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