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Monday, 17 December 12
SHIP PRICES TO BOTTOM OUT IN 2013 SAYS GEORGE D. GOURDOMICHALIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
 Ship values especially in older tonnage, or even modern vessels with poor quality are expected to fall further during 2013, with the market as a whole predicted to bottom-out next year, creating the ground for a rebound later on. In an exclusive interview with Hellenic Shipping News Worldwide, Mr. George D. Gourdomichalis, Managing Director of G. Bros Maritime S.A. talks about the dry bulk market's potential in 2013, which ship types appear to have the best value-for-money and debates the effectiveness of the new breed of "Eco-Carriers".
The Gourdomichalis family commenced their own shipowning activities in the London shipping market in 1950's. Since then have enjoyed a very high reputation in the shipping industry. Members of the family have kept high positions in various Boards of Directors and other Official Organizations such as being President of the Union of Greek Shipowners. In 1974 the firm's offices moved to Piraeus, Hellas while still maintaining a presence in London. Since 1990, the family's involvement in shipping has also included a joint venture with the Romanian State Company (Petromin). The Gourdomichalis brothers first independent foray into shipowning and shipmanagement activities was with the family sponsored Joint Venture with the Russian State owned Baltic Shipping Co. which operated under the flag of Baltmed Shipping Co.
In 1996, after having wound up Baltmed Shipping Co., the J.V. with Baltic Shipping Co., George and Stathis Gourdomichalis established Gourdomichalis Naftiki Eteria S.A. The establishment of the company manifested the younger generation's strong drive to succeed using its own means and skills. Since its inception in 1996 it has managed a total of six dry cargo ships including Freedom and Handy type vessels. The company has also managed a repossessed vessel on behalf of a bank.
In 2004 all their activities were consolidated into a holding company FREESEAS INC. and managed by Free Bulkers S.A. Freeseas Inc was listed on NASDAQ on December 2005. George Gourdomichalis held the position of President and Chairman and Stathis Gourdomichalis was the Treasurer and Chief Financial Officer. The two principals controlled about 48% of the listed company. In January 2007 they sold their shareholding in both Freeseas Inc. and Free Bulkers S.A. to entities controlled by the Restis group.
This development allowed George and Stathis to once again grow their "private - family" shipping activities. A new structure was put into operation under the name G Bros Maritime S.A. They employ a total of sixteen shore-based staff including a Port Captain, Engineer Superintendent, Accountants, Secretarial and Administrative Executive staff. The company occupies approximately 300 sq. meters of office space in prime area on Akti Miaouli, Piraeus, at the heart of the worlds largest shipping center.
This year's performance of the dry bulk market has been less than memorable, in fact quite the opposite. Why did this happen, especially after a satisfying 2011, at least in terms of freight rates?
The softness of the dry bulk market is clearly a function of the imbalance of tonnage supply and demand, world GDP growth slowdown experienced over the past couple of years and the lack of finance. We fail to see any satisfaction in 2011 in freight rates and values and would suggest that the dry bulk market downturn we are experiencing essentially since end 2008, with a short breather in the spring of 2010, is a prolonged down run of the market.
Do you expect 2013 to be just as challenging, or could conditions improve, as a result of an improvement of the supply/demand current imbalance, a product of heavy new building ordering of the past few years?
As stated above there are three basic reasons pressuring freight rates and values down, whereas the supply/demand balance is slowly starting to look better, there is still significant danger of continued oversupply of tonnage on the back of the very strong marketing of the supposedly “eco-ships” by yards lacking utilization. The coming year will be as challenging as 2012, but will also see the market bottom out thus creating the opportunity for purchases and positioning for a upturn.
What strategy did your company follow, in order to cope with these adverse market conditions?
We, as many others, restructured our fleet by retiring older tonnage and restructuring financial arrangements, as well as disposing of vessels with heavier than acceptable debt. In reality, we exercised a stop-loss strategy allowing us to weather the down market.
Do you thinks that ships' values are close to bottoming-out, or is there still room for lower prices?
Vessel values are a function of earnings and replacement value and as such there are certain segments and age groups that may have further down side with overage tonnage in the larger sizes being the most prominent in that group. Having said that, older tonnage across the board has further downside as it is trading at scrap related values. We also believe that younger tonnage of questionable and inferior quality has considerable down side, being that in a buyer’s market one tends to cherry pick the best of the candidates.
Which ship types do you find the most attractive in today's market?
The answer depends on the driver behind purchases, i.e. is it a speculative asset play, or an operational longer term investment? In the case of the first, we would be inclined to look at the very large modern units, whereas in the case of the latter we would look at the modern high quality/high spec handy and handy-max segment.
Do you prefer newbuilding investments, or is it better to look for modern second hand tonnage in today's market environment?
We believe that quality of design and build is paramount these days and as such would rule out any new-building activity at inferior yards. Having said that, the discount to replacement cost found in today’s market leads us to believe that very attractive valuations can be found in top quality modern second hand vessels.
How different are today's conditions in shipping finance, compared to the pre-2009 period? Is it challenging to obtain financing for new vessel acquisitions?
Immensely!! There is practically no finance available except from very select institutions to very select borrowers either by virtue of being existing clients and/or by virtue of paying down existing facilities and thus opening up credit and to the larger corporate entities who are borrowing both on the strength of their balance sheets but also on the strength of their cash flows and cash in hand. Naturally, there are certain segments that are faring better than other in obtaining finance such as the LNG and offshore industries as well as the re-appearance of quasi financial institutions providing higher cost finance. In all though, margins are up, loan to value ratios are down and security is paramount to lenders.
Do you believe that the latest trend of the so-called "Eco Carriers", i.e. ships which promise lower fuel consumption will become dominant in the future, despite the premium prices they command? Are you considering investing in such vessels in the future?
The response of any educated and experienced shipping man is that the plethora of “eco-carrier” designs are untested and make claims that have not yet been put to the test and rigors of the real sea. A properly designed, maintained and operated existing ship can provide good competition to any of the new designs and we believe it is best to reserve judgment till these designs are put to the test.
One of the major concerns of the global shipping industry has also been piracy in various areas around the world. How do you protect your vessels? Which is the best solution in your opinion?
We, as others, have been forced to employ armed guards onboard our vessels transiting/trading in high risk areas. It is not a solution to the problem but is a necessary evil. The solution lies in the geopolitical balances that need to be juggled in Somalia and/or in West Africa and/or S.E. Asia. We hope, primarily for the safety of our crews and the free flow of trade that a final solution both on shore and at sea is found the soonest possible.
Source : Nikos Roussanoglou, Hellenic Shipping News Worldwide
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Friday, 07 December 12
A NEW PHASE FOR AUSTRALIAN RESOURCES - A FITCH STREET INTERVIEW
This week Matt Jamieson spoke with Andrew Colquhoun in Fitch's Asian sovereign rating team, and Vicky Melbourne, Fitch's commodity analyst based i ...
Friday, 07 December 12
SHIPPING INDUSTRY LOOKING ON YET ANOTHER TOUGH YEAR AS WE APPROACH 2013 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With shipping finance "on the ropes" as traditional lenders appear to be cutting their losses and tonnage oversupply still the most import ...
Thursday, 06 December 12
PANAMAX : THE POSITIVE VIBES IN THE ATLANTIC REMAINS - FEARNLEYS AS
Handy
The Atlantic market is still depressed with dearth of cargoes and more ships. The trips from Continent to Feast fixed around USD 12k. Trips f ...
Thursday, 06 December 12
STRONG CHINESE DEMAND FOR DRY BULK COMMODITIES EXPECTED FOR 2013 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A new analysis from BIMCO released yesterday suggests that 2013 is expected to be a stronger year in terms of China's "hunger" for commod ...
Tuesday, 04 December 12
JATENERGY SIGNS MOU FOR INDONESIAN COAL ASSET
COALspot.com - Jatenergy Limited has announced that its fully-owned Indonesian subsidiary, PT Barata Energy (BE), has signed an exclusive, non-bindi ...
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- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thiess Contractors Indonesia
- Aditya Birla Group - India
- Xindia Steels Limited - India
- Holcim Trading Pte Ltd - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Kobexindo Tractors - Indoneisa
- ASAPP Information Group - India
- Kumho Petrochemical, South Korea
- Borneo Indobara - Indonesia
- Maheswari Brothers Coal Limited - India
- Global Green Power PLC Corporation, Philippines
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Electricity Authority, New Zealand
- Edison Trading Spa - Italy
- Kohat Cement Company Ltd. - Pakistan
- London Commodity Brokers - England
- Kapuas Tunggal Persada - Indonesia
- PowerSource Philippines DevCo
- SMG Consultants - Indonesia
- Gujarat Sidhee Cement - India
- Lanco Infratech Ltd - India
- Savvy Resources Ltd - HongKong
- ICICI Bank Limited - India
- Globalindo Alam Lestari - Indonesia
- Planning Commission, India
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- San Jose City I Power Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- White Energy Company Limited
- Sakthi Sugars Limited - India
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Indo Tambangraya Megah - Indonesia
- Orica Mining Services - Indonesia
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- Orica Australia Pty. Ltd.
- Mintek Dendrill Indonesia
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- Kepco SPC Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Trasteel International SA, Italy
- The University of Queensland
- GMR Energy Limited - India
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bhushan Steel Limited - India
- Goldman Sachs - Singapore
- Standard Chartered Bank - UAE
- Alfred C Toepfer International GmbH - Germany
- Indian Energy Exchange, India
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
- Meralco Power Generation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement PLC, Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
- Siam City Cement - Thailand
- Mjunction Services Limited - India
- Thai Mozambique Logistica
- Pipit Mutiara Jaya. PT, Indonesia
- Star Paper Mills Limited - India
- Heidelberg Cement - Germany
- CNBM International Corporation - China
- MS Steel International - UAE
- Australian Commodity Traders Exchange
- Ministry of Mines - Canada
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Global Coal Blending Company Limited - Australia
- Grasim Industreis Ltd - India
- Formosa Plastics Group - Taiwan
- Mercator Lines Limited - India
- IHS Mccloskey Coal Group - USA
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Meenaskhi Energy Private Limited - India
- Indogreen Group - Indonesia
- Malabar Cements Ltd - India
- Semirara Mining Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- GVK Power & Infra Limited - India
- South Luzon Thermal Energy Corporation
- Electricity Generating Authority of Thailand
- Simpson Spence & Young - Indonesia
- Sarangani Energy Corporation, Philippines
- Deloitte Consulting - India
- Baramulti Group, Indonesia
- Australian Coal Association
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- Romanian Commodities Exchange
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Ind-Barath Power Infra Limited - India
- Kaltim Prima Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Wilmar Investment Holdings
- Bayan Resources Tbk. - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- Central Electricity Authority - India
- Bahari Cakrawala Sebuku - Indonesia
- GAC Shipping (India) Pvt Ltd
- Rashtriya Ispat Nigam Limited - India
- Altura Mining Limited, Indonesia
- Intertek Mineral Services - Indonesia
- Indian Oil Corporation Limited
- Iligan Light & Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Uttam Galva Steels Limited - India
- Barasentosa Lestari - Indonesia
- Commonwealth Bank - Australia
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Posco Energy - South Korea
- IEA Clean Coal Centre - UK
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- Ambuja Cements Ltd - India
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- Eastern Energy - Thailand
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- Cement Manufacturers Association - India
- Vedanta Resources Plc - India
- Bukit Baiduri Energy - Indonesia
- Medco Energi Mining Internasional
- Pendopo Energi Batubara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Power Finance Corporation Ltd., India
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- Ceylon Electricity Board - Sri Lanka
- Bhoruka Overseas - Indonesia
- PNOC Exploration Corporation - Philippines
- Indika Energy - Indonesia
- Wood Mackenzie - Singapore
- Bangladesh Power Developement Board
- Salva Resources Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Chamber of Mines of South Africa
- PetroVietnam Power Coal Import and Supply Company
- TNB Fuel Sdn Bhd - Malaysia
- OPG Power Generation Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indonesian Coal Mining Association
- Minerals Council of Australia
- Marubeni Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Attock Cement Pakistan Limited
- Economic Council, Georgia
- Bharathi Cement Corporation - India
- CIMB Investment Bank - Malaysia
- Bhatia International Limited - India
- Coalindo Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- Ministry of Finance - Indonesia
- Independent Power Producers Association of India
- Jindal Steel & Power Ltd - India
- Global Business Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- Riau Bara Harum - Indonesia
- Sical Logistics Limited - India
- Miang Besar Coal Terminal - Indonesia
- Carbofer General Trading SA - India
- Essar Steel Hazira Ltd - India
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