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Monday, 17 December 12
SHIP PRICES TO BOTTOM OUT IN 2013 SAYS GEORGE D. GOURDOMICHALIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
 Ship values especially in older tonnage, or even modern vessels with poor quality are expected to fall further during 2013, with the market as a whole predicted to bottom-out next year, creating the ground for a rebound later on. In an exclusive interview with Hellenic Shipping News Worldwide, Mr. George D. Gourdomichalis, Managing Director of G. Bros Maritime S.A. talks about the dry bulk market's potential in 2013, which ship types appear to have the best value-for-money and debates the effectiveness of the new breed of "Eco-Carriers".
The Gourdomichalis family commenced their own shipowning activities in the London shipping market in 1950's. Since then have enjoyed a very high reputation in the shipping industry. Members of the family have kept high positions in various Boards of Directors and other Official Organizations such as being President of the Union of Greek Shipowners. In 1974 the firm's offices moved to Piraeus, Hellas while still maintaining a presence in London. Since 1990, the family's involvement in shipping has also included a joint venture with the Romanian State Company (Petromin). The Gourdomichalis brothers first independent foray into shipowning and shipmanagement activities was with the family sponsored Joint Venture with the Russian State owned Baltic Shipping Co. which operated under the flag of Baltmed Shipping Co.
In 1996, after having wound up Baltmed Shipping Co., the J.V. with Baltic Shipping Co., George and Stathis Gourdomichalis established Gourdomichalis Naftiki Eteria S.A. The establishment of the company manifested the younger generation's strong drive to succeed using its own means and skills. Since its inception in 1996 it has managed a total of six dry cargo ships including Freedom and Handy type vessels. The company has also managed a repossessed vessel on behalf of a bank.
In 2004 all their activities were consolidated into a holding company FREESEAS INC. and managed by Free Bulkers S.A. Freeseas Inc was listed on NASDAQ on December 2005. George Gourdomichalis held the position of President and Chairman and Stathis Gourdomichalis was the Treasurer and Chief Financial Officer. The two principals controlled about 48% of the listed company. In January 2007 they sold their shareholding in both Freeseas Inc. and Free Bulkers S.A. to entities controlled by the Restis group.
This development allowed George and Stathis to once again grow their "private - family" shipping activities. A new structure was put into operation under the name G Bros Maritime S.A. They employ a total of sixteen shore-based staff including a Port Captain, Engineer Superintendent, Accountants, Secretarial and Administrative Executive staff. The company occupies approximately 300 sq. meters of office space in prime area on Akti Miaouli, Piraeus, at the heart of the worlds largest shipping center.
This year's performance of the dry bulk market has been less than memorable, in fact quite the opposite. Why did this happen, especially after a satisfying 2011, at least in terms of freight rates?
The softness of the dry bulk market is clearly a function of the imbalance of tonnage supply and demand, world GDP growth slowdown experienced over the past couple of years and the lack of finance. We fail to see any satisfaction in 2011 in freight rates and values and would suggest that the dry bulk market downturn we are experiencing essentially since end 2008, with a short breather in the spring of 2010, is a prolonged down run of the market.
Do you expect 2013 to be just as challenging, or could conditions improve, as a result of an improvement of the supply/demand current imbalance, a product of heavy new building ordering of the past few years?
As stated above there are three basic reasons pressuring freight rates and values down, whereas the supply/demand balance is slowly starting to look better, there is still significant danger of continued oversupply of tonnage on the back of the very strong marketing of the supposedly “eco-ships” by yards lacking utilization. The coming year will be as challenging as 2012, but will also see the market bottom out thus creating the opportunity for purchases and positioning for a upturn.
What strategy did your company follow, in order to cope with these adverse market conditions?
We, as many others, restructured our fleet by retiring older tonnage and restructuring financial arrangements, as well as disposing of vessels with heavier than acceptable debt. In reality, we exercised a stop-loss strategy allowing us to weather the down market.
Do you thinks that ships' values are close to bottoming-out, or is there still room for lower prices?
Vessel values are a function of earnings and replacement value and as such there are certain segments and age groups that may have further down side with overage tonnage in the larger sizes being the most prominent in that group. Having said that, older tonnage across the board has further downside as it is trading at scrap related values. We also believe that younger tonnage of questionable and inferior quality has considerable down side, being that in a buyer’s market one tends to cherry pick the best of the candidates.
Which ship types do you find the most attractive in today's market?
The answer depends on the driver behind purchases, i.e. is it a speculative asset play, or an operational longer term investment? In the case of the first, we would be inclined to look at the very large modern units, whereas in the case of the latter we would look at the modern high quality/high spec handy and handy-max segment.
Do you prefer newbuilding investments, or is it better to look for modern second hand tonnage in today's market environment?
We believe that quality of design and build is paramount these days and as such would rule out any new-building activity at inferior yards. Having said that, the discount to replacement cost found in today’s market leads us to believe that very attractive valuations can be found in top quality modern second hand vessels.
How different are today's conditions in shipping finance, compared to the pre-2009 period? Is it challenging to obtain financing for new vessel acquisitions?
Immensely!! There is practically no finance available except from very select institutions to very select borrowers either by virtue of being existing clients and/or by virtue of paying down existing facilities and thus opening up credit and to the larger corporate entities who are borrowing both on the strength of their balance sheets but also on the strength of their cash flows and cash in hand. Naturally, there are certain segments that are faring better than other in obtaining finance such as the LNG and offshore industries as well as the re-appearance of quasi financial institutions providing higher cost finance. In all though, margins are up, loan to value ratios are down and security is paramount to lenders.
Do you believe that the latest trend of the so-called "Eco Carriers", i.e. ships which promise lower fuel consumption will become dominant in the future, despite the premium prices they command? Are you considering investing in such vessels in the future?
The response of any educated and experienced shipping man is that the plethora of “eco-carrier” designs are untested and make claims that have not yet been put to the test and rigors of the real sea. A properly designed, maintained and operated existing ship can provide good competition to any of the new designs and we believe it is best to reserve judgment till these designs are put to the test.
One of the major concerns of the global shipping industry has also been piracy in various areas around the world. How do you protect your vessels? Which is the best solution in your opinion?
We, as others, have been forced to employ armed guards onboard our vessels transiting/trading in high risk areas. It is not a solution to the problem but is a necessary evil. The solution lies in the geopolitical balances that need to be juggled in Somalia and/or in West Africa and/or S.E. Asia. We hope, primarily for the safety of our crews and the free flow of trade that a final solution both on shore and at sea is found the soonest possible.
Source : Nikos Roussanoglou, Hellenic Shipping News Worldwide
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Friday, 07 December 12
A NEW PHASE FOR AUSTRALIAN RESOURCES - A FITCH STREET INTERVIEW
This week Matt Jamieson spoke with Andrew Colquhoun in Fitch's Asian sovereign rating team, and Vicky Melbourne, Fitch's commodity analyst based i ...
Friday, 07 December 12
SHIPPING INDUSTRY LOOKING ON YET ANOTHER TOUGH YEAR AS WE APPROACH 2013 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With shipping finance "on the ropes" as traditional lenders appear to be cutting their losses and tonnage oversupply still the most import ...
Thursday, 06 December 12
PANAMAX : THE POSITIVE VIBES IN THE ATLANTIC REMAINS - FEARNLEYS AS
Handy
The Atlantic market is still depressed with dearth of cargoes and more ships. The trips from Continent to Feast fixed around USD 12k. Trips f ...
Thursday, 06 December 12
STRONG CHINESE DEMAND FOR DRY BULK COMMODITIES EXPECTED FOR 2013 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A new analysis from BIMCO released yesterday suggests that 2013 is expected to be a stronger year in terms of China's "hunger" for commod ...
Tuesday, 04 December 12
JATENERGY SIGNS MOU FOR INDONESIAN COAL ASSET
COALspot.com - Jatenergy Limited has announced that its fully-owned Indonesian subsidiary, PT Barata Energy (BE), has signed an exclusive, non-bindi ...
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- LBH Netherlands Bv - Netherlands
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- Eastern Coal Council - USA
- Jaiprakash Power Ventures ltd
- Marubeni Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Alfred C Toepfer International GmbH - Germany
- Orica Mining Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- GN Power Mariveles Coal Plant, Philippines
- European Bulk Services B.V. - Netherlands
- Australian Coal Association
- San Jose City I Power Corp, Philippines
- ASAPP Information Group - India
- Therma Luzon, Inc, Philippines
- Tata Chemicals Ltd - India
- Chettinad Cement Corporation Ltd - India
- Petron Corporation, Philippines
- Simpson Spence & Young - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Energy Link Ltd, New Zealand
- Electricity Generating Authority of Thailand
- Makarim & Taira - Indonesia
- Goldman Sachs - Singapore
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- The University of Queensland
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Uttam Galva Steels Limited - India
- Standard Chartered Bank - UAE
- Jindal Steel & Power Ltd - India
- Borneo Indobara - Indonesia
- Siam City Cement - Thailand
- Coal and Oil Company - UAE
- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Latin American Coal - Colombia
- Samtan Co., Ltd - South Korea
- The State Trading Corporation of India Ltd
- Indogreen Group - Indonesia
- Sree Jayajothi Cements Limited - India
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Straits Asia Resources Limited - Singapore
- Manunggal Multi Energi - Indonesia
- PTC India Limited - India
- Barasentosa Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bayan Resources Tbk. - Indonesia
- India Bulls Power Limited - India
- London Commodity Brokers - England
- Trasteel International SA, Italy
- Central Electricity Authority - India
- Medco Energi Mining Internasional
- Ministry of Transport, Egypt
- Vijayanagar Sugar Pvt Ltd - India
- Thai Mozambique Logistica
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- Bhatia International Limited - India
- Karaikal Port Pvt Ltd - India
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- Larsen & Toubro Limited - India
- Vedanta Resources Plc - India
- Attock Cement Pakistan Limited
- VISA Power Limited - India
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Formosa Plastics Group - Taiwan
- Bukit Baiduri Energy - Indonesia
- Sakthi Sugars Limited - India
- Indika Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Mintek Dendrill Indonesia
- Indian Energy Exchange, India
- Parry Sugars Refinery, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sojitz Corporation - Japan
- Independent Power Producers Association of India
- Savvy Resources Ltd - HongKong
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Mercuria Energy - Indonesia
- ICICI Bank Limited - India
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Deloitte Consulting - India
- Mercator Lines Limited - India
- Iligan Light & Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Orica Australia Pty. Ltd.
- Sindya Power Generating Company Private Ltd
- Directorate Of Revenue Intelligence - India
- PNOC Exploration Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Finance - Indonesia
- Vizag Seaport Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- GVK Power & Infra Limited - India
- Carbofer General Trading SA - India
- South Luzon Thermal Energy Corporation
- Metalloyd Limited - United Kingdom
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhoruka Overseas - Indonesia
- OPG Power Generation Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- Sical Logistics Limited - India
- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
- Semirara Mining Corp, Philippines
- Romanian Commodities Exchange
- Siam City Cement PLC, Thailand
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- Karbindo Abesyapradhi - Indoneisa
- Chamber of Mines of South Africa
- GMR Energy Limited - India
- Kumho Petrochemical, South Korea
- Bangladesh Power Developement Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Thiess Contractors Indonesia
- Cement Manufacturers Association - India
- Antam Resourcindo - Indonesia
- Minerals Council of Australia
- Edison Trading Spa - Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Oil Corporation Limited
- Essar Steel Hazira Ltd - India
- Parliament of New Zealand
- Asmin Koalindo Tuhup - Indonesia
- McConnell Dowell - Australia
- Rashtriya Ispat Nigam Limited - India
- Coastal Gujarat Power Limited - India
- Anglo American - United Kingdom
- Australian Commodity Traders Exchange
- Global Business Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- Georgia Ports Authority, United States
- Power Finance Corporation Ltd., India
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- Dalmia Cement Bharat India
- Sarangani Energy Corporation, Philippines
- Economic Council, Georgia
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- Price Waterhouse Coopers - Russia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Star Paper Mills Limited - India
- New Zealand Coal & Carbon
- SN Aboitiz Power Inc, Philippines
- Mjunction Services Limited - India
- Energy Development Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Miang Besar Coal Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- Aditya Birla Group - India
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Singapore Mercantile Exchange
- Kohat Cement Company Ltd. - Pakistan
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- CNBM International Corporation - China
- The Treasury - Australian Government
- TNB Fuel Sdn Bhd - Malaysia
- Coalindo Energy - Indonesia
- Central Java Power - Indonesia
- Kartika Selabumi Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- Electricity Authority, New Zealand
- Krishnapatnam Port Company Ltd. - India
- SMG Consultants - Indonesia
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Salva Resources Pvt Ltd - India
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Bharathi Cement Corporation - India
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