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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, 26 November 14
SHIPPING MARKET INSIGHT - EVA TZIMA
The tanker market has been enjoying some good returns lately. Ok, that may be a big understatement, but with all the ups and downs of the past year ...
Tuesday, 25 November 14
FISCAL BREAKEVEN OIL PRICES SHOW SOVEREIGN VULNERABILITY - FITCH
COALspot.com: The vulnerability of the sovereign credit profiles of net oil exporters, as shown by their fiscal breakeven oil prices, suggests that ...
Tuesday, 25 November 14
UK: TRIBUNAL RULES ON SPEED AND PERFORMANCE CLAIMS UNDER TWO CONSECUTIVE TIME CHARTERPARTIES - REED SMITH
KNOWLEDGE TO ELEVATE
“Owners not to be responsible if the vessel under the currency of this charter party stays at port or anchorage or ...
Tuesday, 25 November 14
FOB RICHARDS BAY COAL SWAP FOR Q4' 15 DELIVERY CLOSED AT US$ 68.20
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 gained month on month, week on week and day over day.
The Q1 swap has gain ...
Tuesday, 25 November 14
SUB-BIT FOB INDONESIA COAL SWAP FOR Q2' 15 DELIVERY CLOSED AT $ 49.55
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month, gained week on week.
The Q1 swap has lost US$ 0.12 (-0.24%) ...
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- Merrill Lynch Commodities Europe
- Iligan Light & Power Inc, Philippines
- Bhatia International Limited - India
- The University of Queensland
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Madhucon Powers Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Oldendorff Carriers - Singapore
- Borneo Indobara - Indonesia
- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- San Jose City I Power Corp, Philippines
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- Pipit Mutiara Jaya. PT, Indonesia
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- Ind-Barath Power Infra Limited - India
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Energy Link Ltd, New Zealand
- Africa Commodities Group - South Africa
- Intertek Mineral Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Krishnapatnam Port Company Ltd. - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Attock Cement Pakistan Limited
- IHS Mccloskey Coal Group - USA
- Marubeni Corporation - India
- Energy Development Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Lanco Infratech Ltd - India
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Finance - Indonesia
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- Global Business Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- Leighton Contractors Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Ceylon Electricity Board - Sri Lanka
- Sakthi Sugars Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Indika Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- GAC Shipping (India) Pvt Ltd
- OPG Power Generation Pvt Ltd - India
- Minerals Council of Australia
- Indian Oil Corporation Limited
- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- Economic Council, Georgia
- Goldman Sachs - Singapore
- Sical Logistics Limited - India
- Medco Energi Mining Internasional
- Global Coal Blending Company Limited - Australia
- Posco Energy - South Korea
- VISA Power Limited - India
- Wood Mackenzie - Singapore
- PowerSource Philippines DevCo
- Georgia Ports Authority, United States
- PTC India Limited - India
- Indogreen Group - Indonesia
- Agrawal Coal Company - India
- London Commodity Brokers - England
- New Zealand Coal & Carbon
- Kaltim Prima Coal - Indonesia
- Indonesian Coal Mining Association
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Coal and Oil Company - UAE
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- SN Aboitiz Power Inc, Philippines
- Makarim & Taira - Indonesia
- Mercator Lines Limited - India
- Ministry of Mines - Canada
- Globalindo Alam Lestari - Indonesia
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Antam Resourcindo - Indonesia
- Meenaskhi Energy Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Thiess Contractors Indonesia
- Vedanta Resources Plc - India
- Jindal Steel & Power Ltd - India
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TeaM Sual Corporation - Philippines
- Vizag Seaport Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Deloitte Consulting - India
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
- Bukit Baiduri Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Banpu Public Company Limited - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dalmia Cement Bharat India
- Thai Mozambique Logistica
- Star Paper Mills Limited - India
- Uttam Galva Steels Limited - India
- MS Steel International - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Riau Bara Harum - Indonesia
- The Treasury - Australian Government
- LBH Netherlands Bv - Netherlands
- Kumho Petrochemical, South Korea
- Samtan Co., Ltd - South Korea
- White Energy Company Limited
- Sree Jayajothi Cements Limited - India
- Holcim Trading Pte Ltd - Singapore
- Power Finance Corporation Ltd., India
- Commonwealth Bank - Australia
- Indian Energy Exchange, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GVK Power & Infra Limited - India
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Sindya Power Generating Company Private Ltd
- Alfred C Toepfer International GmbH - Germany
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- Savvy Resources Ltd - HongKong
- Ambuja Cements Ltd - India
- Trasteel International SA, Italy
- Bayan Resources Tbk. - Indonesia
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- Videocon Industries ltd - India
- Latin American Coal - Colombia
- Australian Commodity Traders Exchange
- Kobexindo Tractors - Indoneisa
- Singapore Mercantile Exchange
- Parliament of New Zealand
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- Siam City Cement PLC, Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- Chamber of Mines of South Africa
- Directorate General of MIneral and Coal - Indonesia
- Mintek Dendrill Indonesia
- Xindia Steels Limited - India
- Baramulti Group, Indonesia
- Romanian Commodities Exchange
- Edison Trading Spa - Italy
- Metalloyd Limited - United Kingdom
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Petron Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- McConnell Dowell - Australia
- GN Power Mariveles Coal Plant, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Binh Thuan Hamico - Vietnam
- Orica Mining Services - Indonesia
- Electricity Generating Authority of Thailand
- Planning Commission, India
- Heidelberg Cement - Germany
- Central Java Power - Indonesia
- Mjunction Services Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Indo Tambangraya Megah - Indonesia
- Electricity Authority, New Zealand
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