN Power Mariveles Coal Plant, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Commonwealth Bank - Australia
- Edison Trading Spa - Italy
- Agrawal Coal Company - India
- Mjunction Services Limited - India
- Bharathi Cement Corporation - India
- Bhoruka Overseas - Indonesia
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Xindia Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- Trasteel International SA, Italy
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- Thai Mozambique Logistica
- Deloitte Consulting - India
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
- Grasim Industreis Ltd - India
- Sojitz Corporation - Japan
- Vizag Seaport Private Limited - India
- Cement Manufacturers Association - India
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- CIMB Investment Bank - Malaysia
- Globalindo Alam Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Neyveli Lignite Corporation Ltd, - India
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