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Wednesday, 24 February 16
PRIVATE EQUITY FUNDS LOOKING TO EXIT SHIPPING, MOST NOTABLY DRY BULK, AS OVERORDERING HAS RESULTED IN EXCESS TONNAGE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
 The injection of more than $13 billion in shipping from various private equity funds over the past few years has resulted in what many feared would be the case, i.e. ordering more ships than the market needed to cater to demand. As a result, returns have plummeted, leaving many funds looking for a way out, most notably the dry bulk market, as tanker owners are still protected from the downturn. In its latest report, Gibson noted that “undoubtedly 2015 was a memorable year. For some a year to forget for tankers a year to enjoy. Whilst the misery has continued for many, tankers are still generating healthy returns a cross most sectors, in part aided by cheap bunker prices. However, sentiment, particularly in the tanker time charter market has certainly taken a hit as of late as the global economic outlook becomes increasingly bearish”.
According to Gibson’s analysis, global stock markets have witnessed a terrible start with the China led malaise wiping billions off investments across the globe, unsettling the nerves of many investors, which perhaps explains the loss of appetite for long term commitments. It may be the view of some wealth managers mantra that the economy remains on track but it is difficult for many to stay calm when your investments have dropped in value by 15 to 20 per cent since April 2015. Furthermore after the initial boost of low oil prices, much concern is now focused on the health of the major producers who have expensed vast sums of foreign cash reserves in the face of falling oil prices”.
The shipbroker also noted that “back in August 2014, we highlighted the growing role of private equity in the shipping sector as the involvement of major banks gradually faded from its peak in 2007. We speculated that at least $7 billion would come from this sector in 2014 which was still a drop in the ocean in their overall portfolios. Wilbur Ross estimated that private equity pumped $16 billion into shipping between 2008 and 2013 – two and a half times the amount generated through initial public offerings”.
Meanwhile, “whilst the tanker sector has so far escaped the horrors of dry cargo, there is no longer the hunger of investors to continue their involvement with shipping, as the overall performance of these investments has not fulfilled expectations and they are looking for a swift exit. We argued back in 2014 that the activity was being driven by “other people’s money “ without sufficient restraints which can result in over ordering and this has certainly been a factor. As a result of that activity, several larger private equity groups that invested in shipping in the past, have decided to cut their losses and sell. Investment funds and banks do not want to be shipowners, trying to sell off unwanted assets where the buyers have the upper hand”, Gibson said.
It went on to note “whilst many traditional shipping banks continue to wind down their shipping portfolios, other banks have signalled an intention to increase their presence in the sector with China’s CMB Financial Leasing looking to increase shipping and aviation from 12% of its existing book to 25-40%. This points towards conventional banks playing more of a role once again in ship finance, yet it may not be the traditional European banks fulfilling this role”.
Gibson said though, that “there is a great deal of pain at the moment but this will be seen by some shipowners in a positive light going forward, where realistic ship ping constraints return t o investment decisions, preventing the mass ordering of unwanted new buildings that we have seen from some of the recently funded players from private equity. There is no question that this scenario will put an enormous strain on shipyards who will need to be able to offer financing such as we have seen from Chinese banks and the Export credit agencies in other Asian shipbuilding nations. However their biggest problem is that the market has more than enough ships to meet demand and shipbuilders are struggling to fill their forward slots. This sort of market brings the cash buyer to the fore and there are clear signs that they are focusing in on the opportunities that are being presented. In the dry sector as prices plummet, the traditional second hand cash buyers are becoming increasingly visible. For now tanker owners remain very much protected by the continued healthy state of the market, but we should take nothing for granted as we will encounter more challenges as we progress through 2016”, the shipbroker concluded.
Source: Nikos Roussanoglou, Hellenic Shipping News
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Sunday, 31 January 16
BDI CONTINUED ITS FALL AND CLOSE AT A FRESH RECORD LOW ON FRIDAY
COALspot.com: The Baltic Dry Index, which gauges the cost of shipping dry bulk including iron ore, cement, grain, coal and fertilizer, continued it ...
Friday, 29 January 16
INDONESIAN BENCHMARK COAL PRICE SETTLES DOWN $ 0.31, OR 0.58%, AT $ 53.20 A TON
COALspot.com: Low coal demand and excess supplies sent Indonesian benchmark coal price further down in January 2016. HBA has slumped by 0.58 ...
Friday, 29 January 16
U.S. COAL PRODUCTION OFF 2 PERCENT FROM LAST WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.1 milli ...
Thursday, 28 January 16
COAL REMAINS THE NO.1 FUEL FOR POWER GENERATION - EXXONMOBIL
COALspot.com: Energy demand trends from 2010 to 2040 are expected to vary significantly around the world, as countries move along very different tr ...
Thursday, 28 January 16
WHAT ARE THE PROSPECTS FOR COAL IN LIGHT OF THE PARIS CLIMATE AGREEMENT? - GERMAN COAL IMPORTERS ASSOCIATION
This depends – says the VDKi – to a very great extent on who you want to believe more, the United Nations or the International Energy A ...
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- Mercuria Energy - Indonesia
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- Meralco Power Generation, Philippines
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- Price Waterhouse Coopers - Russia
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- Cement Manufacturers Association - India
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- Electricity Authority, New Zealand
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- Indonesian Coal Mining Association
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- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
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- The State Trading Corporation of India Ltd
- Kaltim Prima Coal - Indonesia
- Singapore Mercantile Exchange
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- Larsen & Toubro Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
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- Kideco Jaya Agung - Indonesia
- Straits Asia Resources Limited - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Interocean Group of Companies - India
- Indika Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- Siam City Cement PLC, Thailand
- Sical Logistics Limited - India
- Ministry of Finance - Indonesia
- Kapuas Tunggal Persada - Indonesia
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- Altura Mining Limited, Indonesia
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- White Energy Company Limited
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- Formosa Plastics Group - Taiwan
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- Petron Corporation, Philippines
- Edison Trading Spa - Italy
- Leighton Contractors Pty Ltd - Australia
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- GVK Power & Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Marubeni Corporation - India
- Ind-Barath Power Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
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- Directorate Of Revenue Intelligence - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
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- Petrochimia International Co. Ltd.- Taiwan
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- Indian Energy Exchange, India
- Indogreen Group - Indonesia
- Bhatia International Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Transport, Egypt
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- Vedanta Resources Plc - India
- Pipit Mutiara Jaya. PT, Indonesia
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
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- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- The University of Queensland
- Billiton Holdings Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- VISA Power Limited - India
- The Treasury - Australian Government
- CIMB Investment Bank - Malaysia
- Mercator Lines Limited - India
- Rio Tinto Coal - Australia
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- ASAPP Information Group - India
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- PTC India Limited - India
- Latin American Coal - Colombia
- Sojitz Corporation - Japan
- Iligan Light & Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Kumho Petrochemical, South Korea
- McConnell Dowell - Australia
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- Star Paper Mills Limited - India
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- Merrill Lynch Commodities Europe
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- Australian Coal Association
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- Sarangani Energy Corporation, Philippines
- Central Electricity Authority - India
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Energy Link Ltd, New Zealand
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- Barasentosa Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Videocon Industries ltd - India
- Madhucon Powers Ltd - India
- Independent Power Producers Association of India
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Chamber of Mines of South Africa
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- CNBM International Corporation - China
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