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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, 15 February 13
SCRAPPING TO RISE AS BULKER OWNERS SUFFER - DREWRY MARITIME RESEARCH
Drewry's latest Dry Bulk Forecaster report suggests that cash-strapped shipowners will scrap younger and younger ships this year as the dry bulk ma ...
Thursday, 14 February 13
HANDY: ATLANTIC "STABLE"; PACIFIC "QUIET" - FEARNLEYS
Handy
The Atlantic remain stable with rates for FH from USG around USD 18k. The Pacific remains quiet due to Chinese New Year holidays. Rates were ...
Thursday, 14 February 13
BIMCO FORECASTS MOSTLY HIGHER DRY BULK RATES FOR THE COMING WEEKS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Higher steel demand is expected to keep dry bulk rates elevated during the next six weeks, according to the latest BIMCO forecast. The Organization ...
Wednesday, 13 February 13
6TH ANNUAL CBM CONFERENCE
The 6th Annual CBM conference which will be held in Singapore on 18-21 June 201 offers comprehensive insights into leading CBM projects in the Asia- ...
Tuesday, 12 February 13
GOVERNMENT DECLARED INDONESIAN THERMAL COAL PRICE INCHES UP IN FEBRUARY
COALspot.com - The Indonesian government has declared bench mark price for coal has moved upwards in February 2013.
The monthly coal refere ...
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Finance - Indonesia
- Sree Jayajothi Cements Limited - India
- Samtan Co., Ltd - South Korea
- Heidelberg Cement - Germany
- Bukit Baiduri Energy - Indonesia
- ICICI Bank Limited - India
- GVK Power & Infra Limited - India
- TeaM Sual Corporation - Philippines
- White Energy Company Limited
- SMG Consultants - Indonesia
- Uttam Galva Steels Limited - India
- Indian Oil Corporation Limited
- Renaissance Capital - South Africa
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- The State Trading Corporation of India Ltd
- Planning Commission, India
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- Global Coal Blending Company Limited - Australia
- Maheswari Brothers Coal Limited - India
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- The Treasury - Australian Government
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- Sindya Power Generating Company Private Ltd
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- Coastal Gujarat Power Limited - India
- PowerSource Philippines DevCo
- VISA Power Limited - India
- Karaikal Port Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- Asmin Koalindo Tuhup - Indonesia
- Makarim & Taira - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- Sical Logistics Limited - India
- PTC India Limited - India
- Aboitiz Power Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Lanco Infratech Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Anglo American - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Goldman Sachs - Singapore
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Mercator Lines Limited - India
- Dalmia Cement Bharat India
- PetroVietnam Power Coal Import and Supply Company
- Chamber of Mines of South Africa
- Ind-Barath Power Infra Limited - India
- Ambuja Cements Ltd - India
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- Electricity Authority, New Zealand
- San Jose City I Power Corp, Philippines
- Simpson Spence & Young - Indonesia
- Bhoruka Overseas - Indonesia
- Oldendorff Carriers - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Orica Mining Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Thiess Contractors Indonesia
- Billiton Holdings Pty Ltd - Australia
- New Zealand Coal & Carbon
- Pendopo Energi Batubara - Indonesia
- Kideco Jaya Agung - Indonesia
- Tamil Nadu electricity Board
- Coalindo Energy - Indonesia
- Marubeni Corporation - India
- Jindal Steel & Power Ltd - India
- Electricity Generating Authority of Thailand
- Ministry of Mines - Canada
- Tata Chemicals Ltd - India
- Bhatia International Limited - India
- Semirara Mining Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
- Metalloyd Limited - United Kingdom
- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- Indo Tambangraya Megah - Indonesia
- Indonesian Coal Mining Association
- Africa Commodities Group - South Africa
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Latin American Coal - Colombia
- CNBM International Corporation - China
- Straits Asia Resources Limited - Singapore
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Standard Chartered Bank - UAE
- Altura Mining Limited, Indonesia
- Meralco Power Generation, Philippines
- Mintek Dendrill Indonesia
- Banpu Public Company Limited - Thailand
- Bukit Makmur.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kumho Petrochemical, South Korea
- Siam City Cement PLC, Thailand
- Economic Council, Georgia
- Kalimantan Lumbung Energi - Indonesia
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- Carbofer General Trading SA - India
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- Star Paper Mills Limited - India
- Chettinad Cement Corporation Ltd - India
- Global Business Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Vizag Seaport Private Limited - India
- Borneo Indobara - Indonesia
- Australian Commodity Traders Exchange
- Salva Resources Pvt Ltd - India
- Central Java Power - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Central Electricity Authority - India
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- SMC Global Power, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ministry of Transport, Egypt
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- Mercuria Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- ASAPP Information Group - India
- Energy Link Ltd, New Zealand
- PNOC Exploration Corporation - Philippines
- Petron Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- GMR Energy Limited - India
- Commonwealth Bank - Australia
- Malabar Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- Singapore Mercantile Exchange
- Global Green Power PLC Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Merrill Lynch Commodities Europe
- South Luzon Thermal Energy Corporation
- Bangladesh Power Developement Board
- Romanian Commodities Exchange
- Rio Tinto Coal - Australia
- Riau Bara Harum - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- Manunggal Multi Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Kepco SPC Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- Eastern Coal Council - USA
- Directorate General of MIneral and Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- MS Steel International - UAE
- Attock Cement Pakistan Limited
- GAC Shipping (India) Pvt Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Energy - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- McConnell Dowell - Australia
- Gujarat Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- International Coal Ventures Pvt Ltd - India
- Interocean Group of Companies - India
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- Iligan Light & Power Inc, Philippines
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Indika Energy - Indonesia
- Thai Mozambique Logistica
- Kartika Selabumi Mining - Indonesia
- Mjunction Services Limited - India
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining and Power Corporation, Philippines
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