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Monday, 07 December 09
DRY BULK RATES' VOLATILITY TO STAY, BUT RECOVERY IS UNDERWAY SAYS ION VAROUXAKIS HEAD OF FREESEAS
 In an interview with Hellenic Shipping News, Mr. Ion G. Varouxakis, Chairman of the Board, President and CEO of Nasdaq-listed Freeseas, explains why dry bulk rates will recover gradually, while volatility will remain. He states that the handysize sector appears to be the healthiest sector right now, mainly because of the low orderbook and the high number of older handies scrapped this year. Mr. Varouxakis founded Free Bulkers, the beginning of a single-vessel, self-financed entrepreneurial venture that led to FreeSeas’ founding and Nasdaq listing in 2005.
Under Mr. Varouxakis’ leadership, FreeSeas has grown to be a leader in the Handysize and Handymax segment in the U.S. capital market. Prior to founding Free Bulkers, Mr. Varouxakis held since 1997 management positions in private shipping companies operating in the drybulk sector.
Lately we witnessed yet another rally of the BDI this year. With the market retreating again, do you think that this erratic behaviour will continue next year as well?
As the world economy rebounds we expect that the charter rates will gradually recover. Seasonality and volatility will continue. For the time being though, the charter rates stand at relatively healthy levels.
What factors are causing this turbulence of dry bulk rates?
The effective removal of trade credit and virtual stand-still of industrial production on a worldwide basis have been the contributing factors for the collapse of the charter rates. As restocking starts taking place the rates will recover. However the recovery is not and will not be uniform and there will be pockets of weakness which will lead to the volatility of the rates.
Do you think that the looming oversupply of vessels will soon become a reality, or is there any room for that to change?
We have seen a very substantial number of cancellations and delays in the deliveries. As a consequence we expect that while the annual rate of newbuilding deliveries will be at record high levels in the next couple of years, they in fact will be spread over a longer period of time, leading to about 20-30 % more newbuilding deliveries than in 2007. This is probably a scenario much better than most fear, but still of concern. It is interesting to note that not all sectors are overbuilt. For instance, the handysize sector we operate in has by far the lowest orderbook (in fact at rather healthy levels), coupled with an overage fleet of handies which should provide support for the future.
As a matter of fact there has been massive scrapping of handysize vessels over the last year.
How does Freeseas cope with current market conditions?
We are operating a profitable and cash flow-positive business under adverse market conditions, and expect to be able to continue to do so under the present conditions.
What measures did you implement in order to improve the company’s performance?
We have taken cost-cutting initiatives, which increased our margins, and decided to operate our vessels coming off-charter in the spot market in order to be able to benefit from improving market conditions.
How would you characterize the current market for second hand vessels?
There is a lot of liquidity and sales in the second hand market, and one could say relatively stable prices. While prices have increased since the beginning of 2009, the volatility of second hand prices is far smaller that the volatility of charter rates. We believe that the scarcity of credit contributes to this situation.
Why have the Chinese been so aggressive this year, leaving Hellenic ship owners at second place?
An explanation could be that there is an intention by authorities (which could soon become a law), under which, ship owners won’t be allowed to fly the Chinese Flag in vessels older than 10 years old in the future. This could a reason, why many owners from China are buying a large number of older second hand bulk carriers from the beginning of the year, as a reaction to such a possibility.
Do you think that second hand ships’ prices will go down again, or are we heading towards firmer prices?
Nobody can predict the future. However we believe that prices will remain relatively stable for a while and will improve only for a sustainable improvement in the charter rates, and release of acquisition credit in the market.
With 2010 just a few weeks away, what are your expectations about next year? How do you think things are shaping up for the dry bulk industry?
I am optimistic for the future. Shipping is a centuries-old industry with its own self-correcting mechanism. We are in the process of the correction, the duration of which is unknown, yet will provide the opportunities for healthy companies to expand.
Recently, there’s been a lot of debate among industry players, regarding the abolition of the Ministry of Mercantile Marine. Do you think it will be the beginning of a series of changes for the way shipping is treated in Hellas, or will we see some positive initiatives, for instance towards the creation of a proper maritime cluster of services?
Bureaucracy, a chronic problem in Greece, is the main enemy for the integration of a modern maritime cluster of services (as you call it).
In our business in which every hour is worth thousands of dollars, there is no room for bureaucracy and the uncertainty it generates, even worse there is no room for ‘client-relations’ with the state.
No government in Greece has so far been able to overcome the public service bureaucracy and implement ground-breaking changes, allowing the development of Greek-based maritime services or providing the appropriate incentives to fly the Greek flag. Let’s see what the future has in task for us.
Source: Nikos Roussanoglou, Hellenic Shipping News Worldwide
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Monday, 14 December 09
RICHARDS BAY COAL TO FINISH EXPANSION IN 1ST QUARTER
Richards Bay Coal Terminal, which ships more than a quarter of Europe’s energy coal, said it will complete its Phase 5 expansion project in th ...
Monday, 14 December 09
SOUTH AFRICAN STEAM COAL PRICES FIRMING UP FOR Q1 TRADE
Reuters reported that Q1 South African coal prices firmed again slightly largely on Asian demand but European delivered prices were little changed.
...
Sunday, 13 December 09
THE FREIGHT MARKET SEEMS TO BE COMING OFF A BIT AND THE MARKET MAY BE SOFT NEXT WEEK - CAPT. REDDY
COALspot.com (Singapore): "The market softened this week especially in the Cape and Panamax segment , where as the Supramax and Handy size was ...
Sunday, 13 December 09
NAPOCOR CUTS COAL IMPORT PROJECTION FOR 2010
STATE-RUN National Power Corp. slashed its planned coal importation for 2010 to only 200,000 metric tons from 3.4 million MT this year, as the gover ...
Sunday, 13 December 09
CHINESE BUYERS SEEK LARGE TONNAGE OF SOUTH AFRICA STEAM COAL
Reuters reported that Chinese utilities on the coast and inland are seeking several cape cargoes each of South African coal for 2010 delivery becaus ...
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- Larsen & Toubro Limited - India
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- Eastern Energy - Thailand
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- Minerals Council of Australia
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- Global Coal Blending Company Limited - Australia
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- Kumho Petrochemical, South Korea
- Directorate General of MIneral and Coal - Indonesia
- Indika Energy - Indonesia
- Sical Logistics Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
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- Electricity Authority, New Zealand
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- Indogreen Group - Indonesia
- Parry Sugars Refinery, India
- Parliament of New Zealand
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Carbofer General Trading SA - India
- IHS Mccloskey Coal Group - USA
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- Central Electricity Authority - India
- London Commodity Brokers - England
- Billiton Holdings Pty Ltd - Australia
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- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Savvy Resources Ltd - HongKong
- McConnell Dowell - Australia
- Borneo Indobara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- Australian Coal Association
- Ambuja Cements Ltd - India
- Bhatia International Limited - India
- Bukit Baiduri Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Posco Energy - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Intertek Mineral Services - Indonesia
- Australian Commodity Traders Exchange
- Toyota Tsusho Corporation, Japan
- Deloitte Consulting - India
- OPG Power Generation Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- SMC Global Power, Philippines
- Port Waratah Coal Services - Australia
- Indo Tambangraya Megah - Indonesia
- Indian Energy Exchange, India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Renaissance Capital - South Africa
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- Thai Mozambique Logistica
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
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- India Bulls Power Limited - India
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- White Energy Company Limited
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- PetroVietnam Power Coal Import and Supply Company
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Kapuas Tunggal Persada - Indonesia
- Thiess Contractors Indonesia
- Commonwealth Bank - Australia
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Planning Commission, India
- Attock Cement Pakistan Limited
- Rashtriya Ispat Nigam Limited - India
- Wilmar Investment Holdings
- Videocon Industries ltd - India
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- Malabar Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Globalindo Alam Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Binh Thuan Hamico - Vietnam
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- Gujarat Sidhee Cement - India
- PTC India Limited - India
- Baramulti Group, Indonesia
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- The State Trading Corporation of India Ltd
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- Independent Power Producers Association of India
- Vizag Seaport Private Limited - India
- Antam Resourcindo - Indonesia
- Chamber of Mines of South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- Singapore Mercantile Exchange
- Eastern Coal Council - USA
- LBH Netherlands Bv - Netherlands
- ICICI Bank Limited - India
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- Economic Council, Georgia
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- CIMB Investment Bank - Malaysia
- The Treasury - Australian Government
- Sojitz Corporation - Japan
- Price Waterhouse Coopers - Russia
- Bangladesh Power Developement Board
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- South Luzon Thermal Energy Corporation
- Banpu Public Company Limited - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Trasteel International SA, Italy
- Global Green Power PLC Corporation, Philippines
- Ministry of Finance - Indonesia
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Bulk Trading Sa - Switzerland
- Leighton Contractors Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- New Zealand Coal & Carbon
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- European Bulk Services B.V. - Netherlands
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- Ministry of Transport, Egypt
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