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