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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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Friday, 28 November 14
NEW BIMCO CLAUSE AIMS TO REDUCE SUPPLIERS' RELIANCE ON SHIP ARREST FOR CHARTERERS' UNPAID BUNKERS
KNOWLEDGE TO ELEVATE
Ship owners can, on occasion, find themselves in the invidious position of suffering unexpected loss of hire due to a tim ...
Friday, 28 November 14
JSW ENERGY AND GRM RESOURCES JOIN GLOBALCOAL
COALspot.com: globalCOAL® announced yesterday that two new Market Members have joined its online coal trading platform. According globaCOAL&rsq ...
Thursday, 27 November 14
MINING SERVICES TAX SPIKED BY 233% - BISNIS INDONESIA
COALspot.com: The Energy and Mineral Resources Department of Indonesia said the tax contribution from mining services sector in the 3rd Q 2014 ...
Thursday, 27 November 14
PANAMAX : EXPECTATION'S FOR A STRONG END OF YEAR RUSH, DISAPPEAR DAY BY DAY - FEARNLEYS
Handy
“We have experienced a firming market the last couple of weeks. More activity from cargo owners in the Atlantic and less available to ...
Wednesday, 26 November 14
OVERSUPPLY OF TONNAGE PUSHED PANAMAX SEGMENT DOWN FOR ANOTHER WEEK
COALspot.com: The Dry Bulk market managed to reverse its course from the week prior and with the sole exception of the Panamax segment, we witnesse ...
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- Aditya Birla Group - India
- Economic Council, Georgia
- Australian Commodity Traders Exchange
- Neyveli Lignite Corporation Ltd, - India
- Singapore Mercantile Exchange
- Riau Bara Harum - Indonesia
- Orica Australia Pty. Ltd.
- GVK Power & Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Straits Asia Resources Limited - Singapore
- Global Green Power PLC Corporation, Philippines
- Central Electricity Authority - India
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Indika Energy - Indonesia
- Vizag Seaport Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indogreen Group - Indonesia
- Price Waterhouse Coopers - Russia
- Eastern Coal Council - USA
- Eastern Energy - Thailand
- Tata Chemicals Ltd - India
- SMG Consultants - Indonesia
- Semirara Mining Corp, Philippines
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Ministry of Mines - Canada
- Barasentosa Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Heidelberg Cement - Germany
- TeaM Sual Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- The State Trading Corporation of India Ltd
- Directorate General of MIneral and Coal - Indonesia
- Port Waratah Coal Services - Australia
- VISA Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Larsen & Toubro Limited - India
- Bhoruka Overseas - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Edison Trading Spa - Italy
- Minerals Council of Australia
- London Commodity Brokers - England
- Ministry of Finance - Indonesia
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Interocean Group of Companies - India
- Commonwealth Bank - Australia
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- Essar Steel Hazira Ltd - India
- Agrawal Coal Company - India
- Kobexindo Tractors - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Marubeni Corporation - India
- Parry Sugars Refinery, India
- Wilmar Investment Holdings
- Chettinad Cement Corporation Ltd - India
- Manunggal Multi Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Indonesian Coal Mining Association
- Malabar Cements Ltd - India
- Carbofer General Trading SA - India
- Attock Cement Pakistan Limited
- LBH Netherlands Bv - Netherlands
- Kaltim Prima Coal - Indonesia
- SMC Global Power, Philippines
- Baramulti Group, Indonesia
- GMR Energy Limited - India
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Makarim & Taira - Indonesia
- Thiess Contractors Indonesia
- San Jose City I Power Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Global Coal Blending Company Limited - Australia
- Independent Power Producers Association of India
- Savvy Resources Ltd - HongKong
- Billiton Holdings Pty Ltd - Australia
- Goldman Sachs - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- PowerSource Philippines DevCo
- Cement Manufacturers Association - India
- Sojitz Corporation - Japan
- Sinarmas Energy and Mining - Indonesia
- Merrill Lynch Commodities Europe
- International Coal Ventures Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Jaiprakash Power Ventures ltd
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
- Indian Energy Exchange, India
- Madhucon Powers Ltd - India
- Star Paper Mills Limited - India
- Africa Commodities Group - South Africa
- Kartika Selabumi Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Bharathi Cement Corporation - India
- Energy Link Ltd, New Zealand
- Trasteel International SA, Italy
- Maheswari Brothers Coal Limited - India
- Sree Jayajothi Cements Limited - India
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- South Luzon Thermal Energy Corporation
- Tamil Nadu electricity Board
- Coal and Oil Company - UAE
- Wood Mackenzie - Singapore
- The Treasury - Australian Government
- Ministry of Transport, Egypt
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- New Zealand Coal & Carbon
- Romanian Commodities Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Ind-Barath Power Infra Limited - India
- Meralco Power Generation, Philippines
- Mintek Dendrill Indonesia
- The University of Queensland
- Pipit Mutiara Jaya. PT, Indonesia
- Samtan Co., Ltd - South Korea
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Gujarat Mineral Development Corp Ltd - India
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- Pendopo Energi Batubara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- Bukit Makmur.PT - Indonesia
- McConnell Dowell - Australia
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- Uttam Galva Steels Limited - India
- Salva Resources Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- CNBM International Corporation - China
- SN Aboitiz Power Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Standard Chartered Bank - UAE
- Mjunction Services Limited - India
- Indian Oil Corporation Limited
- Deloitte Consulting - India
- Karaikal Port Pvt Ltd - India
- MS Steel International - UAE
- GN Power Mariveles Coal Plant, Philippines
- Miang Besar Coal Terminal - Indonesia
- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- Latin American Coal - Colombia
- Petron Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Therma Luzon, Inc, Philippines
- Vedanta Resources Plc - India
- Jindal Steel & Power Ltd - India
- Mercator Lines Limited - India
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Thai Mozambique Logistica
- Sindya Power Generating Company Private Ltd
- Siam City Cement - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Antam Resourcindo - Indonesia
- Kideco Jaya Agung - Indonesia
- Bhushan Steel Limited - India
- ICICI Bank Limited - India
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Globalindo Alam Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Orica Mining Services - Indonesia
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Metalloyd Limited - United Kingdom
- Videocon Industries ltd - India
- Ceylon Electricity Board - Sri Lanka
- Xindia Steels Limited - India
- Anglo American - United Kingdom
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- AsiaOL BioFuels Corp., Philippines
- Parliament of New Zealand
- Ambuja Cements Ltd - India
- Posco Energy - South Korea
- PTC India Limited - India
- European Bulk Services B.V. - Netherlands
- Australian Coal Association
- Kohat Cement Company Ltd. - Pakistan
- Alfred C Toepfer International GmbH - Germany
- Global Business Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
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