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Wednesday, 07 August 13
HANDIES : FINDING IT DIFFICULT TO SUSTAIN THEIR PREVIOUS LEVELS - KONSTANTINOS KONTOMICHIS
 Broker's insight
by Konstantinos Kontomichis,
SnP Broker
Entering the most predictable month of the year, as expected the seasonal effects has pushed sentiment back into negative territory. As the Greek owners are enjoying their summer time off, the S&P market is falling apart. While few prospective buyers have stayed back in their office to grab any chances and possibly avoid competition while doing so, most seem to have postponed their interest till September in the hope of seeing a market that they feel will make more sense. One can say that the recent price inflation posted over the last two quarters in the Dry Bulk market and more specifically for panamax vessels, is an additional reason for some to switch over to a “wait & see” attitude at least until the slowest month (in terms of chartering) has past.
From the beginning of 2013, handy tonnages have faced the smallest fluctuations in values, reflecting the fact that they still the vessels holding the lowest risk exposure in the dry market. Supramax asset values were running on the high end, something which is quite reasonable though considering the fact that this size segment has been enjoying the best returns in the market over the last couple of years. On the other hand the poor rates, overwhelming delivery schedule and overall negative sentiment for Panamaxes during the second half of the previous year caused depressed sales in the sector. The cheapest deals took place, during the end of 2012 and the very beginning of 2013, providing the groundwork and sparking heavy competition amongst Greek cash buyers which resulted in the unexpected climb in prices.
The recent rally in asset prices which we witnessed was also driven by the appearance of funds and private-equity covering the gap left from the more cautious and now heavily regulated banks. Many were claiming “we are scratching the bottom” and their words translated to private investors as “rock bottom bargain prices”. Of course along the way several additional economic factors played their part in the underling reasoning. The bankruptcy of the Cypriot banking system, the instability of Greek financial institutions and the clouded economic policy of the European Union was enough to push investors to the “sea” as a much “safer” choice.
In all these “safer” decisions there seems to be little room for “profitable”. The above decisions are locked at the going charter rates. It does not make any sense at these levels as the actual earnings do not reflect the levels that ship prices have reached. It is no surprise that we have not only reached back to pre-boom long-term repayment periods for bank loans and even surpassing them. Owners are struggling, shipping is still looking like part of a falling domino structure while many fundamentals are still missing from the market such as financing, economic stability, strong world economic growth, slower supply growth etc. Waiting for a market comeback we have to remember there is always a 'Dummy variable”. No one can predict the future, and despite everything seeming “bearish”, there is no telling of the potential direction the market could end up taking.
Chartering (Wet: Stable- / Dry: Stable- )
With the exception of the Capes, the whole of the Dry Bulk market witnessed a further correction in rates on the face of slower activity in the Atlantic and poor positioning overall. The summer blues have continue to overwhelm market players and things are looking set for further decreases over the next couple of days. The BDI closed today (06/08/2013) at 1046points, down by 12 points compared to Monday’s levels (05/08/2013) and a decrease of 21 points compared to previous Tuesday’s levels (29/07/2013).
The crude oil market noted some correction, however overall demand has held fairly well especially when one considers that this is traditionally the slowest part of the year. Demand for Crude oil from the U.S. has now drop, leaving the market ripe for a drop though you never know in this sort of market. The BDTI Monday (05/08/2013), was at 618 points, a decrease of 32 points and the BCTI at 612, an increase of 5 points compared to the previous Monday’s levels (28/07/2013).
Chartering
There was a hold in the rates drop for Capes, with the Atlantic basin showing some improved demand and fending off any further weakening for now. The Pacific was the real market support this week, helping cover much of the slack in demand left by a softer Atlantic and allowing for some temporary relief. With activity likely to drop further over the next couple of weeks especial for iron ore cargoes, August is likely to be a fairly poor performance overall and this current levels are unlikely to hold for long.
Continuing on from the week prior, Panamaxes lost further support this past week as the Atlantic drop further on the face of fewer inquiries coming in from ECSA. The Pacific on the other hand is in no state to cover the gap in demand and is likely going to feel further weakening itself. This overall slower activity has taken its toll on sentiment and it is likely that we will see the index close of this coming Friday well below the 1,000 point mark.
This slower activity in the Atlantic took its toll on Supras as well this week, as it now becomes more evident to what degree the demand from ECSA was holding the market buoyant these past weeks. There was some gains to be noted on other Atlantic basin routes such as Continent/US Gulf, however these were to insignificant to effect the overall picture. Handies were also finding it difficult to sustain their previous levels and have also seen a slight overall drop these past few days. The Pacific basin wasn’t looking very charming either with decreased demand for raw resources from China these past weeks and India still remaining fairly subdued, it looks as though it will be another gloomy August as usual.
Compiled by:
Intermodal Research & Valuations | research@intermodal.gr
Analysts:
Mr. George Lazaridis | g.lazaridis@intermodal.gr
Ms. Eva Tzima | e.tzima@intermodal.gr
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no re-producing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
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Monday, 16 September 13
WHAT RECOVERY MEANS FOR THE CAPESIZE MARKET - COMMODORE RESEARCH
COALspot.com: The simple fact that capesize rates have been able to increase above the $9,000/mark and become much more responsive to changes in car ...
Monday, 16 September 13
CFR SOUTH CHINA COAL SWAP: STABLE TO STEADY
COALspot.com : SGX has launched API 8 CFR South China Coal Swap on 29 April 2013 and SGX replaced the previous swap.
API 8 CFR South China Coal s ...
Monday, 16 September 13
INDONESIAN SUB-BIT COAL SWAP STRUGGLING TO FINDS THE RIGHT PATH
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q4 2013 delivery down 0.75 percept month on month on Friday 13 Septe ...
Sunday, 15 September 13
CAPE FREIGHT RATES RISE ON HIGH DEMAND AND TIGHT AVAILABILITY - CAPT. REDDY
COALspot.com : The BDI, Cape and Panamax indices are continued to rise and saw a steep surge with average index in these segments up around 25 pct w ...
Friday, 13 September 13
US COAL OUTPUT SLIPS 3.34% ON-WEEK
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.20 million short tons (mmst) of ...
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- Kalimantan Lumbung Energi - Indonesia
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- Pipit Mutiara Jaya. PT, Indonesia
- Directorate General of MIneral and Coal - Indonesia
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Lanco Infratech Ltd - India
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- Kumho Petrochemical, South Korea
- International Coal Ventures Pvt Ltd - India
- Marubeni Corporation - India
- The University of Queensland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Intertek Mineral Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Chamber of Mines of South Africa
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- PTC India Limited - India
- Deloitte Consulting - India
- Vizag Seaport Private Limited - India
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- Indo Tambangraya Megah - Indonesia
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- IEA Clean Coal Centre - UK
- Grasim Industreis Ltd - India
- Coastal Gujarat Power Limited - India
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- South Luzon Thermal Energy Corporation
- Australian Commodity Traders Exchange
- Gujarat Sidhee Cement - India
- Parliament of New Zealand
- Thiess Contractors Indonesia
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- Directorate Of Revenue Intelligence - India
- Billiton Holdings Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- Carbofer General Trading SA - India
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- ASAPP Information Group - India
- Mjunction Services Limited - India
- MS Steel International - UAE
- Medco Energi Mining Internasional
- Thai Mozambique Logistica
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
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- Petrochimia International Co. Ltd.- Taiwan
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- Mercuria Energy - Indonesia
- Petron Corporation, Philippines
- Edison Trading Spa - Italy
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Heidelberg Cement - Germany
- Posco Energy - South Korea
- Pendopo Energi Batubara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Meenaskhi Energy Private Limited - India
- Larsen & Toubro Limited - India
- Global Business Power Corporation, Philippines
- Eastern Coal Council - USA
- Wilmar Investment Holdings
- SN Aboitiz Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Altura Mining Limited, Indonesia
- Agrawal Coal Company - India
- Iligan Light & Power Inc, Philippines
- Bhatia International Limited - India
- Wood Mackenzie - Singapore
- Riau Bara Harum - Indonesia
- Sindya Power Generating Company Private Ltd
- Vijayanagar Sugar Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Power Finance Corporation Ltd., India
- Central Electricity Authority - India
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- McConnell Dowell - Australia
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Star Paper Mills Limited - India
- CNBM International Corporation - China
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- GAC Shipping (India) Pvt Ltd
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Sinarmas Energy and Mining - Indonesia
- Dalmia Cement Bharat India
- Sojitz Corporation - Japan
- GMR Energy Limited - India
- Essar Steel Hazira Ltd - India
- Sical Logistics Limited - India
- Cement Manufacturers Association - India
- Indian Energy Exchange, India
- London Commodity Brokers - England
- Uttam Galva Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Electricity Authority, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Merrill Lynch Commodities Europe
- Sakthi Sugars Limited - India
- Ministry of Finance - Indonesia
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- India Bulls Power Limited - India
- Mercator Lines Limited - India
- Orica Mining Services - Indonesia
- Bulk Trading Sa - Switzerland
- Jaiprakash Power Ventures ltd
- SMG Consultants - Indonesia
- Orica Australia Pty. Ltd.
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Attock Cement Pakistan Limited
- Australian Coal Association
- Savvy Resources Ltd - HongKong
- Indian Oil Corporation Limited
- PNOC Exploration Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Romanian Commodities Exchange
- Tata Chemicals Ltd - India
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Georgia Ports Authority, United States
- Anglo American - United Kingdom
- Africa Commodities Group - South Africa
- Latin American Coal - Colombia
- Cigading International Bulk Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Singapore Mercantile Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Metalloyd Limited - United Kingdom
- Aditya Birla Group - India
- Kapuas Tunggal Persada - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bharathi Cement Corporation - India
- Globalindo Alam Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Commonwealth Bank - Australia
- Toyota Tsusho Corporation, Japan
- Semirara Mining and Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Timah Investasi Mineral - Indoneisa
- Standard Chartered Bank - UAE
- Formosa Plastics Group - Taiwan
- Indika Energy - Indonesia
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Bhoruka Overseas - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Economic Council, Georgia
- Ambuja Cements Ltd - India
- GVK Power & Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Interocean Group of Companies - India
- Ind-Barath Power Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Indogreen Group - Indonesia
- Siam City Cement - Thailand
- OPG Power Generation Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Energy Development Corp, Philippines
- Planning Commission, India
- Bhushan Steel Limited - India
- Central Java Power - Indonesia
- Salva Resources Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- Vedanta Resources Plc - India
- Straits Asia Resources Limited - Singapore
- Sree Jayajothi Cements Limited - India
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