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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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Saturday, 22 November 14
THE FALL IN BUNKER PRICES REDUCE FUEL COSTS SIGNIFICANTLY - BIMCO, PETER SAND
For a ship that burns 24 tonnes of fuel per day while steaming, fuel costs are reduced by as much as USD 1 million a year if current price level st ...
Saturday, 22 November 14
DRY BULKERS NEWBUILDING DELIVERIES REACHED 11.8 MILLION DWT DURING THIRD QUARTER, NET FLEET GROWTH FOR 2014 TO REACH 5% - HELLENIC SHIPPING NEWS
The dry bulk market has rebounded since its less than impressive performance since the start of the year, but overall, third quarter figures could ...
Friday, 21 November 14
BUMI ENTERS INTO CONDITIONAL SALE & PURCHASE AGREEMENT TO SELL FBS STAKE
COALspot.com: PT Bumi Resources Tbk, one of the Indonesia's largest coal producers confirms that it has executed a Conditional Sale and Purchas ...
Friday, 21 November 14
U.S LAST WEEK'S COAL PRODUCTION STAYS FLAT W-O-W
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.9 million short tons (mmst) of coal ...
Thursday, 20 November 14
MOST MAJOR ASIAN ECONOMIES TO BENEFIT FROM LOWER OIL - FITCH
COALspot.com: The 25% drop in the price of oil since July is likely to lift economic growth prospects, improve terms of trade, and have a pot ...
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- Coalindo Energy - Indonesia
- Sakthi Sugars Limited - India
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- PTC India Limited - India
- Indika Energy - Indonesia
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- Eastern Energy - Thailand
- Siam City Cement - Thailand
- SN Aboitiz Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Bukit Baiduri Energy - Indonesia
- Cement Manufacturers Association - India
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- CNBM International Corporation - China
- Trasteel International SA, Italy
- GAC Shipping (India) Pvt Ltd
- Manunggal Multi Energi - Indonesia
- The State Trading Corporation of India Ltd
- Kartika Selabumi Mining - Indonesia
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- CIMB Investment Bank - Malaysia
- GMR Energy Limited - India
- Dalmia Cement Bharat India
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Ambuja Cements Ltd - India
- London Commodity Brokers - England
- Semirara Mining and Power Corporation, Philippines
- Ministry of Mines - Canada
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- Wilmar Investment Holdings
- Bulk Trading Sa - Switzerland
- Baramulti Group, Indonesia
- South Luzon Thermal Energy Corporation
- Mintek Dendrill Indonesia
- SMC Global Power, Philippines
- Standard Chartered Bank - UAE
- Latin American Coal - Colombia
- Georgia Ports Authority, United States
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Anglo American - United Kingdom
- Goldman Sachs - Singapore
- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- Xindia Steels Limited - India
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Thai Mozambique Logistica
- Billiton Holdings Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Lanco Infratech Ltd - India
- Toyota Tsusho Corporation, Japan
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- Kobexindo Tractors - Indoneisa
- Sical Logistics Limited - India
- Ind-Barath Power Infra Limited - India
- Singapore Mercantile Exchange
- Sindya Power Generating Company Private Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Kohat Cement Company Ltd. - Pakistan
- Agrawal Coal Company - India
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- Tata Chemicals Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Eastern Coal Council - USA
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhushan Steel Limited - India
- Independent Power Producers Association of India
- Salva Resources Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Indian Oil Corporation Limited
- Uttam Galva Steels Limited - India
- Economic Council, Georgia
- Formosa Plastics Group - Taiwan
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Java Power - Indonesia
- Intertek Mineral Services - Indonesia
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- Simpson Spence & Young - Indonesia
- Star Paper Mills Limited - India
- Rio Tinto Coal - Australia
- Bukit Makmur.PT - Indonesia
- Renaissance Capital - South Africa
- Interocean Group of Companies - India
- Kumho Petrochemical, South Korea
- Antam Resourcindo - Indonesia
- PNOC Exploration Corporation - Philippines
- Mercuria Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- McConnell Dowell - Australia
- Power Finance Corporation Ltd., India
- Directorate Of Revenue Intelligence - India
- White Energy Company Limited
- Parliament of New Zealand
- Minerals Council of Australia
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- Chettinad Cement Corporation Ltd - India
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- Marubeni Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Metalloyd Limited - United Kingdom
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Kapuas Tunggal Persada - Indonesia
- Bhoruka Overseas - Indonesia
- Tamil Nadu electricity Board
- Global Green Power PLC Corporation, Philippines
- New Zealand Coal & Carbon
- Mjunction Services Limited - India
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- Neyveli Lignite Corporation Ltd, - India
- Alfred C Toepfer International GmbH - Germany
- Maheswari Brothers Coal Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Heidelberg Cement - Germany
- Price Waterhouse Coopers - Russia
- Ministry of Finance - Indonesia
- San Jose City I Power Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- Videocon Industries ltd - India
- Makarim & Taira - Indonesia
- Electricity Authority, New Zealand
- Borneo Indobara - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- Australian Commodity Traders Exchange
- Petron Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Globalindo Alam Lestari - Indonesia
- Madhucon Powers Ltd - India
- Bharathi Cement Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Link Ltd, New Zealand
- Meenaskhi Energy Private Limited - India
- Meralco Power Generation, Philippines
- Electricity Generating Authority of Thailand
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- Banpu Public Company Limited - Thailand
- ICICI Bank Limited - India
- TeaM Sual Corporation - Philippines
- Sojitz Corporation - Japan
- Parry Sugars Refinery, India
- Energy Development Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Romanian Commodities Exchange
- Kideco Jaya Agung - Indonesia
- ASAPP Information Group - India
- Indonesian Coal Mining Association
- Kepco SPC Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Savvy Resources Ltd - HongKong
- Port Waratah Coal Services - Australia
- Essar Steel Hazira Ltd - India
- Africa Commodities Group - South Africa
- Iligan Light & Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- Sarangani Energy Corporation, Philippines
- Commonwealth Bank - Australia
- MS Steel International - UAE
- Krishnapatnam Port Company Ltd. - India
- Jindal Steel & Power Ltd - India
- Coal and Oil Company - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indogreen Group - Indonesia
- Thiess Contractors Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Rashtriya Ispat Nigam Limited - India
- OPG Power Generation Pvt Ltd - India
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