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Tuesday, 20 May 14
DRY BULK MARKET IS BOUND FOR A RECOVERY CLAIMS PARAGON SHIPPING'S HEAD MICHAEL BODOUROGLOU
 The dry bulk market is bound for a recovery in the coming weeks, as the market will be better balanced, said Mr. Michael Bodouroglou, Chairman and CEO of Paragon Shipping, in an interview with Hellenic Shipping News Worldwide. Mr. Bodouroglou attributed the lacklustre performance of the market since the start of the year to a high level of newbuilding deliveries and a slowdown of grain and iron ore trade. In terms of Paragon Shipping's fleet growth, Mr. Bodouroglou expressed the view, that, at the moment, it makes more business sense to invest in second hand tonnage or newbuilding resales, rather than newbuildings, given that quality yards have been fully booked for the coming years. He also noted that financing terms remain challenging for smaller owners, creating a two-tier market, while the emergence of private equity funds, as a viable alternative, could create a lot of turmoil in the industry, should they decide to exit the market all at once.
Many analysts, including BIMCO among others, have been preaching about the pending rebound of dry bulk rates during 2014 and its improved prospects going forward. Why haven't we witnessed such an improvement in the market so far in the year?
To be fair, the market this year has done better than in the year-ago period, however many people including ourselves expected a much stronger market by now and rates are still at low levels. There are many reasons why the rebound hasn’t happened yet. There was a large amount of deliveries in the first quarter (Roughly 16M DWT of capacity was delivered in 1Q14 (equating to an annualized growth of 8%)), as many owners delayed delivery of late 2013 vessels into early 2014. For the remainder of the year the deliveries will stabilize, and we expect fleet growth of 6% for the full year. There were also seems to be a slowdown out of South America both for grains and iron ore, and many owners expected a strong trade this year and ballasted their ships to South America to take advantage of a strong market, which caused oversupply in the market and depressed rates further.
Do you share the view that the coming weeks we will see a rebound of the market, on the back of higher China restocking, as a result of low iron ore prices?
Yes we do, we believe the events that have caused the weakness in the market are temporary and will eventually reverse themselves. We expect the low iron ore prices to boost imports to China, while we also expect a solid grain trade out of the US, and a continued strong grain trade out of South America as political issues in Argentina get worked out. These two factors, along with a slower delivery schedule for the rest of the year, should cause a very strong fourth quarter, and rates may even start to improve as soon as the summer.
In terms of the container market, where you are also active through Box Ships Inc., do you expect to see a rebound soon, after a dismal first quarter?
The Containership market has been in a downturn now for over five years, due to several structural changes regarding vessel size, a continued oversupply of vessels, and at the same time has seen a decline in the largest container route, China to Europe, for the past two years. That being said, we do expect the market to rebound but it is difficult to predict when it will start as there continues to be new ordering of larger vessels and it becomes more a factor of demand growth from Europe returning.
Which is your chartering strategy among this environment for both companies?
At this stage in the cycle we believe it is best to run our vessels in the spot market or on short term charters to take advantage of the rising market rates as the markets recover. We have this strategy at both companies currently.
Ship owners have been investing heavily both in newbuildings, as well as second hand vessels over the past few months. Do you think that ship prices have bottomed out?
It depends on the sector. For Containerships, prices have definitely bottomed and in todays market you can find some 10 year old vessels trading close to their scrap value, so they can’t get much lower. However, newbuilding prices have been strong and on the rise due to the increased demand for “eco” vessels, so newbuilding prices have risen significantly over the past year. In drybulk, second hand values have risen faster than rates as many people expect a recovery as we have discussed, so they are not close to the bottom and have been rising significantly over the past year.
How many ships have you added to Paragon's fleet since the start of 2013? Which segment has been the focus?
At Paragon, we have ordered four Ultramax newbuildings and three Kamsarmax newbuildings since the start of 2013. We believe Ultramaxes are versatile vessels that can go into many ports and carry many different cargo types. We also like Kamsarmaxes as they are the new Panamaxes and we expect these vessels to be the workhorses of the industry going forward. That being said, we have a balanced approach when it comes to the segments of the drybulk market and like to have a fleet with several vessels of each class so you can have a diversified fleet to mitigate risks in any one sector.
In terms of your future plans, which has been the main focal point, newbuildings or acquisitions of modern tonnage through the second hand market?
We base our acquisition strategy on where we believe we can get the best value. In early 2013 until recently, we believed that the best value was through ordering new “eco” design vessels at quality shipyards at historically low prices. At the same time, second hand values seemed to get a bit ahead of themselves, so it made the most sense to buy newbuildings. More recently, quality shipyards cannot sell you a ship with delivery any time soon, so that makes second-hand tonnage or newbuild resales a more interesting acquisition target.
Are you a "believer" of the benefits of the new generation of Eco Carriers?
I believe that every new design of vessel is an improvement on the previous designs. These new “eco” designs are definitely more fuel efficient and have some benefits, mainly because for the first time ship owners are worried about fuel consumption, so shipyards had to alter their designs with fuel savings in mind. When you build vessels to save on fuel consumption, you take away from other features. The “innovations’ the shipyards are doing now are not new, these designs are not a step change in fuel efficiency like back when the vessels switched from coal powered engines to bunker-fuel power. However, they have their benefits and given the fuel prices make a compelling argument.
Is financing availability improved, when compared to previous years, or are interest rates and costs still high?
In today’s world there is less financing to less owners at lower advance rates. This is a fact of life, but we find ourselves in the position where financing is readily available to us. It is interesting because every bank has a list of clients they want to lend to and those lists are not very long. Given this, it has caused margins on loans to fall for certain owners at a time when smaller shipowners are still paying high costs. This is causing a two tier market in the industry and is causing problems for the smaller owners.
Have you been looking to take advantage of the emergence of alternative sources of financing in shipping over the past couple of years, such as private equity funds? What's your opinion of those new investors in shipping? Do you share the view of some industry pundits that they could hurt shipping, as a result of their lack of familiarization with this particular segment?
We are always open to alternative sources of financing, and have spoken to private equity funds, but in the end believed it wasn’t for us. My opinion of private equity is that they are filling a gap in the industry that was created by the decline in bank financing, and other sources of equity that dried up during the crisis years. They see that they can make good returns and have invested. Many of them have partnered with shipping veterans to help them navigate the industry, but a few have decided to go it alone and that could hurt shipping. My biggest concern is how they will exit, because if they all decide to exit at once, it will put a tremendous strain on the industry.
Source: Nikos Roussanoglou, Hellenic Shipping News
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Monday, 26 May 14
SUB-BIT FOB INDO COAL SWAP Q1' 15 DELIVERIES CLOSED AT US$ 59.40 PER MT
COALspot.com: Indonesian coal swaps for average Q3’ 2014 lost on day, week and on month according to AsiaClear OTC coal swap's reports re ...
Monday, 26 May 14
Q3 14 CFR SOUTH CHINA COAL SWAPS LOST 2.24% MONTH ON MONTH
COALspot.com: API 8 CFR South China Coal swaps for average Q3 14 deliveries lost 2.24 percent month on month and closed at US$ 73.88 per mt as on F ...
Monday, 26 May 14
NEWBUILDING ORDERING ACTIVITY RISES BY 78% IN DWT TONNAGE OVER THE FIRST 4 MONTHS OF THE YEARS, AS OWNERS INVEST$40.5 BN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Ship owners have plunged into newbuilding orders during the first four months of the year, as overall newbuilding business ended for the first four ...
Sunday, 25 May 14
FREIGHT RATES FROM SOUTH KALIMANTAN TO EAST COAST INDIAN PORTS WERE ASSESSED AT $9.50/MT
COALspot.com: The BDI was closed at 964 points down by 6.13 pct week on week. The Cape Index was lost 172 points or 11.24% week on week and closing ...
Saturday, 24 May 14
DRY BULK MARKET'S RECOVERY IS JUST AROUND THE CORNER SAYS SHIPOWNER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite the weaker than expected market sentiment in the dry bulk market over the course of the past few months, analysts and shipowners alike appe ...
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- London Commodity Brokers - England
- Bayan Resources Tbk. - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Coal Council - USA
- Iligan Light & Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Deloitte Consulting - India
- Indika Energy - Indonesia
- Larsen & Toubro Limited - India
- The State Trading Corporation of India Ltd
- Timah Investasi Mineral - Indoneisa
- Directorate Of Revenue Intelligence - India
- The University of Queensland
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- Renaissance Capital - South Africa
- Carbofer General Trading SA - India
- Straits Asia Resources Limited - Singapore
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- Attock Cement Pakistan Limited
- Mercuria Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Globalindo Alam Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Star Paper Mills Limited - India
- Mjunction Services Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Singapore Mercantile Exchange
- Bharathi Cement Corporation - India
- Mercator Lines Limited - India
- Heidelberg Cement - Germany
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Formosa Plastics Group - Taiwan
- Holcim Trading Pte Ltd - Singapore
- Parry Sugars Refinery, India
- Wood Mackenzie - Singapore
- White Energy Company Limited
- GMR Energy Limited - India
- Sindya Power Generating Company Private Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thiess Contractors Indonesia
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Aboitiz Power Corporation - Philippines
- Kumho Petrochemical, South Korea
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Sical Logistics Limited - India
- Borneo Indobara - Indonesia
- Bulk Trading Sa - Switzerland
- Bangladesh Power Developement Board
- International Coal Ventures Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Videocon Industries ltd - India
- Therma Luzon, Inc, Philippines
- Maheswari Brothers Coal Limited - India
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- Thai Mozambique Logistica
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
- Eastern Energy - Thailand
- Australian Commodity Traders Exchange
- PetroVietnam Power Coal Import and Supply Company
- Sarangani Energy Corporation, Philippines
- Chamber of Mines of South Africa
- Baramulti Group, Indonesia
- Siam City Cement - Thailand
- GAC Shipping (India) Pvt Ltd
- GN Power Mariveles Coal Plant, Philippines
- Central Electricity Authority - India
- Indian Energy Exchange, India
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Latin American Coal - Colombia
- Indogreen Group - Indonesia
- Gujarat Sidhee Cement - India
- Toyota Tsusho Corporation, Japan
- Karbindo Abesyapradhi - Indoneisa
- McConnell Dowell - Australia
- Kobexindo Tractors - Indoneisa
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Manunggal Multi Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Medco Energi Mining Internasional
- Meralco Power Generation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Planning Commission, India
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- Ministry of Transport, Egypt
- PowerSource Philippines DevCo
- Samtan Co., Ltd - South Korea
- Africa Commodities Group - South Africa
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- Goldman Sachs - Singapore
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- AsiaOL BioFuels Corp., Philippines
- Kartika Selabumi Mining - Indonesia
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Minerals Council of Australia
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Madhucon Powers Ltd - India
- Coastal Gujarat Power Limited - India
- San Jose City I Power Corp, Philippines
- Jaiprakash Power Ventures ltd
- Independent Power Producers Association of India
- GVK Power & Infra Limited - India
- Sojitz Corporation - Japan
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- Electricity Authority, New Zealand
- CNBM International Corporation - China
- Sakthi Sugars Limited - India
- Bhoruka Overseas - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Vedanta Resources Plc - India
- New Zealand Coal & Carbon
- Commonwealth Bank - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Rio Tinto Coal - Australia
- Petron Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Lanco Infratech Ltd - India
- Global Green Power PLC Corporation, Philippines
- Altura Mining Limited, Indonesia
- Malabar Cements Ltd - India
- Indonesian Coal Mining Association
- VISA Power Limited - India
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- Parliament of New Zealand
- Siam City Cement PLC, Thailand
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- Cigading International Bulk Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Aditya Birla Group - India
- Ministry of Mines - Canada
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Australian Coal Association
- MS Steel International - UAE
- Standard Chartered Bank - UAE
- SMG Consultants - Indonesia
- Global Business Power Corporation, Philippines
- Bhatia International Limited - India
- Coal and Oil Company - UAE
- Alfred C Toepfer International GmbH - Germany
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Trasteel International SA, Italy
- Intertek Mineral Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Metalloyd Limited - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Anglo American - United Kingdom
- SMC Global Power, Philippines
- Tata Chemicals Ltd - India
- Xindia Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- Wilmar Investment Holdings
- Marubeni Corporation - India
- Kepco SPC Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Tamil Nadu electricity Board
- Savvy Resources Ltd - HongKong
- Mintek Dendrill Indonesia
- Edison Trading Spa - Italy
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
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- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- Ministry of Finance - Indonesia
- Merrill Lynch Commodities Europe
- TeaM Sual Corporation - Philippines
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