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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
FOB RICHARDS BAY COAL SWAP FOR Q2' 15 DELIVERY CLOSED AT US$ 65.60 PMT
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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- Dalmia Cement Bharat India
- VISA Power Limited - India
- Kobexindo Tractors - Indoneisa
- Makarim & Taira - Indonesia
- Toyota Tsusho Corporation, Japan
- Parliament of New Zealand
- IEA Clean Coal Centre - UK
- Oldendorff Carriers - Singapore
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- Borneo Indobara - Indonesia
- Power Finance Corporation Ltd., India
- Malabar Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- Jindal Steel & Power Ltd - India
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- Miang Besar Coal Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- Romanian Commodities Exchange
- Independent Power Producers Association of India
- The Treasury - Australian Government
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- Kumho Petrochemical, South Korea
- Samtan Co., Ltd - South Korea
- Wilmar Investment Holdings
- TNB Fuel Sdn Bhd - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Vizag Seaport Private Limited - India
- Kideco Jaya Agung - Indonesia
- Tamil Nadu electricity Board
- Ministry of Transport, Egypt
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- Mintek Dendrill Indonesia
- Straits Asia Resources Limited - Singapore
- Altura Mining Limited, Indonesia
- Globalindo Alam Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Formosa Plastics Group - Taiwan
- San Jose City I Power Corp, Philippines
- Therma Luzon, Inc, Philippines
- Salva Resources Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Edison Trading Spa - Italy
- Gujarat Sidhee Cement - India
- Semirara Mining Corp, Philippines
- SMG Consultants - Indonesia
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- Deloitte Consulting - India
- Metalloyd Limited - United Kingdom
- GMR Energy Limited - India
- Holcim Trading Pte Ltd - Singapore
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Orica Mining Services - Indonesia
- Jaiprakash Power Ventures ltd
- Eastern Energy - Thailand
- Billiton Holdings Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- Global Business Power Corporation, Philippines
- Renaissance Capital - South Africa
- Sical Logistics Limited - India
- ICICI Bank Limited - India
- Siam City Cement PLC, Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Carbofer General Trading SA - India
- Semirara Mining and Power Corporation, Philippines
- Ministry of Mines - Canada
- Electricity Authority, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Merrill Lynch Commodities Europe
- CNBM International Corporation - China
- GAC Shipping (India) Pvt Ltd
- Sindya Power Generating Company Private Ltd
- Planning Commission, India
- Indian Energy Exchange, India
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Minerals Council of Australia
- Vijayanagar Sugar Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- White Energy Company Limited
- Savvy Resources Ltd - HongKong
- Africa Commodities Group - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- Central Electricity Authority - India
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Chamber of Mines of South Africa
- Interocean Group of Companies - India
- PTC India Limited - India
- ASAPP Information Group - India
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- Timah Investasi Mineral - Indoneisa
- Cement Manufacturers Association - India
- Larsen & Toubro Limited - India
- Star Paper Mills Limited - India
- Directorate Of Revenue Intelligence - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rio Tinto Coal - Australia
- Anglo American - United Kingdom
- Tata Chemicals Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- Aboitiz Power Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- GVK Power & Infra Limited - India
- Commonwealth Bank - Australia
- Marubeni Corporation - India
- Australian Coal Association
- Economic Council, Georgia
- Gujarat Mineral Development Corp Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- Coastal Gujarat Power Limited - India
- Mjunction Services Limited - India
- Grasim Industreis Ltd - India
- Mercator Lines Limited - India
- Energy Link Ltd, New Zealand
- The State Trading Corporation of India Ltd
- Barasentosa Lestari - Indonesia
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement - Thailand
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- Sarangani Energy Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Kapuas Tunggal Persada - Indonesia
- The University of Queensland
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Indogreen Group - Indonesia
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Baiduri Energy - Indonesia
- Wood Mackenzie - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Petron Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Manunggal Multi Energi - Indonesia
- Heidelberg Cement - Germany
- Madhucon Powers Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Asmin Koalindo Tuhup - Indonesia
- TeaM Sual Corporation - Philippines
- Attock Cement Pakistan Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- London Commodity Brokers - England
- SMC Global Power, Philippines
- Singapore Mercantile Exchange
- European Bulk Services B.V. - Netherlands
- Ministry of Finance - Indonesia
- Global Green Power PLC Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Xindia Steels Limited - India
- Central Java Power - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Binh Thuan Hamico - Vietnam
- Medco Energi Mining Internasional
- Ambuja Cements Ltd - India
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- Vedanta Resources Plc - India
- Standard Chartered Bank - UAE
- Thiess Contractors Indonesia
- Riau Bara Harum - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Videocon Industries ltd - India
- Lanco Infratech Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Sakthi Sugars Limited - India
- Bangladesh Power Developement Board
- Electricity Generating Authority of Thailand
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
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