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Wednesday, 15 December 10
LARGE ORDERBOOK TO HINDER 2011 DRY BULK MARKET REBOUND DESPITE INCREASED DEMAND SAYS PARAGON SHIPPING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
 A large orderbook which currently stands at 53% of the existing fleet is expected to render 2011 another challenging year for the dry bulk market. According to Mr. Michael Bodouroglou, Chairman and CEO of Paragon Shipping Inc., in an interview with Hellenic Shipping News Worldwide,
“we believe that 2011 should be a challenging year due to the amount of new vessels that are expected to hit the water during the year”. Providing with an explanation on the flurry of newbuilding orders this year, Mr. Bodouroglou said that current newbuilding prices are 12% below where the prompt resale values are, “so we do believe that the newbuilding market offers the best value in the drybulk sector” he said.
Paragon Shipping recently posted its third quarter and nine-month results. Which were the key performance figures you would highlight?
Despite the turbulence in the markets of the past two years, our chartering strategy enabled us report our 13th straight profitable quarter since we went public in 2007. This past quarter, there was a lot of activity, and we diversified into the containership market, and expanded our fleet without risking our balance sheet and maintaining our dividend. In addition, our adjusted EBITDA was $19.6 million in the third quarter, which was a $3 million improvement over the previous quarter, and our leverage remains at a moderate 57%.
What about your stock’s valuation? Do you think that there is enough room for an increase?
Absolutely, we feel our stock is undervalued. With our current charter coverage at 98% for 2011, our revenues are insulated from any market fluctuations that may occur next year and our stock price doesn’t properly reflect this. Our time charter coverage makes us feel our stock price should be higher.
Do you think that this volatility of the market will continue in 2011 or will things be more stable going forward?
We believe that 2011 should be a challenging year due to the amount of new vessels that are expected to hit the water during the year. Our outlook on the demand side is very positive, and we expect to see increased demand for iron ore and coal from the Asian markets during 2011.
However, the orderbook remains very large with 53% of the existing fleet on order, and even with most analysts’ predictions that continued slippage should be in the range of 30%-40% of the expected deliveries, we expect an oversupply of vessels in 2011, which should create a more volatile market next year.
Oversupply issues have plagued the dry bulk market this year. Are you more optimistic about 2011 or not, especially with regards to the Panamax segment where Paragon has an increased presence?
As I mentioned above, we remain concerned about the orderbook for 2011, and while the orderbook is the largest for Capesized vessels, at 60% of the current fleet, Panamaxes also have a large orderbook at 50% of the current fleet, so we expect to feel some pressure on rates in 2011. This is why we have been proactive in locking up 98% of our revenues for 2011, so that we are protected against a decline in freight rates next year.
This year we witnessed a strong rebound of newbuilding orders which are difficult to justify given the already huge orderbook. Are valuations really that low? What’s your opinion on the matter?
In today’s market, you can see that current newbuilding prices are 12% below where the prompt resale values are, so we do believe that the newbuilding market offers the best value in the drybulk sector.
That is also why you continue to see newbuildings being ordered despite the large orderbook. We ordered seven newbuildings earlier this year, to be delivered between October 2011 and December, 2012, so we have backed up our view with action.
New building cancellations and scrapping of older bulkers seem to be the best chance that shipping has to improve freight rates. How is each of these solutions progressing since the beginning of the year?
Cancellations are very hard to measure, because neither the yards nor the shipowners have an incentive to announce them. This year, it appears cancellations have stalled as the markets were much stronger than expected. There have also been many new orders, which may have been new owners taking over someone else’s order, but these types of deals may never become clear. We continue to see a high amount of slippage, which will push the current orderbook out further, and hopefully extend the orderbook far enough out into the future so that demand will have time to catch up with supply. In addition, vessel scrapings have decreased this year and unless rates are depressed for an extended period, there is no incentive to scrap older tonnage. We would need a market where rates remain depressed for six to nine months before scrapings would be significant enough to offset new deliveries. This is also more pronounced with the smaller tonnage, as over 50% of the handysize fleet is older than 20 years of age, compared to only 16% for the capesize fleet.
How would you characterize the current market for second hand vessels? Are asset values corresponding to current freight rates?
We believe asset values are artificially inflated at current levels, and it is shown by the fact that the price of a five-year old Panamax is 11% above its 10-year historical average, compared to the one-year T/C rate that is 8% below its 10-year historical average. To us, this signifies that second hand values are higher than they should be and that there is a disconnect in the current market between vessel values and freight rates.
Would you see investment opportunities in today’s market conditions?
We have struggled looking for investment opportunities in today’s markets, although we believe that in the drybulk sector, the Handysize vessels are the most attractive at the moment. As we mentioned, over 50% of the fleet is older than 20 years of age, and it also has the smallest orderbook at the moment with 33% of the current fleet on order. We feel Handysize vessels maintain stable earnings, even in declining markets and have the best supply/demand dynamic of the drybulk sector.
What about cargo demand in the future? Is a booming China enough on its own to sustain the global fleet growth?
While China continues to be the primary driver for the drybulk market, other Asian Countries, most notably, India, have also been growing at a significant pace, and it is no longer demand for Iron Ore alone that drives freight rates, it is also the increased demand for Coal. The combined demand for Coal imports from India and China has helped boost the markets in 2010, and we expect this to continue for the next several years. As these Countries continue to build up their infrastructure, there will be an increased demand for energy, which should continue to drive increases in coal imports into China and India. So while China alone may not be able to utilize new tonnage that is expected to enter the market in the coming years, the combination of China, India and the rest of the Asian markets should be able to absorb this tonnage over time. We don’t expect this to happen in 2011, although we expect the market to be stabilized by 2013.
Interviewed by : Nikos Roussanoglou, Hellenic Shipping
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Friday, 26 November 10
INDIA WILL IMPORT 100 MLN TONS OF COAL BY 2012 - LAKSHMINARAYANA
COALspot.com – “India’s coal shortfall will reach 100 million mt by 2011-12”, said Lakshminarayana, Vice Preside ...
Friday, 26 November 10
CHINAS COAL INVENTORY STAYS HIGH FOR 22 MONTHS AT 220 MLN T, ASSOCIATION
Xinhua News Agency reported that, China’s coal inventory has stayed high and unchanged for 22 months to be around 220 million tonnes, reflecti ...
Friday, 26 November 10
DR WOLFGANG CIESLIK TO HEAD GERMAN COAL IMPORTERS ASSOCIATION
COALspot.com – (Press Release): The Management Board of the German Coal Importers Association (Verein der Kohlenimporteure e.V.) has elected D ...
Thursday, 25 November 10
ANALYSIS: COAL SECTOR: VALUE EMERGENCE - THE JAKARTA POST
Coal demand will remain firm due to a build-up of coal-fired power plants in India, China and Indonesia. As a result, we have upgraded our coal pric ...
Thursday, 25 November 10
INDONESIAN ROUNDS ARE ACHIEVING IN THE LOW 10S, OWNERS ARE NOT KEEN FOR TRIPS TO INDIA - FEARNBULK
HANDY
Uneventful week - Supra/Panamax stems ex USG to China/Korea/Japan are the main focus + grains ex. Argentina. The Atlantic market activity re ...
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Showing 5511 to 5515 news of total 6871 |
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- Pendopo Energi Batubara - Indonesia
- Riau Bara Harum - Indonesia
- Economic Council, Georgia
- LBH Netherlands Bv - Netherlands
- Globalindo Alam Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Global Business Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Eastern Energy - Thailand
- Coal and Oil Company - UAE
- Renaissance Capital - South Africa
- Indo Tambangraya Megah - Indonesia
- GVK Power & Infra Limited - India
- Jaiprakash Power Ventures ltd
- Standard Chartered Bank - UAE
- Billiton Holdings Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Siam City Cement - Thailand
- Wood Mackenzie - Singapore
- Carbofer General Trading SA - India
- Aditya Birla Group - India
- ICICI Bank Limited - India
- Simpson Spence & Young - Indonesia
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
- Parliament of New Zealand
- Central Java Power - Indonesia
- Price Waterhouse Coopers - Russia
- Indian Energy Exchange, India
- Essar Steel Hazira Ltd - India
- Bayan Resources Tbk. - Indonesia
- New Zealand Coal & Carbon
- Sojitz Corporation - Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Iligan Light & Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- Straits Asia Resources Limited - Singapore
- Grasim Industreis Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Baramulti Group, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Central Electricity Authority - India
- Indonesian Coal Mining Association
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- SN Aboitiz Power Inc, Philippines
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- Australian Coal Association
- Tata Chemicals Ltd - India
- Vizag Seaport Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Pipit Mutiara Jaya. PT, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- Borneo Indobara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Bukit Makmur.PT - Indonesia
- Interocean Group of Companies - India
- Medco Energi Mining Internasional
- Ministry of Transport, Egypt
- Marubeni Corporation - India
- CNBM International Corporation - China
- Planning Commission, India
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- Ambuja Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- European Bulk Services B.V. - Netherlands
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- PTC India Limited - India
- Independent Power Producers Association of India
- Kalimantan Lumbung Energi - Indonesia
- Singapore Mercantile Exchange
- India Bulls Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Gujarat Sidhee Cement - India
- Chamber of Mines of South Africa
- Africa Commodities Group - South Africa
- Electricity Generating Authority of Thailand
- Indika Energy - Indonesia
- Anglo American - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Port Waratah Coal Services - Australia
- Kaltim Prima Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Manunggal Multi Energi - Indonesia
- Edison Trading Spa - Italy
- Posco Energy - South Korea
- Mjunction Services Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thiess Contractors Indonesia
- Therma Luzon, Inc, Philippines
- Bharathi Cement Corporation - India
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- The University of Queensland
- Semirara Mining and Power Corporation, Philippines
- SMC Global Power, Philippines
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Commonwealth Bank - Australia
- Altura Mining Limited, Indonesia
- Electricity Authority, New Zealand
- Latin American Coal - Colombia
- Wilmar Investment Holdings
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- OPG Power Generation Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Xindia Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Leighton Contractors Pty Ltd - Australia
- Goldman Sachs - Singapore
- Tamil Nadu electricity Board
- Madhucon Powers Ltd - India
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Siam City Cement PLC, Thailand
- Minerals Council of Australia
- Attock Cement Pakistan Limited
- Coastal Gujarat Power Limited - India
- PowerSource Philippines DevCo
- Cigading International Bulk Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Indogreen Group - Indonesia
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- Intertek Mineral Services - Indonesia
- Deloitte Consulting - India
- ASAPP Information Group - India
- Meenaskhi Energy Private Limited - India
- Formosa Plastics Group - Taiwan
- Agrawal Coal Company - India
- Power Finance Corporation Ltd., India
- Alfred C Toepfer International GmbH - Germany
- GMR Energy Limited - India
- Heidelberg Cement - Germany
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- London Commodity Brokers - England
- White Energy Company Limited
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- Dalmia Cement Bharat India
- Samtan Co., Ltd - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- Bhoruka Overseas - Indonesia
- The State Trading Corporation of India Ltd
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- Sinarmas Energy and Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- The Treasury - Australian Government
- Kepco SPC Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Trasteel International SA, Italy
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- Merrill Lynch Commodities Europe
- Star Paper Mills Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Sical Logistics Limited - India
- SMG Consultants - Indonesia
- TeaM Sual Corporation - Philippines
- Petron Corporation, Philippines
- MS Steel International - UAE
- Orica Mining Services - Indonesia
- Kumho Petrochemical, South Korea
- South Luzon Thermal Energy Corporation
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- Krishnapatnam Port Company Ltd. - India
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- CIMB Investment Bank - Malaysia
- Orica Australia Pty. Ltd.
- Sree Jayajothi Cements Limited - India
- Mercuria Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
- Mercator Lines Limited - India
- Semirara Mining Corp, Philippines
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- Metalloyd Limited - United Kingdom
- Parry Sugars Refinery, India
- Vedanta Resources Plc - India
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