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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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Wednesday, 14 May 14
COAL PRICES IN CHINA HAVE DROPPED TO THEIR LOWEST LEVELS SINCE END-2008
COALspot.com: Coal prices in China have dropped to their lowest levels since end-2008, Fitch says in its latest rating report on one of the coal ...
Wednesday, 14 May 14
ALMOST THROUGH THE HALF OF THE YEAR, THE DRY BULK INDEX SHOW SIGNS OF WEAKNESS; CREATING TO BOTH EXISTING SHIP OWNERS AND POTENTIAL INVESTORS A LOT OF INSECURITY - PANOS MAKRINOS
Almost through the half of the year, the overall shipping market and more specifically the Dry Bulk Index show signs of weakness, creating to bo ...
Tuesday, 13 May 14
NPC COAL EXPORT VOLUMES PLUNGE TO 2.48 MMT WEEK ON WEEK
COALspot.com: In the week ended 07:00 hours 12 May 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Quee ...
Tuesday, 13 May 14
YET ANOTHER POSIDONIA EXHIBITION IS ON ITS WAY - INTERMODAL
With less than a month to go before another Posidonia exhibition starts and all the parties and celebrations get under way we thought that it wo ...
Monday, 12 May 14
TAIPOWER TO IMPORT AROUND 1 MMT OF SUB-BITUMINOUS COAL DURING AUGUST 2014 THROUGH NOVEMBER 2014
COALspot.com - Taiwan Power Company intends to procure 1.050 million tons of sub-bituminous coal for Taipower thermal power plant through open t ...
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- Vizag Seaport Private Limited - India
- Australian Commodity Traders Exchange
- Altura Mining Limited, Indonesia
- Xindia Steels Limited - India
- Barasentosa Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kobexindo Tractors - Indoneisa
- CIMB Investment Bank - Malaysia
- Orica Australia Pty. Ltd.
- ICICI Bank Limited - India
- Oldendorff Carriers - Singapore
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- Ind-Barath Power Infra Limited - India
- Trasteel International SA, Italy
- Directorate General of MIneral and Coal - Indonesia
- Meralco Power Generation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Romanian Commodities Exchange
- Toyota Tsusho Corporation, Japan
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Alfred C Toepfer International GmbH - Germany
- Kalimantan Lumbung Energi - Indonesia
- Mercuria Energy - Indonesia
- Singapore Mercantile Exchange
- Indonesian Coal Mining Association
- GN Power Mariveles Coal Plant, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Tamil Nadu electricity Board
- The State Trading Corporation of India Ltd
- Indian Oil Corporation Limited
- PTC India Limited - India
- Gujarat Sidhee Cement - India
- Malabar Cements Ltd - India
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- Eastern Coal Council - USA
- Maharashtra Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- Edison Trading Spa - Italy
- Kumho Petrochemical, South Korea
- Aboitiz Power Corporation - Philippines
- Simpson Spence & Young - Indonesia
- OPG Power Generation Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- Antam Resourcindo - Indonesia
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Grasim Industreis Ltd - India
- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
- PowerSource Philippines DevCo
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Generating Authority of Thailand
- SMG Consultants - Indonesia
- CNBM International Corporation - China
- Goldman Sachs - Singapore
- Samtan Co., Ltd - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Medco Energi Mining Internasional
- Holcim Trading Pte Ltd - Singapore
- Riau Bara Harum - Indonesia
- Coalindo Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Krishnapatnam Port Company Ltd. - India
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- LBH Netherlands Bv - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- New Zealand Coal & Carbon
- Africa Commodities Group - South Africa
- International Coal Ventures Pvt Ltd - India
- GMR Energy Limited - India
- Sakthi Sugars Limited - India
- Agrawal Coal Company - India
- Gujarat Mineral Development Corp Ltd - India
- Anglo American - United Kingdom
- Jaiprakash Power Ventures ltd
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kohat Cement Company Ltd. - Pakistan
- Sinarmas Energy and Mining - Indonesia
- Videocon Industries ltd - India
- Bukit Baiduri Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- VISA Power Limited - India
- Savvy Resources Ltd - HongKong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Commonwealth Bank - Australia
- Pendopo Energi Batubara - Indonesia
- Semirara Mining Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Petron Corporation, Philippines
- McConnell Dowell - Australia
- Intertek Mineral Services - Indonesia
- The Treasury - Australian Government
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- Star Paper Mills Limited - India
- Parry Sugars Refinery, India
- Aditya Birla Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Banpu Public Company Limited - Thailand
- Straits Asia Resources Limited - Singapore
- Wood Mackenzie - Singapore
- Wilmar Investment Holdings
- Electricity Authority, New Zealand
- Larsen & Toubro Limited - India
- Thai Mozambique Logistica
- Australian Coal Association
- Heidelberg Cement - Germany
- Mintek Dendrill Indonesia
- Sree Jayajothi Cements Limited - India
- Bayan Resources Tbk. - Indonesia
- Globalindo Alam Lestari - Indonesia
- Deloitte Consulting - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Chamber of Mines of South Africa
- Sical Logistics Limited - India
- Mercator Lines Limited - India
- Indogreen Group - Indonesia
- Latin American Coal - Colombia
- Orica Mining Services - Indonesia
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bangladesh Power Developement Board
- GAC Shipping (India) Pvt Ltd
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining and Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- SMC Global Power, Philippines
- Central Electricity Authority - India
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- Maheswari Brothers Coal Limited - India
- Merrill Lynch Commodities Europe
- Thiess Contractors Indonesia
- San Jose City I Power Corp, Philippines
- Indika Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- European Bulk Services B.V. - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Energy - Thailand
- Karaikal Port Pvt Ltd - India
- Sojitz Corporation - Japan
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Independent Power Producers Association of India
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Energy Development Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- Formosa Plastics Group - Taiwan
- Ambuja Cements Ltd - India
- Parliament of New Zealand
- MS Steel International - UAE
- Planning Commission, India
- Jindal Steel & Power Ltd - India
- Ministry of Transport, Egypt
- Karbindo Abesyapradhi - Indoneisa
- Attock Cement Pakistan Limited
- Central Java Power - Indonesia
- Indian Energy Exchange, India
- Vijayanagar Sugar Pvt Ltd - India
- Posco Energy - South Korea
- Port Waratah Coal Services - Australia
- Lanco Infratech Ltd - India
- Baramulti Group, Indonesia
- GVK Power & Infra Limited - India
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Marubeni Corporation - India
- Iligan Light & Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- Bharathi Cement Corporation - India
- White Energy Company Limited
- Salva Resources Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- Chettinad Cement Corporation Ltd - India
- Interocean Group of Companies - India
- Carbofer General Trading SA - India
- Dalmia Cement Bharat India
- India Bulls Power Limited - India
- Global Green Power PLC Corporation, Philippines
- The University of Queensland
- Manunggal Multi Energi - Indonesia
- Standard Chartered Bank - UAE
- Ministry of Mines - Canada
- Siam City Cement - Thailand
- Coastal Gujarat Power Limited - India
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
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