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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.
Information contained within the website of COALspot.com is intended for informational purposes only and is not intended as professional counsel and should not be used as such.
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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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- Sarangani Energy Corporation, Philippines
- Anglo American - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Bhushan Steel Limited - India
- Global Business Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Attock Cement Pakistan Limited
- Orica Australia Pty. Ltd.
- Neyveli Lignite Corporation Ltd, - India
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- Bharathi Cement Corporation - India
- Vedanta Resources Plc - India
- SMG Consultants - Indonesia
- VISA Power Limited - India
- The Treasury - Australian Government
- Kohat Cement Company Ltd. - Pakistan
- Sindya Power Generating Company Private Ltd
- Kumho Petrochemical, South Korea
- Mintek Dendrill Indonesia
- Kaltim Prima Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Salva Resources Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Indo Tambangraya Megah - Indonesia
- Ministry of Mines - Canada
- Kepco SPC Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- Bhatia International Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Sidhee Cement - India
- Wood Mackenzie - Singapore
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- ICICI Bank Limited - India
- Kapuas Tunggal Persada - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- Indonesian Coal Mining Association
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Bangladesh Power Developement Board
- Jindal Steel & Power Ltd - India
- Trasteel International SA, Italy
- Semirara Mining Corp, Philippines
- Deloitte Consulting - India
- Indian Oil Corporation Limited
- AsiaOL BioFuels Corp., Philippines
- Posco Energy - South Korea
- Kobexindo Tractors - Indoneisa
- Romanian Commodities Exchange
- Orica Mining Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Holcim Trading Pte Ltd - Singapore
- Essar Steel Hazira Ltd - India
- Carbofer General Trading SA - India
- Baramulti Group, Indonesia
- Merrill Lynch Commodities Europe
- Formosa Plastics Group - Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CIMB Investment Bank - Malaysia
- Riau Bara Harum - Indonesia
- Thiess Contractors Indonesia
- Central Java Power - Indonesia
- Parry Sugars Refinery, India
- European Bulk Services B.V. - Netherlands
- Australian Commodity Traders Exchange
- Interocean Group of Companies - India
- Iligan Light & Power Inc, Philippines
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Coal and Oil Company - UAE
- Krishnapatnam Port Company Ltd. - India
- IHS Mccloskey Coal Group - USA
- Straits Asia Resources Limited - Singapore
- Eastern Energy - Thailand
- Indian Energy Exchange, India
- Standard Chartered Bank - UAE
- Indika Energy - Indonesia
- Central Electricity Authority - India
- Africa Commodities Group - South Africa
- Sical Logistics Limited - India
- Renaissance Capital - South Africa
- Miang Besar Coal Terminal - Indonesia
- Rio Tinto Coal - Australia
- Ministry of Finance - Indonesia
- Mercator Lines Limited - India
- New Zealand Coal & Carbon
- PNOC Exploration Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Global Green Power PLC Corporation, Philippines
- GVK Power & Infra Limited - India
- PowerSource Philippines DevCo
- Semirara Mining and Power Corporation, Philippines
- Marubeni Corporation - India
- Medco Energi Mining Internasional
- Meenaskhi Energy Private Limited - India
- Borneo Indobara - Indonesia
- Port Waratah Coal Services - Australia
- Latin American Coal - Colombia
- Samtan Co., Ltd - South Korea
- Altura Mining Limited, Indonesia
- Electricity Generating Authority of Thailand
- Jorong Barutama Greston.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- Xindia Steels Limited - India
- Makarim & Taira - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- McConnell Dowell - Australia
- Ministry of Transport, Egypt
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Dalmia Cement Bharat India
- Tata Chemicals Ltd - India
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- South Luzon Thermal Energy Corporation
- Sakthi Sugars Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- Ambuja Cements Ltd - India
- IEA Clean Coal Centre - UK
- Maheswari Brothers Coal Limited - India
- Electricity Authority, New Zealand
- Bukit Makmur.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Wilmar Investment Holdings
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- Heidelberg Cement - Germany
- TeaM Sual Corporation - Philippines
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- Sojitz Corporation - Japan
- Leighton Contractors Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- SMC Global Power, Philippines
- Singapore Mercantile Exchange
- Rashtriya Ispat Nigam Limited - India
- Mercuria Energy - Indonesia
- Aditya Birla Group - India
- Economic Council, Georgia
- Minerals Council of Australia
- Karaikal Port Pvt Ltd - India
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Chamber of Mines of South Africa
- Pendopo Energi Batubara - Indonesia
- Goldman Sachs - Singapore
- ASAPP Information Group - India
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- Aboitiz Power Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Tamil Nadu electricity Board
- Gujarat Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Vizag Seaport Private Limited - India
- Videocon Industries ltd - India
- Toyota Tsusho Corporation, Japan
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- MS Steel International - UAE
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- Grasim Industreis Ltd - India
- PTC India Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- LBH Netherlands Bv - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Star Paper Mills Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Banpu Public Company Limited - Thailand
- Energy Link Ltd, New Zealand
- Bulk Trading Sa - Switzerland
- Parliament of New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- White Energy Company Limited
- Mjunction Services Limited - India
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- Cement Manufacturers Association - India
- Georgia Ports Authority, United States
- Lanco Infratech Ltd - India
- Planning Commission, India
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