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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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Friday, 23 May 14
U.S. WEEKLY COAL PRODUCTION SLIPS 1.8% WEEK ENDED MAY 17, 2014
COALspot.com – United States the world's second largest coal producer, produced approximately 18.6 million short tons (mmst) of coal in a ...
Friday, 23 May 14
DRY BULK NEWBUILDING CANCELLATIONS COULD HELP SUPPORT MARKET IN THE COMING WEEKS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market's demise over the past few months maybe has come as a surprise to many, but analysts and shipbrokers are looking forward to ...
Thursday, 22 May 14
HEAR SUCCESSFUL CASE STUDIES FROM 10 INDEPENDENT UNCONVENTIONAL GAS OPERATORS
Unconventional Gas Asia 2014 will provide a unique opportunity for Asia’s unconventional gas leaders to share their experience and expertise ...
Thursday, 22 May 14
CNPC-GAZPROM DEAL A MEDIUM - TERM POSITIVE FOR CHINA'S GAS SECTOR
Fitch Ratings says a 30-year deal in which Russia's OAO Gazprom (BBB/Negative) will supply gas to China National Petroleum Corporation (CNPC; A ...
Thursday, 22 May 14
CAPESIZE : RATES ARE STILL UNDER PRESSURE
Handy
A quiet start into the week in Far East, some fresh Indonesian coal order in the market. For trips within S.E. Asia, Supras are trading aro ...
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- Metalloyd Limited - United Kingdom
- Anglo American - United Kingdom
- Port Waratah Coal Services - Australia
- Australian Commodity Traders Exchange
- Singapore Mercantile Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petrochimia International Co. Ltd.- Taiwan
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Agrawal Coal Company - India
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- Directorate Of Revenue Intelligence - India
- Ministry of Finance - Indonesia
- TeaM Sual Corporation - Philippines
- Riau Bara Harum - Indonesia
- CNBM International Corporation - China
- Renaissance Capital - South Africa
- GAC Shipping (India) Pvt Ltd
- Bulk Trading Sa - Switzerland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Planning Commission, India
- Mjunction Services Limited - India
- Timah Investasi Mineral - Indoneisa
- VISA Power Limited - India
- Central Java Power - Indonesia
- Electricity Generating Authority of Thailand
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- Maheswari Brothers Coal Limited - India
- Mercuria Energy - Indonesia
- Rio Tinto Coal - Australia
- Manunggal Multi Energi - Indonesia
- Power Finance Corporation Ltd., India
- Wilmar Investment Holdings
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- OPG Power Generation Pvt Ltd - India
- Star Paper Mills Limited - India
- Holcim Trading Pte Ltd - Singapore
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Salva Resources Pvt Ltd - India
- Central Electricity Authority - India
- Indian Energy Exchange, India
- Siam City Cement - Thailand
- ICICI Bank Limited - India
- Deloitte Consulting - India
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Gujarat Sidhee Cement - India
- Ind-Barath Power Infra Limited - India
- Latin American Coal - Colombia
- Minerals Council of Australia
- Trasteel International SA, Italy
- Miang Besar Coal Terminal - Indonesia
- India Bulls Power Limited - India
- Binh Thuan Hamico - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Merrill Lynch Commodities Europe
- CIMB Investment Bank - Malaysia
- Bayan Resources Tbk. - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- Standard Chartered Bank - UAE
- Carbofer General Trading SA - India
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Eastern Energy - Thailand
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- MS Steel International - UAE
- Orica Mining Services - Indonesia
- Malabar Cements Ltd - India
- Thai Mozambique Logistica
- AsiaOL BioFuels Corp., Philippines
- The State Trading Corporation of India Ltd
- Goldman Sachs - Singapore
- Energy Link Ltd, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Banpu Public Company Limited - Thailand
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- Tamil Nadu electricity Board
- Ministry of Mines - Canada
- Bhushan Steel Limited - India
- Price Waterhouse Coopers - Russia
- Bhatia International Limited - India
- Kumho Petrochemical, South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- PNOC Exploration Corporation - Philippines
- Borneo Indobara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Coal and Oil Company - UAE
- Xindia Steels Limited - India
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- Romanian Commodities Exchange
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- PowerSource Philippines DevCo
- Dalmia Cement Bharat India
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- Grasim Industreis Ltd - India
- Global Coal Blending Company Limited - Australia
- Medco Energi Mining Internasional
- Leighton Contractors Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Savvy Resources Ltd - HongKong
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- GMR Energy Limited - India
- Chettinad Cement Corporation Ltd - India
- Semirara Mining Corp, Philippines
- Bharathi Cement Corporation - India
- Antam Resourcindo - Indonesia
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- Posco Energy - South Korea
- Edison Trading Spa - Italy
- Uttam Galva Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Energy Development Corp, Philippines
- Wood Mackenzie - Singapore
- SMC Global Power, Philippines
- Jindal Steel & Power Ltd - India
- Lanco Infratech Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- International Coal Ventures Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- Indo Tambangraya Megah - Indonesia
- Parliament of New Zealand
- Siam City Cement PLC, Thailand
- Iligan Light & Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- Mintek Dendrill Indonesia
- Pendopo Energi Batubara - Indonesia
- Barasentosa Lestari - Indonesia
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Gujarat Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Sarangani Energy Corporation, Philippines
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- South Luzon Thermal Energy Corporation
- Mercator Lines Limited - India
- Aboitiz Power Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Indogreen Group - Indonesia
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- The Treasury - Australian Government
- Karaikal Port Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Australian Coal Association
- Indonesian Coal Mining Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Thiess Contractors Indonesia
- Parry Sugars Refinery, India
- Pipit Mutiara Jaya. PT, Indonesia
- Africa Commodities Group - South Africa
- Baramulti Group, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Altura Mining Limited, Indonesia
- The University of Queensland
- Commonwealth Bank - Australia
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Authority, New Zealand
- Kartika Selabumi Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Straits Asia Resources Limited - Singapore
- Interocean Group of Companies - India
- GVK Power & Infra Limited - India
- Cement Manufacturers Association - India
- Economic Council, Georgia
- ASAPP Information Group - India
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