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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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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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- Neyveli Lignite Corporation Ltd, - India
- Karbindo Abesyapradhi - Indoneisa
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Tamil Nadu electricity Board
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- Orica Mining Services - Indonesia
- Australian Commodity Traders Exchange
- Australian Coal Association
- Indian Oil Corporation Limited
- Kohat Cement Company Ltd. - Pakistan
- Chettinad Cement Corporation Ltd - India
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- Ind-Barath Power Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bhoruka Overseas - Indonesia
- PTC India Limited - India
- Eastern Energy - Thailand
- South Luzon Thermal Energy Corporation
- McConnell Dowell - Australia
- Bulk Trading Sa - Switzerland
- Indika Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Central Electricity Authority - India
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- Mintek Dendrill Indonesia
- IHS Mccloskey Coal Group - USA
- Uttam Galva Steels Limited - India
- SMC Global Power, Philippines
- Siam City Cement - Thailand
- Therma Luzon, Inc, Philippines
- Manunggal Multi Energi - Indonesia
- MS Steel International - UAE
- GN Power Mariveles Coal Plant, Philippines
- Jaiprakash Power Ventures ltd
- Kobexindo Tractors - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Power Finance Corporation Ltd., India
- Standard Chartered Bank - UAE
- Bukit Makmur.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- Independent Power Producers Association of India
- Borneo Indobara - Indonesia
- Oldendorff Carriers - Singapore
- Indo Tambangraya Megah - Indonesia
- Indonesian Coal Mining Association
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- Ceylon Electricity Board - Sri Lanka
- Krishnapatnam Port Company Ltd. - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- San Jose City I Power Corp, Philippines
- Grasim Industreis Ltd - India
- CNBM International Corporation - China
- CIMB Investment Bank - Malaysia
- Deloitte Consulting - India
- Global Business Power Corporation, Philippines
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- PetroVietnam Power Coal Import and Supply Company
- Madhucon Powers Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Dalmia Cement Bharat India
- Meralco Power Generation, Philippines
- The Treasury - Australian Government
- Thiess Contractors Indonesia
- Mjunction Services Limited - India
- Romanian Commodities Exchange
- International Coal Ventures Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Jindal Steel & Power Ltd - India
- Cement Manufacturers Association - India
- Sarangani Energy Corporation, Philippines
- Ministry of Transport, Egypt
- OPG Power Generation Pvt Ltd - India
- Interocean Group of Companies - India
- SN Aboitiz Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- Minerals Council of Australia
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Commonwealth Bank - Australia
- Altura Mining Limited, Indonesia
- Economic Council, Georgia
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Simpson Spence & Young - Indonesia
- Global Coal Blending Company Limited - Australia
- Directorate General of MIneral and Coal - Indonesia
- PowerSource Philippines DevCo
- Electricity Authority, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Mercuria Energy - Indonesia
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- Bharathi Cement Corporation - India
- TeaM Sual Corporation - Philippines
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Latin American Coal - Colombia
- Parliament of New Zealand
- Kaltim Prima Coal - Indonesia
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- Bangladesh Power Developement Board
- Wood Mackenzie - Singapore
- Chamber of Mines of South Africa
- Coalindo Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Karaikal Port Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- New Zealand Coal & Carbon
- Bhushan Steel Limited - India
- Maheswari Brothers Coal Limited - India
- Intertek Mineral Services - Indonesia
- Vizag Seaport Private Limited - India
- Vedanta Resources Plc - India
- Gujarat Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- Parry Sugars Refinery, India
- Globalindo Alam Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Star Paper Mills Limited - India
- Merrill Lynch Commodities Europe
- Posco Energy - South Korea
- Planning Commission, India
- Kideco Jaya Agung - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Anglo American - United Kingdom
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- Petron Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Savvy Resources Ltd - HongKong
- Essar Steel Hazira Ltd - India
- Barasentosa Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Medco Energi Mining Internasional
- Eastern Coal Council - USA
- Formosa Plastics Group - Taiwan
- Bayan Resources Tbk. - Indonesia
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- Energy Link Ltd, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Goldman Sachs - Singapore
- Singapore Mercantile Exchange
- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- Coal and Oil Company - UAE
- Straits Asia Resources Limited - Singapore
- Thai Mozambique Logistica
- Leighton Contractors Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Ministry of Mines - Canada
- Samtan Co., Ltd - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- Marubeni Corporation - India
- ICICI Bank Limited - India
- Malabar Cements Ltd - India
- Bhatia International Limited - India
- Price Waterhouse Coopers - Russia
- Metalloyd Limited - United Kingdom
- Aboitiz Power Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Makarim & Taira - Indonesia
- Mercator Lines Limited - India
- The University of Queensland
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- Trasteel International SA, Italy
- GMR Energy Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Lanco Infratech Ltd - India
- VISA Power Limited - India
- Renaissance Capital - South Africa
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
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