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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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Tuesday, 30 December 14
U.S WEEKLY COAL PRODUCTION ALMOST FLAT AT -0.2%
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.8 million short tons (mmst) of coal ...
Monday, 29 December 14
CHINESE COAL IMPORTS: REGULATORY RISKS? - CLARKSONS
In recent years, Chinese seaborne coal imports have surged, registering average growth of 67% p.a. between 2009 and 2013 to total 265mt. However, t ...
Monday, 29 December 14
BULK MARKET ENDS YEAR ON SOUR NOTE, SHIPBROKER SEES 'BUMPY ROAD AHEAD' - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
2014 was supposed to be the year that the dry bulk market would stage a comeback and a sustainable one for that matter. However, while for the most ...
Monday, 29 December 14
Q1'15 CFR SOUTH CHINA COAL SWAP CLOSED AT $59.42
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased by US$ 3.51 (-5.58%) month over month and US$ 0.08 (-0.13%) ...
Monday, 29 December 14
SGX'S FOB NEWCASTLE COAL SWAPS IMPROVED W-O-W, LOST M-O-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.44 per MT (-2.73%) month over month and gained US$ 0.36 (+0.71%) ...
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- PNOC Exploration Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Directorate Of Revenue Intelligence - India
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Ministry of Transport, Egypt
- Rio Tinto Coal - Australia
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- Independent Power Producers Association of India
- Formosa Plastics Group - Taiwan
- Wood Mackenzie - Singapore
- Aditya Birla Group - India
- Power Finance Corporation Ltd., India
- Petron Corporation, Philippines
- VISA Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- SMG Consultants - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Bulk Trading Sa - Switzerland
- Globalindo Alam Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Neyveli Lignite Corporation Ltd, - India
- Vijayanagar Sugar Pvt Ltd - India
- PTC India Limited - India
- Semirara Mining Corp, Philippines
- Georgia Ports Authority, United States
- Sarangani Energy Corporation, Philippines
- Planning Commission, India
- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- Eastern Energy - Thailand
- Indian Energy Exchange, India
- Miang Besar Coal Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Sical Logistics Limited - India
- Economic Council, Georgia
- Ministry of Finance - Indonesia
- ICICI Bank Limited - India
- European Bulk Services B.V. - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Siam City Cement - Thailand
- Malabar Cements Ltd - India
- Merrill Lynch Commodities Europe
- Vedanta Resources Plc - India
- Coalindo Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Africa Commodities Group - South Africa
- Indika Energy - Indonesia
- Mintek Dendrill Indonesia
- Agrawal Coal Company - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Straits Asia Resources Limited - Singapore
- Simpson Spence & Young - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karbindo Abesyapradhi - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The Treasury - Australian Government
- Sojitz Corporation - Japan
- Madhucon Powers Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Parry Sugars Refinery, India
- New Zealand Coal & Carbon
- IEA Clean Coal Centre - UK
- Central Electricity Authority - India
- Indonesian Coal Mining Association
- White Energy Company Limited
- Energy Development Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- McConnell Dowell - Australia
- AsiaOL BioFuels Corp., Philippines
- Holcim Trading Pte Ltd - Singapore
- Energy Link Ltd, New Zealand
- CNBM International Corporation - China
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Timah Investasi Mineral - Indoneisa
- Mercator Lines Limited - India
- Samtan Co., Ltd - South Korea
- Vizag Seaport Private Limited - India
- Central Java Power - Indonesia
- Commonwealth Bank - Australia
- Coal and Oil Company - UAE
- Ceylon Electricity Board - Sri Lanka
- Grasim Industreis Ltd - India
- Indogreen Group - Indonesia
- Larsen & Toubro Limited - India
- Savvy Resources Ltd - HongKong
- The State Trading Corporation of India Ltd
- Electricity Authority, New Zealand
- Carbofer General Trading SA - India
- Rashtriya Ispat Nigam Limited - India
- Kideco Jaya Agung - Indonesia
- LBH Netherlands Bv - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- Bhoruka Overseas - Indonesia
- Bharathi Cement Corporation - India
- The University of Queensland
- Bayan Resources Tbk. - Indonesia
- Standard Chartered Bank - UAE
- Orica Australia Pty. Ltd.
- Altura Mining Limited, Indonesia
- Trasteel International SA, Italy
- Siam City Cement PLC, Thailand
- Mjunction Services Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Antam Resourcindo - Indonesia
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- India Bulls Power Limited - India
- Meralco Power Generation, Philippines
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- Toyota Tsusho Corporation, Japan
- Gujarat Sidhee Cement - India
- Oldendorff Carriers - Singapore
- Cement Manufacturers Association - India
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Lanco Infratech Ltd - India
- Bhatia International Limited - India
- Makarim & Taira - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Singapore Mercantile Exchange
- Bukit Makmur.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- Latin American Coal - Colombia
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Mercuria Energy - Indonesia
- Xindia Steels Limited - India
- Wilmar Investment Holdings
- Chamber of Mines of South Africa
- PetroVietnam Power Coal Import and Supply Company
- Indian Oil Corporation Limited
- Global Coal Blending Company Limited - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Interocean Group of Companies - India
- Minerals Council of Australia
- Orica Mining Services - Indonesia
- Ambuja Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thiess Contractors Indonesia
- GMR Energy Limited - India
- Global Business Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Electricity Generating Authority of Thailand
- Medco Energi Mining Internasional
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Intertek Mineral Services - Indonesia
- Australian Coal Association
- Star Paper Mills Limited - India
- ASAPP Information Group - India
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- Alfred C Toepfer International GmbH - Germany
- Dalmia Cement Bharat India
- CIMB Investment Bank - Malaysia
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- Metalloyd Limited - United Kingdom
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- Jaiprakash Power Ventures ltd
- Borneo Indobara - Indonesia
- Kumho Petrochemical, South Korea
- London Commodity Brokers - England
- Aboitiz Power Corporation - Philippines
- Posco Energy - South Korea
- PowerSource Philippines DevCo
- Marubeni Corporation - India
- TeaM Sual Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- Baramulti Group, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- Essar Steel Hazira Ltd - India
- Barasentosa Lestari - Indonesia
- Edison Trading Spa - Italy
- SN Aboitiz Power Inc, Philippines
- Tata Chemicals Ltd - India
- Port Waratah Coal Services - Australia
- Jorong Barutama Greston.PT - Indonesia
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- Kalimantan Lumbung Energi - Indonesia
- Anglo American - United Kingdom
- Eastern Coal Council - USA
- Cigading International Bulk Terminal - Indonesia
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