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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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Friday, 07 November 14
U.S. PRODUCED 85.60 MILLION SHORT TONS OF COAL IN OCTOBER, UP 2.88% M-O-M
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.0 million short tons (mmst) of coal ...
Thursday, 06 November 14
THE ATLANTIC HAS REMAINED STRONG WITH A HEALTHY SUPPLY OF NEW CARGOES
Handy
This week has continued its slow trend in both hemispheres and even though rates are a bit up w-o-w it is not a clear sign for any improvem ...
Wednesday, 05 November 14
CAPESIZE SEGMENT ENJOYED FIRMING RATES ACROSS BOTH BASINS
Following a fantastic week in terms of rate performance for Capes, the Dry Bulk market managed to note another positive weekly closing, which stron ...
Wednesday, 05 November 14
SHIPPING MARKET INSIGHT - PANOS TSILINGIRIS
COALspot.com: The steep appreciation in dry bulker values between late 2012 and March 2014 resulted in unrealistically expensive ship values compar ...
Tuesday, 04 November 14
INDONESIAN COAL SWAPS FOR 2015 DELIVERIES SHOW A WEAK TREND
COALspot.com: Indonesian coal swaps for delivery Q4' 2014 lost month on month and gained day on day and week on week, the trend was same as las ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- Jindal Steel & Power Ltd - India
- Orica Australia Pty. Ltd.
- Bayan Resources Tbk. - Indonesia
- Africa Commodities Group - South Africa
- Alfred C Toepfer International GmbH - Germany
- Salva Resources Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Marubeni Corporation - India
- Medco Energi Mining Internasional
- Edison Trading Spa - Italy
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- Agrawal Coal Company - India
- Holcim Trading Pte Ltd - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement - Thailand
- Chettinad Cement Corporation Ltd - India
- Borneo Indobara - Indonesia
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- Xindia Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Electricity Generating Authority of Thailand
- Binh Thuan Hamico - Vietnam
- Eastern Energy - Thailand
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Kartika Selabumi Mining - Indonesia
- Gujarat Sidhee Cement - India
- Sakthi Sugars Limited - India
- Indogreen Group - Indonesia
- Kaltim Prima Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- IEA Clean Coal Centre - UK
- PowerSource Philippines DevCo
- Maheswari Brothers Coal Limited - India
- Bharathi Cement Corporation - India
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Uttam Galva Steels Limited - India
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- Port Waratah Coal Services - Australia
- Billiton Holdings Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Petron Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Metalloyd Limited - United Kingdom
- Lanco Infratech Ltd - India
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- Makarim & Taira - Indonesia
- Price Waterhouse Coopers - Russia
- Latin American Coal - Colombia
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Australian Coal Association
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
- Samtan Co., Ltd - South Korea
- Gujarat Electricity Regulatory Commission - India
- The University of Queensland
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- The Treasury - Australian Government
- White Energy Company Limited
- Oldendorff Carriers - Singapore
- Barasentosa Lestari - Indonesia
- Mintek Dendrill Indonesia
- Dalmia Cement Bharat India
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- Singapore Mercantile Exchange
- Directorate General of MIneral and Coal - Indonesia
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kalimantan Lumbung Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Therma Luzon, Inc, Philippines
- Energy Development Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Grasim Industreis Ltd - India
- Mjunction Services Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- Thiess Contractors Indonesia
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Madhucon Powers Ltd - India
- Karaikal Port Pvt Ltd - India
- Ministry of Finance - Indonesia
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
- Vizag Seaport Private Limited - India
- Economic Council, Georgia
- Indika Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Renaissance Capital - South Africa
- MS Steel International - UAE
- Chamber of Mines of South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Sical Logistics Limited - India
- SMG Consultants - Indonesia
- Kobexindo Tractors - Indoneisa
- Merrill Lynch Commodities Europe
- Star Paper Mills Limited - India
- Leighton Contractors Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- Heidelberg Cement - Germany
- Orica Mining Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Coalindo Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement PLC, Thailand
- Ministry of Transport, Egypt
- Commonwealth Bank - Australia
- International Coal Ventures Pvt Ltd - India
- Mercator Lines Limited - India
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Antam Resourcindo - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhatia International Limited - India
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- Aditya Birla Group - India
- Wilmar Investment Holdings
- European Bulk Services B.V. - Netherlands
- Toyota Tsusho Corporation, Japan
- Meenaskhi Energy Private Limited - India
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- Cigading International Bulk Terminal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Romanian Commodities Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Baramulti Group, Indonesia
- Anglo American - United Kingdom
- Videocon Industries ltd - India
- Karbindo Abesyapradhi - Indoneisa
- ICICI Bank Limited - India
- Coastal Gujarat Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Parliament of New Zealand
- Planning Commission, India
- Tamil Nadu electricity Board
- Bulk Trading Sa - Switzerland
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Coal and Oil Company - UAE
- IHS Mccloskey Coal Group - USA
- Savvy Resources Ltd - HongKong
- Essar Steel Hazira Ltd - India
- Meralco Power Generation, Philippines
- Central Java Power - Indonesia
- Energy Link Ltd, New Zealand
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- Central Electricity Authority - India
- SMC Global Power, Philippines
- Bhushan Steel Limited - India
- Timah Investasi Mineral - Indoneisa
- PTC India Limited - India
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- ASAPP Information Group - India
- Global Green Power PLC Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
- Aboitiz Power Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- The State Trading Corporation of India Ltd
- Carbofer General Trading SA - India
- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- Directorate Of Revenue Intelligence - India
- Indian Energy Exchange, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Formosa Plastics Group - Taiwan
- Global Business Power Corporation, Philippines
- McConnell Dowell - Australia
- Kideco Jaya Agung - Indonesia
- Ind-Barath Power Infra Limited - India
- Ministry of Mines - Canada
- Kepco SPC Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- GVK Power & Infra Limited - India
- Malabar Cements Ltd - India
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