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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, 30 November 09
INDIA UTILITIES MOVE TO COAL INDEX - PRICING
Indian state utilities are leading a switch to coal index-linked pricing from fixed prices to secure imports and to be visibly paying fair market pr ...
Monday, 30 November 09
RECAPITAL TO ACQUIRE BERAU COAL
Unlisted Indonesian coal producer Berau will redeem outstanding bonds before the acquisition by Recapital Advisers is completed by the end of this y ...
Friday, 27 November 09
IMPORTING LIGNITE INTO COAL RICH KOSOVO
Balkan Insight has discovered that one of Kosovo’s biggest firms is being forced to import lignite from Malaysia and Indonesia, despite estima ...
Friday, 27 November 09
SOUTH AFRICA STILL TOPS IN COAL EXPORT RANKINGS
Mining Weekly reported that, Despite significant coal-mining capacity recently discovered in the Southern African region, according to senior coal a ...
Friday, 27 November 09
BHP SEEKS VARIABLE COKING COAL PRICE IN JAPAN, NIKKEI SAYS
Bloomberg reproted that, BHP Billiton Ltd. has asked Japanese steelmakers to move to pricing of coking coal linked to spot rates rather than negotia ...
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- Kepco SPC Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
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- The University of Queensland
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- ICICI Bank Limited - India
- Mercuria Energy - Indonesia
- MS Steel International - UAE
- Alfred C Toepfer International GmbH - Germany
- Antam Resourcindo - Indonesia
- GMR Energy Limited - India
- Global Business Power Corporation, Philippines
- Central Java Power - Indonesia
- Mjunction Services Limited - India
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Australian Commodity Traders Exchange
- India Bulls Power Limited - India
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- Bhushan Steel Limited - India
- Global Coal Blending Company Limited - Australia
- Simpson Spence & Young - Indonesia
- Ministry of Mines - Canada
- VISA Power Limited - India
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- White Energy Company Limited
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- Economic Council, Georgia
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- Petron Corporation, Philippines
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- Singapore Mercantile Exchange
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- AsiaOL BioFuels Corp., Philippines
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- Bayan Resources Tbk. - Indonesia
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- Siam City Cement - Thailand
- Thiess Contractors Indonesia
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- Electricity Generating Authority of Thailand
- Rashtriya Ispat Nigam Limited - India
- Minerals Council of Australia
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- Grasim Industreis Ltd - India
- Cement Manufacturers Association - India
- The State Trading Corporation of India Ltd
- Kideco Jaya Agung - Indonesia
- Orica Mining Services - Indonesia
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- Price Waterhouse Coopers - Russia
- Latin American Coal - Colombia
- Interocean Group of Companies - India
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- Wilmar Investment Holdings
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Posco Energy - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Romanian Commodities Exchange
- Sinarmas Energy and Mining - Indonesia
- Lanco Infratech Ltd - India
- Attock Cement Pakistan Limited
- Timah Investasi Mineral - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Parliament of New Zealand
- Renaissance Capital - South Africa
- Xindia Steels Limited - India
- Baramulti Group, Indonesia
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- Planning Commission, India
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- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Manunggal Multi Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Maheswari Brothers Coal Limited - India
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Aditya Birla Group - India
- Independent Power Producers Association of India
- Gujarat Sidhee Cement - India
- Standard Chartered Bank - UAE
- London Commodity Brokers - England
- Rio Tinto Coal - Australia
- Barasentosa Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Wood Mackenzie - Singapore
- Riau Bara Harum - Indonesia
- Billiton Holdings Pty Ltd - Australia
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- GVK Power & Infra Limited - India
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- Vedanta Resources Plc - India
- Ministry of Finance - Indonesia
- Oldendorff Carriers - Singapore
- Gujarat Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- Indika Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Mercator Lines Limited - India
- Bukit Makmur.PT - Indonesia
- Sojitz Corporation - Japan
- Sree Jayajothi Cements Limited - India
- Bangladesh Power Developement Board
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- Indian Oil Corporation Limited
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- Deloitte Consulting - India
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- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- Makarim & Taira - Indonesia
- IEA Clean Coal Centre - UK
- TeaM Sual Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Tamil Nadu electricity Board
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Medco Energi Mining Internasional
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- CNBM International Corporation - China
- Kaltim Prima Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Vijayanagar Sugar Pvt Ltd - India
- Coal and Oil Company - UAE
- Heidelberg Cement - Germany
- Miang Besar Coal Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- Indonesian Coal Mining Association
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- Kartika Selabumi Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Coastal Gujarat Power Limited - India
- Goldman Sachs - Singapore
- Chamber of Mines of South Africa
- Ind-Barath Power Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Therma Luzon, Inc, Philippines
- Australian Coal Association
- Kalimantan Lumbung Energi - Indonesia
- The Treasury - Australian Government
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
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- Formosa Plastics Group - Taiwan
- Sindya Power Generating Company Private Ltd
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- Asmin Koalindo Tuhup - Indonesia
- Sical Logistics Limited - India
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
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- CIMB Investment Bank - Malaysia
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