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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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Monday, 15 December 14
CFR SOUTH CHINA COAL SWAP LOST $3.37 M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased by US$ 3,37 (-5.33%) month over month and US$ 1.58 (-2.57%) ...
Monday, 15 December 14
Q1' 15 FOB NEWCASTLE COAL SWAP CLOSED AT $ 51.45 ON 12 DEC
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.45 per MT (-2.74%) closed at US$ 51.45 on 12 December month over ...
Sunday, 14 December 14
FREIGHT RATES ARE EXPECTED TO BE SOFT NEXT WEEK
COALspot.com: The Baltic Dry Index (BDI), a measure of commodity-shipping costs, fell 12.12 pct to 863 points week ending 12 December 2014.
Th ...
Friday, 12 December 14
LIMITED TRADING AND AN OVERSUPPLY OF TONNAGE PUSHED HANDY SIZE SHIPS TO DOWN IN USG
Handy
We have seen the TA spot market come down this week lead by limited trading and an oversupply of tonnage in the USG, Fearnleys said in its ...
Friday, 12 December 14
U.S WEEKLY COAL PRODUCTION UP 3.4% W/E DECEMBER 6
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.6 million short tons (mmst) of coal ...
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- Petrochimia International Co. Ltd.- Taiwan
- Globalindo Alam Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Baramulti Group, Indonesia
- Bhatia International Limited - India
- Agrawal Coal Company - India
- Gujarat Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Mjunction Services Limited - India
- Bharathi Cement Corporation - India
- Maheswari Brothers Coal Limited - India
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- Gujarat Mineral Development Corp Ltd - India
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- CIMB Investment Bank - Malaysia
- Power Finance Corporation Ltd., India
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- New Zealand Coal & Carbon
- Ceylon Electricity Board - Sri Lanka
- Vedanta Resources Plc - India
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- White Energy Company Limited
- SN Aboitiz Power Inc, Philippines
- ICICI Bank Limited - India
- Orica Mining Services - Indonesia
- Therma Luzon, Inc, Philippines
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- McConnell Dowell - Australia
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- GVK Power & Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Tamil Nadu electricity Board
- Sinarmas Energy and Mining - Indonesia
- Sojitz Corporation - Japan
- Coal and Oil Company - UAE
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Borneo Indobara - Indonesia
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- ASAPP Information Group - India
- Kaltim Prima Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMC Global Power, Philippines
- Petron Corporation, Philippines
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- MS Steel International - UAE
- Deloitte Consulting - India
- Orica Australia Pty. Ltd.
- LBH Netherlands Bv - Netherlands
- Gujarat Sidhee Cement - India
- Bukit Asam (Persero) Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- Edison Trading Spa - Italy
- Maharashtra Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Sindya Power Generating Company Private Ltd
- Siam City Cement - Thailand
- Romanian Commodities Exchange
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- AsiaOL BioFuels Corp., Philippines
- Bukit Baiduri Energy - Indonesia
- PTC India Limited - India
- Thai Mozambique Logistica
- Bangladesh Power Developement Board
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- The University of Queensland
- Interocean Group of Companies - India
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- Trasteel International SA, Italy
- Jorong Barutama Greston.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Timah Investasi Mineral - Indoneisa
- Electricity Generating Authority of Thailand
- Rashtriya Ispat Nigam Limited - India
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- Essar Steel Hazira Ltd - India
- Heidelberg Cement - Germany
- Madhucon Powers Ltd - India
- South Luzon Thermal Energy Corporation
- Sical Logistics Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- Independent Power Producers Association of India
- European Bulk Services B.V. - Netherlands
- Minerals Council of Australia
- India Bulls Power Limited - India
- Energy Development Corp, Philippines
- Mercator Lines Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Singapore Mercantile Exchange
- Indian Energy Exchange, India
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- Simpson Spence & Young - Indonesia
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- Planning Commission, India
- Dalmia Cement Bharat India
- Tata Chemicals Ltd - India
- Ministry of Transport, Egypt
- Jindal Steel & Power Ltd - India
- Energy Link Ltd, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Aditya Birla Group - India
- San Jose City I Power Corp, Philippines
- Barasentosa Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Merrill Lynch Commodities Europe
- Metalloyd Limited - United Kingdom
- Malabar Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Videocon Industries ltd - India
- GAC Shipping (India) Pvt Ltd
- CNBM International Corporation - China
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- Latin American Coal - Colombia
- Indonesian Coal Mining Association
- Georgia Ports Authority, United States
- Kepco SPC Power Corporation, Philippines
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Kideco Jaya Agung - Indonesia
- Formosa Plastics Group - Taiwan
- Australian Coal Association
- Siam City Cement PLC, Thailand
- Pendopo Energi Batubara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Banpu Public Company Limited - Thailand
- Leighton Contractors Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- Wilmar Investment Holdings
- Vizag Seaport Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aboitiz Power Corporation - Philippines
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Standard Chartered Bank - UAE
- Bulk Trading Sa - Switzerland
- Indo Tambangraya Megah - Indonesia
- Global Green Power PLC Corporation, Philippines
- Renaissance Capital - South Africa
- Altura Mining Limited, Indonesia
- Savvy Resources Ltd - HongKong
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Meenaskhi Energy Private Limited - India
- Ministry of Finance - Indonesia
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Jaiprakash Power Ventures ltd
- Thiess Contractors Indonesia
- Directorate Of Revenue Intelligence - India
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- GMR Energy Limited - India
- Global Coal Blending Company Limited - Australia
- Parliament of New Zealand
- Bayan Resources Tbk. - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Eastern Coal Council - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- VISA Power Limited - India
- Meralco Power Generation, Philippines
- Posco Energy - South Korea
- Anglo American - United Kingdom
- Carbofer General Trading SA - India
- Makarim & Taira - Indonesia
- Bukit Makmur.PT - Indonesia
- Port Waratah Coal Services - Australia
- Uttam Galva Steels Limited - India
- Wood Mackenzie - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- Karbindo Abesyapradhi - Indoneisa
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