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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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Thursday, 01 January 15
FOB RICHARDS BAY COAL SWAPS CLOSED AT $63.47 PMT ON 26 DEC, SGX DATA SHOWS
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 lost month on month and week over week.
The Q1 swap has lost US$ 3.37 (-4. ...
Wednesday, 31 December 14
COASTAL ENERGEN (C&O) COMMENCES 1ST UNIT OF 1200 MW POWER PLANT IN INDIA
COALspot.com: Coastal Energen, part of the Coal & Oil Group, announced last week the commissioning and commencement of power production at the ...
Wednesday, 31 December 14
SUB-BIT INDONESIA COAL Q2' 15 DELIVERY SWAP CLOSED 1.03% LOWER COMPARED TO AVERAGE Q1' 15 DELIVERY PRICE - SGX
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month and gained week over week.
The Q1 swap has lost US$ 1.35 (-2 ...
Tuesday, 30 December 14
SHIP PRICES KEEP ON FALLING, SALES COME EARLY FOR SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Ship prices keep on falling on the back of low freight rates. According to the latest report from shipbroker Allied Shipbroking, January sales seem ...
Tuesday, 30 December 14
INDIA INC TO BENEFIT AS IMPORTED COAL PRICES SET TO FALL - RAHUL PRITHIANI
The Hindu: India‘s coal import volumes are set to rise by over 30 per cent over the next two years to 214 million tonnes in 2015-16, as domes ...
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- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PowerSource Philippines DevCo
- Price Waterhouse Coopers - Russia
- Siam City Cement PLC, Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meralco Power Generation, Philippines
- Sakthi Sugars Limited - India
- Planning Commission, India
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- Agrawal Coal Company - India
- Indian Energy Exchange, India
- Billiton Holdings Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Sree Jayajothi Cements Limited - India
- Intertek Mineral Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- India Bulls Power Limited - India
- Savvy Resources Ltd - HongKong
- Bukit Makmur.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- CNBM International Corporation - China
- Bukit Asam (Persero) Tbk - Indonesia
- Posco Energy - South Korea
- European Bulk Services B.V. - Netherlands
- Bhatia International Limited - India
- PTC India Limited - India
- Bukit Baiduri Energy - Indonesia
- Dalmia Cement Bharat India
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Minerals Council of Australia
- Kartika Selabumi Mining - Indonesia
- Baramulti Group, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- London Commodity Brokers - England
- Metalloyd Limited - United Kingdom
- Global Coal Blending Company Limited - Australia
- Kumho Petrochemical, South Korea
- Mintek Dendrill Indonesia
- MS Steel International - UAE
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Merrill Lynch Commodities Europe
- Kohat Cement Company Ltd. - Pakistan
- Ind-Barath Power Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Central Java Power - Indonesia
- Medco Energi Mining Internasional
- Eastern Coal Council - USA
- Global Green Power PLC Corporation, Philippines
- SMC Global Power, Philippines
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Sical Logistics Limited - India
- Oldendorff Carriers - Singapore
- IEA Clean Coal Centre - UK
- Petron Corporation, Philippines
- Bhushan Steel Limited - India
- Vizag Seaport Private Limited - India
- Parliament of New Zealand
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- ASAPP Information Group - India
- Cigading International Bulk Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- Anglo American - United Kingdom
- Binh Thuan Hamico - Vietnam
- Mjunction Services Limited - India
- Attock Cement Pakistan Limited
- Kideco Jaya Agung - Indonesia
- Lanco Infratech Ltd - India
- Indogreen Group - Indonesia
- Heidelberg Cement - Germany
- Star Paper Mills Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Aboitiz Power Corporation - Philippines
- Ministry of Mines - Canada
- Videocon Industries ltd - India
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- The Treasury - Australian Government
- Sarangani Energy Corporation, Philippines
- Africa Commodities Group - South Africa
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- Chettinad Cement Corporation Ltd - India
- Cement Manufacturers Association - India
- Interocean Group of Companies - India
- Asmin Koalindo Tuhup - Indonesia
- Directorate Of Revenue Intelligence - India
- Neyveli Lignite Corporation Ltd, - India
- Economic Council, Georgia
- Borneo Indobara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Electricity Generating Authority of Thailand
- Riau Bara Harum - Indonesia
- Wood Mackenzie - Singapore
- Barasentosa Lestari - Indonesia
- Chamber of Mines of South Africa
- Mercuria Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Goldman Sachs - Singapore
- Antam Resourcindo - Indonesia
- Carbofer General Trading SA - India
- GAC Shipping (India) Pvt Ltd
- Australian Commodity Traders Exchange
- Miang Besar Coal Terminal - Indonesia
- Wilmar Investment Holdings
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- Krishnapatnam Port Company Ltd. - India
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- TeaM Sual Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Sojitz Corporation - Japan
- Indian Oil Corporation Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bayan Resources Tbk. - Indonesia
- Energy Link Ltd, New Zealand
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- Larsen & Toubro Limited - India
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- Commonwealth Bank - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Latin American Coal - Colombia
- Edison Trading Spa - Italy
- Bahari Cakrawala Sebuku - Indonesia
- Grasim Industreis Ltd - India
- Formosa Plastics Group - Taiwan
- Eastern Energy - Thailand
- Marubeni Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- Parry Sugars Refinery, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Deloitte Consulting - India
- ICICI Bank Limited - India
- Orica Mining Services - Indonesia
- Ambuja Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Pendopo Energi Batubara - Indonesia
- Sindya Power Generating Company Private Ltd
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- Coalindo Energy - Indonesia
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Aditya Birla Group - India
- Timah Investasi Mineral - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karaikal Port Pvt Ltd - India
- Malabar Cements Ltd - India
- Central Electricity Authority - India
- Gujarat Sidhee Cement - India
- Kepco SPC Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Madhucon Powers Ltd - India
- Electricity Authority, New Zealand
- Thai Mozambique Logistica
- Xindia Steels Limited - India
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Australian Coal Association
- Kalimantan Lumbung Energi - Indonesia
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- Gujarat Electricity Regulatory Commission - India
- The University of Queensland
- Singapore Mercantile Exchange
- Iligan Light & Power Inc, Philippines
- VISA Power Limited - India
- Makarim & Taira - Indonesia
- Uttam Galva Steels Limited - India
- Coal and Oil Company - UAE
- Bharathi Cement Corporation - India
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
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