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Wednesday, 15 December 10
LARGE ORDERBOOK TO HINDER 2011 DRY BULK MARKET REBOUND DESPITE INCREASED DEMAND SAYS PARAGON SHIPPING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
 A large orderbook which currently stands at 53% of the existing fleet is expected to render 2011 another challenging year for the dry bulk market. According to Mr. Michael Bodouroglou, Chairman and CEO of Paragon Shipping Inc., in an interview with Hellenic Shipping News Worldwide,
“we believe that 2011 should be a challenging year due to the amount of new vessels that are expected to hit the water during the year”. Providing with an explanation on the flurry of newbuilding orders this year, Mr. Bodouroglou said that current newbuilding prices are 12% below where the prompt resale values are, “so we do believe that the newbuilding market offers the best value in the drybulk sector” he said.
Paragon Shipping recently posted its third quarter and nine-month results. Which were the key performance figures you would highlight?
Despite the turbulence in the markets of the past two years, our chartering strategy enabled us report our 13th straight profitable quarter since we went public in 2007. This past quarter, there was a lot of activity, and we diversified into the containership market, and expanded our fleet without risking our balance sheet and maintaining our dividend. In addition, our adjusted EBITDA was $19.6 million in the third quarter, which was a $3 million improvement over the previous quarter, and our leverage remains at a moderate 57%.
What about your stock’s valuation? Do you think that there is enough room for an increase?
Absolutely, we feel our stock is undervalued. With our current charter coverage at 98% for 2011, our revenues are insulated from any market fluctuations that may occur next year and our stock price doesn’t properly reflect this. Our time charter coverage makes us feel our stock price should be higher.
Do you think that this volatility of the market will continue in 2011 or will things be more stable going forward?
We believe that 2011 should be a challenging year due to the amount of new vessels that are expected to hit the water during the year. Our outlook on the demand side is very positive, and we expect to see increased demand for iron ore and coal from the Asian markets during 2011.
However, the orderbook remains very large with 53% of the existing fleet on order, and even with most analysts’ predictions that continued slippage should be in the range of 30%-40% of the expected deliveries, we expect an oversupply of vessels in 2011, which should create a more volatile market next year.
Oversupply issues have plagued the dry bulk market this year. Are you more optimistic about 2011 or not, especially with regards to the Panamax segment where Paragon has an increased presence?
As I mentioned above, we remain concerned about the orderbook for 2011, and while the orderbook is the largest for Capesized vessels, at 60% of the current fleet, Panamaxes also have a large orderbook at 50% of the current fleet, so we expect to feel some pressure on rates in 2011. This is why we have been proactive in locking up 98% of our revenues for 2011, so that we are protected against a decline in freight rates next year.
This year we witnessed a strong rebound of newbuilding orders which are difficult to justify given the already huge orderbook. Are valuations really that low? What’s your opinion on the matter?
In today’s market, you can see that current newbuilding prices are 12% below where the prompt resale values are, so we do believe that the newbuilding market offers the best value in the drybulk sector.
That is also why you continue to see newbuildings being ordered despite the large orderbook. We ordered seven newbuildings earlier this year, to be delivered between October 2011 and December, 2012, so we have backed up our view with action.
New building cancellations and scrapping of older bulkers seem to be the best chance that shipping has to improve freight rates. How is each of these solutions progressing since the beginning of the year?
Cancellations are very hard to measure, because neither the yards nor the shipowners have an incentive to announce them. This year, it appears cancellations have stalled as the markets were much stronger than expected. There have also been many new orders, which may have been new owners taking over someone else’s order, but these types of deals may never become clear. We continue to see a high amount of slippage, which will push the current orderbook out further, and hopefully extend the orderbook far enough out into the future so that demand will have time to catch up with supply. In addition, vessel scrapings have decreased this year and unless rates are depressed for an extended period, there is no incentive to scrap older tonnage. We would need a market where rates remain depressed for six to nine months before scrapings would be significant enough to offset new deliveries. This is also more pronounced with the smaller tonnage, as over 50% of the handysize fleet is older than 20 years of age, compared to only 16% for the capesize fleet.
How would you characterize the current market for second hand vessels? Are asset values corresponding to current freight rates?
We believe asset values are artificially inflated at current levels, and it is shown by the fact that the price of a five-year old Panamax is 11% above its 10-year historical average, compared to the one-year T/C rate that is 8% below its 10-year historical average. To us, this signifies that second hand values are higher than they should be and that there is a disconnect in the current market between vessel values and freight rates.
Would you see investment opportunities in today’s market conditions?
We have struggled looking for investment opportunities in today’s markets, although we believe that in the drybulk sector, the Handysize vessels are the most attractive at the moment. As we mentioned, over 50% of the fleet is older than 20 years of age, and it also has the smallest orderbook at the moment with 33% of the current fleet on order. We feel Handysize vessels maintain stable earnings, even in declining markets and have the best supply/demand dynamic of the drybulk sector.
What about cargo demand in the future? Is a booming China enough on its own to sustain the global fleet growth?
While China continues to be the primary driver for the drybulk market, other Asian Countries, most notably, India, have also been growing at a significant pace, and it is no longer demand for Iron Ore alone that drives freight rates, it is also the increased demand for Coal. The combined demand for Coal imports from India and China has helped boost the markets in 2010, and we expect this to continue for the next several years. As these Countries continue to build up their infrastructure, there will be an increased demand for energy, which should continue to drive increases in coal imports into China and India. So while China alone may not be able to utilize new tonnage that is expected to enter the market in the coming years, the combination of China, India and the rest of the Asian markets should be able to absorb this tonnage over time. We don’t expect this to happen in 2011, although we expect the market to be stabilized by 2013.
Interviewed by : Nikos Roussanoglou, Hellenic Shipping
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Friday, 17 December 10
NALCO SHORTLISTS COAL FIRMS FOR INDONESIA PROJECT - BUSINESS-STANDARD
Business-Standard reported that, State-owned NALCO today said it has shortlisted two firms for supply of coal for its Rs 18,000-crore (US$ 3,953,003 ...
Thursday, 16 December 10
LANCO BAGS AUSTRALIAN COAL MINER GRIFFITH - DNA
As part of its strategy to secure coal supplies for meeting its needs in expanding power generation capacities, infrastructure major Lanco Infratech ...
Thursday, 16 December 10
COAL INDIA IN TALKS WITH INDONESIAN CO TO BUY ITS COAL MINES - APN NEWS
APN News reported that, World’s largest coal producer Coal India is in talks with Indonesia’s Sinar Mas Group for acquiring coal mines i ...
Wednesday, 15 December 10
GOVT SETS NEW MINIMUM LEVEL FOR DOMESTIC MARKET SALES - THE JAKARTA POST
The Jakarta Post reported that, Indonesian coal producers are required to sell at least 24.17 percent of their production to the domestic market nex ...
Wednesday, 15 December 10
CAPESIZE RATES ARE NOW AT THEIR LOWEST LEVEL SINCE AUGUST
It was a repeat performance for the market this week, with another increase in earnings for the small sizes but a sharp drop for the Capes. Overall ...
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- Bulk Trading Sa - Switzerland
- Indo Tambangraya Megah - Indonesia
- Timah Investasi Mineral - Indoneisa
- Parry Sugars Refinery, India
- Energy Development Corp, Philippines
- Semirara Mining Corp, Philippines
- Vizag Seaport Private Limited - India
- TeaM Sual Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- GMR Energy Limited - India
- Global Coal Blending Company Limited - Australia
- Ambuja Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Sojitz Corporation - Japan
- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- Jaiprakash Power Ventures ltd
- McConnell Dowell - Australia
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- Port Waratah Coal Services - Australia
- The University of Queensland
- ASAPP Information Group - India
- PowerSource Philippines DevCo
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Kalimantan Lumbung Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Trasteel International SA, Italy
- Simpson Spence & Young - Indonesia
- Agrawal Coal Company - India
- OPG Power Generation Pvt Ltd - India
- CNBM International Corporation - China
- Bhatia International Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The State Trading Corporation of India Ltd
- IEA Clean Coal Centre - UK
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Attock Cement Pakistan Limited
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- Commonwealth Bank - Australia
- Xindia Steels Limited - India
- Marubeni Corporation - India
- International Coal Ventures Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Energy Link Ltd, New Zealand
- Central Electricity Authority - India
- Africa Commodities Group - South Africa
- Romanian Commodities Exchange
- Planning Commission, India
- Samtan Co., Ltd - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Makarim & Taira - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- White Energy Company Limited
- Indonesian Coal Mining Association
- Indian Oil Corporation Limited
- London Commodity Brokers - England
- Dalmia Cement Bharat India
- Larsen & Toubro Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Interocean Group of Companies - India
- Sinarmas Energy and Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Directorate General of MIneral and Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Bhushan Steel Limited - India
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- Mercator Lines Limited - India
- Parliament of New Zealand
- Globalindo Alam Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Vedanta Resources Plc - India
- Borneo Indobara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- VISA Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jindal Steel & Power Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Coalindo Energy - Indonesia
- Heidelberg Cement - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- CIMB Investment Bank - Malaysia
- Global Business Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- PNOC Exploration Corporation - Philippines
- The Treasury - Australian Government
- Savvy Resources Ltd - HongKong
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- Kumho Petrochemical, South Korea
- Sarangani Energy Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Mjunction Services Limited - India
- Cement Manufacturers Association - India
- Cigading International Bulk Terminal - Indonesia
- Latin American Coal - Colombia
- Mercuria Energy - Indonesia
- Bangladesh Power Developement Board
- Therma Luzon, Inc, Philippines
- Standard Chartered Bank - UAE
- GVK Power & Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- SMC Global Power, Philippines
- Pendopo Energi Batubara - Indonesia
- Aboitiz Power Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Independent Power Producers Association of India
- Bukit Baiduri Energy - Indonesia
- Central Java Power - Indonesia
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Thiess Contractors Indonesia
- Directorate Of Revenue Intelligence - India
- Kideco Jaya Agung - Indonesia
- Metalloyd Limited - United Kingdom
- Anglo American - United Kingdom
- Barasentosa Lestari - Indonesia
- Eastern Coal Council - USA
- Sakthi Sugars Limited - India
- Straits Asia Resources Limited - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Riau Bara Harum - Indonesia
- Videocon Industries ltd - India
- Banpu Public Company Limited - Thailand
- Malabar Cements Ltd - India
- Ministry of Finance - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Bhoruka Overseas - Indonesia
- Tata Chemicals Ltd - India
- Meenaskhi Energy Private Limited - India
- Karaikal Port Pvt Ltd - India
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- Rio Tinto Coal - Australia
- Meralco Power Generation, Philippines
- Indogreen Group - Indonesia
- Maheswari Brothers Coal Limited - India
- Intertek Mineral Services - Indonesia
- Antam Resourcindo - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- Orica Australia Pty. Ltd.
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Formosa Plastics Group - Taiwan
- Economic Council, Georgia
- Orica Mining Services - Indonesia
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- SN Aboitiz Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Petron Corporation, Philippines
- ICICI Bank Limited - India
- Australian Coal Association
- Ministry of Transport, Egypt
- SMG Consultants - Indonesia
- Power Finance Corporation Ltd., India
- Minerals Council of Australia
- Essar Steel Hazira Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Deloitte Consulting - India
- Star Paper Mills Limited - India
- South Luzon Thermal Energy Corporation
- IHS Mccloskey Coal Group - USA
- Sical Logistics Limited - India
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Goldman Sachs - Singapore
- LBH Netherlands Bv - Netherlands
- Renaissance Capital - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Billiton Holdings Pty Ltd - Australia
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- TNB Fuel Sdn Bhd - Malaysia
- European Bulk Services B.V. - Netherlands
- MS Steel International - UAE
- Merrill Lynch Commodities Europe
- Carbofer General Trading SA - India
- Mintek Dendrill Indonesia
- Bharathi Cement Corporation - India
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