MARKETS
IN this week’s
COMPANIES &
MARKETS PAGES
COMPANIES
Petrolifera goes Turkish.......34
NEWBUILDINGS
Cancellation gloom..............38
SHIP SALES
On the scrapheap .................40
Photo: Istockphoto
Dry bulk
becomes an
extreme sport
NICK Collins, director of Clarksons,
introduced the shipping session of
last week’s Coaltrans conference
in Prague by referring to it as “the
extreme sports section.”
He wasn’t far off. Even so, it was
among the conference’s most wellattended sessions, as delegates
clamoured to discover what was in
store for dry bulk shipping. Collins
identified China’s wrangling with
Vale over iron ore prices as the trigger which sent the main buttress
of shipping trade crumbling. In
his opening address, he also highlighted the vulnerability of export
capacity in Brazil and Australia to
force majeure, as well as port infrastructure and capacity constraints.
On top of that, a new breed of
post-Panamax vessels have been
heating up orderbooks, while
older Handies have “morphed”
into Supramaxes in the Southeast
Asia coal trades. The anticipated
influx of VLOC conversions also
sent a shiver down the spines of
certain delegates. Keith Denholm,
director of Pacific Carriers put it
bluntly: “Panamaxes are a dying
breed, eaten from above by postPanamaxes and eaten from below
by Supramaxes.” Nick Collins retorted that “there’s about 1,100 of them
– they’re going to take a long time
to die.”
While Henriette van Niekerk, senior freight analyst at Clarksons, said
that owners’ margins “are absolutely
squeezed” right now, she mooted
the idea that the much-maligned
credit crunch could be a “blessing in
disguise for owners” if it erases the
bulging orderbook.
Nonetheless, Drewry’s senior
consultant on bulk shipping, Susan
Oatway, declared: “I can’t think of
a better time to go talk prices with
your scrapyard.” Per Lange, managing director of Eitzen Bulk, said that
the industry would be looking to
scrap between 40-60M tonnes in the
next four years, adding “It’s going
to be a huge challenge finding the
yards to do this.”
All this, combined with the global economic meltdown, made
for a gloomy outlook among delegates. “Trade today is effectively
handcuffed,” said Keith Denholm,
At a glance: week-on-week changes in the major market sectors
Baltic
Dry
Index
1,102
-23.4%
www.fairplay.co.uk
Baltic
Capesize
Index
1,504
-15.3%
921
-17.0%
Baltic
Panamax
Index
817
-32.3%
Baltic
Supramax
Index
Baltic
Crude
Oil
1,390
+3.5%
COMMODITIES
All about sulfur.......................42
Containers
Unrelenting pressure...........45
DRY MARKETS
Plumbing the depths...........46
TANKER MARKETS
Reaction to OPEC cut............48
LRF rESEARCH
Box ship blues.........................50
while Viral Vora, vice-president of
ArcelorMittal Steel Group, confessed:
“Right now, I’m working out how
much I’m losing instead of saving.”
Most delegates polled believe
that the shipping recession will last
for three years, but in the next year
a global recession and the threat of
counterparty defaults topped the
list of fears.
Nick Collins said that the fragility
of the financial world made counterparty defaults a real possibility: “No
main charterer has yet defaulted but
this may be on the horizon,” he said.
“Some companies are already said
to be in trouble.”
Newbuildings are particularly at
risk from the questionable viability
of the banking system that finances
yards and the ships they are contracted to build.
One delegate said a well-known
London legal firm had revealed to
him a massive increase in cases of
owners, not shipyards, walking away
from deposits.
“I don’t want to scaremonger
here, but if the market is talking
about this issue, so should we
– responsibly,” concluded Collins.
30 October 2008 Fairplay 37