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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, 28 November 14
NEW BIMCO CLAUSE AIMS TO REDUCE SUPPLIERS' RELIANCE ON SHIP ARREST FOR CHARTERERS' UNPAID BUNKERS
KNOWLEDGE TO ELEVATE
Ship owners can, on occasion, find themselves in the invidious position of suffering unexpected loss of hire due to a tim ...
Friday, 28 November 14
JSW ENERGY AND GRM RESOURCES JOIN GLOBALCOAL
COALspot.com: globalCOAL® announced yesterday that two new Market Members have joined its online coal trading platform. According globaCOAL&rsq ...
Thursday, 27 November 14
MINING SERVICES TAX SPIKED BY 233% - BISNIS INDONESIA
COALspot.com: The Energy and Mineral Resources Department of Indonesia said the tax contribution from mining services sector in the 3rd Q 2014 ...
Thursday, 27 November 14
PANAMAX : EXPECTATION'S FOR A STRONG END OF YEAR RUSH, DISAPPEAR DAY BY DAY - FEARNLEYS
Handy
“We have experienced a firming market the last couple of weeks. More activity from cargo owners in the Atlantic and less available to ...
Wednesday, 26 November 14
OVERSUPPLY OF TONNAGE PUSHED PANAMAX SEGMENT DOWN FOR ANOTHER WEEK
COALspot.com: The Dry Bulk market managed to reverse its course from the week prior and with the sole exception of the Panamax segment, we witnesse ...
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- Interocean Group of Companies - India
- Savvy Resources Ltd - HongKong
- Star Paper Mills Limited - India
- Ministry of Finance - Indonesia
- Attock Cement Pakistan Limited
- Coastal Gujarat Power Limited - India
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Tamil Nadu electricity Board
- Wood Mackenzie - Singapore
- Barasentosa Lestari - Indonesia
- Latin American Coal - Colombia
- Ind-Barath Power Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The Treasury - Australian Government
- MS Steel International - UAE
- Gujarat Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Bukit Makmur.PT - Indonesia
- Petron Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- Orica Mining Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Central Electricity Authority - India
- Chettinad Cement Corporation Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thai Mozambique Logistica
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
- Siam City Cement - Thailand
- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Meralco Power Generation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Indika Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Mercuria Energy - Indonesia
- Chamber of Mines of South Africa
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Timah Investasi Mineral - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Medco Energi Mining Internasional
- Toyota Tsusho Corporation, Japan
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- Indonesian Coal Mining Association
- Sinarmas Energy and Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- Coal and Oil Company - UAE
- Power Finance Corporation Ltd., India
- Metalloyd Limited - United Kingdom
- IEA Clean Coal Centre - UK
- Indogreen Group - Indonesia
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- Thiess Contractors Indonesia
- Ceylon Electricity Board - Sri Lanka
- IHS Mccloskey Coal Group - USA
- Trasteel International SA, Italy
- Altura Mining Limited, Indonesia
- Essar Steel Hazira Ltd - India
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Bukit Baiduri Energy - Indonesia
- Cement Manufacturers Association - India
- Jindal Steel & Power Ltd - India
- Iligan Light & Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Samtan Co., Ltd - South Korea
- The State Trading Corporation of India Ltd
- Australian Coal Association
- Mintek Dendrill Indonesia
- Sree Jayajothi Cements Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Gujarat Sidhee Cement - India
- The University of Queensland
- Antam Resourcindo - Indonesia
- Sical Logistics Limited - India
- Kobexindo Tractors - Indoneisa
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- Electricity Authority, New Zealand
- Port Waratah Coal Services - Australia
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Price Waterhouse Coopers - Russia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- Standard Chartered Bank - UAE
- SMG Consultants - Indonesia
- Australian Commodity Traders Exchange
- Alfred C Toepfer International GmbH - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bank of Tokyo Mitsubishi UFJ Ltd
- TeaM Sual Corporation - Philippines
- Makarim & Taira - Indonesia
- PowerSource Philippines DevCo
- Jaiprakash Power Ventures ltd
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Minerals Council of Australia
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- Simpson Spence & Young - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Mercator Lines Limited - India
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Indo Tambangraya Megah - Indonesia
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- Georgia Ports Authority, United States
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- Tata Chemicals Ltd - India
- Bayan Resources Tbk. - Indonesia
- Kaltim Prima Coal - Indonesia
- Goldman Sachs - Singapore
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Lanco Infratech Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Aboitiz Power Corporation - Philippines
- Semirara Mining Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Wilmar Investment Holdings
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Xindia Steels Limited - India
- Dalmia Cement Bharat India
- Karaikal Port Pvt Ltd - India
- Economic Council, Georgia
- Pipit Mutiara Jaya. PT, Indonesia
- Heidelberg Cement - Germany
- South Luzon Thermal Energy Corporation
- ASAPP Information Group - India
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- Borneo Indobara - Indonesia
- Planning Commission, India
- Intertek Mineral Services - Indonesia
- Therma Luzon, Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Global Green Power PLC Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Madhucon Powers Ltd - India
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Anglo American - United Kingdom
- Commonwealth Bank - Australia
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Oil Corporation Limited
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- SMC Global Power, Philippines
- Global Business Power Corporation, Philippines
- Aditya Birla Group - India
- Marubeni Corporation - India
- Eastern Coal Council - USA
- Meenaskhi Energy Private Limited - India
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- London Commodity Brokers - England
- Independent Power Producers Association of India
- Oldendorff Carriers - Singapore
- Energy Development Corp, Philippines
- Carbofer General Trading SA - India
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- OPG Power Generation Pvt Ltd - India
- Singapore Mercantile Exchange
- Parry Sugars Refinery, India
- Bulk Trading Sa - Switzerland
- New Zealand Coal & Carbon
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- PTC India Limited - India
- Uttam Galva Steels Limited - India
- Formosa Plastics Group - Taiwan
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