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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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Friday, 20 November 09
INDONESIAN CO PLANS JV WITH NAGARJUNA
Economic Times reported that, Infrastructure firm Nagarjuna Constructions Company (NCC) is set to form a joint venture with an Indonesian coal minin ...
Thursday, 19 November 09
S. KOREA TO BUY COAL FROM CHINA FOR US$ 85-90/T IN 2010
Head of one S. Korea power company on November 18 unveiled that S. Korea’s power companies may purchase coal from China at the contract price ...
Thursday, 19 November 09
SNAPSHOT OF INDONESIA'S COAL INDUSTRY - FACT BOX BY REUTERS
Indonesian plans to cap coal exports to meet domestic demand will not hit global supplies in the near term, but could start to bite in three to five ...
Thursday, 19 November 09
INDONESIA COAL EXPORTS CURB WILL TAKE TIME TO BITE
Indonesia's plans to cap coal exports to satisfy demand at home are unlikely to crimp global supplies for as long as five years, when new power pla ...
Thursday, 19 November 09
THE GOVERNMENT TO GUARANTEE COAL SUPPLIES FOR POWER PLANTS
The government guarantees coal supplies for power plants under a 10,000 MW-capacity power plant construction acceleration program.
Minister of En ...
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- Bhatia International Limited - India
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- The University of Queensland
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- GN Power Mariveles Coal Plant, Philippines
- Independent Power Producers Association of India
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- Indo Tambangraya Megah - Indonesia
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- Eastern Coal Council - USA
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- Rashtriya Ispat Nigam Limited - India
- Wilmar Investment Holdings
- IHS Mccloskey Coal Group - USA
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- PTC India Limited - India
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- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
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- Siam City Cement PLC, Thailand
- Simpson Spence & Young - Indonesia
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- San Jose City I Power Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
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- Vedanta Resources Plc - India
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- Siam City Cement - Thailand
- Bhoruka Overseas - Indonesia
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- SN Aboitiz Power Inc, Philippines
- Australian Commodity Traders Exchange
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- Aboitiz Power Corporation - Philippines
- India Bulls Power Limited - India
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- Global Coal Blending Company Limited - Australia
- Bhushan Steel Limited - India
- CNBM International Corporation - China
- GAC Shipping (India) Pvt Ltd
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- White Energy Company Limited
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- Sical Logistics Limited - India
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- Thiess Contractors Indonesia
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- Merrill Lynch Commodities Europe
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- Anglo American - United Kingdom
- New Zealand Coal & Carbon
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- McConnell Dowell - Australia
- Cement Manufacturers Association - India
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- Trasteel International SA, Italy
- Marubeni Corporation - India
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- Jaiprakash Power Ventures ltd
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- Gujarat Electricity Regulatory Commission - India
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- Intertek Mineral Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Chamber of Mines of South Africa
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- Indogreen Group - Indonesia
- Larsen & Toubro Limited - India
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- Antam Resourcindo - Indonesia
- Petron Corporation, Philippines
- Altura Mining Limited, Indonesia
- Planning Commission, India
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- Gujarat Sidhee Cement - India
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- Maheswari Brothers Coal Limited - India
- Bharathi Cement Corporation - India
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- Economic Council, Georgia
- Barasentosa Lestari - Indonesia
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- Lanco Infratech Ltd - India
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- Directorate Of Revenue Intelligence - India
- MS Steel International - UAE
- Indian Energy Exchange, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- Directorate General of MIneral and Coal - Indonesia
- Power Finance Corporation Ltd., India
- Attock Cement Pakistan Limited
- Mercuria Energy - Indonesia
- Kideco Jaya Agung - Indonesia
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- Electricity Authority, New Zealand
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