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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, 03 December 14
SHIPPING MARKET INSIGHT - KONSTANTINOS KONTOMICHIS
The dry bulk market seems unable to turn sentiment round and is still looking for direction. The BCI's 887-point free fall last week had an obv ...
Wednesday, 03 December 14
CAPESIZE DRY BULK CARRIERS ENTER 2015 WITH MIXED FORTUNES, WITH A POSITIVE AND A NEGATIVE SCENARIO BOTH EMERGING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The future of the Capesize dry bulk market appears to be engulfed from mixed “feelings” among analysts and market participants, despite ...
Tuesday, 02 December 14
KEY PLAYERS SHED NEW PERSPECTIVES ON COAL MARKETS
Press Release: Singapore’s ONLY and longest established Coal Trade event. Whilst Coal prices remain challenging, there is widespread consensu ...
Tuesday, 02 December 14
KOMIPO INVITES BIDS FOR 585,000 METRIC TONS OF COAL FOR Q1'15
COALspot.com - Korea Midland Power Co. Ltd. (KOMIPO) is inviting bids for the supply of 585,000 Metric Tons of coal. According to invitation, 5700 ...
Tuesday, 02 December 14
U.S WEEKLY COAL PRODUCTION FELL 1.4% WEEK ON WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.6 million short tons (mmst) o ...
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- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- Kapuas Tunggal Persada - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- The Treasury - Australian Government
- Simpson Spence & Young - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Salva Resources Pvt Ltd - India
- Edison Trading Spa - Italy
- OPG Power Generation Pvt Ltd - India
- Commonwealth Bank - Australia
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Jaiprakash Power Ventures ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Lanco Infratech Ltd - India
- Anglo American - United Kingdom
- Power Finance Corporation Ltd., India
- Ceylon Electricity Board - Sri Lanka
- Ministry of Mines - Canada
- European Bulk Services B.V. - Netherlands
- Mjunction Services Limited - India
- Price Waterhouse Coopers - Russia
- GVK Power & Infra Limited - India
- Energy Development Corp, Philippines
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- GAC Shipping (India) Pvt Ltd
- Timah Investasi Mineral - Indoneisa
- PNOC Exploration Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Asam (Persero) Tbk - Indonesia
- Cement Manufacturers Association - India
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Gujarat Sidhee Cement - India
- Kalimantan Lumbung Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Ind-Barath Power Infra Limited - India
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- Bharathi Cement Corporation - India
- Holcim Trading Pte Ltd - Singapore
- Mintek Dendrill Indonesia
- Makarim & Taira - Indonesia
- Sarangani Energy Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Borneo Indobara - Indonesia
- New Zealand Coal & Carbon
- Agrawal Coal Company - India
- Cigading International Bulk Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Oldendorff Carriers - Singapore
- Uttam Galva Steels Limited - India
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- Pipit Mutiara Jaya. PT, Indonesia
- Coal and Oil Company - UAE
- Ambuja Cements Ltd - India
- Carbofer General Trading SA - India
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhatia International Limited - India
- Africa Commodities Group - South Africa
- Kaltim Prima Coal - Indonesia
- MS Steel International - UAE
- Central Electricity Authority - India
- Attock Cement Pakistan Limited
- Merrill Lynch Commodities Europe
- Bayan Resources Tbk. - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Energy Link Ltd, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Bukit Baiduri Energy - Indonesia
- Posco Energy - South Korea
- SMC Global Power, Philippines
- Madhucon Powers Ltd - India
- Sojitz Corporation - Japan
- The University of Queensland
- IHS Mccloskey Coal Group - USA
- Chamber of Mines of South Africa
- Mercator Lines Limited - India
- Bangladesh Power Developement Board
- Central Java Power - Indonesia
- Electricity Authority, New Zealand
- The State Trading Corporation of India Ltd
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Meenaskhi Energy Private Limited - India
- LBH Netherlands Bv - Netherlands
- SN Aboitiz Power Inc, Philippines
- Aditya Birla Group - India
- Ministry of Finance - Indonesia
- Global Green Power PLC Corporation, Philippines
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Intertek Mineral Services - Indonesia
- Formosa Plastics Group - Taiwan
- Sical Logistics Limited - India
- Rio Tinto Coal - Australia
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Economic Council, Georgia
- Semirara Mining Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Larsen & Toubro Limited - India
- IEA Clean Coal Centre - UK
- Global Business Power Corporation, Philippines
- Renaissance Capital - South Africa
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Deloitte Consulting - India
- ASAPP Information Group - India
- Kobexindo Tractors - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Dalmia Cement Bharat India
- Australian Commodity Traders Exchange
- Pendopo Energi Batubara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Mineral Development Corp Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- Thai Mozambique Logistica
- Directorate General of MIneral and Coal - Indonesia
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Minerals Council of Australia
- Vizag Seaport Private Limited - India
- Interocean Group of Companies - India
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Trasteel International SA, Italy
- McConnell Dowell - Australia
- Meralco Power Generation, Philippines
- Indogreen Group - Indonesia
- Georgia Ports Authority, United States
- Thiess Contractors Indonesia
- Bhushan Steel Limited - India
- Toyota Tsusho Corporation, Japan
- SMG Consultants - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Goldman Sachs - Singapore
- Mercuria Energy - Indonesia
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- Planning Commission, India
- Tata Chemicals Ltd - India
- Indian Oil Corporation Limited
- Vedanta Resources Plc - India
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- Medco Energi Mining Internasional
- Aboitiz Power Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Romanian Commodities Exchange
- Indika Energy - Indonesia
- Antam Resourcindo - Indonesia
- India Bulls Power Limited - India
- Eastern Energy - Thailand
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- South Luzon Thermal Energy Corporation
- Bukit Makmur.PT - Indonesia
- Heidelberg Cement - Germany
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Maheswari Brothers Coal Limited - India
- Baramulti Group, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GMR Energy Limited - India
- Manunggal Multi Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Xindia Steels Limited - India
- PTC India Limited - India
- Tamil Nadu electricity Board
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- Banpu Public Company Limited - Thailand
- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- Grasim Industreis Ltd - India
- Videocon Industries ltd - India
- Semirara Mining and Power Corporation, Philippines
- Singapore Mercantile Exchange
- Parry Sugars Refinery, India
- Directorate Of Revenue Intelligence - India
- Sree Jayajothi Cements Limited - India
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