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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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Thursday, 20 November 14
HANDY: INDO ROUNDS ARE BEING FIXED IN REGION OF US$ 10K - FEARNLEYS
Handy
In the Atlantic we have experienced firmer rates this week much lead by the grain activity out of USG. Vsls open in the USG can achieve in ...
Thursday, 20 November 14
DEMAND FOR DRY BULK CARRIERS INCREASES ON THE BACK OF HEIGHTENED FREIGHT RATE MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Ship owners are looking to take advantage of favorable market conditions through the acquisition of more dry bulk carriers. According to shipbroker ...
Wednesday, 19 November 14
INDONESIA FUEL-PRICE RISE A CLEAR, POSITIVE REFORM SIGNAL - FITCH
COALspot.com: Indonesia's hike of more than 30% in administered fuel prices, announced on 17 November, provides a clear, positive signal of the ...
Wednesday, 19 November 14
CAPES WERE UNDER PRESSURE; LOST 20% WITHIN A WEEK
COALspot.com: " The negative environment in which the week prior ended, marked this past week as well, which closed off on Friday noting the f ...
Wednesday, 19 November 14
SHIPPING MARKET INSIGHT - BY KATERINA RESTIS
The current Ebola outbreak in West Africa has been declared as a worldwide health emergency by the World Health Organization and has had a great im ...
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- San Jose City I Power Corp, Philippines
- Posco Energy - South Korea
- Cement Manufacturers Association - India
- Chamber of Mines of South Africa
- Minerals Council of Australia
- Maheswari Brothers Coal Limited - India
- International Coal Ventures Pvt Ltd - India
- Australian Commodity Traders Exchange
- Standard Chartered Bank - UAE
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sojitz Corporation - Japan
- Riau Bara Harum - Indonesia
- Vedanta Resources Plc - India
- Karbindo Abesyapradhi - Indoneisa
- Iligan Light & Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Siam City Cement - Thailand
- Thiess Contractors Indonesia
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indo Tambangraya Megah - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- Semirara Mining Corp, Philippines
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Tamil Nadu electricity Board
- Kaltim Prima Coal - Indonesia
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- Lanco Infratech Ltd - India
- Australian Coal Association
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- Deloitte Consulting - India
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Aboitiz Power Corporation - Philippines
- Attock Cement Pakistan Limited
- CIMB Investment Bank - Malaysia
- PTC India Limited - India
- Indika Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Eastern Energy - Thailand
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- Africa Commodities Group - South Africa
- London Commodity Brokers - England
- Sarangani Energy Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Wood Mackenzie - Singapore
- Larsen & Toubro Limited - India
- Antam Resourcindo - Indonesia
- IHS Mccloskey Coal Group - USA
- Intertek Mineral Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Malabar Cements Ltd - India
- Interocean Group of Companies - India
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- Edison Trading Spa - Italy
- Petron Corporation, Philippines
- Uttam Galva Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Banpu Public Company Limited - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- White Energy Company Limited
- Samtan Co., Ltd - South Korea
- SN Aboitiz Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- Gujarat Sidhee Cement - India
- SMC Global Power, Philippines
- Parliament of New Zealand
- Mercuria Energy - Indonesia
- Simpson Spence & Young - Indonesia
- GAC Shipping (India) Pvt Ltd
- Renaissance Capital - South Africa
- Karaikal Port Pvt Ltd - India
- SMG Consultants - Indonesia
- Formosa Plastics Group - Taiwan
- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Latin American Coal - Colombia
- Savvy Resources Ltd - HongKong
- Videocon Industries ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- CNBM International Corporation - China
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Aditya Birla Group - India
- GVK Power & Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Economic Council, Georgia
- Sical Logistics Limited - India
- The University of Queensland
- OPG Power Generation Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ambuja Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- PowerSource Philippines DevCo
- Ministry of Mines - Canada
- Bank of Tokyo Mitsubishi UFJ Ltd
- MS Steel International - UAE
- Altura Mining Limited, Indonesia
- Planning Commission, India
- Indonesian Coal Mining Association
- TeaM Sual Corporation - Philippines
- Carbofer General Trading SA - India
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- Marubeni Corporation - India
- Straits Asia Resources Limited - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Bhushan Steel Limited - India
- Binh Thuan Hamico - Vietnam
- Agrawal Coal Company - India
- Ceylon Electricity Board - Sri Lanka
- Bangladesh Power Developement Board
- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- The Treasury - Australian Government
- ICICI Bank Limited - India
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Coalindo Energy - Indonesia
- Central Java Power - Indonesia
- PNOC Exploration Corporation - Philippines
- Mjunction Services Limited - India
- Therma Luzon, Inc, Philippines
- Ministry of Transport, Egypt
- Neyveli Lignite Corporation Ltd, - India
- Bhatia International Limited - India
- Bukit Makmur.PT - Indonesia
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- Xindia Steels Limited - India
- Indian Energy Exchange, India
- Romanian Commodities Exchange
- Heidelberg Cement - Germany
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- Bulk Trading Sa - Switzerland
- Parry Sugars Refinery, India
- Metalloyd Limited - United Kingdom
- Toyota Tsusho Corporation, Japan
- Kalimantan Lumbung Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Independent Power Producers Association of India
- Siam City Cement PLC, Thailand
- ASAPP Information Group - India
- Dalmia Cement Bharat India
- Energy Link Ltd, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- IEA Clean Coal Centre - UK
- Ind-Barath Power Infra Limited - India
- New Zealand Coal & Carbon
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- Bharathi Cement Corporation - India
- Baramulti Group, Indonesia
- Port Waratah Coal Services - Australia
- Energy Development Corp, Philippines
- Wilmar Investment Holdings
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- Manunggal Multi Energi - Indonesia
- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- McConnell Dowell - Australia
- Star Paper Mills Limited - India
- Singapore Mercantile Exchange
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
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