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