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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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Wednesday, 10 December 14
SHIPPING MARKET INSIGHT - GEORGE ILIOPOULOS, INTERMODAL
COALspot.com: As 2014 is coming to an end, we look back to what has happened during the year and notice that SnP activity has been particularly sof ...
Wednesday, 10 December 14
WORLD HARD COAL MARKET 2014: PRODUCTION AND TRADE STAGNATING, IMPORTS TO GERMANY AND EUROPE ON THE DECLINE
Press Release: German Coal Importers Association (VDKi) criticizes regulations ordering reduction of CO2 emissions from coal-fired power plants as ...
Tuesday, 09 December 14
PRESSURE ON CHINA COAL MINERS TO CONTINUE DESPITE GOVERNMENT SUPPORT - FITCH
COALspot.com: Fitch Ratings says that Chinese coal mining companies will continue to be pressured by low prices, which will persist despite recent ...
Tuesday, 09 December 14
Q4' 2015, FOB INDONESIA COAL SWAP CLOSED AT $ 49.02 W/E 5 DEC
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month, week over week and day on day.
The Q1 swap has lost US$ 0.2 ...
Tuesday, 09 December 14
API 8 CFR SOUTH CHINA COAL SWAPS FELL 1.8% MONTH OVER MONTH
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased US$ 1.84 (-2.91%) month over month and US$ 0.95 (-1.52%) we ...
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- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- Aboitiz Power Corporation - Philippines
- Gujarat Sidhee Cement - India
- Merrill Lynch Commodities Europe
- Gujarat Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Commonwealth Bank - Australia
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- Romanian Commodities Exchange
- London Commodity Brokers - England
- Bukit Baiduri Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Bhushan Steel Limited - India
- Trasteel International SA, Italy
- Kepco SPC Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Parry Sugars Refinery, India
- Kartika Selabumi Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Indian Energy Exchange, India
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- Sinarmas Energy and Mining - Indonesia
- Cement Manufacturers Association - India
- Directorate General of MIneral and Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Marubeni Corporation - India
- Manunggal Multi Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Posco Energy - South Korea
- Wilmar Investment Holdings
- PNOC Exploration Corporation - Philippines
- Indian Oil Corporation Limited
- Petron Corporation, Philippines
- Latin American Coal - Colombia
- Independent Power Producers Association of India
- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Straits Asia Resources Limited - Singapore
- Holcim Trading Pte Ltd - Singapore
- Edison Trading Spa - Italy
- Indika Energy - Indonesia
- Bangladesh Power Developement Board
- LBH Netherlands Bv - Netherlands
- Uttam Galva Steels Limited - India
- Intertek Mineral Services - Indonesia
- Interocean Group of Companies - India
- The Treasury - Australian Government
- Iligan Light & Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- Ministry of Transport, Egypt
- Bulk Trading Sa - Switzerland
- PTC India Limited - India
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- Bharathi Cement Corporation - India
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Alfred C Toepfer International GmbH - Germany
- IEA Clean Coal Centre - UK
- TeaM Sual Corporation - Philippines
- Siam City Cement PLC, Thailand
- Altura Mining Limited, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- The University of Queensland
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- Videocon Industries ltd - India
- SMC Global Power, Philippines
- Riau Bara Harum - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sree Jayajothi Cements Limited - India
- Simpson Spence & Young - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- New Zealand Coal & Carbon
- Kalimantan Lumbung Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- Carbofer General Trading SA - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Globalindo Alam Lestari - Indonesia
- Thai Mozambique Logistica
- Malabar Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- Baramulti Group, Indonesia
- ASAPP Information Group - India
- Bukit Makmur.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Essar Steel Hazira Ltd - India
- Renaissance Capital - South Africa
- Rio Tinto Coal - Australia
- International Coal Ventures Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Savvy Resources Ltd - HongKong
- Semirara Mining Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Economic Council, Georgia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Planning Commission, India
- Tata Chemicals Ltd - India
- Singapore Mercantile Exchange
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- The State Trading Corporation of India Ltd
- Timah Investasi Mineral - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Attock Cement Pakistan Limited
- Orica Australia Pty. Ltd.
- Global Green Power PLC Corporation, Philippines
- Tamil Nadu electricity Board
- GAC Shipping (India) Pvt Ltd
- Australian Coal Association
- OPG Power Generation Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- CIMB Investment Bank - Malaysia
- European Bulk Services B.V. - Netherlands
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- Aditya Birla Group - India
- Heidelberg Cement - Germany
- Global Business Power Corporation, Philippines
- MS Steel International - UAE
- Metalloyd Limited - United Kingdom
- Meenaskhi Energy Private Limited - India
- Samtan Co., Ltd - South Korea
- Georgia Ports Authority, United States
- Energy Development Corp, Philippines
- Electricity Authority, New Zealand
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- Chamber of Mines of South Africa
- Sojitz Corporation - Japan
- Eastern Coal Council - USA
- Mjunction Services Limited - India
- McConnell Dowell - Australia
- South Luzon Thermal Energy Corporation
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Price Waterhouse Coopers - Russia
- Karbindo Abesyapradhi - Indoneisa
- Vedanta Resources Plc - India
- Minerals Council of Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Agrawal Coal Company - India
- Bhatia International Limited - India
- Anglo American - United Kingdom
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- Kaltim Prima Coal - Indonesia
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- ICICI Bank Limited - India
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Barasentosa Lestari - Indonesia
- India Bulls Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Electricity Generating Authority of Thailand
- Mintek Dendrill Indonesia
- Xindia Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Deloitte Consulting - India
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