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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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Friday, 26 December 14
SHIPS FACE LOWER SULPHUR FUEL REQUIREMENTS IN EMISSION CONTROL AREAS FROM 1 JANUARY 2015 - IMO
Ships trading in designated emission control areas will have to use on board fuel oil with a sulphur content of no more than 0.10% from 1 January 2 ...
Wednesday, 24 December 14
CAPE DEMAND WAS STILL EXTREMELY SOFT THIS PAST WEEK ACROSS BOTH BASINS - INTERMODAL
COALspot.com: The performance of the Dry Bulk market, which found itself in desperate search of support for yet another week, has left very little ...
Wednesday, 24 December 14
MARKET INSIGHT - JOHN N. COTZIAS, INTERMODAL SNP BROKER
The year is coming to an end, and we should be able to assess if this was a good year, a bad year, or even a lousy one? The answer clearly de ...
Tuesday, 23 December 14
Q1'15 FOB INDONESIA COAL SWAP GAINED 48 CENTS IN ONE WEEK
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month and gained week over week and day on day.
The Q1 swap has lo ...
Tuesday, 23 December 14
Q4'15 FOB RICHARDS BAY COAL SWAPS FALL $ 3.85 IN A MONTH
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 lost month on month.
The Q1 swap has lost US$ 2.13 (-3.17%) month on month ...
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- GMR Energy Limited - India
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- Dalmia Cement Bharat India
- Meralco Power Generation, Philippines
- Madhucon Powers Ltd - India
- Pendopo Energi Batubara - Indonesia
- Kideco Jaya Agung - Indonesia
- Maheswari Brothers Coal Limited - India
- Leighton Contractors Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- The University of Queensland
- Ministry of Transport, Egypt
- Thiess Contractors Indonesia
- Coastal Gujarat Power Limited - India
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- Essar Steel Hazira Ltd - India
- Orica Australia Pty. Ltd.
- Australian Coal Association
- Bukit Asam (Persero) Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Siam City Cement PLC, Thailand
- Singapore Mercantile Exchange
- Kepco SPC Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Xindia Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Mineral Development Corp Ltd - India
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- Latin American Coal - Colombia
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- Timah Investasi Mineral - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Standard Chartered Bank - UAE
- Aboitiz Power Corporation - Philippines
- PTC India Limited - India
- Jaiprakash Power Ventures ltd
- Deloitte Consulting - India
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- Edison Trading Spa - Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Georgia Ports Authority, United States
- ASAPP Information Group - India
- Carbofer General Trading SA - India
- Commonwealth Bank - Australia
- Oldendorff Carriers - Singapore
- San Jose City I Power Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Global Business Power Corporation, Philippines
- Cement Manufacturers Association - India
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Authority, New Zealand
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- Baramulti Group, Indonesia
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- Bhushan Steel Limited - India
- Ministry of Finance - Indonesia
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Global Green Power PLC Corporation, Philippines
- Parliament of New Zealand
- Minerals Council of Australia
- Medco Energi Mining Internasional
- Videocon Industries ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Mercator Lines Limited - India
- Central Electricity Authority - India
- Bharathi Cement Corporation - India
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Riau Bara Harum - Indonesia
- Bayan Resources Tbk. - Indonesia
- Formosa Plastics Group - Taiwan
- Vizag Seaport Private Limited - India
- Chamber of Mines of South Africa
- Ambuja Cements Ltd - India
- SMG Consultants - Indonesia
- Sakthi Sugars Limited - India
- Toyota Tsusho Corporation, Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Independent Power Producers Association of India
- Iligan Light & Power Inc, Philippines
- Orica Mining Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- Siam City Cement - Thailand
- Bukit Baiduri Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Bangladesh Power Developement Board
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Altura Mining Limited, Indonesia
- Global Coal Blending Company Limited - Australia
- Globalindo Alam Lestari - Indonesia
- Lanco Infratech Ltd - India
- Wood Mackenzie - Singapore
- Meenaskhi Energy Private Limited - India
- Indian Energy Exchange, India
- Marubeni Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- GVK Power & Infra Limited - India
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- Indo Tambangraya Megah - Indonesia
- Therma Luzon, Inc, Philippines
- Interocean Group of Companies - India
- Kalimantan Lumbung Energi - Indonesia
- Grasim Industreis Ltd - India
- Electricity Generating Authority of Thailand
- Anglo American - United Kingdom
- Power Finance Corporation Ltd., India
- Central Java Power - Indonesia
- Manunggal Multi Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Cigading International Bulk Terminal - Indonesia
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Sical Logistics Limited - India
- Tata Chemicals Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- MS Steel International - UAE
- London Commodity Brokers - England
- Pipit Mutiara Jaya. PT, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Karaikal Port Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Malabar Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Attock Cement Pakistan Limited
- Merrill Lynch Commodities Europe
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- The State Trading Corporation of India Ltd
- European Bulk Services B.V. - Netherlands
- Sarangani Energy Corporation, Philippines
- New Zealand Coal & Carbon
- Uttam Galva Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- The Treasury - Australian Government
- South Luzon Thermal Energy Corporation
- Billiton Holdings Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Mintek Dendrill Indonesia
- Directorate General of MIneral and Coal - Indonesia
- India Bulls Power Limited - India
- Straits Asia Resources Limited - Singapore
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- Eastern Coal Council - USA
- Banpu Public Company Limited - Thailand
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- TeaM Sual Corporation - Philippines
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
- Semirara Mining and Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Rashtriya Ispat Nigam Limited - India
- SN Aboitiz Power Inc, Philippines
- CNBM International Corporation - China
- Petrochimia International Co. Ltd.- Taiwan
- Chettinad Cement Corporation Ltd - India
- PowerSource Philippines DevCo
- Kobexindo Tractors - Indoneisa
- Romanian Commodities Exchange
- Australian Commodity Traders Exchange
- PNOC Exploration Corporation - Philippines
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- Agrawal Coal Company - India
- Port Waratah Coal Services - Australia
- Simpson Spence & Young - Indonesia
- Kaltim Prima Coal - Indonesia
- Renaissance Capital - South Africa
- Aditya Birla Group - India
- SMC Global Power, Philippines
- AsiaOL BioFuels Corp., Philippines
- Indika Energy - Indonesia
- IEA Clean Coal Centre - UK
- Indogreen Group - Indonesia
- Planning Commission, India
- Gujarat Sidhee Cement - India
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Goldman Sachs - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parry Sugars Refinery, India
- Larsen & Toubro Limited - India
- OPG Power Generation Pvt Ltd - India
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
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