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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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Friday, 05 December 14
CHINESE SPECIAL STEEL MAKERS' RISK PROFILES MORE RESILIENT - FITCH
Fitch Ratings says the risk profiles of Chinese makers of special steel, especially high-end products, are more like those of manufacturers and mor ...
Friday, 05 December 14
U.S. YEAR-TO-DATE COAL PRODUCTION REACHED AROUND 905 MMST - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19 million short tons (mmst) of coal i ...
Thursday, 04 December 14
CAPE MARKET IS DEVELOPING FROM BAD TO WORSE
Handy
The Atlantic market has been pretty stable and balanced this week, Fearnleys AS says in its latest weekly report.
The broker furt ...
Thursday, 04 December 14
DRY BULK MARKET; ANOTHER DISAPPOINTING WEEK
COALspot.com: For those who have been hoping to see alignment of freight direction across the Dry Bulk market, this must have been another disappoi ...
Wednesday, 03 December 14
PROGRESSING SMELTER PROJECTS IN INDONESIA
Press Release: Indonesia’s ban on ‘raw mineral export’ that was designed to encouraging downstream investment in mineral processi ...
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- Aboitiz Power Corporation - Philippines
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Energy Link Ltd, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- Kartika Selabumi Mining - Indonesia
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement - Thailand
- Holcim Trading Pte Ltd - Singapore
- Videocon Industries ltd - India
- Sakthi Sugars Limited - India
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- Singapore Mercantile Exchange
- Dalmia Cement Bharat India
- Indogreen Group - Indonesia
- European Bulk Services B.V. - Netherlands
- Price Waterhouse Coopers - Russia
- Global Coal Blending Company Limited - Australia
- Orica Mining Services - Indonesia
- Oldendorff Carriers - Singapore
- TeaM Sual Corporation - Philippines
- Parry Sugars Refinery, India
- Sojitz Corporation - Japan
- Anglo American - United Kingdom
- Ministry of Mines - Canada
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- Standard Chartered Bank - UAE
- Savvy Resources Ltd - HongKong
- Sical Logistics Limited - India
- Indo Tambangraya Megah - Indonesia
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- OPG Power Generation Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Sarangani Energy Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Larsen & Toubro Limited - India
- Indian Oil Corporation Limited
- CNBM International Corporation - China
- Kumho Petrochemical, South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Malabar Cements Ltd - India
- Planning Commission, India
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- CIMB Investment Bank - Malaysia
- Indika Energy - Indonesia
- Global Business Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Sindya Power Generating Company Private Ltd
- Independent Power Producers Association of India
- GVK Power & Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Karaikal Port Pvt Ltd - India
- Parliament of New Zealand
- Medco Energi Mining Internasional
- Goldman Sachs - Singapore
- Iligan Light & Power Inc, Philippines
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- Meralco Power Generation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
- Xindia Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Mintek Dendrill Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Coal and Oil Company - UAE
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- Coalindo Energy - Indonesia
- Petron Corporation, Philippines
- Energy Development Corp, Philippines
- Aditya Birla Group - India
- Global Green Power PLC Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Coastal Gujarat Power Limited - India
- Mjunction Services Limited - India
- Borneo Indobara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Merrill Lynch Commodities Europe
- Petrochimia International Co. Ltd.- Taiwan
- SN Aboitiz Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Star Paper Mills Limited - India
- Deloitte Consulting - India
- Essar Steel Hazira Ltd - India
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- PNOC Exploration Corporation - Philippines
- Altura Mining Limited, Indonesia
- SMG Consultants - Indonesia
- ASAPP Information Group - India
- Electricity Generating Authority of Thailand
- Directorate Of Revenue Intelligence - India
- Bangladesh Power Developement Board
- GAC Shipping (India) Pvt Ltd
- Binh Thuan Hamico - Vietnam
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Agrawal Coal Company - India
- Formosa Plastics Group - Taiwan
- VISA Power Limited - India
- Ambuja Cements Ltd - India
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- San Jose City I Power Corp, Philippines
- SMC Global Power, Philippines
- Gujarat Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Ministry of Finance - Indonesia
- Meenaskhi Energy Private Limited - India
- The Treasury - Australian Government
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
- Globalindo Alam Lestari - Indonesia
- Commonwealth Bank - Australia
- Semirara Mining Corp, Philippines
- Orica Australia Pty. Ltd.
- Barasentosa Lestari - Indonesia
- Economic Council, Georgia
- Banpu Public Company Limited - Thailand
- Intertek Mineral Services - Indonesia
- Thiess Contractors Indonesia
- Sinarmas Energy and Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Marubeni Corporation - India
- Edison Trading Spa - Italy
- Electricity Authority, New Zealand
- LBH Netherlands Bv - Netherlands
- White Energy Company Limited
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Interocean Group of Companies - India
- Latin American Coal - Colombia
- Africa Commodities Group - South Africa
- Romanian Commodities Exchange
- Minerals Council of Australia
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- IEA Clean Coal Centre - UK
- Simpson Spence & Young - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Chamber of Mines of South Africa
- Mercuria Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Eastern Coal Council - USA
- Vizag Seaport Private Limited - India
- Lanco Infratech Ltd - India
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- Central Electricity Authority - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Carbofer General Trading SA - India
- McConnell Dowell - Australia
- Australian Coal Association
- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- Indian Energy Exchange, India
- Bahari Cakrawala Sebuku - Indonesia
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- Maheswari Brothers Coal Limited - India
- Tata Chemicals Ltd - India
- International Coal Ventures Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Thai Mozambique Logistica
- GMR Energy Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The University of Queensland
- Australian Commodity Traders Exchange
- Leighton Contractors Pty Ltd - Australia
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