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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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Wednesday, 14 January 15
DRY BULK MARKET NOTED ANOTHER WEEKLY DECLINE - INTERMODAL
COALspot.com: The Dry bulk market noted another weekly decline on Friday, with the performance of the Capesize market still weighing down on the re ...
Wednesday, 14 January 15
MARKET INSIGHT - TIMOS PAPADIMITRIOU
In Oil we trust! The Barrel price has declined by almost a third in comparison to the 2014 January and has being on the downhill since early last s ...
Wednesday, 14 January 15
COMMODITIES AREN'T PRIMED FOR A REBOUND DURING 2015: SHIPPING COULD BENEFIT FROM LOWER PRICES - ROUSSANOGLOU, HELLENIC SHIPPING NEWS
In the recent past, higher commodity prices were driven by an increase in demand from developing countries, which spelled good news for ship owners ...
Wednesday, 14 January 15
SUB-BIT FOB INDONESIA COAL SWAP FOR Q1 DELIVERY CLOSED AT US$ 46.97 PMT
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 declined month on month and week over week.
The Q1 swap has fell US$ 1.53 (-3.15 ...
Wednesday, 14 January 15
Q4' 15 FOB NEWCASTLE COAL SWAP CLOSED 4.51% LOWER COMPARED TO Q1' 15 PRICE
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.56 per MT (-3.0%) month over month and US$ 1.03 (-2.0%) week ove ...
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- Sree Jayajothi Cements Limited - India
- Wilmar Investment Holdings
- Power Finance Corporation Ltd., India
- Sindya Power Generating Company Private Ltd
- Maharashtra Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- The State Trading Corporation of India Ltd
- Mercuria Energy - Indonesia
- Marubeni Corporation - India
- PNOC Exploration Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- Xindia Steels Limited - India
- Global Business Power Corporation, Philippines
- Romanian Commodities Exchange
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- Mercator Lines Limited - India
- CIMB Investment Bank - Malaysia
- Central Electricity Authority - India
- Lanco Infratech Ltd - India
- Uttam Galva Steels Limited - India
- Indogreen Group - Indonesia
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- Ministry of Finance - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Parliament of New Zealand
- London Commodity Brokers - England
- Ceylon Electricity Board - Sri Lanka
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Bukit Makmur.PT - Indonesia
- Latin American Coal - Colombia
- Ambuja Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Coal and Oil Company - UAE
- Rio Tinto Coal - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Coastal Gujarat Power Limited - India
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- SMG Consultants - Indonesia
- Global Green Power PLC Corporation, Philippines
- Energy Development Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Coal Council - USA
- White Energy Company Limited
- VISA Power Limited - India
- Barasentosa Lestari - Indonesia
- Planning Commission, India
- Baramulti Group, Indonesia
- The Treasury - Australian Government
- Global Coal Blending Company Limited - Australia
- Electricity Authority, New Zealand
- MS Steel International - UAE
- Energy Link Ltd, New Zealand
- Kobexindo Tractors - Indoneisa
- Therma Luzon, Inc, Philippines
- Dalmia Cement Bharat India
- ASAPP Information Group - India
- Metalloyd Limited - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Anglo American - United Kingdom
- Grasim Industreis Ltd - India
- Riau Bara Harum - Indonesia
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- Chamber of Mines of South Africa
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Australian Coal Association
- Medco Energi Mining Internasional
- Independent Power Producers Association of India
- Interocean Group of Companies - India
- Heidelberg Cement - Germany
- Thai Mozambique Logistica
- Timah Investasi Mineral - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Petrochimia International Co. Ltd.- Taiwan
- CNBM International Corporation - China
- Central Java Power - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- Alfred C Toepfer International GmbH - Germany
- The University of Queensland
- Madhucon Powers Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- Parry Sugars Refinery, India
- Coalindo Energy - Indonesia
- SMC Global Power, Philippines
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- Binh Thuan Hamico - Vietnam
- Aboitiz Power Corporation - Philippines
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Bukit Baiduri Energy - Indonesia
- ICICI Bank Limited - India
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Trasteel International SA, Italy
- Karbindo Abesyapradhi - Indoneisa
- Tamil Nadu electricity Board
- PowerSource Philippines DevCo
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- McConnell Dowell - Australia
- Bhushan Steel Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- Sakthi Sugars Limited - India
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining Corp, Philippines
- GVK Power & Infra Limited - India
- Attock Cement Pakistan Limited
- Thiess Contractors Indonesia
- Aditya Birla Group - India
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- IHS Mccloskey Coal Group - USA
- San Jose City I Power Corp, Philippines
- Goldman Sachs - Singapore
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- PetroVietnam Power Coal Import and Supply Company
- Kepco SPC Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Australian Commodity Traders Exchange
- IEA Clean Coal Centre - UK
- Kideco Jaya Agung - Indonesia
- Formosa Plastics Group - Taiwan
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- Deloitte Consulting - India
- Star Paper Mills Limited - India
- International Coal Ventures Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Minerals Council of Australia
- Bhatia International Limited - India
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- Vizag Seaport Private Limited - India
- TeaM Sual Corporation - Philippines
- PTC India Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Salva Resources Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- Krishnapatnam Port Company Ltd. - India
- Mintek Dendrill Indonesia
- Posco Energy - South Korea
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Billiton Holdings Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Ministry of Transport, Egypt
- Mjunction Services Limited - India
- India Bulls Power Limited - India
- Economic Council, Georgia
- Petron Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Port Waratah Coal Services - Australia
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- Tata Chemicals Ltd - India
- Chettinad Cement Corporation Ltd - India
- Maheswari Brothers Coal Limited - India
- Ministry of Mines - Canada
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Globalindo Alam Lestari - Indonesia
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