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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, 31 October 14
BUKIT ASAM'S NET PROFIT ROSE 27.42% FOR THE PERIOD JANUARY - SEPTEMBER 2014
COALspot.com: Publicly listed coal miner Bukit Asam reported solid profits in the first nine months of 2014 year.
Coal miner Bukit Asam manage ...
Friday, 31 October 14
U.S PRODUCED AROUND 19.3 MMST OF COAL IN A WEEK
COALspot.com – United States the world's one of largest coal producers, produced approximately 19.3 million short tons (mmst) of coal in ...
Thursday, 30 October 14
COAL & GRAINS SUPPORT PANAMAX AND IRON ORE SUPPORTS CAPES
Handy
The Atlantic market has been flat this week. Rates are up about US$ 200 from last week on the TA´s, but the volumes are about the sam ...
Thursday, 30 October 14
DOES A LOU ARBITRATION AGREEMENT FOR THE UNDERLYING CARGO CLAIM COMPLETELY REPLACE THE BILL OF LADING ARBITRATION CLAUSE? - INCE &CO
KNOWLEDGE TO ELEVATE
In the context of cargo claims brought under four bills of lading, the Commercial Court has recently considered whether a ...
Wednesday, 29 October 14
GOOD REASON WHY Q4 CAPESIZE OUTLOOK WAS SO BULLISH AT START OF THE YEAR - COMMODORE RESEARCH
COALspot.com: There was good reason why so many analysts' capesize outlook for Q4 was so very strong at the start of this year. Brazilian ...
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- San Jose City I Power Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- IEA Clean Coal Centre - UK
- ASAPP Information Group - India
- PTC India Limited - India
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Georgia Ports Authority, United States
- Miang Besar Coal Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Orica Australia Pty. Ltd.
- Karaikal Port Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Independent Power Producers Association of India
- Pendopo Energi Batubara - Indonesia
- PNOC Exploration Corporation - Philippines
- Petron Corporation, Philippines
- Baramulti Group, Indonesia
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- Latin American Coal - Colombia
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Sindya Power Generating Company Private Ltd
- Barasentosa Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Sarangani Energy Corporation, Philippines
- Australian Coal Association
- Minerals Council of Australia
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Altura Mining Limited, Indonesia
- New Zealand Coal & Carbon
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Authority, New Zealand
- Price Waterhouse Coopers - Russia
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- India Bulls Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Ministry of Transport, Egypt
- CNBM International Corporation - China
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bhushan Steel Limited - India
- AsiaOL BioFuels Corp., Philippines
- Jaiprakash Power Ventures ltd
- Antam Resourcindo - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- The Treasury - Australian Government
- Malabar Cements Ltd - India
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Manunggal Multi Energi - Indonesia
- Sojitz Corporation - Japan
- Bharathi Cement Corporation - India
- Chamber of Mines of South Africa
- Edison Trading Spa - Italy
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Billiton Holdings Pty Ltd - Australia
- Indika Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMG Consultants - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- MS Steel International - UAE
- Gujarat Mineral Development Corp Ltd - India
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Maheswari Brothers Coal Limited - India
- Global Coal Blending Company Limited - Australia
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- Rashtriya Ispat Nigam Limited - India
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- Global Business Power Corporation, Philippines
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- Bukit Baiduri Energy - Indonesia
- Mercuria Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Siam City Cement - Thailand
- GVK Power & Infra Limited - India
- Riau Bara Harum - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Metalloyd Limited - United Kingdom
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Planning Commission, India
- Lanco Infratech Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Ambuja Cements Ltd - India
- Parliament of New Zealand
- Interocean Group of Companies - India
- Formosa Plastics Group - Taiwan
- Kideco Jaya Agung - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bhatia International Limited - India
- Holcim Trading Pte Ltd - Singapore
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- Directorate Of Revenue Intelligence - India
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Deloitte Consulting - India
- Timah Investasi Mineral - Indoneisa
- Siam City Cement PLC, Thailand
- Aditya Birla Group - India
- Port Waratah Coal Services - Australia
- Star Paper Mills Limited - India
- Wilmar Investment Holdings
- Merrill Lynch Commodities Europe
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Ind-Barath Power Infra Limited - India
- Gujarat Sidhee Cement - India
- Borneo Indobara - Indonesia
- Bukit Makmur.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Parry Sugars Refinery, India
- Kapuas Tunggal Persada - Indonesia
- Indogreen Group - Indonesia
- Eastern Coal Council - USA
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- GAC Shipping (India) Pvt Ltd
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- IHS Mccloskey Coal Group - USA
- Sree Jayajothi Cements Limited - India
- Therma Luzon, Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Grasim Industreis Ltd - India
- The University of Queensland
- Dalmia Cement Bharat India
- TeaM Sual Corporation - Philippines
- Posco Energy - South Korea
- PowerSource Philippines DevCo
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- London Commodity Brokers - England
- Marubeni Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Thai Mozambique Logistica
- Gujarat Electricity Regulatory Commission - India
- White Energy Company Limited
- Mintek Dendrill Indonesia
- Sakthi Sugars Limited - India
- Meralco Power Generation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Goldman Sachs - Singapore
- Australian Commodity Traders Exchange
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- ICICI Bank Limited - India
- Kaltim Prima Coal - Indonesia
- Orica Mining Services - Indonesia
- Coalindo Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Rio Tinto Coal - Australia
- Xindia Steels Limited - India
- GMR Energy Limited - India
- Ministry of Finance - Indonesia
- Tamil Nadu electricity Board
- Oldendorff Carriers - Singapore
- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- Renaissance Capital - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aboitiz Power Corporation - Philippines
- Larsen & Toubro Limited - India
- Indian Energy Exchange, India
- Petrochimia International Co. Ltd.- Taiwan
- Kumho Petrochemical, South Korea
- Mercator Lines Limited - India
- International Coal Ventures Pvt Ltd - India
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- Romanian Commodities Exchange
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