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Friday, 15 March 13
CHEAP SHIP VALUATIONS DON'T NECESSARILY MEAN ATTRACTIVE SAYS VESSELS VALUE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
 With ship prices plunging by double-digits in the past few years, many ship owners are pondering their next moves in a market often described as attractive. But is this really the case, when taking into account other factors, like for instance freight rates? VesselsValue's Adrian Economakis, Strategy Director with the company describes the current and future trends of the ship valuation market. VesselsValue' service has been established as a leading tool among banks, ship onwers and investors in the maritime industry, seeking accurate valuations of various types of vessels.
During the past couple of years, we've seen ship values plunging across the board, as a result of the economical and shipping crisis. Based on your data, could you provide us with some info on the ship types which have been affected the most?
Since 1st Jan 2007, worst performing sectors in terms of asset price depreciation have been the large bulkers. For example, 5 year old Capes are currently at about 30% of their January 2007 value and less than 20% of their mid 2008 peak value. For example, a 5 year old 180k dwt Japanese/Korean built Cape is currently worth around usd 31.2m, while in August 2008 a 5 year old Cape was worth usd 164m and in Jan 2007 was worth usd 89m.
In contrast, of the sectors we currently cover, the best performing has been LNG closely followed by LPG. For example, a resale large LNG vessel (160k cbm) is currently worth about USD 205m while in August 2008 was worth about USD 195m and in Jan 2007 was worth USD 207m (i.e. there a very small decline (c3%) since 2007 and a small increase since summer 2008). This is drastically different to the huge drop in values experienced across the tank, bulk and container sectors.
Do you believe that current market valuations are really that attractive, when adding to the equation, the factor of low freight rates and oversupply of tonnage?
Prices across most of the traditional tank, bulk, container sectors are certainly cheap but this does not necessarily mean attractive. It really depends on your appetite for risk, your view on the future growth of international trade vs growth of the fleet and your investment timeframe.
The issue with buying “cheap” vessels is that they are cheap for a reason, notably due to the low earnings they currently achieve, poor expectations for the future and the current high cost of finance.
Unsurprisingly, the cheapest vessels are in sectors with the worst current earnings and the largest relative orderbooks. For example; Capes, Panamax bulkers, VLCC’s and some of the other larger types have recently had extended periods with earnings at or below their operating cost, resulting in an operating loss even before capital costs and overheads are taken into account. This effectively means that you can buy such a vessel at a cheap price but you will have to support the investment until the earnings improve significantly. Therefore, there is a significant risk in buying cheap vessels at this time in the market, but also the potential for significant gains in the medium to long run if earnings improve.
The sectors with the highest potential for improved earnings are those that have the highest potential for demand growth and lowest potential for fleet growth. In terms of demand, analysis needs to be done on a sector by sector basis, but it essentially depends on growth in the world economy and for the wet and gas sectors, the changing trends of energy demand and production. For example, forecasts of the growth in crude ton miles are currently rather conservative due to the growth in the demand and supply of Gas as an energy source. Also, the gradual movement of refineries to the east is believed to reduce the ton miles of crude and increase ton miles of products. In terms of vessel supply, it really depends on the relative size of the current orderbook and the capacity for new orders in the future. Generally, the more specialized the vessel type, the lower the capacity for future supply. However, these perceptions of demand and supply fundamentals are in many ways already priced into the market which is why we have seen the gas, offshore and to a lesser extent the chemical and product tanker sectors perform significantly better than the traditional crude, bulk and container sectors.
Saying all of this, the only thing that can be said for sure about the shipping market is that the future is unknown. There are many factors that could cause a sudden increase in global demand that could quickly make current prices seem incredibly attractive (and vica versa)
How do you expect the market to behave in the coming months? Do you think that ship prices will continue to fall in the near future?
It really depends on the sector. We continue to see downward pressure in the container sectors with the continuing troubles of the German KG’s. In contrast, we have seen a recent flattening of values and decline in volatility in the Bulk and Tank sectors following the steep drop over the last few years. The bright spark of the market has been the gas ships (LNG & LPG) which have maintained strong values and good earnings. In the near future, we expect this trend to continue, although we hope to see an improvement in product tanker values as their earnings have been pretty strong over the last 6 months or so.
Additionally, it depends on the age and design of the vessels. There is definitely a preference for new, eco designed vessels. We believe these will hold up their values better than the older less efficient vessels that are generally attracting bargain prices
Which was the driving force behind the spawning of Vessels Value?
Our CEO, Richard Rivlin was the real driving force behind the development of VesselsValue. After many years of working at the top of the S&P market, he identified the need for instant and accurate vessel valuation and supporting market intelligence. This need has grown significantly with the recent difficulties of the market. Banks, funds and increasingly owners have realized the huge benefits of having an objective and daily updated view of asset values and market intelligence.
What types of services do you provide?
-- Instant valuations for actual vessels, fleet and portfolios – updated and recalculated daily
-- Daily historical values, time series and excel exports
-- Transactions and vessel specifications
-- Fleet statistics
-- Advanced vessel search functionality
-- Portfolios and automated alerts
What types of ships are included in the valuations that you offer?
Types of ships currently valued:
-- Tankers over 29,500 dwt
-- Bulkers over 20,000 dwt,
-- Containers over 500 teu,
-- LNG & LPG vessels over 100 cbm in size
Shortly, the service will also cover the smaller vessel sizes and offshore.
Which are your main clients?
The main 3 client types are banks, investment funds and shipowners. We also provide our services to commodity & oil majors, brokers, class societies, insurers and lawyers. We currently have around 80 clients on annual subscriptions to our service.
As would be expected, our client base is spread around the world with the largest concentrations in London, New York, Tokyo, Seoul, Athens, Hamburg, Hong Kong and Singapore.
How do you ensure that the ship prices you offer are accurately reflecting current market conditions?
We constantly test the accuracy of our valuations by comparing our values the day before each clean sale and the sale price. We also are constantly analyzing values across the different sectors to make sure are in line with current ongoing negotiations.
Our accuracy level is published monthly on our website.
Are you planning on the introduction of new ship types, to be added in the valuations you provide?
Yes, as per above, we are extending to sub handy/feedermax vessels and offshore types of vessels.
Source: Nikos Roussanoglou, Hellenic Shipping News Worldwide
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Friday, 19 April 13
FIRST QUARTER OF 2013 PROVEN A POSITIVE SURPRISE FOR DRY BULK MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite ominous predictions regarding the negative performance of the dry bulk market during the – traditionally weak anyway – first qua ...
Thursday, 18 April 13
HANDY: STABLE ; PANAMAX: BUSY WEEK - FEARNRESEARCH
Handy
The Atlantic markets remain stable in this week. The USG-Feast was at USD 19k and Black Sea-Feast was at USD 12k. The Pacific market is bit f ...
Thursday, 18 April 13
FEATURE: PREDICTING THE FUTURE - AND THE PAST - BIMCO
It’s not predicting the future that is problematical, it’s the realisation that you have to relive the past again and again when you fai ...
Wednesday, 17 April 13
INDONESIA SHIPPED 80 MILLION TONS OF COAL IN FIRST QUARTER - COAL DIRECTOR
COALspot.com - Indonesia has exported around 80 million tons of coal including power plant coal in first three months of this year.
Speaking on t ...
Tuesday, 16 April 13
AUSTRALIAN NEWCASTLE PORT'S COAL EXPORTS JUMPED 20.87 PER CENT ON WEEK TO 3.07 MMT
COALspot.com - Newcastle port in Australia has loaded 3,077,431 tons of thermal and coking coal for week ended 0700 hours 15 April 2013, Newca ...
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- Maheswari Brothers Coal Limited - India
- Tata Chemicals Ltd - India
- Kaltim Prima Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- IEA Clean Coal Centre - UK
- Australian Commodity Traders Exchange
- Parliament of New Zealand
- Banpu Public Company Limited - Thailand
- SMG Consultants - Indonesia
- Georgia Ports Authority, United States
- PNOC Exploration Corporation - Philippines
- Latin American Coal - Colombia
- Oldendorff Carriers - Singapore
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Ceylon Electricity Board - Sri Lanka
- Straits Asia Resources Limited - Singapore
- PTC India Limited - India
- Orica Mining Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- Larsen & Toubro Limited - India
- Rio Tinto Coal - Australia
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- AsiaOL BioFuels Corp., Philippines
- Binh Thuan Hamico - Vietnam
- Medco Energi Mining Internasional
- Ambuja Cements Ltd - India
- Wood Mackenzie - Singapore
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- IHS Mccloskey Coal Group - USA
- Attock Cement Pakistan Limited
- Kumho Petrochemical, South Korea
- Intertek Mineral Services - Indonesia
- Thiess Contractors Indonesia
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- Holcim Trading Pte Ltd - Singapore
- Edison Trading Spa - Italy
- Salva Resources Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Deloitte Consulting - India
- Semirara Mining and Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GMR Energy Limited - India
- Meenaskhi Energy Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Central Java Power - Indonesia
- MS Steel International - UAE
- Wilmar Investment Holdings
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- ASAPP Information Group - India
- Indogreen Group - Indonesia
- Planning Commission, India
- GAC Shipping (India) Pvt Ltd
- Orica Australia Pty. Ltd.
- Vedanta Resources Plc - India
- Marubeni Corporation - India
- Interocean Group of Companies - India
- Barasentosa Lestari - Indonesia
- Ministry of Finance - Indonesia
- Port Waratah Coal Services - Australia
- Star Paper Mills Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Mercuria Energy - Indonesia
- Bhatia International Limited - India
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- Altura Mining Limited, Indonesia
- The University of Queensland
- Bukit Baiduri Energy - Indonesia
- Goldman Sachs - Singapore
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Ministry of Mines - Canada
- Bayan Resources Tbk. - Indonesia
- Price Waterhouse Coopers - Russia
- Gujarat Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Sakthi Sugars Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Agrawal Coal Company - India
- Eastern Energy - Thailand
- Energy Link Ltd, New Zealand
- Independent Power Producers Association of India
- Simpson Spence & Young - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Global Coal Blending Company Limited - Australia
- Kepco SPC Power Corporation, Philippines
- Coal and Oil Company - UAE
- Standard Chartered Bank - UAE
- PetroVietnam Power Coal Import and Supply Company
- Malabar Cements Ltd - India
- Siam City Cement - Thailand
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Kartika Selabumi Mining - Indonesia
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- VISA Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- PowerSource Philippines DevCo
- SN Aboitiz Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Grasim Industreis Ltd - India
- Posco Energy - South Korea
- Mjunction Services Limited - India
- Bulk Trading Sa - Switzerland
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Transport, Egypt
- Gujarat Sidhee Cement - India
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- Metalloyd Limited - United Kingdom
- Bukit Makmur.PT - Indonesia
- McConnell Dowell - Australia
- Ind-Barath Power Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Renaissance Capital - South Africa
- International Coal Ventures Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- ICICI Bank Limited - India
- Eastern Coal Council - USA
- Baramulti Group, Indonesia
- Makarim & Taira - Indonesia
- Coalindo Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Singapore Mercantile Exchange
- Karaikal Port Pvt Ltd - India
- Sojitz Corporation - Japan
- Borneo Indobara - Indonesia
- Chamber of Mines of South Africa
- Cigading International Bulk Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Xindia Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- CNBM International Corporation - China
- Kapuas Tunggal Persada - Indonesia
- Kideco Jaya Agung - Indonesia
- Global Business Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kalimantan Lumbung Energi - Indonesia
- Vizag Seaport Private Limited - India
- Essar Steel Hazira Ltd - India
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Mintek Dendrill Indonesia
- LBH Netherlands Bv - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Sical Logistics Limited - India
- Aditya Birla Group - India
- Indian Oil Corporation Limited
- Anglo American - United Kingdom
- South Luzon Thermal Energy Corporation
- India Bulls Power Limited - India
- Thai Mozambique Logistica
- Riau Bara Harum - Indonesia
- Commonwealth Bank - Australia
- Madhucon Powers Ltd - India
- SMC Global Power, Philippines
- European Bulk Services B.V. - Netherlands
- Petron Corporation, Philippines
- Energy Development Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- Bhushan Steel Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Trasteel International SA, Italy
- Global Green Power PLC Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Timah Investasi Mineral - Indoneisa
- Uttam Galva Steels Limited - India
- Minerals Council of Australia
- Sindya Power Generating Company Private Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indonesian Coal Mining Association
- Jindal Steel & Power Ltd - India
- London Commodity Brokers - England
- Carbofer General Trading SA - India
- Electricity Authority, New Zealand
- Siam City Cement PLC, Thailand
- Meralco Power Generation, Philippines
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- Cement Manufacturers Association - India
- CIMB Investment Bank - Malaysia
- Indika Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Maharashtra Electricity Regulatory Commission - India
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