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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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Tuesday, 02 December 14
FOB RICHARDS BAY COAL SWAPS LOST MONTH OVER MONTH
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 lost month on month, week on week and day over day.
The Q1 swap has lost U ...
Tuesday, 02 December 14
SUB-BIT FOB INDONESIA COAL Q1' 15 DELIVERY SWAP CLOSED AT US$ 49.50
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$ 0.4 ...
Monday, 01 December 14
SGX'S FOB NEWCASTLE COAL SWAP FOR Q1' 2015 DELIVERY CLOSED AT US$ 52.50
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery closed at US$ 52.50 on 28 November after losing US$ 1.20 (-2.23%) month ove ...
Monday, 01 December 14
Q2' 15 DELIVERY CFR SOUTH CHINA COAL SWAP CLOSED 0.42% LOWER THAN Q1' 15 DELIVERY CLOSING
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased US$ 2.45 (-3.78%) month over month and US$ 0.67 (-1.06%) we ...
Sunday, 30 November 14
SUPRAMAX COAL FREIGHT RATES FROM INDONESIA TO INDIA : FIRM
COALspot.com: The BDI fell 171 points and closed at 1153 points on Friday 28 November 2014. The Cape index also lost 887 points and closed at 2151 ...
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- Meenaskhi Energy Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Lanco Infratech Ltd - India
- Medco Energi Mining Internasional
- The University of Queensland
- Deloitte Consulting - India
- Kumho Petrochemical, South Korea
- Semirara Mining and Power Corporation, Philippines
- Malabar Cements Ltd - India
- Meralco Power Generation, Philippines
- Intertek Mineral Services - Indonesia
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- White Energy Company Limited
- Gujarat Mineral Development Corp Ltd - India
- Uttam Galva Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- Kepco SPC Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Maheswari Brothers Coal Limited - India
- Directorate Of Revenue Intelligence - India
- Interocean Group of Companies - India
- Trasteel International SA, Italy
- Dalmia Cement Bharat India
- Neyveli Lignite Corporation Ltd, - India
- Alfred C Toepfer International GmbH - Germany
- GVK Power & Infra Limited - India
- Siam City Cement - Thailand
- AsiaOL BioFuels Corp., Philippines
- Agrawal Coal Company - India
- Sarangani Energy Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Posco Energy - South Korea
- Toyota Tsusho Corporation, Japan
- Metalloyd Limited - United Kingdom
- India Bulls Power Limited - India
- Electricity Authority, New Zealand
- Mjunction Services Limited - India
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- Port Waratah Coal Services - Australia
- Bharathi Cement Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Sojitz Corporation - Japan
- Billiton Holdings Pty Ltd - Australia
- Economic Council, Georgia
- Central Electricity Authority - India
- Romanian Commodities Exchange
- Ambuja Cements Ltd - India
- Formosa Plastics Group - Taiwan
- CNBM International Corporation - China
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Bangladesh Power Developement Board
- Bukit Asam (Persero) Tbk - Indonesia
- Indonesian Coal Mining Association
- Orica Mining Services - Indonesia
- Coalindo Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Grasim Industreis Ltd - India
- International Coal Ventures Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Directorate General of MIneral and Coal - Indonesia
- Videocon Industries ltd - India
- Antam Resourcindo - Indonesia
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Standard Chartered Bank - UAE
- Chettinad Cement Corporation Ltd - India
- Jindal Steel & Power Ltd - India
- Bhushan Steel Limited - India
- Energy Development Corp, Philippines
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Maharashtra Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Banpu Public Company Limited - Thailand
- CIMB Investment Bank - Malaysia
- Tamil Nadu electricity Board
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- Chamber of Mines of South Africa
- Global Coal Blending Company Limited - Australia
- Coal and Oil Company - UAE
- Eastern Coal Council - USA
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Indian Oil Corporation Limited
- Savvy Resources Ltd - HongKong
- Anglo American - United Kingdom
- Wilmar Investment Holdings
- The Treasury - Australian Government
- Bukit Makmur.PT - Indonesia
- Xindia Steels Limited - India
- MS Steel International - UAE
- Parliament of New Zealand
- PNOC Exploration Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- PetroVietnam Power Coal Import and Supply Company
- Binh Thuan Hamico - Vietnam
- SMC Global Power, Philippines
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- Borneo Indobara - Indonesia
- Essar Steel Hazira Ltd - India
- Electricity Generating Authority of Thailand
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- London Commodity Brokers - England
- Renaissance Capital - South Africa
- Mintek Dendrill Indonesia
- Georgia Ports Authority, United States
- GN Power Mariveles Coal Plant, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercator Lines Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Cement Manufacturers Association - India
- Simpson Spence & Young - Indonesia
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- Global Business Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Iligan Light & Power Inc, Philippines
- McConnell Dowell - Australia
- Planning Commission, India
- Australian Coal Association
- Karbindo Abesyapradhi - Indoneisa
- Marubeni Corporation - India
- PTC India Limited - India
- Price Waterhouse Coopers - Russia
- Thai Mozambique Logistica
- Rashtriya Ispat Nigam Limited - India
- New Zealand Coal & Carbon
- Samtan Co., Ltd - South Korea
- Ministry of Transport, Egypt
- Bahari Cakrawala Sebuku - Indonesia
- Kideco Jaya Agung - Indonesia
- Ind-Barath Power Infra Limited - India
- Minerals Council of Australia
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- OPG Power Generation Pvt Ltd - India
- Singapore Mercantile Exchange
- Heidelberg Cement - Germany
- Asmin Koalindo Tuhup - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Mines - Canada
- Kohat Cement Company Ltd. - Pakistan
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- Orica Australia Pty. Ltd.
- Goldman Sachs - Singapore
- Manunggal Multi Energi - Indonesia
- Barasentosa Lestari - Indonesia
- VISA Power Limited - India
- Bhoruka Overseas - Indonesia
- Sical Logistics Limited - India
- Bayan Resources Tbk. - Indonesia
- Straits Asia Resources Limited - Singapore
- Africa Commodities Group - South Africa
- SN Aboitiz Power Inc, Philippines
- Commonwealth Bank - Australia
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Independent Power Producers Association of India
- Ministry of Finance - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bhatia International Limited - India
- Central Java Power - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Latin American Coal - Colombia
- Gujarat Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Madhucon Powers Ltd - India
- Indian Energy Exchange, India
- Kobexindo Tractors - Indoneisa
- Semirara Mining Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Eastern Energy - Thailand
- Riau Bara Harum - Indonesia
- Oldendorff Carriers - Singapore
- Star Paper Mills Limited - India
- Thiess Contractors Indonesia
- Global Green Power PLC Corporation, Philippines
- TeaM Sual Corporation - Philippines
- PowerSource Philippines DevCo
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
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