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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, 17 October 14
INTERNATIONAL COAL PRICES ARE AT LOWEST LEVEL; COAL STOCKS AT INDIAN POWER PLANTS ARE ALSO AT LOWEST LEVEL
International coal prices as well as coal freights are falling and reaching to its lowest levels. According to PTI, fuel stockpiles at the thermal ...
Friday, 17 October 14
U.S. COAL PRODUCTION UP BY 3.6% WEEK - ON - WEEK
COALspot.com – United States the world's one of largest coal producers, produced approximately 19.20 million short tons (mmst) of coal in ...
Friday, 17 October 14
DRY BULK SHIPPING'S OUTLOOK NOW SHIFTING TO A LESS PROMISING ONE, SHIP PRICES EXPECTED TO FOLLOW SOON - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
China’s and other Asian countries’ return to the dry bulk market last week, didn’t trigger the hoped support towards the dry bulk ...
Thursday, 16 October 14
KOREA MIDLAND POWER TO BUY 490K MT OF LCV COAL FOR 1Q 2015
COALspot.com : Korea Midland Power Co., Ltd. has invited bids through International open bidding for 490,000 Metric Tons (MT) of LCV (Sub) Bitumino ...
Thursday, 16 October 14
PANAMAX OWNERS RECEIVE A PREMIUM FOR GOING TO INDIA VIA INDONESIA - FEARNLEYS AS
Handy
The Handy/Supra market continues to slide in both hemispheres, said Fearnleys AS in its latest week report. In the Atlantic we see rates co ...
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- Siam City Cement - Thailand
- Simpson Spence & Young - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Bukit Baiduri Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Parliament of New Zealand
- SMC Global Power, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Chamber of Mines of South Africa
- Semirara Mining and Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Madhucon Powers Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Therma Luzon, Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Minerals Council of Australia
- Kapuas Tunggal Persada - Indonesia
- Merrill Lynch Commodities Europe
- Maheswari Brothers Coal Limited - India
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Kohat Cement Company Ltd. - Pakistan
- Central Java Power - Indonesia
- Sakthi Sugars Limited - India
- CNBM International Corporation - China
- Anglo American - United Kingdom
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- LBH Netherlands Bv - Netherlands
- Riau Bara Harum - Indonesia
- Larsen & Toubro Limited - India
- Sojitz Corporation - Japan
- Interocean Group of Companies - India
- Marubeni Corporation - India
- IEA Clean Coal Centre - UK
- Wilmar Investment Holdings
- Oldendorff Carriers - Singapore
- Meralco Power Generation, Philippines
- Ind-Barath Power Infra Limited - India
- Petron Corporation, Philippines
- White Energy Company Limited
- India Bulls Power Limited - India
- Binh Thuan Hamico - Vietnam
- Kaltim Prima Coal - Indonesia
- Mercator Lines Limited - India
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- New Zealand Coal & Carbon
- CIMB Investment Bank - Malaysia
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- Coal and Oil Company - UAE
- Wood Mackenzie - Singapore
- IHS Mccloskey Coal Group - USA
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Global Green Power PLC Corporation, Philippines
- London Commodity Brokers - England
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parry Sugars Refinery, India
- McConnell Dowell - Australia
- Planning Commission, India
- Cigading International Bulk Terminal - Indonesia
- Bharathi Cement Corporation - India
- Bhatia International Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Singapore Mercantile Exchange
- VISA Power Limited - India
- Straits Asia Resources Limited - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Port Waratah Coal Services - Australia
- PNOC Exploration Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Sical Logistics Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Gujarat Mineral Development Corp Ltd - India
- Power Finance Corporation Ltd., India
- Vedanta Resources Plc - India
- San Jose City I Power Corp, Philippines
- Bhushan Steel Limited - India
- Romanian Commodities Exchange
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- Coastal Gujarat Power Limited - India
- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- Thai Mozambique Logistica
- Central Electricity Authority - India
- PetroVietnam Power Coal Import and Supply Company
- Sarangani Energy Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Africa Commodities Group - South Africa
- Standard Chartered Bank - UAE
- Samtan Co., Ltd - South Korea
- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Energy - Thailand
- Dalmia Cement Bharat India
- Ministry of Transport, Egypt
- Sree Jayajothi Cements Limited - India
- Manunggal Multi Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- Altura Mining Limited, Indonesia
- PTC India Limited - India
- Energy Development Corp, Philippines
- Semirara Mining Corp, Philippines
- European Bulk Services B.V. - Netherlands
- GMR Energy Limited - India
- Kepco SPC Power Corporation, Philippines
- Indogreen Group - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- Electricity Generating Authority of Thailand
- Energy Link Ltd, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Goldman Sachs - Singapore
- Lanco Infratech Ltd - India
- GAC Shipping (India) Pvt Ltd
- Bahari Cakrawala Sebuku - Indonesia
- TeaM Sual Corporation - Philippines
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Australian Coal Association
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Bhoruka Overseas - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Renaissance Capital - South Africa
- The University of Queensland
- Asmin Koalindo Tuhup - Indonesia
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- Ambuja Cements Ltd - India
- Medco Energi Mining Internasional
- Thiess Contractors Indonesia
- Timah Investasi Mineral - Indoneisa
- Australian Commodity Traders Exchange
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indo Tambangraya Megah - Indonesia
- Salva Resources Pvt Ltd - India
- Carbofer General Trading SA - India
- Miang Besar Coal Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- MS Steel International - UAE
- Coalindo Energy - Indonesia
- Indian Oil Corporation Limited
- The Treasury - Australian Government
- Deloitte Consulting - India
- Orica Mining Services - Indonesia
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- Agrawal Coal Company - India
- Mintek Dendrill Indonesia
- Jindal Steel & Power Ltd - India
- Aditya Birla Group - India
- Banpu Public Company Limited - Thailand
- SMG Consultants - Indonesia
- Eastern Coal Council - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- South Luzon Thermal Energy Corporation
- OPG Power Generation Pvt Ltd - India
- Mjunction Services Limited - India
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Antam Resourcindo - Indonesia
- Videocon Industries ltd - India
- Karaikal Port Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Metalloyd Limited - United Kingdom
- Global Business Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Aboitiz Power Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Vizag Seaport Private Limited - India
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