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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, 07 January 15
2015 IS RIDDLED WITH CHALLENGES FOR THE SHIPPING SECTOR, MOST NOTABLY THE DRY BULK MARKET - HELLENIC SHIPPING NEWS
As the new year has now set foot for real, many are still looking to detect what’s in store for the various shipping markets, with the first ...
Tuesday, 06 January 15
SHIPPING MUST ADOPT CAN-DO ATTITUDE IN 2015 - MOORE STEPHENS
Shipping needs to adopt a can-do attitude in order to successfully meet the challenges which are likely to come its way in 2015.
Shipping part ...
Tuesday, 06 January 15
Q4' 15 FOB INDONESIA COAL SWAP CLOSED 1.81% HIGHER COMPARED TO Q1' 15 CLOSING
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month and week over week.
The Q1 swap has lost US$ 0.74 (-1.51%) m ...
Tuesday, 06 January 15
FOB RICHARDS BAY COAL SWAPS LOST W-O-W AND M-O-M, SGX DATA SHOWS
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 lost month on month and week over week.
The Q1 swap has lost US$ 3.52 (-5. ...
Monday, 05 January 15
CFR SOUTH CHINA COAL SWAPS GAINED WEEK OVER WEEK, SGX DATA SHOWS
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased by US$ 2.50 (-4.02%) month over month and gained US$ 0.20 ( ...
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- Karbindo Abesyapradhi - Indoneisa
- ICICI Bank Limited - India
- Semirara Mining Corp, Philippines
- IEA Clean Coal Centre - UK
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- CNBM International Corporation - China
- Global Coal Blending Company Limited - Australia
- Commonwealth Bank - Australia
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Sidhee Cement - India
- Marubeni Corporation - India
- LBH Netherlands Bv - Netherlands
- Latin American Coal - Colombia
- Tata Chemicals Ltd - India
- AsiaOL BioFuels Corp., Philippines
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- ASAPP Information Group - India
- Orica Mining Services - Indonesia
- Coalindo Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Coal and Oil Company - UAE
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement - Thailand
- Jaiprakash Power Ventures ltd
- Interocean Group of Companies - India
- Electricity Generating Authority of Thailand
- The State Trading Corporation of India Ltd
- Wood Mackenzie - Singapore
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Alfred C Toepfer International GmbH - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Sree Jayajothi Cements Limited - India
- Videocon Industries ltd - India
- Thiess Contractors Indonesia
- Georgia Ports Authority, United States
- Attock Cement Pakistan Limited
- Leighton Contractors Pty Ltd - Australia
- Tamil Nadu electricity Board
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- Bulk Trading Sa - Switzerland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Savvy Resources Ltd - HongKong
- SMG Consultants - Indonesia
- Chettinad Cement Corporation Ltd - India
- Ministry of Mines - Canada
- Indian Oil Corporation Limited
- Manunggal Multi Energi - Indonesia
- Renaissance Capital - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Sindya Power Generating Company Private Ltd
- Mercuria Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Independent Power Producers Association of India
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- Maheswari Brothers Coal Limited - India
- Kalimantan Lumbung Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Bhatia International Limited - India
- The University of Queensland
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- PowerSource Philippines DevCo
- International Coal Ventures Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Rio Tinto Coal - Australia
- Kideco Jaya Agung - Indonesia
- Dalmia Cement Bharat India
- SN Aboitiz Power Inc, Philippines
- MS Steel International - UAE
- Kepco SPC Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- Neyveli Lignite Corporation Ltd, - India
- Sical Logistics Limited - India
- Semirara Mining and Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Directorate Of Revenue Intelligence - India
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Vedanta Resources Plc - India
- VISA Power Limited - India
- New Zealand Coal & Carbon
- Chamber of Mines of South Africa
- Antam Resourcindo - Indonesia
- Posco Energy - South Korea
- Global Business Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Indogreen Group - Indonesia
- Parry Sugars Refinery, India
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Lanco Infratech Ltd - India
- Bhushan Steel Limited - India
- Straits Asia Resources Limited - Singapore
- South Luzon Thermal Energy Corporation
- Economic Council, Georgia
- Agrawal Coal Company - India
- Bharathi Cement Corporation - India
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Grasim Industreis Ltd - India
- Power Finance Corporation Ltd., India
- Electricity Authority, New Zealand
- Indian Energy Exchange, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- Wilmar Investment Holdings
- Eastern Energy - Thailand
- Medco Energi Mining Internasional
- Mercator Lines Limited - India
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Port Waratah Coal Services - Australia
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Indonesian Coal Mining Association
- Aditya Birla Group - India
- Ministry of Transport, Egypt
- Globalindo Alam Lestari - Indonesia
- Petron Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Kaltim Prima Coal - Indonesia
- Minerals Council of Australia
- The Treasury - Australian Government
- Intertek Mineral Services - Indonesia
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Cement Manufacturers Association - India
- Barasentosa Lestari - Indonesia
- Singapore Mercantile Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ambuja Cements Ltd - India
- Central Electricity Authority - India
- Energy Development Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Pendopo Energi Batubara - Indonesia
- Kobexindo Tractors - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Standard Chartered Bank - UAE
- Orica Australia Pty. Ltd.
- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
- McConnell Dowell - Australia
- Planning Commission, India
- Bahari Cakrawala Sebuku - Indonesia
- Samtan Co., Ltd - South Korea
- Toyota Tsusho Corporation, Japan
- Maharashtra Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- Baramulti Group, Indonesia
- Australian Commodity Traders Exchange
- Vizag Seaport Private Limited - India
- Mjunction Services Limited - India
- CIMB Investment Bank - Malaysia
- Deloitte Consulting - India
- Makarim & Taira - Indonesia
- Borneo Indobara - Indonesia
- Xindia Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Simpson Spence & Young - Indonesia
- Parliament of New Zealand
- Energy Link Ltd, New Zealand
- Bukit Baiduri Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- OPG Power Generation Pvt Ltd - India
- Trasteel International SA, Italy
- Gujarat Mineral Development Corp Ltd - India
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
- India Bulls Power Limited - India
- Romanian Commodities Exchange
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Goldman Sachs - Singapore
- Kumho Petrochemical, South Korea
- White Energy Company Limited
- SMC Global Power, Philippines
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