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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, 04 November 14
FOB NEWCASTLE COAL SWAPS GAINED WEEK OVER WEEK
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2014 delivery decreased US$ 1.09 (-1.99%) month over month and increased US$ 0.31 (+0.58% ...
Monday, 03 November 14
ADARO PRODUCED 41.90MT OF COAL FOR FIRST 9 MONTHS OF 2014
COALspot.com: Adaro’s coal production in the third quarter reached 14.03 Mt, a 2% increase compared to the same period of last year. Accordin ...
Monday, 03 November 14
CFR SOUTH CHINA COAL SWAP FOR Q4' 2014 DELIVERY LOST 2.80% MONTH OVER MONTH
COALspot.com: API 8 CFR South China Coal swap for Q4’ 2014 delivery has decreased US$ 1.86 (-2.80%) month over month and increased US$ 0.37 ( ...
Monday, 03 November 14
INDONESIAN'S COAL EXPORTS JUMP IN SEPTEMBER
COALspot.com: Indonesia, one of the world's largest coal producers and the global leading multi grade coal exporter shipped around $1.50 ...
Sunday, 02 November 14
CAPE INDEX WAS UP 46.65% WEEK ON WEEK
COALspot.com: The BDI and Cape index continued the strong upward trend this week. The BDI was up 19.80 pct and Cape index was up by 46.65 per ...
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- Heidelberg Cement - Germany
- Bulk Trading Sa - Switzerland
- Therma Luzon, Inc, Philippines
- Medco Energi Mining Internasional
- Orica Australia Pty. Ltd.
- Wood Mackenzie - Singapore
- Tata Chemicals Ltd - India
- Aditya Birla Group - India
- McConnell Dowell - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Bharathi Cement Corporation - India
- Sinarmas Energy and Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Electricity Authority, New Zealand
- Coastal Gujarat Power Limited - India
- Wilmar Investment Holdings
- Mercuria Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Oldendorff Carriers - Singapore
- LBH Netherlands Bv - Netherlands
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Latin American Coal - Colombia
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Grasim Industreis Ltd - India
- Price Waterhouse Coopers - Russia
- Malabar Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Jindal Steel & Power Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Cement Manufacturers Association - India
- SN Aboitiz Power Inc, Philippines
- Indonesian Coal Mining Association
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- Mintek Dendrill Indonesia
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- Formosa Plastics Group - Taiwan
- Madhucon Powers Ltd - India
- Global Business Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Iligan Light & Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- Meenaskhi Energy Private Limited - India
- Edison Trading Spa - Italy
- Standard Chartered Bank - UAE
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- Ministry of Transport, Egypt
- Bayan Resources Tbk. - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- Kapuas Tunggal Persada - Indonesia
- Eastern Coal Council - USA
- Economic Council, Georgia
- International Coal Ventures Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Simpson Spence & Young - Indonesia
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Banpu Public Company Limited - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Meralco Power Generation, Philippines
- South Luzon Thermal Energy Corporation
- Tamil Nadu electricity Board
- Ceylon Electricity Board - Sri Lanka
- Port Waratah Coal Services - Australia
- Xindia Steels Limited - India
- Power Finance Corporation Ltd., India
- Africa Commodities Group - South Africa
- Kumho Petrochemical, South Korea
- Bhatia International Limited - India
- CIMB Investment Bank - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thiess Contractors Indonesia
- Baramulti Group, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Commonwealth Bank - Australia
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- Jaiprakash Power Ventures ltd
- Semirara Mining and Power Corporation, Philippines
- Georgia Ports Authority, United States
- Barasentosa Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kartika Selabumi Mining - Indonesia
- Thai Mozambique Logistica
- Indo Tambangraya Megah - Indonesia
- Salva Resources Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Interocean Group of Companies - India
- Sindya Power Generating Company Private Ltd
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- Borneo Indobara - Indonesia
- Posco Energy - South Korea
- Energy Development Corp, Philippines
- Semirara Mining Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Energy Link Ltd, New Zealand
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Attock Cement Pakistan Limited
- Jorong Barutama Greston.PT - Indonesia
- Sojitz Corporation - Japan
- Parliament of New Zealand
- Merrill Lynch Commodities Europe
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bangladesh Power Developement Board
- GVK Power & Infra Limited - India
- Ministry of Mines - Canada
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- India Bulls Power Limited - India
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- Kepco SPC Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Marubeni Corporation - India
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- Chamber of Mines of South Africa
- Vedanta Resources Plc - India
- Carbofer General Trading SA - India
- Sical Logistics Limited - India
- VISA Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- GMR Energy Limited - India
- ICICI Bank Limited - India
- Siam City Cement - Thailand
- Electricity Generating Authority of Thailand
- Leighton Contractors Pty Ltd - Australia
- Coalindo Energy - Indonesia
- PTC India Limited - India
- Metalloyd Limited - United Kingdom
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Timah Investasi Mineral - Indoneisa
- Ind-Barath Power Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- Kobexindo Tractors - Indoneisa
- Planning Commission, India
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- Riau Bara Harum - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coal and Oil Company - UAE
- Dalmia Cement Bharat India
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- Savvy Resources Ltd - HongKong
- Karaikal Port Pvt Ltd - India
- Minerals Council of Australia
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- Rashtriya Ispat Nigam Limited - India
- Central Electricity Authority - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Trasteel International SA, Italy
- Indogreen Group - Indonesia
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Global Green Power PLC Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Lanco Infratech Ltd - India
- Petron Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Sakthi Sugars Limited - India
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- Indian Oil Corporation Limited
- Krishnapatnam Port Company Ltd. - India
- Larsen & Toubro Limited - India
- Gujarat Sidhee Cement - India
- Australian Coal Association
- Directorate General of MIneral and Coal - Indonesia
- Parry Sugars Refinery, India
- Global Coal Blending Company Limited - Australia
- Indian Energy Exchange, India
- The University of Queensland
- Bhushan Steel Limited - India
- IHS Mccloskey Coal Group - USA
- Ambuja Cements Ltd - India
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