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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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Wednesday, 12 November 14
PANAMAX: WITNESSED A FAIRLY STABLE MARKET IN THE ATLANTIC
COALspot.com: Despite the fact that the Dry Bulk market noted another weekly increase, clouds of uncertainty returned mid-week onwards, as the mini ...
Wednesday, 12 November 14
SHIPPING MARKET INSIGHT - CHRISTOPHER T. WHITTY
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Tuesday, 11 November 14
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Tuesday, 11 November 14
NEWCASTLE COAL SWAP CLOSED AT $ 52.65 FOR Q1' 15 DELIVERY
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Tuesday, 11 November 14
PORT OF NEWCASTLE'S OCTOBER COAL SHIPMENTS SLIPPED 7.40% M-O-M
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1,115.7 mil ...
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- Maharashtra Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Timah Investasi Mineral - Indoneisa
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coalindo Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Mines - Canada
- Bukit Makmur.PT - Indonesia
- New Zealand Coal & Carbon
- Romanian Commodities Exchange
- Antam Resourcindo - Indonesia
- MS Steel International - UAE
- Directorate General of MIneral and Coal - Indonesia
- Indonesian Coal Mining Association
- Interocean Group of Companies - India
- Independent Power Producers Association of India
- Asmin Koalindo Tuhup - Indonesia
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- Electricity Generating Authority of Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Orica Mining Services - Indonesia
- Heidelberg Cement - Germany
- ICICI Bank Limited - India
- Makarim & Taira - Indonesia
- European Bulk Services B.V. - Netherlands
- Edison Trading Spa - Italy
- Economic Council, Georgia
- LBH Netherlands Bv - Netherlands
- Karaikal Port Pvt Ltd - India
- Indogreen Group - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Cement Manufacturers Association - India
- Sojitz Corporation - Japan
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- PowerSource Philippines DevCo
- Standard Chartered Bank - UAE
- OPG Power Generation Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Borneo Indobara - Indonesia
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- Energy Link Ltd, New Zealand
- Minerals Council of Australia
- Oldendorff Carriers - Singapore
- The Treasury - Australian Government
- Baramulti Group, Indonesia
- Australian Commodity Traders Exchange
- Toyota Tsusho Corporation, Japan
- Coastal Gujarat Power Limited - India
- PNOC Exploration Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- IEA Clean Coal Centre - UK
- Globalindo Alam Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kaltim Prima Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Merrill Lynch Commodities Europe
- Deloitte Consulting - India
- The University of Queensland
- Billiton Holdings Pty Ltd - Australia
- Renaissance Capital - South Africa
- Attock Cement Pakistan Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parry Sugars Refinery, India
- TeaM Sual Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Australia Pty. Ltd.
- Bahari Cakrawala Sebuku - Indonesia
- Manunggal Multi Energi - Indonesia
- Central Electricity Authority - India
- Global Business Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Therma Luzon, Inc, Philippines
- Altura Mining Limited, Indonesia
- South Luzon Thermal Energy Corporation
- Bhushan Steel Limited - India
- Siam City Cement PLC, Thailand
- Ambuja Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Rashtriya Ispat Nigam Limited - India
- SN Aboitiz Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Pendopo Energi Batubara - Indonesia
- Thiess Contractors Indonesia
- Latin American Coal - Colombia
- Krishnapatnam Port Company Ltd. - India
- Kideco Jaya Agung - Indonesia
- Essar Steel Hazira Ltd - India
- Kepco SPC Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Chamber of Mines of South Africa
- Port Waratah Coal Services - Australia
- Binh Thuan Hamico - Vietnam
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- CNBM International Corporation - China
- Xindia Steels Limited - India
- Indika Energy - Indonesia
- Wilmar Investment Holdings
- Star Paper Mills Limited - India
- Sical Logistics Limited - India
- Simpson Spence & Young - Indonesia
- Bayan Resources Tbk. - Indonesia
- Africa Commodities Group - South Africa
- Cigading International Bulk Terminal - Indonesia
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Development Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- GMR Energy Limited - India
- Wood Mackenzie - Singapore
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- Jaiprakash Power Ventures ltd
- Tata Chemicals Ltd - India
- PTC India Limited - India
- VISA Power Limited - India
- Agrawal Coal Company - India
- McConnell Dowell - Australia
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Aditya Birla Group - India
- Kapuas Tunggal Persada - Indonesia
- London Commodity Brokers - England
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- Sarangani Energy Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
- PetroVietnam Power Coal Import and Supply Company
- Planning Commission, India
- Global Coal Blending Company Limited - Australia
- Sree Jayajothi Cements Limited - India
- Vizag Seaport Private Limited - India
- Posco Energy - South Korea
- IHS Mccloskey Coal Group - USA
- ASAPP Information Group - India
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Grasim Industreis Ltd - India
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Petrochimia International Co. Ltd.- Taiwan
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- White Energy Company Limited
- SMC Global Power, Philippines
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- Rio Tinto Coal - Australia
- Bhoruka Overseas - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- CIMB Investment Bank - Malaysia
- Mercuria Energy - Indonesia
- Australian Coal Association
- Vedanta Resources Plc - India
- Leighton Contractors Pty Ltd - Australia
- Eastern Coal Council - USA
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- Malabar Cements Ltd - India
- Parliament of New Zealand
- Savvy Resources Ltd - HongKong
- Anglo American - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Kumho Petrochemical, South Korea
- Semirara Mining and Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- Singapore Mercantile Exchange
- SMG Consultants - Indonesia
- Tamil Nadu electricity Board
- Eastern Energy - Thailand
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- Lanco Infratech Ltd - India
- Meralco Power Generation, Philippines
- Indian Oil Corporation Limited
- Bukit Baiduri Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- India Bulls Power Limited - India
- GVK Power & Infra Limited - India
- Larsen & Toubro Limited - India
- Videocon Industries ltd - India
- Metalloyd Limited - United Kingdom
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