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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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Monday, 08 December 14
GOVERMENT TO WITHDRAW CNC STATUS OVER SUSPECTED FLAWS - THE JAKARTA POST
The Energy and Mineral Resources Ministry’s directorate general for mineral and coal plans to review the clean and clear (CnC) status held by ...
Monday, 08 December 14
FOB NEWCASTLE COAL SWAPS SLIP W-O-W AND M-O-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery closed at US$ 52.10 on 5 December after losing US$ 0.55 (-1.04%) month over ...
Sunday, 07 December 14
SUPRAMAX S8 ROUTE SLIGHTLY INCREASED WEEK ON WEEK
COALspot.com: The BDI continued its fall as cape index fell heavily week on week.
The BDI lost around14.83 pct within last five working day an ...
Saturday, 06 December 14
TANKER FLOATING STORAGE PLAYS COULD COME INTO PLAY IF VLCC RATES STAY AT CURRENT LEVEL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Contango: A phenomenon in commodities futures price curves where the delivery price of a futures contract is greater than the current price. With t ...
Saturday, 06 December 14
MUNDRA PORT MAKES HISTORY BY HANDLING THE LARGEST BULK CARRIER TO CALL ON WEST COAST OF INDIA
COALspot.com: Adani Ports & SEZ Ltd, India’s largest port developer and part of Adani Group, yesterday said its Mundra Port successf ...
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- Baramulti Group, Indonesia
- Intertek Mineral Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- Savvy Resources Ltd - HongKong
- Coastal Gujarat Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Xindia Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Dalmia Cement Bharat India
- VISA Power Limited - India
- IHS Mccloskey Coal Group - USA
- Eastern Coal Council - USA
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Billiton Holdings Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Kobexindo Tractors - Indoneisa
- Manunggal Multi Energi - Indonesia
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- Binh Thuan Hamico - Vietnam
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- Coalindo Energy - Indonesia
- Star Paper Mills Limited - India
- Ministry of Mines - Canada
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- Romanian Commodities Exchange
- The Treasury - Australian Government
- Petrochimia International Co. Ltd.- Taiwan
- Grasim Industreis Ltd - India
- Borneo Indobara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Alfred C Toepfer International GmbH - Germany
- San Jose City I Power Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Meenaskhi Energy Private Limited - India
- White Energy Company Limited
- London Commodity Brokers - England
- Mercuria Energy - Indonesia
- Interocean Group of Companies - India
- Ministry of Transport, Egypt
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- CIMB Investment Bank - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Thai Mozambique Logistica
- Orica Australia Pty. Ltd.
- Central Electricity Authority - India
- Kapuas Tunggal Persada - Indonesia
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Formosa Plastics Group - Taiwan
- Anglo American - United Kingdom
- Trasteel International SA, Italy
- PNOC Exploration Corporation - Philippines
- Parry Sugars Refinery, India
- Central Java Power - Indonesia
- Parliament of New Zealand
- Makarim & Taira - Indonesia
- Wood Mackenzie - Singapore
- The University of Queensland
- Posco Energy - South Korea
- Siam City Cement - Thailand
- Indian Oil Corporation Limited
- Vedanta Resources Plc - India
- Sojitz Corporation - Japan
- Karbindo Abesyapradhi - Indoneisa
- Toyota Tsusho Corporation, Japan
- Cigading International Bulk Terminal - Indonesia
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- Rashtriya Ispat Nigam Limited - India
- Medco Energi Mining Internasional
- Electricity Generating Authority of Thailand
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- SMC Global Power, Philippines
- Minerals Council of Australia
- IEA Clean Coal Centre - UK
- TeaM Sual Corporation - Philippines
- Videocon Industries ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- Indika Energy - Indonesia
- Standard Chartered Bank - UAE
- Ministry of Finance - Indonesia
- Africa Commodities Group - South Africa
- Planning Commission, India
- Rio Tinto Coal - Australia
- Tata Chemicals Ltd - India
- Price Waterhouse Coopers - Russia
- Mercator Lines Limited - India
- Ambuja Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- Bukit Makmur.PT - Indonesia
- New Zealand Coal & Carbon
- Renaissance Capital - South Africa
- Sarangani Energy Corporation, Philippines
- ICICI Bank Limited - India
- Tamil Nadu electricity Board
- Indo Tambangraya Megah - Indonesia
- Globalindo Alam Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- South Luzon Thermal Energy Corporation
- Goldman Sachs - Singapore
- International Coal Ventures Pvt Ltd - India
- Energy Link Ltd, New Zealand
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- OPG Power Generation Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- Electricity Authority, New Zealand
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- The State Trading Corporation of India Ltd
- Petron Corporation, Philippines
- Independent Power Producers Association of India
- GMR Energy Limited - India
- LBH Netherlands Bv - Netherlands
- Indian Energy Exchange, India
- Aditya Birla Group - India
- Karaikal Port Pvt Ltd - India
- Siam City Cement PLC, Thailand
- McConnell Dowell - Australia
- Australian Coal Association
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Salva Resources Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Kumho Petrochemical, South Korea
- Economic Council, Georgia
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- Global Coal Blending Company Limited - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Marubeni Corporation - India
- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- Latin American Coal - Colombia
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- Edison Trading Spa - Italy
- Wilmar Investment Holdings
- Attock Cement Pakistan Limited
- SMG Consultants - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Meralco Power Generation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- Energy Development Corp, Philippines
- Global Business Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- Kartika Selabumi Mining - Indonesia
- Indonesian Coal Mining Association
- GN Power Mariveles Coal Plant, Philippines
- Chettinad Cement Corporation Ltd - India
- Miang Besar Coal Terminal - Indonesia
- PowerSource Philippines DevCo
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- Ind-Barath Power Infra Limited - India
- Cement Manufacturers Association - India
- Sical Logistics Limited - India
- Power Finance Corporation Ltd., India
- ASAPP Information Group - India
- Metalloyd Limited - United Kingdom
- Kaltim Prima Coal - Indonesia
- Vizag Seaport Private Limited - India
- Bangladesh Power Developement Board
- Commonwealth Bank - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bharathi Cement Corporation - India
- Essar Steel Hazira Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Global Green Power PLC Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- MS Steel International - UAE
- Timah Investasi Mineral - Indoneisa
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Antam Resourcindo - Indonesia
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