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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, 16 December 14
THIS PRICE IS A STEAL - EVA TZIMA
COALspot.com: Despite concerns that the slowdown of the Chinese economy would affect imports of iron ore, it seems that this has not been the case ...
Tuesday, 16 December 14
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COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 lost month on month.
The Q1 swap has lost US$ 0.18 (-0.27%) month on month ...
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Monday, 15 December 14
WILL TANKERS BENEFIT FROM REEMERGENCE OF FLOATING STORAGE PLAYS? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The tanker market has been seeing high freight rates for some time now, riding on the back of low oil prices, which are boosting demand from develo ...
Monday, 15 December 14
INDONESIAN COAL PRICE REFERENCE CRASHES THROUGH $65
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down the coal bench mark price once again in December. HBA for t ...
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- Jorong Barutama Greston.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Wood Mackenzie - Singapore
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Power Finance Corporation Ltd., India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kapuas Tunggal Persada - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Bukit Makmur.PT - Indonesia
- Bhushan Steel Limited - India
- Ministry of Transport, Egypt
- Standard Chartered Bank - UAE
- Gujarat Mineral Development Corp Ltd - India
- Singapore Mercantile Exchange
- Mercator Lines Limited - India
- Global Green Power PLC Corporation, Philippines
- Ministry of Finance - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- MS Steel International - UAE
- Krishnapatnam Port Company Ltd. - India
- OPG Power Generation Pvt Ltd - India
- Vedanta Resources Plc - India
- Indian Energy Exchange, India
- Central Electricity Authority - India
- Indo Tambangraya Megah - Indonesia
- Bhoruka Overseas - Indonesia
- Parry Sugars Refinery, India
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- Posco Energy - South Korea
- SMC Global Power, Philippines
- Gujarat Sidhee Cement - India
- Holcim Trading Pte Ltd - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Petron Corporation, Philippines
- Romanian Commodities Exchange
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- Bayan Resources Tbk. - Indonesia
- Ind-Barath Power Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- Ambuja Cements Ltd - India
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- San Jose City I Power Corp, Philippines
- Uttam Galva Steels Limited - India
- Agrawal Coal Company - India
- McConnell Dowell - Australia
- Kohat Cement Company Ltd. - Pakistan
- Carbofer General Trading SA - India
- Billiton Holdings Pty Ltd - Australia
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- PetroVietnam Power Coal Import and Supply Company
- Tata Chemicals Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Sarangani Energy Corporation, Philippines
- Port Waratah Coal Services - Australia
- Independent Power Producers Association of India
- Mercuria Energy - Indonesia
- Madhucon Powers Ltd - India
- Medco Energi Mining Internasional
- Africa Commodities Group - South Africa
- ICICI Bank Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- LBH Netherlands Bv - Netherlands
- Sindya Power Generating Company Private Ltd
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Global Business Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Australian Coal Association
- Salva Resources Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- The University of Queensland
- Therma Luzon, Inc, Philippines
- Parliament of New Zealand
- Renaissance Capital - South Africa
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- Sakthi Sugars Limited - India
- Semirara Mining and Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Planning Commission, India
- SMG Consultants - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- Price Waterhouse Coopers - Russia
- Coalindo Energy - Indonesia
- The Treasury - Australian Government
- Georgia Ports Authority, United States
- Kaltim Prima Coal - Indonesia
- White Energy Company Limited
- Ceylon Electricity Board - Sri Lanka
- Kalimantan Lumbung Energi - Indonesia
- Minerals Council of Australia
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- Central Java Power - Indonesia
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- PTC India Limited - India
- Cement Manufacturers Association - India
- Mjunction Services Limited - India
- Trasteel International SA, Italy
- Star Paper Mills Limited - India
- IEA Clean Coal Centre - UK
- GVK Power & Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- Karaikal Port Pvt Ltd - India
- Edison Trading Spa - Italy
- Banpu Public Company Limited - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- London Commodity Brokers - England
- CIMB Investment Bank - Malaysia
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Binh Thuan Hamico - Vietnam
- Sinarmas Energy and Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bukit Baiduri Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Kumho Petrochemical, South Korea
- PNOC Exploration Corporation - Philippines
- New Zealand Coal & Carbon
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- Manunggal Multi Energi - Indonesia
- Ministry of Mines - Canada
- Wilmar Investment Holdings
- Larsen & Toubro Limited - India
- PowerSource Philippines DevCo
- Deloitte Consulting - India
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- Economic Council, Georgia
- South Luzon Thermal Energy Corporation
- Leighton Contractors Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- TeaM Sual Corporation - Philippines
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- Savvy Resources Ltd - HongKong
- Petrochimia International Co. Ltd.- Taiwan
- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- Marubeni Corporation - India
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- Meralco Power Generation, Philippines
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- Simpson Spence & Young - Indonesia
- Riau Bara Harum - Indonesia
- Anglo American - United Kingdom
- Directorate Of Revenue Intelligence - India
- Maheswari Brothers Coal Limited - India
- Siam City Cement PLC, Thailand
- AsiaOL BioFuels Corp., Philippines
- Bharathi Cement Corporation - India
- Dalmia Cement Bharat India
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- Orica Mining Services - Indonesia
- Sojitz Corporation - Japan
- Energy Link Ltd, New Zealand
- Indika Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Intertek Mineral Services - Indonesia
- Samtan Co., Ltd - South Korea
- GMR Energy Limited - India
- Sical Logistics Limited - India
- Pendopo Energi Batubara - Indonesia
- India Bulls Power Limited - India
- CNBM International Corporation - China
- Attock Cement Pakistan Limited
- Mintek Dendrill Indonesia
- Goldman Sachs - Singapore
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- Karbindo Abesyapradhi - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Generating Authority of Thailand
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