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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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Monday, 10 November 14
Q4' 15 FOB INDONESIA COAL SWAP CLOSED LOWER THAN Q1' 15 CLOSING PRICE OF US$ 49.58 ON LAST FRIDAY
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month, week on week and day on day.
The Q1 swap has lost just US$ ...
Monday, 10 November 14
SGX'S API 4 FOB RICHARDS BAY COAL SWAP FOR Q1' 2015 DELIVERY CLOSED AT US$ 65.44 ON 7 NOV, LOST 4.08% M-O-M
COALspot.com: API 4 FOB Richards Bay Coal swap for Q1’ 2015 delivery has decreased US$ 2.78 (-4.08%) month over month and US$ 1.41 (-2.11%) w ...
Monday, 10 November 14
MOZAMBIQUE SIGNED CONTRACT WITH ETA STAR OF UAE FOR OPEN CAST COAL MINE IN TETE - AIM
- ETA Star to build slurry pipeline over the 600 kilometers to Beira in Mozambique to transport coal.
- The viability studies show the presence o ...
Monday, 10 November 14
YEAR 2015 CFR SOUTH CHINA COAL SWAP SHOWS A WEAK TREND THIS PAST WEEK
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased US$ 3.74 (-5.63%) month over month and US$ 2.19 (+3.37%) we ...
Sunday, 09 November 14
CAPE INDEX UP 3.06%; PANAMAX INDEX FELL 4.05%
COALspot.com: The BDI was almost at same levels compared to last week closing or just increased 0.77 pct from last week. The BDI was closed at 1437 ...
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- CIMB Investment Bank - Malaysia
- TeaM Sual Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- Renaissance Capital - South Africa
- Xindia Steels Limited - India
- Malabar Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Central Electricity Authority - India
- Coal and Oil Company - UAE
- Lanco Infratech Ltd - India
- San Jose City I Power Corp, Philippines
- London Commodity Brokers - England
- Maheswari Brothers Coal Limited - India
- Billiton Holdings Pty Ltd - Australia
- Parliament of New Zealand
- Indian Oil Corporation Limited
- Kepco SPC Power Corporation, Philippines
- Central Java Power - Indonesia
- Riau Bara Harum - Indonesia
- Posco Energy - South Korea
- Mercuria Energy - Indonesia
- Carbofer General Trading SA - India
- Gujarat Mineral Development Corp Ltd - India
- Directorate Of Revenue Intelligence - India
- OPG Power Generation Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Wilmar Investment Holdings
- IHS Mccloskey Coal Group - USA
- Semirara Mining and Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Uttam Galva Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- Coalindo Energy - Indonesia
- Ministry of Mines - Canada
- Simpson Spence & Young - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Eastern Coal Council - USA
- Dalmia Cement Bharat India
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Makarim & Taira - Indonesia
- Global Green Power PLC Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Kohat Cement Company Ltd. - Pakistan
- Indogreen Group - Indonesia
- MS Steel International - UAE
- Indo Tambangraya Megah - Indonesia
- Petron Corporation, Philippines
- Commonwealth Bank - Australia
- Ambuja Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Sojitz Corporation - Japan
- Eastern Energy - Thailand
- LBH Netherlands Bv - Netherlands
- Indian Energy Exchange, India
- Barasentosa Lestari - Indonesia
- The Treasury - Australian Government
- Agrawal Coal Company - India
- Wood Mackenzie - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- Banpu Public Company Limited - Thailand
- Videocon Industries ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Orica Mining Services - Indonesia
- Orica Australia Pty. Ltd.
- Rashtriya Ispat Nigam Limited - India
- Indika Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Sakthi Sugars Limited - India
- PowerSource Philippines DevCo
- Trasteel International SA, Italy
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- Bhatia International Limited - India
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- Economic Council, Georgia
- Gujarat Sidhee Cement - India
- The University of Queensland
- SMC Global Power, Philippines
- Ind-Barath Power Infra Limited - India
- Baramulti Group, Indonesia
- Latin American Coal - Colombia
- VISA Power Limited - India
- Merrill Lynch Commodities Europe
- Heidelberg Cement - Germany
- Kumho Petrochemical, South Korea
- Interocean Group of Companies - India
- Jorong Barutama Greston.PT - Indonesia
- Marubeni Corporation - India
- GAC Shipping (India) Pvt Ltd
- McConnell Dowell - Australia
- Sical Logistics Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Bhushan Steel Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Indonesian Coal Mining Association
- Metalloyd Limited - United Kingdom
- Romanian Commodities Exchange
- White Energy Company Limited
- Medco Energi Mining Internasional
- Therma Luzon, Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- Coastal Gujarat Power Limited - India
- PTC India Limited - India
- SMG Consultants - Indonesia
- Tata Chemicals Ltd - India
- Goldman Sachs - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Global Coal Blending Company Limited - Australia
- Straits Asia Resources Limited - Singapore
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Electricity Authority, New Zealand
- Thiess Contractors Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- Cement Manufacturers Association - India
- Samtan Co., Ltd - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- CNBM International Corporation - China
- Planning Commission, India
- Chettinad Cement Corporation Ltd - India
- Aboitiz Power Corporation - Philippines
- The State Trading Corporation of India Ltd
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- Kapuas Tunggal Persada - Indonesia
- Standard Chartered Bank - UAE
- Alfred C Toepfer International GmbH - Germany
- Singapore Mercantile Exchange
- Pendopo Energi Batubara - Indonesia
- Attock Cement Pakistan Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Star Paper Mills Limited - India
- Tamil Nadu electricity Board
- Australian Coal Association
- Bhoruka Overseas - Indonesia
- Kideco Jaya Agung - Indonesia
- Africa Commodities Group - South Africa
- Mercator Lines Limited - India
- Meenaskhi Energy Private Limited - India
- GVK Power & Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Grasim Industreis Ltd - India
- Siam City Cement PLC, Thailand
- Siam City Cement - Thailand
- Vedanta Resources Plc - India
- Leighton Contractors Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Parry Sugars Refinery, India
- Essar Steel Hazira Ltd - India
- Oldendorff Carriers - Singapore
- Edison Trading Spa - Italy
- Gujarat Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- India Bulls Power Limited - India
- Aditya Birla Group - India
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- International Coal Ventures Pvt Ltd - India
- Meralco Power Generation, Philippines
- Karaikal Port Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- Larsen & Toubro Limited - India
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Electricity Generating Authority of Thailand
- Intertek Mineral Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Energy Development Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Ministry of Transport, Egypt
- Energy Link Ltd, New Zealand
- Deloitte Consulting - India
- IEA Clean Coal Centre - UK
- Bangladesh Power Developement Board
- Salva Resources Pvt Ltd - India
- Georgia Ports Authority, United States
- ICICI Bank Limited - India
- Borneo Indobara - Indonesia
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