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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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Monday, 08 December 14
GOVERMENT TO WITHDRAW CNC STATUS OVER SUSPECTED FLAWS - THE JAKARTA POST
The Energy and Mineral Resources Ministry’s directorate general for mineral and coal plans to review the clean and clear (CnC) status held by ...
Monday, 08 December 14
FOB NEWCASTLE COAL SWAPS SLIP W-O-W AND M-O-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery closed at US$ 52.10 on 5 December after losing US$ 0.55 (-1.04%) month over ...
Sunday, 07 December 14
SUPRAMAX S8 ROUTE SLIGHTLY INCREASED WEEK ON WEEK
COALspot.com: The BDI continued its fall as cape index fell heavily week on week.
The BDI lost around14.83 pct within last five working day an ...
Saturday, 06 December 14
TANKER FLOATING STORAGE PLAYS COULD COME INTO PLAY IF VLCC RATES STAY AT CURRENT LEVEL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Contango: A phenomenon in commodities futures price curves where the delivery price of a futures contract is greater than the current price. With t ...
Saturday, 06 December 14
MUNDRA PORT MAKES HISTORY BY HANDLING THE LARGEST BULK CARRIER TO CALL ON WEST COAST OF INDIA
COALspot.com: Adani Ports & SEZ Ltd, India’s largest port developer and part of Adani Group, yesterday said its Mundra Port successf ...
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- TeaM Sual Corporation - Philippines
- Sakthi Sugars Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Romanian Commodities Exchange
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- Trasteel International SA, Italy
- Aditya Birla Group - India
- SMC Global Power, Philippines
- Mercuria Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Australian Commodity Traders Exchange
- Thai Mozambique Logistica
- Kartika Selabumi Mining - Indonesia
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Videocon Industries ltd - India
- Indonesian Coal Mining Association
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- Lanco Infratech Ltd - India
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Coal and Oil Company - UAE
- Tata Chemicals Ltd - India
- Thiess Contractors Indonesia
- ASAPP Information Group - India
- International Coal Ventures Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- AsiaOL BioFuels Corp., Philippines
- IEA Clean Coal Centre - UK
- Baramulti Group, Indonesia
- European Bulk Services B.V. - Netherlands
- Deloitte Consulting - India
- Semirara Mining and Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Parliament of New Zealand
- GAC Shipping (India) Pvt Ltd
- Cement Manufacturers Association - India
- Maharashtra Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- Vijayanagar Sugar Pvt Ltd - India
- Attock Cement Pakistan Limited
- Ministry of Mines - Canada
- Sindya Power Generating Company Private Ltd
- Chettinad Cement Corporation Ltd - India
- Electricity Generating Authority of Thailand
- Commonwealth Bank - Australia
- Meralco Power Generation, Philippines
- Bulk Trading Sa - Switzerland
- Rashtriya Ispat Nigam Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- The Treasury - Australian Government
- Bhatia International Limited - India
- Eastern Coal Council - USA
- Samtan Co., Ltd - South Korea
- Africa Commodities Group - South Africa
- Price Waterhouse Coopers - Russia
- PetroVietnam Power Coal Import and Supply Company
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- Kepco SPC Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- Kaltim Prima Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Central Electricity Authority - India
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- Goldman Sachs - Singapore
- Power Finance Corporation Ltd., India
- Straits Asia Resources Limited - Singapore
- Oldendorff Carriers - Singapore
- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
- Kohat Cement Company Ltd. - Pakistan
- Wood Mackenzie - Singapore
- Edison Trading Spa - Italy
- Pendopo Energi Batubara - Indonesia
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- Offshore Bulk Terminal Pte Ltd, Singapore
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Grasim Industreis Ltd - India
- Timah Investasi Mineral - Indoneisa
- Indogreen Group - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- Indika Energy - Indonesia
- PowerSource Philippines DevCo
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- Semirara Mining Corp, Philippines
- SMG Consultants - Indonesia
- SN Aboitiz Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Anglo American - United Kingdom
- Minerals Council of Australia
- VISA Power Limited - India
- Electricity Authority, New Zealand
- Altura Mining Limited, Indonesia
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Baiduri Energy - Indonesia
- Borneo Indobara - Indonesia
- ICICI Bank Limited - India
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Mercator Lines Limited - India
- Iligan Light & Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- The University of Queensland
- Global Green Power PLC Corporation, Philippines
- Therma Luzon, Inc, Philippines
- CIMB Investment Bank - Malaysia
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Merrill Lynch Commodities Europe
- Indo Tambangraya Megah - Indonesia
- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- Xindia Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jorong Barutama Greston.PT - Indonesia
- Singapore Mercantile Exchange
- McConnell Dowell - Australia
- Marubeni Corporation - India
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Simpson Spence & Young - Indonesia
- OPG Power Generation Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Vedanta Resources Plc - India
- Karbindo Abesyapradhi - Indoneisa
- Rio Tinto Coal - Australia
- Carbofer General Trading SA - India
- Riau Bara Harum - Indonesia
- Global Business Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Economic Council, Georgia
- Kapuas Tunggal Persada - Indonesia
- MS Steel International - UAE
- Meenaskhi Energy Private Limited - India
- Port Waratah Coal Services - Australia
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- LBH Netherlands Bv - Netherlands
- Central Java Power - Indonesia
- Sarangani Energy Corporation, Philippines
- Uttam Galva Steels Limited - India
- Petron Corporation, Philippines
- Chamber of Mines of South Africa
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Development Corp, Philippines
- Larsen & Toubro Limited - India
- GMR Energy Limited - India
- Eastern Energy - Thailand
- Posco Energy - South Korea
- Energy Link Ltd, New Zealand
- CNBM International Corporation - China
- South Luzon Thermal Energy Corporation
- Interocean Group of Companies - India
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- Jaiprakash Power Ventures ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- Australian Coal Association
- Dalmia Cement Bharat India
- Gujarat Mineral Development Corp Ltd - India
- Renaissance Capital - South Africa
- Wilmar Investment Holdings
- Coalindo Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Independent Power Producers Association of India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- Mjunction Services Limited - India
- Parry Sugars Refinery, India
- Ministry of Transport, Egypt
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
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