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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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Monday, 15 December 14
CFR SOUTH CHINA COAL SWAP LOST $3.37 M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased by US$ 3,37 (-5.33%) month over month and US$ 1.58 (-2.57%) ...
Monday, 15 December 14
Q1' 15 FOB NEWCASTLE COAL SWAP CLOSED AT $ 51.45 ON 12 DEC
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.45 per MT (-2.74%) closed at US$ 51.45 on 12 December month over ...
Sunday, 14 December 14
FREIGHT RATES ARE EXPECTED TO BE SOFT NEXT WEEK
COALspot.com: The Baltic Dry Index (BDI), a measure of commodity-shipping costs, fell 12.12 pct to 863 points week ending 12 December 2014.
Th ...
Friday, 12 December 14
LIMITED TRADING AND AN OVERSUPPLY OF TONNAGE PUSHED HANDY SIZE SHIPS TO DOWN IN USG
Handy
We have seen the TA spot market come down this week lead by limited trading and an oversupply of tonnage in the USG, Fearnleys said in its ...
Friday, 12 December 14
U.S WEEKLY COAL PRODUCTION UP 3.4% W/E DECEMBER 6
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.6 million short tons (mmst) of coal ...
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- Samtan Co., Ltd - South Korea
- Directorate Of Revenue Intelligence - India
- Romanian Commodities Exchange
- Australian Coal Association
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- Africa Commodities Group - South Africa
- SMG Consultants - Indonesia
- Economic Council, Georgia
- Jindal Steel & Power Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bulk Trading Sa - Switzerland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parry Sugars Refinery, India
- The State Trading Corporation of India Ltd
- PowerSource Philippines DevCo
- Merrill Lynch Commodities Europe
- Sakthi Sugars Limited - India
- Cigading International Bulk Terminal - Indonesia
- Deloitte Consulting - India
- Globalindo Alam Lestari - Indonesia
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- Chamber of Mines of South Africa
- MS Steel International - UAE
- Aditya Birla Group - India
- Kaltim Prima Coal - Indonesia
- Power Finance Corporation Ltd., India
- Sarangani Energy Corporation, Philippines
- Bangladesh Power Developement Board
- PTC India Limited - India
- Meenaskhi Energy Private Limited - India
- Orica Australia Pty. Ltd.
- Rashtriya Ispat Nigam Limited - India
- Kartika Selabumi Mining - Indonesia
- Mercator Lines Limited - India
- Petron Corporation, Philippines
- Lanco Infratech Ltd - India
- ASAPP Information Group - India
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Indika Energy - Indonesia
- Semirara Mining Corp, Philippines
- Electricity Generating Authority of Thailand
- Renaissance Capital - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Kepco SPC Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Interocean Group of Companies - India
- Kobexindo Tractors - Indoneisa
- Oldendorff Carriers - Singapore
- Jorong Barutama Greston.PT - Indonesia
- India Bulls Power Limited - India
- Grasim Industreis Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Energy Link Ltd, New Zealand
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Trasteel International SA, Italy
- CNBM International Corporation - China
- GVK Power & Infra Limited - India
- Star Paper Mills Limited - India
- Anglo American - United Kingdom
- Aboitiz Power Corporation - Philippines
- Singapore Mercantile Exchange
- Directorate General of MIneral and Coal - Indonesia
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- Meralco Power Generation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Riau Bara Harum - Indonesia
- Electricity Authority, New Zealand
- Attock Cement Pakistan Limited
- Leighton Contractors Pty Ltd - Australia
- Heidelberg Cement - Germany
- Indonesian Coal Mining Association
- Indian Energy Exchange, India
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- London Commodity Brokers - England
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Toyota Tsusho Corporation, Japan
- Kideco Jaya Agung - Indonesia
- McConnell Dowell - Australia
- Bhushan Steel Limited - India
- Mintek Dendrill Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Karaikal Port Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- Xindia Steels Limited - India
- Videocon Industries ltd - India
- Mercuria Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- Gujarat Sidhee Cement - India
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Ambuja Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- Coalindo Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- Sical Logistics Limited - India
- Thiess Contractors Indonesia
- Uttam Galva Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Thai Mozambique Logistica
- TeaM Sual Corporation - Philippines
- Jaiprakash Power Ventures ltd
- PetroVietnam Power Coal Import and Supply Company
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Price Waterhouse Coopers - Russia
- Madhucon Powers Ltd - India
- Manunggal Multi Energi - Indonesia
- Global Business Power Corporation, Philippines
- Marubeni Corporation - India
- Parliament of New Zealand
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Formosa Plastics Group - Taiwan
- Timah Investasi Mineral - Indoneisa
- VISA Power Limited - India
- Maheswari Brothers Coal Limited - India
- Mjunction Services Limited - India
- Intertek Mineral Services - Indonesia
- IEA Clean Coal Centre - UK
- Offshore Bulk Terminal Pte Ltd, Singapore
- Planning Commission, India
- Carbofer General Trading SA - India
- GAC Shipping (India) Pvt Ltd
- Ministry of Finance - Indonesia
- Agrawal Coal Company - India
- Ceylon Electricity Board - Sri Lanka
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Simpson Spence & Young - Indonesia
- Kumho Petrochemical, South Korea
- Binh Thuan Hamico - Vietnam
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- Altura Mining Limited, Indonesia
- Therma Luzon, Inc, Philippines
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- Iligan Light & Power Inc, Philippines
- ICICI Bank Limited - India
- Wilmar Investment Holdings
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Latin American Coal - Colombia
- International Coal Ventures Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- Global Green Power PLC Corporation, Philippines
- The University of Queensland
- Ministry of Mines - Canada
- Miang Besar Coal Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Asmin Koalindo Tuhup - Indonesia
- CIMB Investment Bank - Malaysia
- Ind-Barath Power Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Indo Tambangraya Megah - Indonesia
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- Pendopo Energi Batubara - Indonesia
- Energy Development Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dalmia Cement Bharat India
- Billiton Holdings Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Central Electricity Authority - India
- Savvy Resources Ltd - HongKong
- Coal and Oil Company - UAE
- Bukit Makmur.PT - Indonesia
- Edison Trading Spa - Italy
- Malabar Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Tata Chemicals Ltd - India
- Orica Mining Services - Indonesia
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- GN Power Mariveles Coal Plant, Philippines
- The Treasury - Australian Government
- Port Waratah Coal Services - Australia
- Kapuas Tunggal Persada - Indonesia
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