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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, 21 October 14
INDIA'S DIESEL DEREGULATION POSITIVE FOR OIL COMPANIES - FITCH
The Indian government's 18 October decision to deregulate diesel prices will have a positive effect on the national oil marketing companies tha ...
Tuesday, 21 October 14
LOW DEMAND PUTTING COAL SWAPS UNDER PRESSURE
COALspot.com: Indonesian coal swaps for delivery Q4' 2014 lost on day, week and month.
The swap has lost US$ 1.57 (-3.04%) month on month ...
Monday, 20 October 14
CHINA'S ENVIRONMENTAL POLICIES DO NOT SPELL THE END FOR COAL - WOOD MACKENZIE
China's environmental policies do not spell the end for coal Analysis across energy commodities show coal still accounting for 64% of power mix ...
Monday, 20 October 14
CFR SOUTH CHINA COAL SWAPS FAILED TO PERFORM POSITIVE
COALspot.com: API 8 CFR South China Coal swap for Q4’ 2014 delivery decreased US$ 3.04 (-4.57%) month over month and US$ 1.75 (-2.68%) week o ...
Sunday, 19 October 14
LOW DEMAND PUSHES DOWN COAL FREIGHT RATES; VOLATILITY CONTINUES
COALspot.com: This week all the segments softened including BDI except for Panamax index.
The BDI was down by1.70 pct and clsoed at 944 points ...
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- Latin American Coal - Colombia
- Xindia Steels Limited - India
- PTC India Limited - India
- Gujarat Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Barasentosa Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Energy Link Ltd, New Zealand
- Vizag Seaport Private Limited - India
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Agrawal Coal Company - India
- Dalmia Cement Bharat India
- Thiess Contractors Indonesia
- Kumho Petrochemical, South Korea
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- Karaikal Port Pvt Ltd - India
- Larsen & Toubro Limited - India
- Bukit Baiduri Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Binh Thuan Hamico - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- VISA Power Limited - India
- Sakthi Sugars Limited - India
- Bayan Resources Tbk. - Indonesia
- Minerals Council of Australia
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- Posco Energy - South Korea
- Indo Tambangraya Megah - Indonesia
- Mercuria Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Chettinad Cement Corporation Ltd - India
- OPG Power Generation Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- European Bulk Services B.V. - Netherlands
- Tamil Nadu electricity Board
- Maharashtra Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Wood Mackenzie - Singapore
- Grasim Industreis Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- Star Paper Mills Limited - India
- Power Finance Corporation Ltd., India
- Indogreen Group - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Makarim & Taira - Indonesia
- Orica Australia Pty. Ltd.
- Jaiprakash Power Ventures ltd
- Port Waratah Coal Services - Australia
- Energy Development Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- Rio Tinto Coal - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Toyota Tsusho Corporation, Japan
- Economic Council, Georgia
- Chamber of Mines of South Africa
- Bangladesh Power Developement Board
- Coal and Oil Company - UAE
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Mjunction Services Limited - India
- PowerSource Philippines DevCo
- Gujarat Sidhee Cement - India
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Romanian Commodities Exchange
- Marubeni Corporation - India
- GVK Power & Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Borneo Indobara - Indonesia
- Goldman Sachs - Singapore
- Independent Power Producers Association of India
- International Coal Ventures Pvt Ltd - India
- GMR Energy Limited - India
- Bhatia International Limited - India
- Indian Energy Exchange, India
- PetroVietnam Power Coal Import and Supply Company
- Alfred C Toepfer International GmbH - Germany
- Asmin Koalindo Tuhup - Indonesia
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Lanco Infratech Ltd - India
- Vedanta Resources Plc - India
- Orica Mining Services - Indonesia
- Mercator Lines Limited - India
- Videocon Industries ltd - India
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- GN Power Mariveles Coal Plant, Philippines
- Sarangani Energy Corporation, Philippines
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement PLC, Thailand
- Wilmar Investment Holdings
- Siam City Cement - Thailand
- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
- Ambuja Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- MS Steel International - UAE
- Bhushan Steel Limited - India
- Kartika Selabumi Mining - Indonesia
- London Commodity Brokers - England
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- TeaM Sual Corporation - Philippines
- Altura Mining Limited, Indonesia
- Heidelberg Cement - Germany
- Cement Manufacturers Association - India
- Edison Trading Spa - Italy
- Essar Steel Hazira Ltd - India
- Tata Chemicals Ltd - India
- Kaltim Prima Coal - Indonesia
- CIMB Investment Bank - Malaysia
- IEA Clean Coal Centre - UK
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- SMC Global Power, Philippines
- Ministry of Finance - Indonesia
- Singapore Mercantile Exchange
- Directorate General of MIneral and Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- Price Waterhouse Coopers - Russia
- Interocean Group of Companies - India
- Semirara Mining Corp, Philippines
- Sojitz Corporation - Japan
- Billiton Holdings Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- IHS Mccloskey Coal Group - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- Eastern Coal Council - USA
- Krishnapatnam Port Company Ltd. - India
- Jindal Steel & Power Ltd - India
- The State Trading Corporation of India Ltd
- Electricity Generating Authority of Thailand
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- Trasteel International SA, Italy
- Anglo American - United Kingdom
- Georgia Ports Authority, United States
- San Jose City I Power Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Maheswari Brothers Coal Limited - India
- Planning Commission, India
- Renaissance Capital - South Africa
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Salva Resources Pvt Ltd - India
- Coalindo Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- ICICI Bank Limited - India
- New Zealand Coal & Carbon
- Oldendorff Carriers - Singapore
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- ASAPP Information Group - India
- Intertek Mineral Services - Indonesia
- Commonwealth Bank - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Standard Chartered Bank - UAE
- Meenaskhi Energy Private Limited - India
- Madhucon Powers Ltd - India
- Manunggal Multi Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- South Luzon Thermal Energy Corporation
- Central Electricity Authority - India
- AsiaOL BioFuels Corp., Philippines
- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- The University of Queensland
- Deloitte Consulting - India
- Banpu Public Company Limited - Thailand
- Riau Bara Harum - Indonesia
- SMG Consultants - Indonesia
- Global Business Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- White Energy Company Limited
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