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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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Wednesday, 10 December 14
SHIPPING MARKET INSIGHT - GEORGE ILIOPOULOS, INTERMODAL
COALspot.com: As 2014 is coming to an end, we look back to what has happened during the year and notice that SnP activity has been particularly sof ...
Wednesday, 10 December 14
WORLD HARD COAL MARKET 2014: PRODUCTION AND TRADE STAGNATING, IMPORTS TO GERMANY AND EUROPE ON THE DECLINE
Press Release: German Coal Importers Association (VDKi) criticizes regulations ordering reduction of CO2 emissions from coal-fired power plants as ...
Tuesday, 09 December 14
PRESSURE ON CHINA COAL MINERS TO CONTINUE DESPITE GOVERNMENT SUPPORT - FITCH
COALspot.com: Fitch Ratings says that Chinese coal mining companies will continue to be pressured by low prices, which will persist despite recent ...
Tuesday, 09 December 14
Q4' 2015, FOB INDONESIA COAL SWAP CLOSED AT $ 49.02 W/E 5 DEC
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month, week over week and day on day.
The Q1 swap has lost US$ 0.2 ...
Tuesday, 09 December 14
API 8 CFR SOUTH CHINA COAL SWAPS FELL 1.8% MONTH OVER MONTH
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased US$ 1.84 (-2.91%) month over month and US$ 0.95 (-1.52%) we ...
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- PetroVietnam Power Coal Import and Supply Company
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- London Commodity Brokers - England
- Videocon Industries ltd - India
- Parliament of New Zealand
- Tata Chemicals Ltd - India
- IEA Clean Coal Centre - UK
- GMR Energy Limited - India
- PTC India Limited - India
- New Zealand Coal & Carbon
- Coal and Oil Company - UAE
- Orica Australia Pty. Ltd.
- CNBM International Corporation - China
- Agrawal Coal Company - India
- Global Business Power Corporation, Philippines
- Mercator Lines Limited - India
- Orica Mining Services - Indonesia
- Wilmar Investment Holdings
- Eastern Energy - Thailand
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- International Coal Ventures Pvt Ltd - India
- Meralco Power Generation, Philippines
- Parry Sugars Refinery, India
- SMG Consultants - Indonesia
- Indogreen Group - Indonesia
- Mintek Dendrill Indonesia
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- Therma Luzon, Inc, Philippines
- SMC Global Power, Philippines
- Larsen & Toubro Limited - India
- Directorate Of Revenue Intelligence - India
- McConnell Dowell - Australia
- LBH Netherlands Bv - Netherlands
- Madhucon Powers Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhushan Steel Limited - India
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Neyveli Lignite Corporation Ltd, - India
- Cigading International Bulk Terminal - Indonesia
- Posco Energy - South Korea
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- Power Finance Corporation Ltd., India
- GVK Power & Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rashtriya Ispat Nigam Limited - India
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- Chamber of Mines of South Africa
- Vedanta Resources Plc - India
- Economic Council, Georgia
- Sinarmas Energy and Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- PNOC Exploration Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- Krishnapatnam Port Company Ltd. - India
- Makarim & Taira - Indonesia
- Indonesian Coal Mining Association
- Energy Development Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- Sree Jayajothi Cements Limited - India
- Standard Chartered Bank - UAE
- Interocean Group of Companies - India
- ICICI Bank Limited - India
- Attock Cement Pakistan Limited
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Baramulti Group, Indonesia
- Intertek Mineral Services - Indonesia
- Vizag Seaport Private Limited - India
- Bhatia International Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Manunggal Multi Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Global Coal Blending Company Limited - Australia
- Barasentosa Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- SN Aboitiz Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- Bulk Trading Sa - Switzerland
- Oldendorff Carriers - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Samtan Co., Ltd - South Korea
- IHS Mccloskey Coal Group - USA
- Gujarat Sidhee Cement - India
- Bhoruka Overseas - Indonesia
- White Energy Company Limited
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Rio Tinto Coal - Australia
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Coastal Gujarat Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Independent Power Producers Association of India
- Africa Commodities Group - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Metalloyd Limited - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Singapore Mercantile Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Marubeni Corporation - India
- Siam City Cement - Thailand
- Latin American Coal - Colombia
- Banpu Public Company Limited - Thailand
- Holcim Trading Pte Ltd - Singapore
- Meenaskhi Energy Private Limited - India
- Xindia Steels Limited - India
- Anglo American - United Kingdom
- Deloitte Consulting - India
- Malabar Cements Ltd - India
- Tamil Nadu electricity Board
- Binh Thuan Hamico - Vietnam
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Minerals Council of Australia
- Indian Energy Exchange, India
- European Bulk Services B.V. - Netherlands
- Indian Oil Corporation Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Petron Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Kumho Petrochemical, South Korea
- The University of Queensland
- Heidelberg Cement - Germany
- Kaltim Prima Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- Global Green Power PLC Corporation, Philippines
- Trasteel International SA, Italy
- Bukit Makmur.PT - Indonesia
- Ambuja Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Dalmia Cement Bharat India
- TNB Fuel Sdn Bhd - Malaysia
- Ind-Barath Power Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Electricity Generating Authority of Thailand
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Mercuria Energy - Indonesia
- Australian Coal Association
- Aditya Birla Group - India
- Semirara Mining Corp, Philippines
- The Treasury - Australian Government
- Aboitiz Power Corporation - Philippines
- Bharathi Cement Corporation - India
- Sical Logistics Limited - India
- Medco Energi Mining Internasional
- Salva Resources Pvt Ltd - India
- ASAPP Information Group - India
- Globalindo Alam Lestari - Indonesia
- Antam Resourcindo - Indonesia
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- MS Steel International - UAE
- GN Power Mariveles Coal Plant, Philippines
- Sarangani Energy Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- Merrill Lynch Commodities Europe
- Sindya Power Generating Company Private Ltd
- Indika Energy - Indonesia
- Georgia Ports Authority, United States
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- Goldman Sachs - Singapore
- Central Java Power - Indonesia
- Sojitz Corporation - Japan
- Port Waratah Coal Services - Australia
- Gujarat Mineral Development Corp Ltd - India
- Central Electricity Authority - India
- Sakthi Sugars Limited - India
- Karaikal Port Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Savvy Resources Ltd - HongKong
- Ministry of Mines - Canada
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- Star Paper Mills Limited - India
- GAC Shipping (India) Pvt Ltd
- Miang Besar Coal Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- CIMB Investment Bank - Malaysia
- Bukit Baiduri Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Essar Steel Hazira Ltd - India
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