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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, 24 January 13
DRY BULK MARKET FALLS ON TROPICAL CYCLONE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been on the downside during the past couple of days, mainly as a result of the tropical storm which forced ports to close do ...
Tuesday, 22 January 13
PORT OF ANTWERP HANDLES 7.0 PERCENT MORE COAL IN 2012 Y-Y
COALspot.com - The port of Antwerp handled 184,134,516 tonnes of freight last year.
This represents a drop of 1.6% compared with 2011, when the v ...
Monday, 21 January 13
NEWCASTLE PORT SHIPPED 10.21 PERCENT LESS COAL W/E 21 JANUARY 2013
COALspot.com - Newcastle port in Australia has loaded 2,804,152 MT of thermal and coking coal for week ended 0700 hours 21 January 2013, Newca ...
Monday, 21 January 13
PANAMAX DRY BULK CARRIERS AND AFRAMAX TANKERS PROVED TO BE THE "WEAPON OF CHOICE" FOR MOST SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
With ship financing getting ever so difficult to procure during the past year or so, ship owners had to get creative in order to persuade banks and ...
Sunday, 20 January 13
Q1 & Q4 SUB-BIT FOB INDONESIA COAL SWAPS: FIRM
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) and CFR South China coal shipment for average Q1’ 2013 delivery have gained 0.81percent and ...
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- Africa Commodities Group - South Africa
- Siam City Cement PLC, Thailand
- Tata Chemicals Ltd - India
- London Commodity Brokers - England
- Indian Oil Corporation Limited
- TeaM Sual Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Romanian Commodities Exchange
- Power Finance Corporation Ltd., India
- Maheswari Brothers Coal Limited - India
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- Madhucon Powers Ltd - India
- Parry Sugars Refinery, India
- Meralco Power Generation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- CNBM International Corporation - China
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- Ministry of Transport, Egypt
- Borneo Indobara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- Australian Commodity Traders Exchange
- Bangladesh Power Developement Board
- PNOC Exploration Corporation - Philippines
- Independent Power Producers Association of India
- Bhushan Steel Limited - India
- Jaiprakash Power Ventures ltd
- Bhatia International Limited - India
- Baramulti Group, Indonesia
- Uttam Galva Steels Limited - India
- Tamil Nadu electricity Board
- Goldman Sachs - Singapore
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Antam Resourcindo - Indonesia
- Indogreen Group - Indonesia
- Bukit Makmur.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Asmin Koalindo Tuhup - Indonesia
- Sical Logistics Limited - India
- Grasim Industreis Ltd - India
- Electricity Authority, New Zealand
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- Agrawal Coal Company - India
- Simpson Spence & Young - Indonesia
- Mintek Dendrill Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- SMC Global Power, Philippines
- Aditya Birla Group - India
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- The State Trading Corporation of India Ltd
- Indo Tambangraya Megah - Indonesia
- Thiess Contractors Indonesia
- New Zealand Coal & Carbon
- MS Steel International - UAE
- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Renaissance Capital - South Africa
- Medco Energi Mining Internasional
- Vedanta Resources Plc - India
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Oldendorff Carriers - Singapore
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Sinarmas Energy and Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- Indika Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Metalloyd Limited - United Kingdom
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- Therma Luzon, Inc, Philippines
- Dalmia Cement Bharat India
- Altura Mining Limited, Indonesia
- Karaikal Port Pvt Ltd - India
- Bharathi Cement Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
- GVK Power & Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Lanco Infratech Ltd - India
- Latin American Coal - Colombia
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- PTC India Limited - India
- AsiaOL BioFuels Corp., Philippines
- Australian Coal Association
- Attock Cement Pakistan Limited
- Aboitiz Power Corporation - Philippines
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
- Anglo American - United Kingdom
- Samtan Co., Ltd - South Korea
- Toyota Tsusho Corporation, Japan
- Savvy Resources Ltd - HongKong
- Timah Investasi Mineral - Indoneisa
- Mercator Lines Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Standard Chartered Bank - UAE
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- Leighton Contractors Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- Interocean Group of Companies - India
- ASAPP Information Group - India
- The Treasury - Australian Government
- Commonwealth Bank - Australia
- Xindia Steels Limited - India
- San Jose City I Power Corp, Philippines
- Coastal Gujarat Power Limited - India
- European Bulk Services B.V. - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Star Paper Mills Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mjunction Services Limited - India
- Petron Corporation, Philippines
- Posco Energy - South Korea
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- Riau Bara Harum - Indonesia
- Rio Tinto Coal - Australia
- Semirara Mining and Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Meenaskhi Energy Private Limited - India
- Port Waratah Coal Services - Australia
- Eastern Coal Council - USA
- Chettinad Cement Corporation Ltd - India
- Bayan Resources Tbk. - Indonesia
- Formosa Plastics Group - Taiwan
- Global Business Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Parliament of New Zealand
- Coal and Oil Company - UAE
- Semirara Mining Corp, Philippines
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Straits Asia Resources Limited - Singapore
- Kapuas Tunggal Persada - Indonesia
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- PowerSource Philippines DevCo
- Thai Mozambique Logistica
- Sree Jayajothi Cements Limited - India
- McConnell Dowell - Australia
- Deloitte Consulting - India
- The University of Queensland
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- Minerals Council of Australia
- Bahari Cakrawala Sebuku - Indonesia
- GMR Energy Limited - India
- Planning Commission, India
- Heidelberg Cement - Germany
- Singapore Mercantile Exchange
- ICICI Bank Limited - India
- Wilmar Investment Holdings
- Chamber of Mines of South Africa
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Finance - Indonesia
- Indian Energy Exchange, India
- Mercuria Energy - Indonesia
- Siam City Cement - Thailand
- Kumho Petrochemical, South Korea
- Kideco Jaya Agung - Indonesia
- Orica Mining Services - Indonesia
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Manunggal Multi Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kepco SPC Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Gujarat Sidhee Cement - India
- Orica Australia Pty. Ltd.
- Miang Besar Coal Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Ministry of Mines - Canada
- Georgia Ports Authority, United States
- Videocon Industries ltd - India
- Central Electricity Authority - India
- Bank of Tokyo Mitsubishi UFJ Ltd
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