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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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Friday, 26 December 14
SHIPS FACE LOWER SULPHUR FUEL REQUIREMENTS IN EMISSION CONTROL AREAS FROM 1 JANUARY 2015 - IMO
Ships trading in designated emission control areas will have to use on board fuel oil with a sulphur content of no more than 0.10% from 1 January 2 ...
Wednesday, 24 December 14
CAPE DEMAND WAS STILL EXTREMELY SOFT THIS PAST WEEK ACROSS BOTH BASINS - INTERMODAL
COALspot.com: The performance of the Dry Bulk market, which found itself in desperate search of support for yet another week, has left very little ...
Wednesday, 24 December 14
MARKET INSIGHT - JOHN N. COTZIAS, INTERMODAL SNP BROKER
The year is coming to an end, and we should be able to assess if this was a good year, a bad year, or even a lousy one? The answer clearly de ...
Tuesday, 23 December 14
Q1'15 FOB INDONESIA COAL SWAP GAINED 48 CENTS IN ONE WEEK
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month and gained week over week and day on day.
The Q1 swap has lo ...
Tuesday, 23 December 14
Q4'15 FOB RICHARDS BAY COAL SWAPS FALL $ 3.85 IN A MONTH
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 lost month on month.
The Q1 swap has lost US$ 2.13 (-3.17%) month on month ...
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- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- GAC Shipping (India) Pvt Ltd
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Standard Chartered Bank - UAE
- Merrill Lynch Commodities Europe
- Australian Commodity Traders Exchange
- San Jose City I Power Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Australian Coal Association
- Port Waratah Coal Services - Australia
- Parry Sugars Refinery, India
- White Energy Company Limited
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- Altura Mining Limited, Indonesia
- Madhucon Powers Ltd - India
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Central Electricity Authority - India
- Kaltim Prima Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Makarim & Taira - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Toyota Tsusho Corporation, Japan
- Baramulti Group, Indonesia
- Commonwealth Bank - Australia
- Price Waterhouse Coopers - Russia
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- McConnell Dowell - Australia
- Aditya Birla Group - India
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Posco Energy - South Korea
- South Luzon Thermal Energy Corporation
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- Sical Logistics Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Indogreen Group - Indonesia
- Sree Jayajothi Cements Limited - India
- Tamil Nadu electricity Board
- Bhoruka Overseas - Indonesia
- Ministry of Finance - Indonesia
- Singapore Mercantile Exchange
- Agrawal Coal Company - India
- Simpson Spence & Young - Indonesia
- Ceylon Electricity Board - Sri Lanka
- VISA Power Limited - India
- Metalloyd Limited - United Kingdom
- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- Eastern Coal Council - USA
- Goldman Sachs - Singapore
- Latin American Coal - Colombia
- SN Aboitiz Power Inc, Philippines
- Carbofer General Trading SA - India
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Orica Mining Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Pendopo Energi Batubara - Indonesia
- PowerSource Philippines DevCo
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Renaissance Capital - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Neyveli Lignite Corporation Ltd, - India
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- International Coal Ventures Pvt Ltd - India
- Electricity Authority, New Zealand
- Orica Australia Pty. Ltd.
- LBH Netherlands Bv - Netherlands
- Bukit Makmur.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- Economic Council, Georgia
- IEA Clean Coal Centre - UK
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Siam City Cement PLC, Thailand
- Mintek Dendrill Indonesia
- Thiess Contractors Indonesia
- Indika Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Minerals Council of Australia
- TNB Fuel Sdn Bhd - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- Kumho Petrochemical, South Korea
- Africa Commodities Group - South Africa
- Xindia Steels Limited - India
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Rashtriya Ispat Nigam Limited - India
- MS Steel International - UAE
- PTC India Limited - India
- Savvy Resources Ltd - HongKong
- Deloitte Consulting - India
- Cigading International Bulk Terminal - Indonesia
- Videocon Industries ltd - India
- The Treasury - Australian Government
- Planning Commission, India
- The University of Queensland
- ICICI Bank Limited - India
- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bharathi Cement Corporation - India
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Barasentosa Lestari - Indonesia
- Rio Tinto Coal - Australia
- Uttam Galva Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Coal and Oil Company - UAE
- Karbindo Abesyapradhi - Indoneisa
- Mjunction Services Limited - India
- Kepco SPC Power Corporation, Philippines
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Mines - Canada
- Bayan Resources Tbk. - Indonesia
- Kideco Jaya Agung - Indonesia
- Indonesian Coal Mining Association
- Star Paper Mills Limited - India
- SMG Consultants - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- India Bulls Power Limited - India
- Iligan Light & Power Inc, Philippines
- Central Java Power - Indonesia
- London Commodity Brokers - England
- Bukit Baiduri Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- Salva Resources Pvt Ltd - India
- Romanian Commodities Exchange
- Semirara Mining Corp, Philippines
- Coalindo Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Parliament of New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Banpu Public Company Limited - Thailand
- Wood Mackenzie - Singapore
- Sakthi Sugars Limited - India
- GMR Energy Limited - India
- Georgia Ports Authority, United States
- Bhatia International Limited - India
- Intertek Mineral Services - Indonesia
- Global Business Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Medco Energi Mining Internasional
- Thai Mozambique Logistica
- Attock Cement Pakistan Limited
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- Sojitz Corporation - Japan
- Larsen & Toubro Limited - India
- Heidelberg Cement - Germany
- Marubeni Corporation - India
- Vedanta Resources Plc - India
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Indo Tambangraya Megah - Indonesia
- Interocean Group of Companies - India
- Petron Corporation, Philippines
- Borneo Indobara - Indonesia
- SMC Global Power, Philippines
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercator Lines Limited - India
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Bangladesh Power Developement Board
- Manunggal Multi Energi - Indonesia
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Energy Link Ltd, New Zealand
- Power Finance Corporation Ltd., India
- Electricity Generating Authority of Thailand
- Jindal Steel & Power Ltd - India
- The State Trading Corporation of India Ltd
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