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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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Saturday, 22 November 14
THE FALL IN BUNKER PRICES REDUCE FUEL COSTS SIGNIFICANTLY - BIMCO, PETER SAND
For a ship that burns 24 tonnes of fuel per day while steaming, fuel costs are reduced by as much as USD 1 million a year if current price level st ...
Saturday, 22 November 14
DRY BULKERS NEWBUILDING DELIVERIES REACHED 11.8 MILLION DWT DURING THIRD QUARTER, NET FLEET GROWTH FOR 2014 TO REACH 5% - HELLENIC SHIPPING NEWS
The dry bulk market has rebounded since its less than impressive performance since the start of the year, but overall, third quarter figures could ...
Friday, 21 November 14
BUMI ENTERS INTO CONDITIONAL SALE & PURCHASE AGREEMENT TO SELL FBS STAKE
COALspot.com: PT Bumi Resources Tbk, one of the Indonesia's largest coal producers confirms that it has executed a Conditional Sale and Purchas ...
Friday, 21 November 14
U.S LAST WEEK'S COAL PRODUCTION STAYS FLAT W-O-W
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.9 million short tons (mmst) of coal ...
Thursday, 20 November 14
MOST MAJOR ASIAN ECONOMIES TO BENEFIT FROM LOWER OIL - FITCH
COALspot.com: The 25% drop in the price of oil since July is likely to lift economic growth prospects, improve terms of trade, and have a pot ...
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- Romanian Commodities Exchange
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Price Waterhouse Coopers - Russia
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- White Energy Company Limited
- Bhushan Steel Limited - India
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- Lanco Infratech Ltd - India
- Kartika Selabumi Mining - Indonesia
- McConnell Dowell - Australia
- Directorate Of Revenue Intelligence - India
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Sree Jayajothi Cements Limited - India
- Uttam Galva Steels Limited - India
- Carbofer General Trading SA - India
- IEA Clean Coal Centre - UK
- Goldman Sachs - Singapore
- Coal and Oil Company - UAE
- PetroVietnam Power Coal Import and Supply Company
- Globalindo Alam Lestari - Indonesia
- Australian Commodity Traders Exchange
- Bhoruka Overseas - Indonesia
- ASAPP Information Group - India
- Ministry of Mines - Canada
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Toyota Tsusho Corporation, Japan
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Rashtriya Ispat Nigam Limited - India
- CNBM International Corporation - China
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Malabar Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Electricity Authority - India
- PowerSource Philippines DevCo
- San Jose City I Power Corp, Philippines
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining and Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Commonwealth Bank - Australia
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Indonesian Coal Mining Association
- Straits Asia Resources Limited - Singapore
- Gujarat Sidhee Cement - India
- Indogreen Group - Indonesia
- Vedanta Resources Plc - India
- Banpu Public Company Limited - Thailand
- Therma Luzon, Inc, Philippines
- SMG Consultants - Indonesia
- AsiaOL BioFuels Corp., Philippines
- The Treasury - Australian Government
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- Sindya Power Generating Company Private Ltd
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- GVK Power & Infra Limited - India
- Samtan Co., Ltd - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Singapore Mercantile Exchange
- PNOC Exploration Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Trasteel International SA, Italy
- TNB Fuel Sdn Bhd - Malaysia
- Essar Steel Hazira Ltd - India
- Orica Australia Pty. Ltd.
- Maheswari Brothers Coal Limited - India
- Tamil Nadu electricity Board
- LBH Netherlands Bv - Netherlands
- Port Waratah Coal Services - Australia
- Meralco Power Generation, Philippines
- Georgia Ports Authority, United States
- Baramulti Group, Indonesia
- Thai Mozambique Logistica
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- Orica Mining Services - Indonesia
- Oldendorff Carriers - Singapore
- Mintek Dendrill Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Rio Tinto Coal - Australia
- Karbindo Abesyapradhi - Indoneisa
- Kumho Petrochemical, South Korea
- Ind-Barath Power Infra Limited - India
- Sarangani Energy Corporation, Philippines
- The State Trading Corporation of India Ltd
- Kohat Cement Company Ltd. - Pakistan
- European Bulk Services B.V. - Netherlands
- Grasim Industreis Ltd - India
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- Eastern Coal Council - USA
- Bhatia International Limited - India
- International Coal Ventures Pvt Ltd - India
- MS Steel International - UAE
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- The University of Queensland
- Meenaskhi Energy Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Kapuas Tunggal Persada - Indonesia
- Savvy Resources Ltd - HongKong
- Borneo Indobara - Indonesia
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- Petrochimia International Co. Ltd.- Taiwan
- Parry Sugars Refinery, India
- Mjunction Services Limited - India
- Madhucon Powers Ltd - India
- Coastal Gujarat Power Limited - India
- Xindia Steels Limited - India
- Bulk Trading Sa - Switzerland
- London Commodity Brokers - England
- Attock Cement Pakistan Limited
- GN Power Mariveles Coal Plant, Philippines
- Salva Resources Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- New Zealand Coal & Carbon
- Heidelberg Cement - Germany
- Anglo American - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Java Power - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- Chamber of Mines of South Africa
- Mercuria Energy - Indonesia
- Global Business Power Corporation, Philippines
- Ministry of Transport, Egypt
- Simpson Spence & Young - Indonesia
- Wilmar Investment Holdings
- Chettinad Cement Corporation Ltd - India
- Planning Commission, India
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- Mercator Lines Limited - India
- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- Vizag Seaport Private Limited - India
- Aditya Birla Group - India
- Ceylon Electricity Board - Sri Lanka
- ICICI Bank Limited - India
- Electricity Authority, New Zealand
- Economic Council, Georgia
- Jaiprakash Power Ventures ltd
- GAC Shipping (India) Pvt Ltd
- Binh Thuan Hamico - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Independent Power Producers Association of India
- Sical Logistics Limited - India
- Power Finance Corporation Ltd., India
- PTC India Limited - India
- Parliament of New Zealand
- Indian Oil Corporation Limited
- Posco Energy - South Korea
- Jindal Steel & Power Ltd - India
- Antam Resourcindo - Indonesia
- Larsen & Toubro Limited - India
- Interocean Group of Companies - India
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Wood Mackenzie - Singapore
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Sojitz Corporation - Japan
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Global Coal Blending Company Limited - Australia
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- Videocon Industries ltd - India
- Semirara Mining Corp, Philippines
- Cement Manufacturers Association - India
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