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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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Tuesday, 18 November 14
VALEMAX DEAL TO DETERMINE DRY BULK MARKET'S FATE - DREWRY MARITIME RESEARCH
Vale’s accord to sell and lease four Valemax vessels to COSCO might have negative repercussions on dry bulk freight rates. Vale has committed ...
Tuesday, 18 November 14
SUB-BIT FOB INDONESIA COAL SWAP DELIVERY Q2' 2015 CLOSED AT $ 49.55; DOWN 4.10% M-O-M
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month, gained week on week and day on day.
The Q1 swap has lost US ...
Tuesday, 18 November 14
FOB RICHARDS BAY COAL SWAP FOR Q1' 2015 DELIVERY CLOSED AT $ 66.31; UP 1.33% W-O-W
COALspot.com: API 4 FOB Richards Bay Coal swap for Q1’ 2015 delivery has gained US$ 0.27 (+0.41%) month over month and US$ 0.87 (+1.33%) week ...
Tuesday, 18 November 14
CHEAP OIL PRICES COULD RESHAPE GLOBAL OIL EXPORTING MAP - HELLENIC SHIPPING
Tanker owners have enjoyed a rather healthy 2014, but as the year draws to a close, the fall of oil prices is bound to reshape traditional, as well ...
Monday, 17 November 14
SKULD ISSUES URGENT NOTICE ON BANKRUPTCY OF OW BUNKER A/S
Further to the Association’s advices of 7 November 2014, more information has come to light with respect to the potential impact and scale of ...
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- Global Coal Blending Company Limited - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- Interocean Group of Companies - India
- GVK Power & Infra Limited - India
- San Jose City I Power Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- MS Steel International - UAE
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- Wood Mackenzie - Singapore
- Mercuria Energy - Indonesia
- Ministry of Finance - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Price Waterhouse Coopers - Russia
- Parry Sugars Refinery, India
- Wilmar Investment Holdings
- VISA Power Limited - India
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- India Bulls Power Limited - India
- Eastern Coal Council - USA
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Bukit Baiduri Energy - Indonesia
- Trasteel International SA, Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
- Salva Resources Pvt Ltd - India
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- Posco Energy - South Korea
- Planning Commission, India
- Ministry of Mines - Canada
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Eastern Energy - Thailand
- IEA Clean Coal Centre - UK
- Romanian Commodities Exchange
- LBH Netherlands Bv - Netherlands
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- SMC Global Power, Philippines
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- Deloitte Consulting - India
- Gujarat Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- GMR Energy Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Kapuas Tunggal Persada - Indonesia
- CNBM International Corporation - China
- Thiess Contractors Indonesia
- GAC Shipping (India) Pvt Ltd
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- Barasentosa Lestari - Indonesia
- Australian Coal Association
- Cement Manufacturers Association - India
- IHS Mccloskey Coal Group - USA
- Dalmia Cement Bharat India
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Coastal Gujarat Power Limited - India
- Indika Energy - Indonesia
- Global Business Power Corporation, Philippines
- Electricity Authority, New Zealand
- Therma Luzon, Inc, Philippines
- Vizag Seaport Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Uttam Galva Steels Limited - India
- Savvy Resources Ltd - HongKong
- Bayan Resources Tbk. - Indonesia
- Sree Jayajothi Cements Limited - India
- Marubeni Corporation - India
- Semirara Mining Corp, Philippines
- Meralco Power Generation, Philippines
- Banpu Public Company Limited - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Anglo American - United Kingdom
- Siam City Cement - Thailand
- Agrawal Coal Company - India
- Chettinad Cement Corporation Ltd - India
- Xindia Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Borneo Indobara - Indonesia
- Mintek Dendrill Indonesia
- Malabar Cements Ltd - India
- Larsen & Toubro Limited - India
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- Merrill Lynch Commodities Europe
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- OPG Power Generation Pvt Ltd - India
- Heidelberg Cement - Germany
- Miang Besar Coal Terminal - Indonesia
- Indogreen Group - Indonesia
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Formosa Plastics Group - Taiwan
- Mercator Lines Limited - India
- Bulk Trading Sa - Switzerland
- The Treasury - Australian Government
- Bahari Cakrawala Sebuku - Indonesia
- Petron Corporation, Philippines
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- Oldendorff Carriers - Singapore
- Tamil Nadu electricity Board
- Kumho Petrochemical, South Korea
- Cigading International Bulk Terminal - Indonesia
- Carbofer General Trading SA - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Minerals Council of Australia
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
- Medco Energi Mining Internasional
- Kohat Cement Company Ltd. - Pakistan
- Jaiprakash Power Ventures ltd
- Directorate Of Revenue Intelligence - India
- Maheswari Brothers Coal Limited - India
- Videocon Industries ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sical Logistics Limited - India
- Central Java Power - Indonesia
- Thai Mozambique Logistica
- Leighton Contractors Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Intertek Mineral Services - Indonesia
- Makarim & Taira - Indonesia
- Global Green Power PLC Corporation, Philippines
- Indian Oil Corporation Limited
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- PetroVietnam Power Coal Import and Supply Company
- PowerSource Philippines DevCo
- London Commodity Brokers - England
- Timah Investasi Mineral - Indoneisa
- Orica Mining Services - Indonesia
- Indonesian Coal Mining Association
- PNOC Exploration Corporation - Philippines
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- Independent Power Producers Association of India
- Jindal Steel & Power Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Directorate General of MIneral and Coal - Indonesia
- Vedanta Resources Plc - India
- The University of Queensland
- Rashtriya Ispat Nigam Limited - India
- Lanco Infratech Ltd - India
- Ambuja Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Kobexindo Tractors - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Goldman Sachs - Singapore
- Billiton Holdings Pty Ltd - Australia
- Economic Council, Georgia
- McConnell Dowell - Australia
- Alfred C Toepfer International GmbH - Germany
- Georgia Ports Authority, United States
- Power Finance Corporation Ltd., India
- Africa Commodities Group - South Africa
- ASAPP Information Group - India
- Jorong Barutama Greston.PT - Indonesia
- Parliament of New Zealand
- PTC India Limited - India
- Port Waratah Coal Services - Australia
- Karbindo Abesyapradhi - Indoneisa
- Bukit Makmur.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- International Coal Ventures Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Madhucon Powers Ltd - India
- Pendopo Energi Batubara - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Essar Steel Hazira Ltd - India
- Energy Link Ltd, New Zealand
- Australian Commodity Traders Exchange
- Bhushan Steel Limited - India
- Meenaskhi Energy Private Limited - India
- Aditya Birla Group - India
- Iligan Light & Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- Kepco SPC Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Straits Asia Resources Limited - Singapore
- Orica Australia Pty. Ltd.
- Indo Tambangraya Megah - Indonesia
- Siam City Cement PLC, Thailand
- Bhatia International Limited - India
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