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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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Wednesday, 31 July 13
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Tuesday, 30 July 13
KOMIPO INVITES BIDS FOR 520,000 MT OF 5,700 KCAL/KG COAL ON NAR BASIS FOR H1, 2014
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- Ministry of Transport, Egypt
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- Parliament of New Zealand
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- Planning Commission, India
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- Energy Link Ltd, New Zealand
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- Gujarat Mineral Development Corp Ltd - India
- Australian Coal Association
- Heidelberg Cement - Germany
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Bayan Resources Tbk. - Indonesia
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- TNB Fuel Sdn Bhd - Malaysia
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
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- Ministry of Mines - Canada
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- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- The State Trading Corporation of India Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- Chamber of Mines of South Africa
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- Sical Logistics Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Bhushan Steel Limited - India
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Price Waterhouse Coopers - Russia
- Kalimantan Lumbung Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Xindia Steels Limited - India
- Indogreen Group - Indonesia
- Essar Steel Hazira Ltd - India
- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Sinarmas Energy and Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mintek Dendrill Indonesia
- Star Paper Mills Limited - India
- ASAPP Information Group - India
- Global Coal Blending Company Limited - Australia
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- GVK Power & Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Baramulti Group, Indonesia
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- Krishnapatnam Port Company Ltd. - India
- Siam City Cement PLC, Thailand
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Karbindo Abesyapradhi - Indoneisa
- LBH Netherlands Bv - Netherlands
- Energy Development Corp, Philippines
- Trasteel International SA, Italy
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- New Zealand Coal & Carbon
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- Borneo Indobara - Indonesia
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- Indian Oil Corporation Limited
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- Coal and Oil Company - UAE
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- Minerals Council of Australia
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- GN Power Mariveles Coal Plant, Philippines
- Globalindo Alam Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Vedanta Resources Plc - India
- Savvy Resources Ltd - HongKong
- Timah Investasi Mineral - Indoneisa
- Indonesian Coal Mining Association
- Deloitte Consulting - India
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Economic Council, Georgia
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- Indian Energy Exchange, India
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Thiess Contractors Indonesia
- Global Green Power PLC Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- Central Electricity Authority - India
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- PowerSource Philippines DevCo
- Attock Cement Pakistan Limited
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Marubeni Corporation - India
- Formosa Plastics Group - Taiwan
- Power Finance Corporation Ltd., India
- Kapuas Tunggal Persada - Indonesia
- MS Steel International - UAE
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- Siam City Cement - Thailand
- Gujarat Sidhee Cement - India
- Mjunction Services Limited - India
- Interocean Group of Companies - India
- Bukit Makmur.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
- Manunggal Multi Energi - Indonesia
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- Vizag Seaport Private Limited - India
- GAC Shipping (India) Pvt Ltd
- AsiaOL BioFuels Corp., Philippines
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- IEA Clean Coal Centre - UK
- Rashtriya Ispat Nigam Limited - India
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- Petrochimia International Co. Ltd.- Taiwan
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- Semirara Mining Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Riau Bara Harum - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Intertek Mineral Services - Indonesia
- Electricity Authority, New Zealand
- Parry Sugars Refinery, India
- Ministry of Finance - Indonesia
- Commonwealth Bank - Australia
- Coalindo Energy - Indonesia
- PTC India Limited - India
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