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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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Wednesday, 19 September 12
CHURCHILL STRENGTHENS LITIGATION TEAM WITH APPOINTMENT OF NICHOLAS SMITH AS MANAGING DIRECTOR
COALspot.com - Churchill Mining PLC (AIM: CHL) has announced that, Mr Nicholas Smith has joined the board of the Company and has been appointed as t ...
Wednesday, 19 September 12
DRY BULK TERMINALS SINGAPORE
Press Release - Dry bulk terminals are used all around the world to handle large quantities of bulk materials, like minerals, grains, etc. In today& ...
Tuesday, 18 September 12
JORC CODE REVISION - EXPOSURE DRAFT RELEASED FOR COMMENT
COALspot.com - The Australasian Joint Ore Reserves Committee (JORC) has today released for public comment the exposure draft of the JORC Code (2012) ...
Monday, 17 September 12
YEAR TO DATE, BUMA PRODUCED 231.1 MILLION BCM OF OVERBURDEN
COALspot.com - PT. Delta Dunia Makmur Tbk has removed 31.5 million bcm (+6.0 percent YoY) overburden in August 2012 totaled 31.5 million bcm ( ...
Sunday, 16 September 12
GLOBAL LOW DEMAND ; INDONESIA COAL AND CFR SOUTH CHINA COAL SWAPS DIP
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for November 2012 delivery lost 1.345 percent W-O-W on Friday, 14 September 2012, closing but gai ...
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- Kideco Jaya Agung - Indonesia
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- Larsen & Toubro Limited - India
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- Chettinad Cement Corporation Ltd - India
- Meralco Power Generation, Philippines
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
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- Bahari Cakrawala Sebuku - Indonesia
- Energy Development Corp, Philippines
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- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Madhucon Powers Ltd - India
- Mintek Dendrill Indonesia
- Ceylon Electricity Board - Sri Lanka
- Intertek Mineral Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Posco Energy - South Korea
- MS Steel International - UAE
- Parry Sugars Refinery, India
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- Coastal Gujarat Power Limited - India
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- Wood Mackenzie - Singapore
- Bhatia International Limited - India
- Vizag Seaport Private Limited - India
- Eastern Coal Council - USA
- Bhoruka Overseas - Indonesia
- Thai Mozambique Logistica
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Karbindo Abesyapradhi - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement PLC, Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Mining Services - Indonesia
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- GAC Shipping (India) Pvt Ltd
- European Bulk Services B.V. - Netherlands
- GVK Power & Infra Limited - India
- Trasteel International SA, Italy
- Holcim Trading Pte Ltd - Singapore
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Economic Council, Georgia
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- Iligan Light & Power Inc, Philippines
- New Zealand Coal & Carbon
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- Independent Power Producers Association of India
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- Toyota Tsusho Corporation, Japan
- Bhushan Steel Limited - India
- Central Java Power - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Planning Commission, India
- Formosa Plastics Group - Taiwan
- Tamil Nadu electricity Board
- Directorate General of MIneral and Coal - Indonesia
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- Sical Logistics Limited - India
- TeaM Sual Corporation - Philippines
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- Jaiprakash Power Ventures ltd
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- South Luzon Thermal Energy Corporation
- Bukit Makmur.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- Ministry of Finance - Indonesia
- Antam Resourcindo - Indonesia
- Metalloyd Limited - United Kingdom
- International Coal Ventures Pvt Ltd - India
- SMG Consultants - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Renaissance Capital - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- GMR Energy Limited - India
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Kumho Petrochemical, South Korea
- London Commodity Brokers - England
- Singapore Mercantile Exchange
- Coal and Oil Company - UAE
- Alfred C Toepfer International GmbH - Germany
- Oldendorff Carriers - Singapore
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- Orica Australia Pty. Ltd.
- PetroVietnam Power Coal Import and Supply Company
- Banpu Public Company Limited - Thailand
- Coalindo Energy - Indonesia
- Semirara Mining Corp, Philippines
- Lanco Infratech Ltd - India
- Dalmia Cement Bharat India
- Samtan Co., Ltd - South Korea
- Directorate Of Revenue Intelligence - India
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- Mercuria Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Marubeni Corporation - India
- Power Finance Corporation Ltd., India
- ICICI Bank Limited - India
- Minerals Council of Australia
- Indian Energy Exchange, India
- CNBM International Corporation - China
- Sree Jayajothi Cements Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Eastern Energy - Thailand
- Latin American Coal - Colombia
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- TNB Fuel Sdn Bhd - Malaysia
- Port Waratah Coal Services - Australia
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Chamber of Mines of South Africa
- CIMB Investment Bank - Malaysia
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Kartika Selabumi Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IHS Mccloskey Coal Group - USA
- Indo Tambangraya Megah - Indonesia
- Romanian Commodities Exchange
- Straits Asia Resources Limited - Singapore
- Edison Trading Spa - Italy
- Neyveli Lignite Corporation Ltd, - India
- Price Waterhouse Coopers - Russia
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- IEA Clean Coal Centre - UK
- Attock Cement Pakistan Limited
- Therma Luzon, Inc, Philippines
- Baramulti Group, Indonesia
- Manunggal Multi Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Uttam Galva Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
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- Goldman Sachs - Singapore
- Indogreen Group - Indonesia
- Indian Oil Corporation Limited
- VISA Power Limited - India
- The University of Queensland
- OPG Power Generation Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- Savvy Resources Ltd - HongKong
- Thiess Contractors Indonesia
- Australian Commodity Traders Exchange
- Africa Commodities Group - South Africa
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- Ministry of Mines - Canada
- Jindal Steel & Power Ltd - India
- Miang Besar Coal Terminal - Indonesia
- McConnell Dowell - Australia
- Bayan Resources Tbk. - Indonesia
- Cement Manufacturers Association - India
- Borneo Indobara - Indonesia
- Central Electricity Authority - India
- Maheswari Brothers Coal Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Siam City Cement - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Carbofer General Trading SA - India
- PTC India Limited - India
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- Interocean Group of Companies - India
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- Ind-Barath Power Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Petron Corporation, Philippines
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- Australian Coal Association
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