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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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Thursday, 14 March 13
SHIPPERS AND CARRIERS NEED GREATER COMMUNICATION AND MUTUAL UNDERSTANDING
Press Release – Shippers and shipping lines both need to raise their game if global container supply chains are not to be habitually subject t ...
Wednesday, 13 March 13
NEWBUILDING PRICES EXHIBIT NO FALL IN PAST SIX MONTHS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Despite the fact that oversupply has been the key plague of the shipping markets in recent years and newbuilding ordering activity has receded subst ...
Tuesday, 12 March 13
COAL MINING PRIVATIZATION IN INDIA: MUST - SUNIL K KUMBHAT
COALspot.com - India has the one of the richest coal reserves in the world and the country should have shown significant progress and gained the pos ...
Tuesday, 12 March 13
NEWCASTLE PORT SHIPPED 2.47 MILLION TONS OF COAL W/E 11 MARCH 2013
COALspot.com - Newcastle port in Australia has loaded 2,471,080 MT of thermal and coking coal for week ended 0700 hours 11 March 2013, Newcast ...
Monday, 11 March 13
SUB-BIT FOB INDONESIA COAL SWAPS FELL 1.41 PERCENT W-W
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average Q2’ 2013 delivery has lost 1.41percent and CFR South China coal shipment ...
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- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- IEA Clean Coal Centre - UK
- Cement Manufacturers Association - India
- Ministry of Mines - Canada
- Chamber of Mines of South Africa
- Mjunction Services Limited - India
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- GAC Shipping (India) Pvt Ltd
- Sojitz Corporation - Japan
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Vizag Seaport Private Limited - India
- Manunggal Multi Energi - Indonesia
- White Energy Company Limited
- Tamil Nadu electricity Board
- AsiaOL BioFuels Corp., Philippines
- Meenaskhi Energy Private Limited - India
- Grasim Industreis Ltd - India
- Tata Chemicals Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Videocon Industries ltd - India
- Electricity Generating Authority of Thailand
- Kartika Selabumi Mining - Indonesia
- The Treasury - Australian Government
- Siam City Cement PLC, Thailand
- Indonesian Coal Mining Association
- Planning Commission, India
- Indian Oil Corporation Limited
- Iligan Light & Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Riau Bara Harum - Indonesia
- Ind-Barath Power Infra Limited - India
- Renaissance Capital - South Africa
- Ceylon Electricity Board - Sri Lanka
- Energy Development Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- Straits Asia Resources Limited - Singapore
- Star Paper Mills Limited - India
- Bhushan Steel Limited - India
- Barasentosa Lestari - Indonesia
- PowerSource Philippines DevCo
- Trasteel International SA, Italy
- London Commodity Brokers - England
- Central Java Power - Indonesia
- Formosa Plastics Group - Taiwan
- Kepco SPC Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Bhoruka Overseas - Indonesia
- Siam City Cement - Thailand
- Rashtriya Ispat Nigam Limited - India
- Malabar Cements Ltd - India
- Standard Chartered Bank - UAE
- Ministry of Finance - Indonesia
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petrochimia International Co. Ltd.- Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Indika Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Kapuas Tunggal Persada - Indonesia
- Kobexindo Tractors - Indoneisa
- Latin American Coal - Colombia
- CIMB Investment Bank - Malaysia
- PTC India Limited - India
- Global Business Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Parry Sugars Refinery, India
- Sinarmas Energy and Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Goldman Sachs - Singapore
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Neyveli Lignite Corporation Ltd, - India
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Transport, Egypt
- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- Carbofer General Trading SA - India
- South Luzon Thermal Energy Corporation
- Simpson Spence & Young - Indonesia
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- Mercator Lines Limited - India
- Interocean Group of Companies - India
- Parliament of New Zealand
- Aboitiz Power Corporation - Philippines
- Georgia Ports Authority, United States
- Kideco Jaya Agung - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Coalindo Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Borneo Indobara - Indonesia
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Uttam Galva Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Makarim & Taira - Indonesia
- ICICI Bank Limited - India
- Ambuja Cements Ltd - India
- CNBM International Corporation - China
- Minerals Council of Australia
- Directorate Of Revenue Intelligence - India
- Independent Power Producers Association of India
- SMC Global Power, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- The University of Queensland
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Lanco Infratech Ltd - India
- Coal and Oil Company - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- VISA Power Limited - India
- LBH Netherlands Bv - Netherlands
- Central Electricity Authority - India
- India Bulls Power Limited - India
- San Jose City I Power Corp, Philippines
- Jindal Steel & Power Ltd - India
- Port Waratah Coal Services - Australia
- Miang Besar Coal Terminal - Indonesia
- Thai Mozambique Logistica
- Kumho Petrochemical, South Korea
- Bhatia International Limited - India
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Madhucon Powers Ltd - India
- Larsen & Toubro Limited - India
- Savvy Resources Ltd - HongKong
- Essar Steel Hazira Ltd - India
- Marubeni Corporation - India
- Antam Resourcindo - Indonesia
- Gujarat Sidhee Cement - India
- Timah Investasi Mineral - Indoneisa
- Indian Energy Exchange, India
- Bharathi Cement Corporation - India
- Aditya Birla Group - India
- Power Finance Corporation Ltd., India
- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- Indo Tambangraya Megah - Indonesia
- The State Trading Corporation of India Ltd
- Karaikal Port Pvt Ltd - India
- Economic Council, Georgia
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- Medco Energi Mining Internasional
- Altura Mining Limited, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- Petron Corporation, Philippines
- Merrill Lynch Commodities Europe
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sical Logistics Limited - India
- Deloitte Consulting - India
- Samtan Co., Ltd - South Korea
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- Intertek Mineral Services - Indonesia
- MS Steel International - UAE
- Wood Mackenzie - Singapore
- Australian Commodity Traders Exchange
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Meralco Power Generation, Philippines
- Sree Jayajothi Cements Limited - India
- Australian Coal Association
- Commonwealth Bank - Australia
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- Mintek Dendrill Indonesia
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- Vedanta Resources Plc - India
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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