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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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Sunday, 26 October 14
CAPE'S STRONG PERFORMANCE PUSHES BDI INDEX UPWARDS
COALspot.com: The BDI was up by 26.27 pct and closed at 1192 points week and week. The Cape size performance has pushed up BDI and Cape size index ...
Friday, 24 October 14
WEEKLY U.S COAL PRODUCTION DOWN 2.7% FOR THE WEEK ENDING OCTOBER 18
COALspot.com – United States the world's one of largest coal producers, produced approximately 18.7 million short tons (mmst) of coal in ...
Thursday, 23 October 14
THE BEARS, HOWEVER, STILL CRY; FOR HOW LONG WILL IT LAST? - FEARNLEYS
Handy
"We experience a typical oversupply of ships in the Atlantic which causing rates to slide. In the USG it is just enough cargoes to kee ...
Wednesday, 22 October 14
MARKET INSIGHT - THEODORE NTALAKOS, INTERMODAL
ECO designs - revisited
The ECO vessels are already here but the oil and bunker prices are plummeting to their cheapest level since 2010. Is this ...
Wednesday, 22 October 14
CAPESIZE MARKET REMAINED UNDER PRESSURE
COALspot.com: The Dry Bulk market closed on the red for yet another week although following Friday sentiment has started to improve on the back of ...
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- Latin American Coal - Colombia
- Agrawal Coal Company - India
- Parliament of New Zealand
- Jaiprakash Power Ventures ltd
- Riau Bara Harum - Indonesia
- London Commodity Brokers - England
- Madhucon Powers Ltd - India
- Altura Mining Limited, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Australian Coal Association
- Uttam Galva Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Siam City Cement PLC, Thailand
- Merrill Lynch Commodities Europe
- Coastal Gujarat Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- Singapore Mercantile Exchange
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- Electricity Authority, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Tamil Nadu electricity Board
- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
- Price Waterhouse Coopers - Russia
- Chettinad Cement Corporation Ltd - India
- Bhoruka Overseas - Indonesia
- Goldman Sachs - Singapore
- Gujarat Sidhee Cement - India
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Anglo American - United Kingdom
- Australian Commodity Traders Exchange
- Baramulti Group, Indonesia
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- European Bulk Services B.V. - Netherlands
- Mjunction Services Limited - India
- Kapuas Tunggal Persada - Indonesia
- Kideco Jaya Agung - Indonesia
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- Sical Logistics Limited - India
- Karaikal Port Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Central Electricity Authority - India
- Bukit Asam (Persero) Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Sakthi Sugars Limited - India
- Kalimantan Lumbung Energi - Indonesia
- GMR Energy Limited - India
- Kartika Selabumi Mining - Indonesia
- PTC India Limited - India
- Indian Oil Corporation Limited
- Semirara Mining and Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Chamber of Mines of South Africa
- Renaissance Capital - South Africa
- Eastern Energy - Thailand
- Ministry of Finance - Indonesia
- Antam Resourcindo - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- Banpu Public Company Limited - Thailand
- Wood Mackenzie - Singapore
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- Attock Cement Pakistan Limited
- OPG Power Generation Pvt Ltd - India
- Borneo Indobara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Aditya Birla Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- Neyveli Lignite Corporation Ltd, - India
- CNBM International Corporation - China
- Makarim & Taira - Indonesia
- GVK Power & Infra Limited - India
- Star Paper Mills Limited - India
- Leighton Contractors Pty Ltd - Australia
- Malabar Cements Ltd - India
- The University of Queensland
- Krishnapatnam Port Company Ltd. - India
- Thai Mozambique Logistica
- Wilmar Investment Holdings
- Formosa Plastics Group - Taiwan
- Posco Energy - South Korea
- ASAPP Information Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indika Energy - Indonesia
- Commonwealth Bank - Australia
- Sojitz Corporation - Japan
- Barasentosa Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Mining Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Iligan Light & Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- SMC Global Power, Philippines
- The Treasury - Australian Government
- Bayan Resources Tbk. - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Timah Investasi Mineral - Indoneisa
- Ministry of Mines - Canada
- Kepco SPC Power Corporation, Philippines
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Kaltim Prima Coal - Indonesia
- Tata Chemicals Ltd - India
- PNOC Exploration Corporation - Philippines
- Marubeni Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Pendopo Energi Batubara - Indonesia
- Independent Power Producers Association of India
- Economic Council, Georgia
- Ministry of Transport, Egypt
- Meralco Power Generation, Philippines
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Bulk Trading Sa - Switzerland
- Power Finance Corporation Ltd., India
- Orica Australia Pty. Ltd.
- Gujarat Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- Directorate General of MIneral and Coal - Indonesia
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- Energy Development Corp, Philippines
- Coal and Oil Company - UAE
- Mercator Lines Limited - India
- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- Romanian Commodities Exchange
- Mintek Dendrill Indonesia
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Grasim Industreis Ltd - India
- Sarangani Energy Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- SMG Consultants - Indonesia
- Planning Commission, India
- Carbofer General Trading SA - India
- VISA Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- LBH Netherlands Bv - Netherlands
- Lanco Infratech Ltd - India
- Port Waratah Coal Services - Australia
- Bhatia International Limited - India
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Deloitte Consulting - India
- Kobexindo Tractors - Indoneisa
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- TeaM Sual Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Interocean Group of Companies - India
- Therma Luzon, Inc, Philippines
- New Zealand Coal & Carbon
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- Globalindo Alam Lestari - Indonesia
- Indian Energy Exchange, India
- Jorong Barutama Greston.PT - Indonesia
- Vedanta Resources Plc - India
- Essar Steel Hazira Ltd - India
- Bukit Baiduri Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Indonesian Coal Mining Association
- Asmin Koalindo Tuhup - Indonesia
- Directorate Of Revenue Intelligence - India
- Intertek Mineral Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Eastern Coal Council - USA
- Cement Manufacturers Association - India
- Bharathi Cement Corporation - India
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Global Coal Blending Company Limited - Australia
- Rio Tinto Coal - Australia
- Miang Besar Coal Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
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