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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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Thursday, 04 November 10
GVK TALKS WITH MEC FOR INDONESIAN MINES DEAL - DNA INDIA
As reported by DNA India, GVK Power and Infrastructure on Wednesday said it is in talks with Gulf-based MEC Coal to buy its coal mines in Indonesia, ...
Wednesday, 03 November 10
PANAMAX SIZE DRY-BULK CARRIER MARKET IS STRONG - GERSON LEHRMAN
Panamax class vessels have been part of the fluctuation of the broader current dry bulk market. They have experienced occasional steep movements, du ...
Tuesday, 02 November 10
ADDED VALUE REMAINS STAGNANT - MAJALAH TAMBANG
The improvement of added value of mining products in accordance with mandate of the mining law has not been visible. Minerals and coal are still exp ...
Saturday, 30 October 10
THE SUPRAMAX FREIGHT MARKET THIS WEEK REMAINED ALMOST AT LAST WEEK LEVELS - VISTAAR SINGAPORE
COALspot.com: The freight market this week remained almost at same levels except for Panamax index which was up by 191 points.
The feast/SE Asia ...
Friday, 29 October 10
CAPE MARKET STARTED TO BREAK THOUGH THE UPWARDS RESISTANCE LEVEL OF USD 40K DAILY FOR SPOT CARGOS - FEARNLEYS
HANDY
The Atlantic markets remain flat and lackluster. The expectations that the grain ...
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Showing 5541 to 5545 news of total 6871 |
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- Medco Energi Mining Internasional
- Vedanta Resources Plc - India
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Interocean Group of Companies - India
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
- Carbofer General Trading SA - India
- Siam City Cement - Thailand
- India Bulls Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bhushan Steel Limited - India
- IHS Mccloskey Coal Group - USA
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- Indika Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Trasteel International SA, Italy
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Kartika Selabumi Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Asmin Koalindo Tuhup - Indonesia
- PNOC Exploration Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Xindia Steels Limited - India
- Intertek Mineral Services - Indonesia
- Mjunction Services Limited - India
- Electricity Generating Authority of Thailand
- Global Business Power Corporation, Philippines
- Anglo American - United Kingdom
- Toyota Tsusho Corporation, Japan
- Bangladesh Power Developement Board
- London Commodity Brokers - England
- Binh Thuan Hamico - Vietnam
- Sinarmas Energy and Mining - Indonesia
- Sojitz Corporation - Japan
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- Coalindo Energy - Indonesia
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- Gujarat Sidhee Cement - India
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Global Coal Blending Company Limited - Australia
- Antam Resourcindo - Indonesia
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- Altura Mining Limited, Indonesia
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- The Treasury - Australian Government
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Ind-Barath Power Infra Limited - India
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Borneo Indobara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bharathi Cement Corporation - India
- Grasim Industreis Ltd - India
- Savvy Resources Ltd - HongKong
- Salva Resources Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Indo Tambangraya Megah - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Singapore Mercantile Exchange
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- Parry Sugars Refinery, India
- Baramulti Group, Indonesia
- Heidelberg Cement - Germany
- TNB Fuel Sdn Bhd - Malaysia
- LBH Netherlands Bv - Netherlands
- Price Waterhouse Coopers - Russia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parliament of New Zealand
- Aditya Birla Group - India
- Thai Mozambique Logistica
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Agrawal Coal Company - India
- Globalindo Alam Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Tamil Nadu electricity Board
- Vijayanagar Sugar Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Metalloyd Limited - United Kingdom
- Power Finance Corporation Ltd., India
- Independent Power Producers Association of India
- Karaikal Port Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indian Oil Corporation Limited
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Eastern Coal Council - USA
- Ministry of Finance - Indonesia
- Merrill Lynch Commodities Europe
- Central Electricity Authority - India
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Electricity Authority, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- ASAPP Information Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Essar Steel Hazira Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Planning Commission, India
- Rashtriya Ispat Nigam Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- Riau Bara Harum - Indonesia
- Indian Energy Exchange, India
- Economic Council, Georgia
- Marubeni Corporation - India
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- Jaiprakash Power Ventures ltd
- Directorate Of Revenue Intelligence - India
- Global Green Power PLC Corporation, Philippines
- Minerals Council of Australia
- New Zealand Coal & Carbon
- Mintek Dendrill Indonesia
- Wood Mackenzie - Singapore
- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- Meenaskhi Energy Private Limited - India
- Orica Mining Services - Indonesia
- Oldendorff Carriers - Singapore
- ICICI Bank Limited - India
- The State Trading Corporation of India Ltd
- Aboitiz Power Corporation - Philippines
- Renaissance Capital - South Africa
- CNBM International Corporation - China
- McConnell Dowell - Australia
- Indogreen Group - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Billiton Holdings Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Bhatia International Limited - India
- Energy Development Corp, Philippines
- Standard Chartered Bank - UAE
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- SN Aboitiz Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- PTC India Limited - India
- Commonwealth Bank - Australia
- GAC Shipping (India) Pvt Ltd
- Kepco SPC Power Corporation, Philippines
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Central Java Power - Indonesia
- Coal and Oil Company - UAE
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining and Power Corporation, Philippines
- Romanian Commodities Exchange
- Semirara Mining Corp, Philippines
- Cement Manufacturers Association - India
- Miang Besar Coal Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Kumho Petrochemical, South Korea
- Eastern Energy - Thailand
- VISA Power Limited - India
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- Ministry of Mines - Canada
- Edison Trading Spa - Italy
- Sindya Power Generating Company Private Ltd
- Straits Asia Resources Limited - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Ministry of Transport, Egypt
- Gujarat Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Therma Luzon, Inc, Philippines
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
- Maharashtra Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- International Coal Ventures Pvt Ltd - India
- Tata Chemicals Ltd - India
- Posco Energy - South Korea
- Bayan Resources Tbk. - Indonesia
- Manunggal Multi Energi - Indonesia
- GMR Energy Limited - India
- Pendopo Energi Batubara - Indonesia
- The University of Queensland
- Petron Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Videocon Industries ltd - India
- Larsen & Toubro Limited - India
- Kideco Jaya Agung - Indonesia
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