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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, 28 October 14
SGX'S FOB RICHARDS BAY COAL SWAP FOR DELIVERY Q1' 2015 CLOSED AT $ 68.07 ON 24 OCT
COALspot.com: API 4 FOB Richards Bay coal swap for Q4’ 2014 delivery decreased US$ 0.65 (-0.96%) month over month and increased US$ 1.79 (+2. ...
Tuesday, 28 October 14
SUB-BIT FOB INDONESIA COAL SWAP FOR Q1' 15 DELIVERY CLOSED 3.68% LOWER MONTH ON MONTH
COALspot.com: Indonesian coal swaps for delivery Q4' 2014 lost month on month and gained day on day and week on week.
The swap has lost US ...
Monday, 27 October 14
GOVT PROMISES TO EASE LICENSING PROCEDURES IN MINING SECTOR - THE JAKARTA POST
The Energy and Mineral Resources Ministry’s directorate general for mineral and coal plans to simplify the complicated licensing procedures i ...
Monday, 27 October 14
FOB NEWCASTLE COAL SWAP FOR Q1' 15 DELIVERY CLOSED $ 0.10 LESSER THAN Q4' 14 CLOSING OF $ 53.27 PMT
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2014 delivery decreased US$ 1.43 (-2.61%) month over month and increased US$ 0.05 (+0.09% ...
Monday, 27 October 14
CFR SOUTH CHINA COAL SWAPS PERFORMED POSITIVE THIS PAST WEEK
COALspot.com: API 8 CFR South China Coal swap for Q4’ 2014 delivery decreased US$ 1.68 (-2.55%) month over month and increased US$ 0.87 (+1.3 ...
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- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Tamil Nadu electricity Board
- Miang Besar Coal Terminal - Indonesia
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- Tata Chemicals Ltd - India
- Semirara Mining Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Orica Australia Pty. Ltd.
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Commonwealth Bank - Australia
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bharathi Cement Corporation - India
- Timah Investasi Mineral - Indoneisa
- ASAPP Information Group - India
- Sree Jayajothi Cements Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercuria Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Latin American Coal - Colombia
- Ceylon Electricity Board - Sri Lanka
- Deloitte Consulting - India
- Samtan Co., Ltd - South Korea
- Sical Logistics Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
- Parliament of New Zealand
- Manunggal Multi Energi - Indonesia
- Orica Mining Services - Indonesia
- GMR Energy Limited - India
- SN Aboitiz Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Siam City Cement PLC, Thailand
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- Ind-Barath Power Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Sojitz Corporation - Japan
- Australian Commodity Traders Exchange
- Merrill Lynch Commodities Europe
- Agrawal Coal Company - India
- VISA Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Australian Coal Association
- TeaM Sual Corporation - Philippines
- Antam Resourcindo - Indonesia
- Dalmia Cement Bharat India
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Romanian Commodities Exchange
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Indian Energy Exchange, India
- Globalindo Alam Lestari - Indonesia
- Port Waratah Coal Services - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Uttam Galva Steels Limited - India
- Oldendorff Carriers - Singapore
- Parry Sugars Refinery, India
- IHS Mccloskey Coal Group - USA
- Sarangani Energy Corporation, Philippines
- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- Semirara Mining and Power Corporation, Philippines
- Economic Council, Georgia
- Bhoruka Overseas - Indonesia
- Maheswari Brothers Coal Limited - India
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Wood Mackenzie - Singapore
- Jindal Steel & Power Ltd - India
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- Mintek Dendrill Indonesia
- Eastern Energy - Thailand
- The Treasury - Australian Government
- Pipit Mutiara Jaya. PT, Indonesia
- Sakthi Sugars Limited - India
- Georgia Ports Authority, United States
- Petrochimia International Co. Ltd.- Taiwan
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- Standard Chartered Bank - UAE
- Trasteel International SA, Italy
- Minerals Council of Australia
- Bhatia International Limited - India
- ICICI Bank Limited - India
- Bayan Resources Tbk. - Indonesia
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Electricity Generating Authority of Thailand
- Indonesian Coal Mining Association
- Carbofer General Trading SA - India
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- PTC India Limited - India
- Mjunction Services Limited - India
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Singapore Mercantile Exchange
- CNBM International Corporation - China
- Cigading International Bulk Terminal - Indonesia
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Asmin Koalindo Tuhup - Indonesia
- Cement Manufacturers Association - India
- Planning Commission, India
- Bukit Makmur.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Independent Power Producers Association of India
- MS Steel International - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maharashtra Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- Aditya Birla Group - India
- Alfred C Toepfer International GmbH - Germany
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMC Global Power, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Authority, New Zealand
- Kideco Jaya Agung - Indonesia
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indian Oil Corporation Limited
- Renaissance Capital - South Africa
- Global Business Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Gujarat Mineral Development Corp Ltd - India
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- Petron Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
- Holcim Trading Pte Ltd - Singapore
- Bukit Baiduri Energy - Indonesia
- Edison Trading Spa - Italy
- Videocon Industries ltd - India
- Makarim & Taira - Indonesia
- Star Paper Mills Limited - India
- OPG Power Generation Pvt Ltd - India
- Eastern Coal Council - USA
- Central Electricity Authority - India
- Central Java Power - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Sidhee Cement - India
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- Indogreen Group - Indonesia
- Barasentosa Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- Marubeni Corporation - India
- Billiton Holdings Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Posco Energy - South Korea
- South Luzon Thermal Energy Corporation
- Indo Tambangraya Megah - Indonesia
- White Energy Company Limited
- Indika Energy - Indonesia
- Ambuja Cements Ltd - India
- Intertek Mineral Services - Indonesia
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- International Coal Ventures Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- Coal and Oil Company - UAE
- Thiess Contractors Indonesia
- Kartika Selabumi Mining - Indonesia
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