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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, 23 December 14
SHIPOWNERS ARE FINALIZING MORE DEALS AS YEAR END COMES CLOSER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS WORLDWIDE
With the 2014 year just a few days before waving goodbye, shipowners are looking to close their pending deals in both the newbuilding and S&P m ...
Monday, 22 December 14
Q2'15 CFR SOUTH CHINA COAL SWAP CLOSED $ 0.30 LOWER THAN Q1'15 CLOSING
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased by US$ 3.67 (-5.81%) month over month and US$ 0.35 (-0.58%) ...
Monday, 22 December 14
API 5 FOB NEWCASTLE COAL SWAPS ARE HEADING SOUTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.71 per MT (-3.24%) and closed at US$ 51.02 on 19 December month ...
Sunday, 21 December 14
PANAMAX COAL FREIGHT FROM INDONESIA TO INDIA FALLS FURTHER
COALspot.com: The BDI continued its fall as cape index lost heavily week on week.
The BDI was down 6.95 percent week over week and closed at 8 ...
Friday, 19 December 14
HOW WILL LOWER BUNKER PRICES AFFECT THE SUBSTANTIAL OVERCAPACITY IN DRY BULK MARKET? - BIMCO
As bunker fuel costs have come down from USD 600 per tonnes to USD 330 per tonnes in the past 6 months, much talk about increased ship speed have s ...
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- Sojitz Corporation - Japan
- Ind-Barath Power Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- Orica Mining Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Merrill Lynch Commodities Europe
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- Chettinad Cement Corporation Ltd - India
- Global Business Power Corporation, Philippines
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Singapore Mercantile Exchange
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- Salva Resources Pvt Ltd - India
- Edison Trading Spa - Italy
- Indika Energy - Indonesia
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Thiess Contractors Indonesia
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- Malabar Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- White Energy Company Limited
- Dalmia Cement Bharat India
- Electricity Generating Authority of Thailand
- Bukit Baiduri Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Meenaskhi Energy Private Limited - India
- Formosa Plastics Group - Taiwan
- Africa Commodities Group - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Independent Power Producers Association of India
- The Treasury - Australian Government
- PTC India Limited - India
- Kartika Selabumi Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- Tamil Nadu electricity Board
- Savvy Resources Ltd - HongKong
- Neyveli Lignite Corporation Ltd, - India
- Bangladesh Power Developement Board
- PetroVietnam Power Coal Import and Supply Company
- International Coal Ventures Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Antam Resourcindo - Indonesia
- The University of Queensland
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- Uttam Galva Steels Limited - India
- Banpu Public Company Limited - Thailand
- Coastal Gujarat Power Limited - India
- Commonwealth Bank - Australia
- Kobexindo Tractors - Indoneisa
- Standard Chartered Bank - UAE
- Orica Australia Pty. Ltd.
- Borneo Indobara - Indonesia
- Siam City Cement - Thailand
- Australian Commodity Traders Exchange
- GN Power Mariveles Coal Plant, Philippines
- Mercator Lines Limited - India
- Pendopo Energi Batubara - Indonesia
- Latin American Coal - Colombia
- European Bulk Services B.V. - Netherlands
- Economic Council, Georgia
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
- Grasim Industreis Ltd - India
- Sical Logistics Limited - India
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- Mercuria Energy - Indonesia
- Ministry of Mines - Canada
- Coalindo Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- Parry Sugars Refinery, India
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- ICICI Bank Limited - India
- Jaiprakash Power Ventures ltd
- Ministry of Transport, Egypt
- Indo Tambangraya Megah - Indonesia
- Altura Mining Limited, Indonesia
- Sakthi Sugars Limited - India
- Maheswari Brothers Coal Limited - India
- Chamber of Mines of South Africa
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Madhucon Powers Ltd - India
- Bulk Trading Sa - Switzerland
- Minerals Council of Australia
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- CNBM International Corporation - China
- Cement Manufacturers Association - India
- Indogreen Group - Indonesia
- Riau Bara Harum - Indonesia
- Larsen & Toubro Limited - India
- Deloitte Consulting - India
- SMG Consultants - Indonesia
- IEA Clean Coal Centre - UK
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- Star Paper Mills Limited - India
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- Trasteel International SA, Italy
- Barasentosa Lestari - Indonesia
- Indian Energy Exchange, India
- Coal and Oil Company - UAE
- GMR Energy Limited - India
- Directorate Of Revenue Intelligence - India
- Power Finance Corporation Ltd., India
- SMC Global Power, Philippines
- Ambuja Cements Ltd - India
- Indonesian Coal Mining Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Aditya Birla Group - India
- Indian Oil Corporation Limited
- Jorong Barutama Greston.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Anglo American - United Kingdom
- Price Waterhouse Coopers - Russia
- Xindia Steels Limited - India
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Therma Luzon, Inc, Philippines
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- Renaissance Capital - South Africa
- Parliament of New Zealand
- Toyota Tsusho Corporation, Japan
- Samtan Co., Ltd - South Korea
- Bhoruka Overseas - Indonesia
- Bukit Makmur.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bhatia International Limited - India
- Metalloyd Limited - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- The State Trading Corporation of India Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- VISA Power Limited - India
- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- Global Green Power PLC Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- PowerSource Philippines DevCo
- Miang Besar Coal Terminal - Indonesia
- Australian Coal Association
- Mintek Dendrill Indonesia
- Gujarat Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Mjunction Services Limited - India
- Central Electricity Authority - India
- Carbofer General Trading SA - India
- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- Gujarat Sidhee Cement - India
- Kalimantan Lumbung Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- India Bulls Power Limited - India
- Simpson Spence & Young - Indonesia
- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- Posco Energy - South Korea
- Thai Mozambique Logistica
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Bayan Resources Tbk. - Indonesia
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