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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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Monday, 17 November 14
INDONESIAN COAL PRICE REFERENCE CONTINUES FREE FALL; SLUMPS TO 69-MONTH LOW
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down the coal bench mark price once again in November. HBA for t ...
Monday, 17 November 14
API 5 FOB NEWCASTLE COAL SWAP FOR Q1' 15 DELIVERY CLOSED AT $ 52.75
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery has decreased US$ 1.77 (-3.25%) month over month and US$ 0.02 (-0.04%) day ...
Monday, 17 November 14
SOUTH CHINA COAL SWAP SLIGHTLY INCREASED WEEK OVER WEEK
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased US$ 1.73 (-2.67%) month over month and US$ 0.10 (-0.16%) da ...
Sunday, 16 November 14
THE BDI LOST 12.59% WEEK ON WEEK; THE BCI LOST 19.95%
COALspot.com: The BDI fell 12.59 percent to 1256 point week on week on Friday 14 November. All the segments were also most down this week. The cape ...
Friday, 14 November 14
U.S. WEEKLY COAL OUTPUT SLIPS SLIGHTLY WEEK ENDING NOVEMBER 08
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.9 million short tons (mmst) of coal ...
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- Coalindo Energy - Indonesia
- SMG Consultants - Indonesia
- Kideco Jaya Agung - Indonesia
- Gujarat Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Offshore Bulk Terminal Pte Ltd, Singapore
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Mercator Lines Limited - India
- Bhushan Steel Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Romanian Commodities Exchange
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- Vijayanagar Sugar Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Edison Trading Spa - Italy
- Bukit Makmur.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Marubeni Corporation - India
- Australian Commodity Traders Exchange
- Timah Investasi Mineral - Indoneisa
- Mercuria Energy - Indonesia
- Indonesian Coal Mining Association
- Central Electricity Authority - India
- Orica Mining Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Gujarat Sidhee Cement - India
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Kobexindo Tractors - Indoneisa
- Energy Development Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GN Power Mariveles Coal Plant, Philippines
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Transport, Egypt
- Bhatia International Limited - India
- Port Waratah Coal Services - Australia
- Lanco Infratech Ltd - India
- Renaissance Capital - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Eastern Coal Council - USA
- Bharathi Cement Corporation - India
- Bayan Resources Tbk. - Indonesia
- Salva Resources Pvt Ltd - India
- Madhucon Powers Ltd - India
- Indian Energy Exchange, India
- Meenaskhi Energy Private Limited - India
- Central Java Power - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Altura Mining Limited, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Planning Commission, India
- Indika Energy - Indonesia
- CNBM International Corporation - China
- Global Business Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Global Coal Blending Company Limited - Australia
- Directorate General of MIneral and Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Bhoruka Overseas - Indonesia
- GAC Shipping (India) Pvt Ltd
- Jorong Barutama Greston.PT - Indonesia
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Heidelberg Cement - Germany
- Tamil Nadu electricity Board
- Wilmar Investment Holdings
- Antam Resourcindo - Indonesia
- Agrawal Coal Company - India
- Alfred C Toepfer International GmbH - Germany
- GVK Power & Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Posco Energy - South Korea
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Merrill Lynch Commodities Europe
- Vedanta Resources Plc - India
- Medco Energi Mining Internasional
- Kaltim Prima Coal - Indonesia
- Power Finance Corporation Ltd., India
- Bahari Cakrawala Sebuku - Indonesia
- Australian Coal Association
- ASAPP Information Group - India
- Commonwealth Bank - Australia
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Global Green Power PLC Corporation, Philippines
- Chamber of Mines of South Africa
- Petrochimia International Co. Ltd.- Taiwan
- PowerSource Philippines DevCo
- Price Waterhouse Coopers - Russia
- Sojitz Corporation - Japan
- Mintek Dendrill Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- Simpson Spence & Young - Indonesia
- Africa Commodities Group - South Africa
- Sree Jayajothi Cements Limited - India
- SMC Global Power, Philippines
- Baramulti Group, Indonesia
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- Chettinad Cement Corporation Ltd - India
- Oldendorff Carriers - Singapore
- Cigading International Bulk Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Parliament of New Zealand
- Thiess Contractors Indonesia
- VISA Power Limited - India
- Electricity Generating Authority of Thailand
- Toyota Tsusho Corporation, Japan
- Siam City Cement - Thailand
- SN Aboitiz Power Inc, Philippines
- Ministry of Mines - Canada
- LBH Netherlands Bv - Netherlands
- White Energy Company Limited
- Vizag Seaport Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ICICI Bank Limited - India
- Larsen & Toubro Limited - India
- Neyveli Lignite Corporation Ltd, - India
- The Treasury - Australian Government
- GMR Energy Limited - India
- Miang Besar Coal Terminal - Indonesia
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Samtan Co., Ltd - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- Mjunction Services Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Deloitte Consulting - India
- Georgia Ports Authority, United States
- Borneo Indobara - Indonesia
- Rio Tinto Coal - Australia
- IHS Mccloskey Coal Group - USA
- Ceylon Electricity Board - Sri Lanka
- MS Steel International - UAE
- Straits Asia Resources Limited - Singapore
- Economic Council, Georgia
- Barasentosa Lestari - Indonesia
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- European Bulk Services B.V. - Netherlands
- Directorate Of Revenue Intelligence - India
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- Xindia Steels Limited - India
- Intertek Mineral Services - Indonesia
- Indogreen Group - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- London Commodity Brokers - England
- Indo Tambangraya Megah - Indonesia
- Videocon Industries ltd - India
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- OPG Power Generation Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Minerals Council of Australia
- Independent Power Producers Association of India
- The University of Queensland
- Goldman Sachs - Singapore
- Kartika Selabumi Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
- Star Paper Mills Limited - India
- Cement Manufacturers Association - India
- Electricity Authority, New Zealand
- Savvy Resources Ltd - HongKong
- International Coal Ventures Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- Semirara Mining Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Sical Logistics Limited - India
- Riau Bara Harum - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Trasteel International SA, Italy
- Kapuas Tunggal Persada - Indonesia
- Ministry of Finance - Indonesia
- Globalindo Alam Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- South Luzon Thermal Energy Corporation
- The State Trading Corporation of India Ltd
- Maheswari Brothers Coal Limited - India
- Malabar Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- Sindya Power Generating Company Private Ltd
- Carbofer General Trading SA - India
- Thai Mozambique Logistica
- Parry Sugars Refinery, India
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