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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, 27 January 13
CFR SOUTH CHINA COAL SWAPS: WEAK
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average Q1’ 2013 delivery has gained 0.31 percent and CFR South China coal shipment&nbs ...
Sunday, 27 January 13
FREIGHT MARKET: FLAT TO SOFT - VISTAAR
COALspot.com - The freight market was soft and all the indices were down except for handy size.
The BDI was down 4.66 pct closing at 798 points.. ...
Friday, 25 January 13
BOTSWANA GOVERNMENT GRANTS COAL LICENSES TO A-CAP RESOURCES LIMITED
A-Cap Resources Limited has announced that it has been granted coal rights within its Bolau tenements which sit next to the Sese Coal and Power Proj ...
Friday, 25 January 13
SMALL ROOM FOR OPTIMISM FOR THE PROSPECTS OF THE DRY BULK MARKET AS NET FLEET GROWTH IS SLOWING DOWN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite the fact that the dry bulk market didn't manage to post a rebound during the past year, quite the opposite, as a fast fleet growth and slow ...
Thursday, 24 January 13
INDO - INDIA NOW AT APS $ 8K + BB USD 90000 - FEARNLEYS AS
Handy
The Atlantic market remains stable as supply of tonnage is still in excess of demand. USG- Far east fixed at $18k and CONT-FEAST at $ 11k. Pa ...
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Indo Tambangraya Megah - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Tata Chemicals Ltd - India
- Jindal Steel & Power Ltd - India
- IEA Clean Coal Centre - UK
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Carbofer General Trading SA - India
- Gujarat Mineral Development Corp Ltd - India
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Baramulti Group, Indonesia
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- Tamil Nadu electricity Board
- Star Paper Mills Limited - India
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- Coalindo Energy - Indonesia
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Timah Investasi Mineral - Indoneisa
- Videocon Industries ltd - India
- Sarangani Energy Corporation, Philippines
- Anglo American - United Kingdom
- Binh Thuan Hamico - Vietnam
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- New Zealand Coal & Carbon
- London Commodity Brokers - England
- Energy Link Ltd, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
- Dalmia Cement Bharat India
- Minerals Council of Australia
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- PowerSource Philippines DevCo
- Electricity Authority, New Zealand
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- Eastern Energy - Thailand
- Intertek Mineral Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thiess Contractors Indonesia
- Parliament of New Zealand
- Chamber of Mines of South Africa
- Latin American Coal - Colombia
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
- GAC Shipping (India) Pvt Ltd
- Central Electricity Authority - India
- Semirara Mining Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Cigading International Bulk Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Pendopo Energi Batubara - Indonesia
- Bharathi Cement Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meralco Power Generation, Philippines
- Sakthi Sugars Limited - India
- VISA Power Limited - India
- Wood Mackenzie - Singapore
- Ceylon Electricity Board - Sri Lanka
- Indonesian Coal Mining Association
- Chettinad Cement Corporation Ltd - India
- Oldendorff Carriers - Singapore
- LBH Netherlands Bv - Netherlands
- CNBM International Corporation - China
- MS Steel International - UAE
- Indian Energy Exchange, India
- Maharashtra Electricity Regulatory Commission - India
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Interocean Group of Companies - India
- The State Trading Corporation of India Ltd
- Simpson Spence & Young - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Uttam Galva Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Altura Mining Limited, Indonesia
- Iligan Light & Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Ministry of Mines - Canada
- Sindya Power Generating Company Private Ltd
- Kumho Petrochemical, South Korea
- Lanco Infratech Ltd - India
- Bhatia International Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- Aditya Birla Group - India
- Kapuas Tunggal Persada - Indonesia
- Independent Power Producers Association of India
- Vizag Seaport Private Limited - India
- International Coal Ventures Pvt Ltd - India
- ICICI Bank Limited - India
- OPG Power Generation Pvt Ltd - India
- Australian Coal Association
- Barasentosa Lestari - Indonesia
- The University of Queensland
- GMR Energy Limited - India
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Therma Luzon, Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Maheswari Brothers Coal Limited - India
- Price Waterhouse Coopers - Russia
- Bayan Resources Tbk. - Indonesia
- Australian Commodity Traders Exchange
- South Luzon Thermal Energy Corporation
- Sree Jayajothi Cements Limited - India
- Meenaskhi Energy Private Limited - India
- Xindia Steels Limited - India
- Metalloyd Limited - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining and Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- PNOC Exploration Corporation - Philippines
- Indogreen Group - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Riau Bara Harum - Indonesia
- Global Coal Blending Company Limited - Australia
- Standard Chartered Bank - UAE
- Siam City Cement - Thailand
- Cement Manufacturers Association - India
- AsiaOL BioFuels Corp., Philippines
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Georgia Ports Authority, United States
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Larsen & Toubro Limited - India
- Mintek Dendrill Indonesia
- Borneo Indobara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Ministry of Finance - Indonesia
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- Global Green Power PLC Corporation, Philippines
- SMC Global Power, Philippines
- Deloitte Consulting - India
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- Manunggal Multi Energi - Indonesia
- Planning Commission, India
- Singapore Mercantile Exchange
- ASAPP Information Group - India
- Romanian Commodities Exchange
- SMG Consultants - Indonesia
- Aboitiz Power Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate General of MIneral and Coal - Indonesia
- Sojitz Corporation - Japan
- Eastern Coal Council - USA
- Global Business Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Coal and Oil Company - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bahari Cakrawala Sebuku - Indonesia
- Indian Oil Corporation Limited
- Directorate Of Revenue Intelligence - India
- White Energy Company Limited
- Economic Council, Georgia
- Orica Mining Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Development Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Salva Resources Pvt Ltd - India
- Mercator Lines Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Heidelberg Cement - Germany
- Mjunction Services Limited - India
- Ministry of Transport, Egypt
- Globalindo Alam Lestari - Indonesia
- Ambuja Cements Ltd - India
- PTC India Limited - India
- Samtan Co., Ltd - South Korea
- Toyota Tsusho Corporation, Japan
- Agrawal Coal Company - India
- Power Finance Corporation Ltd., India
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