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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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Sunday, 10 March 13
INDIA - INDONESIA SUPRAMAX FREIGHT : FIRM TREND
COALspot.com – This week freight market was raised and remained firm in all segments.
The BDI was up by 6.70 pct closed at 843 points, ...
Sunday, 10 March 13
INDONESIA'S FORESTRY DEPARTMENT IS TO INCREASE BORROW-TO-USE PERMITS (IJIN PINJAM PAKAI) FEE SOON
COALspot.com : Indonesia to increase borrows-to-use permit fees by 33.33 percent. The government of Indonesia is planning to increase the state&rsqu ...
Friday, 08 March 13
EKO SANTOSO BUDIANTO APPOINTED AS PRESDIENT DIRECTOR OF BERAU COAL ENERGY
COALspot.com - PT Berau Coal Energy has appointed Eko Santoso Budianto as new president director, replacing Rosan Roeslani. Berau’s extraordin ...
Friday, 08 March 13
INDONESIAN HBA UP FOR FIVE CONSECUTIVE MONTHS
COALspot.com - The Indonesian government has declared bench mark price for coal has moved upwards in March 2013.
The monthly coal reference ...
Friday, 08 March 13
DRY BULK MARKET ON A RISING TREND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has continued its rising pattern set after China opened up again for business, following the Asian New Year Holidays. As a resul ...
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- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kobexindo Tractors - Indoneisa
- Bhatia International Limited - India
- Attock Cement Pakistan Limited
- Kideco Jaya Agung - Indonesia
- Posco Energy - South Korea
- Electricity Authority, New Zealand
- Singapore Mercantile Exchange
- ICICI Bank Limited - India
- Cigading International Bulk Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Formosa Plastics Group - Taiwan
- Vedanta Resources Plc - India
- Sojitz Corporation - Japan
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement PLC, Thailand
- Coalindo Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Latin American Coal - Colombia
- Semirara Mining and Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- White Energy Company Limited
- Coal and Oil Company - UAE
- Gujarat Mineral Development Corp Ltd - India
- Kumho Petrochemical, South Korea
- Simpson Spence & Young - Indonesia
- Mercuria Energy - Indonesia
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- Indo Tambangraya Megah - Indonesia
- Thai Mozambique Logistica
- Uttam Galva Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- India Bulls Power Limited - India
- Parry Sugars Refinery, India
- Jorong Barutama Greston.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Minerals Council of Australia
- Gujarat Sidhee Cement - India
- IEA Clean Coal Centre - UK
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- CIMB Investment Bank - Malaysia
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- Aditya Birla Group - India
- The Treasury - Australian Government
- Interocean Group of Companies - India
- Global Coal Blending Company Limited - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Eastern Coal Council - USA
- Ministry of Finance - Indonesia
- Sree Jayajothi Cements Limited - India
- Planning Commission, India
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
- Madhucon Powers Ltd - India
- SMG Consultants - Indonesia
- Bukit Baiduri Energy - Indonesia
- Edison Trading Spa - Italy
- VISA Power Limited - India
- European Bulk Services B.V. - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Africa Commodities Group - South Africa
- Meralco Power Generation, Philippines
- PTC India Limited - India
- Anglo American - United Kingdom
- Independent Power Producers Association of India
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- The State Trading Corporation of India Ltd
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Ministry of Transport, Egypt
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Aboitiz Power Corporation - Philippines
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Power Finance Corporation Ltd., India
- Carbofer General Trading SA - India
- GVK Power & Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Sical Logistics Limited - India
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
- Toyota Tsusho Corporation, Japan
- Karbindo Abesyapradhi - Indoneisa
- Economic Council, Georgia
- Coastal Gujarat Power Limited - India
- GAC Shipping (India) Pvt Ltd
- MS Steel International - UAE
- Grasim Industreis Ltd - India
- Merrill Lynch Commodities Europe
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Orica Australia Pty. Ltd.
- Standard Chartered Bank - UAE
- Commonwealth Bank - Australia
- Essar Steel Hazira Ltd - India
- Iligan Light & Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Marubeni Corporation - India
- Romanian Commodities Exchange
- The University of Queensland
- Malabar Cements Ltd - India
- Tamil Nadu electricity Board
- Orica Mining Services - Indonesia
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Barasentosa Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- Bharathi Cement Corporation - India
- ASAPP Information Group - India
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- Parliament of New Zealand
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- McConnell Dowell - Australia
- Mintek Dendrill Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kepco SPC Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Jindal Steel & Power Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Indika Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bangladesh Power Developement Board
- Intertek Mineral Services - Indonesia
- Energy Link Ltd, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
- Riau Bara Harum - Indonesia
- Petron Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Rio Tinto Coal - Australia
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Alfred C Toepfer International GmbH - Germany
- Ambuja Cements Ltd - India
- Wilmar Investment Holdings
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- Goldman Sachs - Singapore
- Larsen & Toubro Limited - India
- Trasteel International SA, Italy
- Australian Commodity Traders Exchange
- Savvy Resources Ltd - HongKong
- Vizag Seaport Private Limited - India
- Eastern Energy - Thailand
- Deloitte Consulting - India
- London Commodity Brokers - England
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- Cement Manufacturers Association - India
- Electricity Generating Authority of Thailand
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- Global Business Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wood Mackenzie - Singapore
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- South Luzon Thermal Energy Corporation
- New Zealand Coal & Carbon
- Indian Energy Exchange, India
- Australian Coal Association
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- Straits Asia Resources Limited - Singapore
- Tata Chemicals Ltd - India
- Indogreen Group - Indonesia
- TeaM Sual Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- Directorate General of MIneral and Coal - Indonesia
- Oldendorff Carriers - Singapore
- Medco Energi Mining Internasional
- Sarangani Energy Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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