Tuesday, August 04, 2009
Shipping investment funds a new trend among ship owners
Tuesday, 04 August 2009
Just a couple of months after we had reported that a number of institutional investors and investment companies had been actively scouting the Piraeus shipping market for opportunities, market sources indicate that another shipping fund is on the verge of being set up.The private equity fund Financier Investment Group (FIG) is expected to be created by ship owners Spyros Lemos, aiming to accumulate funds of between $700 million and $1 billion. They will be directed towards the acquisition of second hand dry bulk carriers built from 2004 until today, targeting panamaxes in particular. According to market reports, the minimum fleet should comprise at least 5-7 modern vessels. Besides shipping, the fund is also expected to make investments in the areas of insurance and health. Spyros Lemos is coming from one of the most traditional shipping families of Hellas. His father, Panagos Lemos is the owner of LPL Shipping, which had been acting as agent in the Hellenic market, on behalf of leading shipping management company V Ships.
But, FIG isn’t the only fund seeking to take advantage of the dramatic fall in ship values during the previous months. It is estimated that more than $1.5 billion in funds is currently searching the Hellenic market opportunities, where the world’s leading maritime community is based. Morgan Stanley was the story of the days in Piraeus, with the emergence of the company’s intentions to set up an opportunity fund to take advantage of the global downturn in shipping by investing up to $400m in dry bulk and container ships. The bank is working with two Hellenic shipping organizations (either banks or even ship owners) to create the debt fund which will target distressed investments in shipping. The fund is aiming to invest in shipping debt that could be sold off for as much as a 60pc discount. The Morgan Stanley fund is expected to target investing in up to 40 of these ships, mainly through buying up debt.
Also, according to Hellenic Shipping News’ sources, a big and traditional ship broker is closely advising both Merill Lynch and US fund Alterna, on ship acquisitions. Similarly, Hellenic investors are also looking to set up a shipping fund, in cooperation with a banking group.
Cyprus-based SFS Group Public Co Ltd and Kuwait Finance House Labuan (KFHL) will also jointly establish a Shariah compliant shipping fund with a target fund size of US$150mil by year-end. SFS Group and KFHL, a wholly owned subsidiary of Kuwait Finance House (M) Bhd have signed a joint venture agreement to set-up the fund via a limited partnership in the Cayman Islands. The companies said in May that the fund would be managed by an equally-owned company acting as the general partner based there. The shipping fund’s objective will be to invest directly in shipping assets and primarily in vessels to be chartered out on a long-term basis to top league charterers. The term of the fund will be seven years from first closing with up to three additional one-year extensions. Another US investment group, JP Morgan Asset Management is launching a maritime strategy this year which will invest in the distressed shipping market. JP Morgan is currently in fund-raising mode for the strategy, seeking some $500 million to $750 million initially.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
Carras Hellas Group receives first capesize from Odense Steel Shipyard
Tuesday, 04 August 2009
Odense Steel Shipyard, part of the AP Moeller Maersk Group has delivered the first of six capesize bulk carriers to Hellenic ship owner Carras Hellas. It was the first dry bulk delivery from the Danish shipyard in more than 25 years, the previous delivery of this type took place in 1983 when the Elsam Fyn sailed from Odense. The Hellenic-flagged Aquamarine, 100,615 GT and 182,060 DWT, has a length of 292 metres and a beam of 44.9 metres. The MAN-engine type 6S70MC-C develops 18.600 kW to a service speed of 15 knots. Originally Carras Hellas ordered eight units but cancelled two of the units due to a collapsing capesize market. The order had been placed back in 2007 and the new 180,000 –dwt design has been developed between Odense and Carras. In a relative statement, the shipyard had said that “these orders, which will be built in the largest dock at the Shipyard will, together with existing orders, fill up the capacity of Odense Steel Shipyard into 2010.” "This marks a significant move into the bulk sector of the market by Odense and we are delighted to be developing a relationship with this leading capesize operator." said Managing Director Finn Buus Nielsen.
In addition to being the parent company in the Group, Odense Steel Shipyard Ltd. operates the Odense-Lindø shipyard, the largest single unit in the Group´s operation. This yard is known for designing and building vessels that expand the envelope within their particular category or class.
The shipyard’s result for 2008, before tax and before shares in the results of affiliated and as-sociated companies, amounted to a deficit of DKK 513 million. (2007: deficit of DKK 833 million before profits from the sale of affiliated companies).
The shipyard’s result, after tax and before shares in the results of affiliated and associated companies, amounted to a deficit of DKK 389 million (2007: profit of DKK 65 million).
This overall result has been negatively affected by higher production costs as well as provi-sions made to counter the effects of contracts resulting in a deficit.
During the year, the Lindø Shipyard delivered one 11,000 TEU container ship and four 7,000 TEU container ships to A.P. Møller – Mærsk A/S. Bad weather in November 2008 resulted in damage to some of the shipyard’s cranes, which in turn meant that delivery of one 7,000 TEU container ship was transferred to 2009.
During the year, the shipyard entered into a contract to build two RoRo vessels for Pacific Basin. As a result, there are orders that ensure full use of the shipyard’s capacity until the end of 2010, as well as an order for three frigates for delivery in the period up to 2012.
The shipyard has developed and published a new business plan in which the shipyard only uses part of its overall production capacity from 2010 onwards, and works to rent out the re-maining capacity to other parties.
In 2008, the Group returned a pre-tax deficit of DKK 562 million, which was worse than ex-pected (2007: deficit of DKK 802 million, prior to taxation and without including the profits from the sale of affiliated companies). After tax, the deficit amounted to DKK 440 million (2007: profit of DKK 52 million after profits from the sale of affiliated companies). It is expected that the 2009 financial year will end with a deficit.
Cosco Corp.'s first half net profits down by 67%
Tuesday, 04 August 2009
The Group achieved net profit attributable to equity holders of $37.0 million on turnover of $718.5 million in Q2 2009 despite another challenging quarter for the industry. For 1H 2009, Group net profit attributable to equity holders amounted to $70.2 million on turnover of $1.4 billion. Turnover Group turnover declined 31% to $718.5 million in Q2 2009 from $1.0 billion in Q2 2008 mainly due to less revenue recognized from ship repair, ship building and marine engineering projects and lower dry bulk shipping revenue.
Ship repair, ship building and marine engineering operations fell 30.4% to $681.3 million in Q2 2009 on lower revenue from ship repair and conversion projects due to the global economic downturn.
Turnover from dry bulk shipping business decreased 45.2% to $33.5 million in Q2 2009 on lower charter-hire rates compared to Q2 2008. The Baltic Dry Index (BDI), a measure of shipping costs for commodities, rebounded partially from 1,574 points as at 1 April 2009 to 4,291 points on 3 June 2009, hitting its highest level since 29 September 2008, before retreating to 3,757 points on 30 June 2009. In comparison, the BDI was hovering at a relatively high level of around 8,000 points in Q2 2008 with a record high of 11,793 points on 20 May 2008.
Ship repair, ship building and marine engineering business remained the largest revenue contributor, representing 94.8% of Group turnover in Q2 2009. Dry bulk shipping and shipping agency and others
accounted for the remaining 5.2%.
For 1H 2009, Group turnover fell 18.8% to $1.4 billion from $1.8 billion in 1H 2008 on declines in revenues from shipping, ship repair, shipbuilding and marine engineering owing to the global economic downturn.
Profitability
Gross profit fell 67.7% from $245.4 million in Q2 2008 to $79.3 million in Q2 2009 due to the lower dry bulk shipping charter rates and lower profit contributions from ship repair, ship building and marine engineering business led by higher operational costs and a difficult business environment.
Other gains comprised gain from the disposal of scrap metal, interest income, currency exchange gain and net fair value gain on forward currency contracts. Other gains fell 33.0% to $41.8 million in Q2 2009 mainly due to the lower sales value of scrap materials led by a 40% plunge in steel market
prices from those of Q2 2008.
Distribution and administrative costs fell in line with lower turnover. The reversal of impairment of trade and other receivables of $25.9 million also led to the decrease in administrative costs. Interest expense increased $10.3 million to $11.9 million in Q2 2009 due to the additional bank borrowings to fund shipyard expansion.
Income tax expense decreased due to the lower profits for some of the Company’s subsidiaries in the People’s Republic of China (“PRC”). Effective tax rate increased from 10.2% in Q2 2008 to 22.9% in Q2 2009 due to lower tax-exempt shipping profits and higher tax rates for certain subsidiaries in the PRC.
Minority interests decreased due to lower contributions from the Group’s PRC subsidiaries involved in ship repair, ship building and marine engineering operations.
Overall, net profit attributable to equity holders of the Company decreased 71.2% from $128.7 million in Q2 2008 to $37.0 million in Q2 2009 due to lower profit contributions from dry bulk shipping and ship repair, ship building and marine engineering operations. Compared to 1H 2008, net profit attributable to equity holders of the Company fell 67.0% from $212.6 million to $70.2
million in 1H 2009.
Balance Sheet and Cash Flow
(30 June 2009 vs. 31 December 2008)
Cash and cash equivalents remained almost unchanged at $1.9 billion as compared to the balance as at 31 December 2008. Please refer to note 1(c) Cash Flow Statement for more details.
The increase in trade and other receivables from $1.6 billion to $1.7 billion was mainly due to increase in advances paid to suppliers (from $743.1 million to $894.4 million). Property, plant & equipment increased from $2.1 billion to $ 2.2 billion as a result of ongoing facilities expansion of the major shipyards in COSCO Shipyard Group Co., Ltd (“CSG”).
The decrease in trade and other payables from $4.4 billion to $4.1 billion was mainly due to the decrease in advances from customers (from $2.8 billion to $2.4 billion). Total borrowings increased from $656.6 million to $1.2 billion due to additional funding procured for the ongoing expansion of the Group’s major shipyards.
Shareholder’s equity remained almost unchanged at $1.1 billion as at 30 June 2009 after the payment of dividends in May 2009.
The Group maintains a cautious outlook for the rest of 2009. While taking some comfort from signs of slight improvement in the global economic outlook in recent months, the Group expects overall operating conditions to continue to be challenging amidst the ongoing uncertainties. The Group believes that confidence will not be restored until clearer and more concrete evidence of real
recovery from the current economic doldrums.
The IMF (International Monetary Fund) has just revised down its global GDP forecast for 2009 and upgraded its outlook for 2010. The world economy is expected to contract 1.4% in 2009 instead of the 1.3% decline predicted in April and this would be the deepest recession in more than 60 years.
The IMF now foresees a 2.5% rebound in global growth in 2010, which is up from a 1.9% growth estimate in April 2009, as signs are emerging that the rate of output decline has moderated after two quarters of unprecedented global economic contraction that carried through this year’s first quarter. The Group expects its dry bulk shipping performance to continue to be adversely affected by the relatively weak BDI as the global economy stumbles on its road to recovery. Due to lagging effect, the Group’s ship building order flow and ship repair and conversion business volume are expected to remain subdued until any pickup in global trade and economic activities takes hold. Meanwhile, the
Group will continue to increase efficiency while strengthening control on expenses in face of the high material and operational costs and low profit margin.
The Group has an order book of US$6.8 billion as of 30 June 2009 with progressive delivery up to first half of 2012 which will keep the Group’s shipyards busy. This order book is subject to revision from any cancellation of orders or new orders that may arise. The Group has announced on 15 July
2009 the cancellation of eight 57,000 dwt bulk carriers and the total value of the cancelled orders is US$ 298.7 million.
To ensure that it is ready to take advantage of the demand recovery when the economic uptick does happen, the Group will continue to focus on expanding its shipyard capabilities and efficiencies, while monitoring the rapidly evolving operating environment closely.
Due to the uncertain global economic environment, the Group expects earnings for FY2009 to be substantially lower than FY2008.
Source: Cosco Corp.
German ship financing faces its deepest crisis
Tuesday, 04 August 2009
The system that financed a third of the world’s container ships is facing its biggest crisis after the industry slump has eliminated or slashed many specialist shipping funds’ earnings. More than 20 of Germany’s 1,600 Kommanditgesellschaft – or KG – shipping funds have been forced into insolvency or other restructuring, according to Deutsche Zweitmarkt, which runs a secondary market in fund shares.
Hundreds more funds could be forced to ask investors for extra capital if the crisis in the container ship sector is as prolonged as most analysts expect.
About 40 funds have already asked investors for more capital, according to Björn Meschkat, a director of Deutsche Zweitmarkt.
More than 20 already face insolvency, restructuring or forced ship sales. Up to 400 might have to seek more capital if the sector crisis continues until late 2010.
Mr Meschkat said investors “are not very appreciative about it”.
Some companies that organise KG funds, known as “emissions houses”, face potential liquidation if banks call on their guarantees to raise finance for new ships.
Tobias König, managing partner at König & Cie, a large emissions house in Hamburg, the sector’s centre, said the crisis was not the first for the KG system, set up in the early 1970s. But it was the first to coincide with a banking crisis.
“It’s the first time the banks are not there to bail us out,” he said.
Shipowners that arrange crewing and chartering for KG funds’ ships, the banks that have lent to those involved and shipyards could all be affected as well.
“It’s shipowners; it’s shipyards and emissions houses,” Mr König said.
KG funds are popular with Germans investing in many different asset types for their significant tax advantages.
Shipping KG funds raised €33.1bn ($46.8bn), mainly from private investors, between 1992 and 2008, according to Deutsche Zweitmarkt, and long delivered consistent returns.
They have focused heavily on container ships, where German companies now manage 35 per cent of the world fleet.
However, in the face of container shipping’s sharpest downturn, most lines are ending charters with outside owners whenever possible. Even where operators renew charters, the rates on offer barely cover operating costs.
Source: Financial Times
China’s export machine switches back on
Shanghai: Manufacturing and transport related stocks in Greater China surged yesterday on the back of more than one sign the China export machine is now back and running.
CLSA's China Purchasing Managers' Index (PMI), a key gauge of China's manufacturing sector, rose to a one-year high in July of 52.8 from 51.8 in June.
The positive PMI also suggests that export orders rose last month. The index above 50 indicates expansion. A separate government index of purchasing manager’s also increased to 53.3 in July from 53.2 in June. Shares in freight companies rose. China Cosco and China Shipping Container Lines both rose 10 percent on both the Shanghai and Hong Kong bourses. Cosco's port operating company Cosco Pacific soared 17.9 percent while Shanghai Port soared 4.8% to 6.37 yuan. Both indexes also point to a resilient healthy domestic consumption, a fact boosted by the results yesterday from China Vanke, the country’s leading property retailer, whose interim profit jumped 22%. [04/08/09]
Construction underway of giant cold storage facility near Yangshan
Shanghai: Jones Lang LaSalle recently announced that New Jersey-based Preferred Freezer Services (PFS) has broken ground on its historic expansion into China. The cold storage specialist will start construction on a new state-of-the-art facility at Lingang Logistics Park in Shanghai, China. After construction, the approximately 280,000-square-foot refrigerated warehouse will be the largest and most advanced single-story cold storage facility in China, according to the Shanghai Institute of Mechanical & Electrical Engineering Co., Ltd.
"Once completed, the facility will be the largest in PFS' global network," said John Galiher, ceo of Preferred Freezer Services. "This project will be the first of many leading-edge facilities that we have planned for China. Our expertise in cold storage warehouse operations coupled with unsurpassed customer services will no doubt provide an improved option for local as well as multinational food companies in the country."
"This represents one of the largest build-to-suit transactions in the Shanghai region and marks a notable trading partnership between the U.S. and China," said John Carver, Executive Vice President of Jones Lang LaSalle. "The facility is strategically located just minutes away from the 17-mile East Sea Bridge connecting the Lingang New Area in Shanghai to the recently opened Yangshan Deep Water Port."
China has the world's fastest-growing consumer market for perishable food and pharmaceutical products, but its per capita refrigerated warehouse space is less than one-tenth of most developed countries. The demand for cold chain facilities with improved quality is enormous in China and with the growth of foreign capital in recent years; this presents investors with massive opportunities. Preferred Freezer Services has worked with Dalian-based Yida Group to jointly invest in the development of the cold storage market in China. [04/08/09]
BP shuts down Tangguh LNG plant for August repairs
Jakarta: Indonesia's Tangguh liquefied natural gas (LNG) plant in Papua will be temporarily shut in August to resolve problems since its start-up earlier this year, an official at BP Indonesia said on Monday.
Tangguh, with a capacity to produce 7.6 million tonnes per year (tpy) via two trains, sent one LNG cargo to South Korea's POSCO and one to China's Fujian terminal last month.
"We are planning to temporarily shut down Tangguh Train 1 to rectify a number of initial problems identified during the start up phase of the plant," Nico Kanter, BP Indonesia head of country, told Reuters in an email without giving details.
"It is not unusual for the start up of a plant to show up a number issues such as this. The work is expected to last for a number of weeks," he said. [04/08/09]
SCI on the hunt for second hand tonnage
Mumbai: Shipping Corp of India may buy four to five used ships later this year mainly to import coking coal under a planned joint venture with Steel Authority of India, a senior company executive told Dow Jones.
"A proposal for buying ships, possibly from the secondary market, is being discussed," the executive, who declined to be named, said. "It will be placed before the board in August."
Shipping Corp. is in talks to set up a joint venture with Steel Authority, the country's biggest steel producer by local capacity.
The two companies will own 25% each in the joint venture, which is expected to be formed by March, Shipping Corp.'s Chairman and Managing Director S. Hajara said last month. The remaining stake could be offered to one or more private partners, including local or overseas financial institutions, Mr. Hajara said.
The nation's largest shipping company by fleet size is considering buying bulk carriers such as supramaxes or panamaxes, or even very large crude carriers, the executive told Dow Jones Newswires recently. [04/08/09]
MPA and MaritimeONE scholarships target young talent
Singapore: Despite the economic downturn, the Lion republic’s maritime community is stepping up efforts to attract bright young talent to the sector. The Maritime and Port Authority of Singapore (MPA) and a number of key maritime industry players awarded 40 outstanding students with scholarships and sponsorships at the MPA and MaritimeONE Scholarship Awards Ceremony yesterday. Of these students, 24 will be pursuing their bachelor degrees and 16 will be pursuing diploma studies at the Singapore Maritime Academy in Singapore Polytechnic.
Organised for the second time, the joint MPA and MaritimeONE Scholarship Awards Ceremony included scholarships and sponsorships such as MPA Scholarships, MPA Sponsorships, Tripartite Maritime Scholarship Scheme (TMSS), Seafaring Alternative…An Investment For Life (SAIL) scholarships and MaritimeONE Scholarships.
“Despite the downturn, the maritime community remains very supportive of the scholarships and sponsorships under the MaritimeONE initiative,” said MPA chairman Lucien Wong, who presented the scholarships at the ceremony. “I would like to thank our maritime industry and the Singapore Maritime Foundation for their continued commitment to grow and nurture maritime talent.”
“We are pleased to announce that there are a total of 17 MaritimeONE Scholarships this year, up from 14 at the inaugural awards ceremony last year,” said S.S. Teo, chairman of the MaritimeONE Steering Committee and SMF. “These scholarships are worth S$438,500, adding to over S$1.6 million committed by maritime businesses to the MaritimeONE Scholarship since its launch in 2007. This marks the strong pledge by the maritime industry to grow the maritime talent pool in Singapore.”
The MaritimeONE Scholarships are funded by sponsoring maritime companies. For 2009, the six sponsoring companies are Lloyd’s Register Educational Trust, Pacific Carriers Limited, Pacific International Lines Pte Ltd, SingaporeMaritimeAcademy in Singapore Polytechnic, SMA-SMTC-Global (S) Pte Ltd, and TORM Singapore Pte Ltd.
Selected from 687 applicants, the 40 recipients of the scholarships and sponsorships will be pursuing higher education at prestigious local and overseas universities and the SingaporeMaritimeAcademy in Singapore Polytechnic. [04/08/09]
Chinese yard jumps into the scrapping fray
Shanghai: The downturn in global shipbuilding has begin a shift in industry focus towards the demolition side of shipping, with China-based Jiangsu Yangzijiang Shipbuilding becoming the latest yard to target this buoyant sector. The yard intends to set up a $88m ship demolition joint venture with Chongqing Iron and Steel, which would begin operations by the end of next year.
This news comes on the heels of plans to bring mothballed Scottish yard Nigg in Easter Ros into commission to cash in on the growing international ship demolition business. [03/08/09]
Jurong Shipyard files $199m claim against Societe General
Singapore: Sembcorp Marine subsidiary Jurong Shipyard (pictured) today filed a claim against Societe General (SG) in the High Court of Singapore in the company’s latest attempt to iron out issues relating to unauthorised foreign exchange transactions discovered in October 2007.
The claim to recover $198.9m covers $83.5m that Jurong Shipyard states was paid to SG before the “unauthorised transactions” were uncovered, as well as $115.4m paid to SG as part of a pre-condition for closing out of the said transactions with Jurong Shipyard in November 2007. The latter half of the claim was subject to the yard’s right to a refund of the monies from SG if the dispute is resolved in Jurong Shipyard’s favour.
However, in a statement to the press, Sembcorp Marine said that its subsidiary “remains of the view that the Unauthorised Transactions were not valid and binding on JSPL, and is pursuing its right to claim for a refund of the monies from SG.” [03/08/09]
Monday, August 03, 2009
Daily Summary of Baltic Exchange Dry Indices 30 July 2009
Baltic Exchange Dry Index TM 3445 (DOWN 54)
Baltic Exchange Capesize Index TM 5585 (DOWN 119)
Baltic Exchange Panamax Index TM 3282 (DOWN 80)
Baltic Exchange Supramax Index TM 2089 (DOWN 2)
Baltic Exchange Handysize Index TM 888 (UP 4)
Daily Summary of the Baltic Exchange Time Charter Routes
Rate($/Day) Change
BCI
Average of the T/C routes $60471 (DOWN 1343)
BPI
Average of the T/C routes $26316 (DOWN 622)
BSI
Average of the T/C routes $21848 (DOWN 19)
BHSI
Average of the T/C routes $12805 (UP 77)
Baltic Exchange Capesize Index 5585 (DOWN 119)
Route
Number Description Weighting Average Movement
C2 160000lt Tubarao -Rotterdam 10 19.568 -1.127
C3 160000mt Tubarao - Qingdao 15 37.417 -0.604
C4 150000mt Richards Bay - Rotterdam 5 17.459 0.286
C5 160000mt W Australia - Qingdao 15 14.327 -0.173
C7 150000mt Bolivar - Rotterdam 5 22.068 -0.655
C8_03 172000mt Gibraltar/Hamburg trans Atlantic RV 10 72318 -2000
C9_03 172000mt Continent/Mediterranean trip Far East 5 84423 -1615
C10_03 172000mt Pacific RV 20 53019 -1212
C11_03 172000mt China/Japan trip Mediterranean/Cont 5 32125 -542
C12 150000mt Gladstone - Rotterdam 10 24.360 0.035
Average of the T/C Routes 60471 -1343
Baltic Exchange Panamax Index 3282 (DOWN 80)
Route
Number Description Weighting Average Movement
P1A_03 74000mt Transatlantic RV 25 30800 -1478
P2A_03 74000mt SKAW-GIB/FAR EAST 25 38852 -874
P3A_03 74000mt Japan-SK/Pacific/RV 25 22811 48
P4_03 74000mt FAR EAST/NOPAC-AUST/SK-PASS 25 12800 -185
Average of the T/C Routes 26316 -622
Baltic Exchange Supramax Index 2089 (DOWN 2)
Route
Number Description Weighting Average Movement
S1A Antwerp - Skaw Trip Far East 12.5 33639 17
S1B Canakkale Trip Far East 12.5 33070 230
S2 Japan - SK / NOPAC or Australia rv 25 18360 -169
S3 Japan - SK Trip Gib - Skaw range 25 9469 -64
S4A US Gulf - Skaw-Passero 12.5 36506 67
S4B Skaw-Passero - US Gulf 12.5 15911 0
Average of the T/C Routes 21848 -19
The route(s) below do not form part of the index calculation
S5 W.Africa via ECSA to FarEast 0 29244 61
S6 Jpn-SK trip via Aus/India 0 17348 -287
S7 EC India - China 0 28971 -929
Baltic Exchange Handysize Index 888 (UP 4)
Route
Number Description Weighting Average Movement
HS1 Skaw - Passero trip Recalada - Rio de Janeiro 12.5 10914 0
HS2 Skaw - Passero trip Boston - Galveston 12.5 10836 0
HS3 Recalada - Rio de Janeiro trip Skaw - Passero. 12.5 16428 0
HS4 US Gulf trip via US Gulf or NCSA to Skaw - Passero 12.5 20878 -33
HS5 SE Asia trip via Australia to Singapore - Japan 25 11156 175
HS6 S Korea - Japan via NOPAC to Singapore-Japan 25 10536 150
Average of the T/C Routes 12805 77
Production at RasGas train 6 “imminent”: ExxonMobil
Dubai: ExxonMobil Corp said over the weekend that production from its new liquefied natural gas unit in Qatar is "imminent".
Ras Laffan Liquefied Natural Gas Co's train 6 "was mechanically completed during the second quarter", David Rosenthal, ExxonMobil's vice president of investor relations, said. "Gas is flowing into the unit and first LNG production is imminent."
Ras Laffan Liquefied Natural Gas, or RasGas, is a venture between state-controlled Qatar Petroleum and ExxonMobil. Train 6 will be the second LNG unit to start operations this year in Qatar, the world's biggest producer of LNG.
The facility, which can produce 7.8 million tons of LNG a year, was scheduled to start operations by June, according to the second-quarter newsletter from RasGas. QatarGas2 train 4 began operations in March.
Phase 2 of the Al Khaleej gas project in the country is scheduled to start operations in the second half of the year, Rosenthal said. Al Khaleej will supply gas for industries and power generation plants in Qatar. [03/08/09]
Third Japanese yard files for bankruptcy
Tokyo: Sanuki Shipbuilding & Iron Works Co., a Kagawa shipbuilder specializing in coastal and nearseas vessels, filed a petition for the second time in five years with the Takamatsu District Court on July 29 for application of the Civil Rehabilitation Law. Tokyo Shoko Research, Ltd. estimated its liabilities at Y9.4 billion. It is the third Japanese yard to go under in 200, according to the Kaiji Press, following Kanasashi Heavy Industries in April and Onishigumi Zosen in July.
With two docks and eight slipways at its two factories Sanuki has a backlog orders for around seven 10,000 dwt-class cargo ships and around six 7,000 dwt-class cargo ships for delivery to owners in Japan and overseas. [03/08/09]
Somali pirates free Malaysian tugboat after seven months
Nairobi: A European Union naval spokesman said over the weekend pirates have freed a Malaysian tugboat they held for more than seven months.
Lt. Cmdr. Daniel Auwermann said the Somali pirates released Masindra 7 on Saturday. He said the master of the tugboat told a German navy vessel that all 11 Indonesian crew members are in good health.
Auwermann said Sunday that Masindra 7 is sailing to Male, the capital of Maldives. The tugboat belongs to a Malaysian company, Masindra Shipping Pvt. Ltd. It was seized in mid-December on the way back to Malaysia from Mukallah in Yemen, where it had been operated under a contract from French oil-giant TOTAL. [03/08/09]
DP World interim throughput dips 10%
Dubai: DP World has announced it has handled more than 20 million TEU in the first six months of 2009across its 49 terminals. After consolidation, the terminals reported a throughput of 12.3 million TEU, a decline of 10% against the same period last year. This year, DP World has new terminals at Doraleh, Djibouti and two terminals in Algeria, at Algiers and Djen-Djen.
“The first six months of 2009 have seen some of the most challenging operating environments our industry has ever known. Whilst DP World has performed better than the market, the 10% decline in consolidated volumes will lead to an inevitable decline in first half profit before tax against the same period last year,” said Mohammed Sharaf, CEO of DP World. [03/08/09]
Baltic index stays weak, activity remains light
Monday, 03 August 2009
The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, fell 2.76 percent on Friday with weaker interest for cargoes weighing on activity. The index, which gauges the cost of shipping resources including iron ore, cement, grain, coal and fertiliser, fell 95 points to 3,350 points on Friday in a second day of falls after rising for three sessions previously.
Brokers said there had been a lack of fresh business for cargoes in past two days, dragging the index lower.
"Sentiment remained very fragile for the big ships with just a couple of days of quiet sending a shiver through the market," the Baltic Exchange said in its weekly market report. Brokers and analysts have said short-term movements of the main index continued to be dominated by the availability of the Capesize fleet, typically hauling 150,000 tonne cargoes such as iron ore and coal.
Chinese demand for iron ore -- the primary material in the manufacture of steel -- has driven freight market activity.
In recent months heavy congestion at China's ports tightened the supply of Capesize vessels and helped push the Baltic index higher but also added to swings in freight rates.
Port congestion in China as well as off Australia's coast had tied up a large number of Capesize vessels.
The Baltic's Capesize index .BACI dropped 3.58 percent on Friday, in a second day of falls, also reversing previous gains made earlier this week.
"There appeared a slowdown in Chinese imports from Australia, congestion unwinding at Chinese ports, newbuildings (new ships) coming out and with sufficient landed stocks and cargo still on the water, the market took on a softer tone," the Baltic Exchange report said.
The main sea freight index hit a more than eight-month high on June 3 of 4,291 but has been erratic since then.
"The volatility may well continue but the market looks reasonably underpinned at the current level in terms of the sentiment coming out from Q2 results," said Peter Ashworth, equity analyst with Charles Stanley Securities.
Dry bulk shipping company DryShips Inc reported better-than-expected quarterly earnings this week, partly helped by a recent rise in spot charter rates.
But concerns continue to grow over the rising number of ships set to hit the market this year, which is likely to weigh on freight rates given weak global appetite for commodities and an economic slowdown, analysts said.
"The supply side remains unclear in terms of the proportion of cancellations," said Charles Stanley's Ashworth.
"That is one of the long-term uncertainties which still overhangs sentiment towards the sector."
Source: Reuters
Lemissoler mulls $300m buying spree
Monday, 03 August 2009
Limassol-based ship owner and ship manager Lemissoler Shipping Group has $300 million to spend on the S&P markets and could start a buying spree towards the end of the year. According to company CEO Philippos Philis, Lemissoler is already scrutinising the sale and purchase markets to ensure that when it does enter the fray, it will buy the units at the best price but also at the right time.
The purchase plan is also in line with a company strategy to enter into very close relationships with its charterers that will guarantee both long term income as well as profit sharing on both sides of the fence.
“We are looking to develop projects with our charterers and we are very close now to concluding deals so we will know in advance who is our counterpart and what the business plan will be for both parties,” said Mr Philis.
The Lemissoler boss said his views on the market probably ran counter to the opinion of other owners who maybe believed the bulk market would continue to strengthen ahead of a pick up in container freight rates. “The collapse of the market is in front of us and we will see a correction in all the sectors especially bulk towards the end of the year. I expect the bulk market to drop at least 20% but I also expect a slight improvement in container volumes as stores in Europe start to fill their shelves for Xmas. But after November, we will see a drop again in the box sector.
“We will continue to focus on the container and bulk trades but the issue is timing and when we will start to buy ships. At the moment we are looking to expand with immediate effect in bulk carriers but we do not expect the market will touch bottom. We are focusing on ships between handy size, handymax and supramax,” he added.
Source: Shipmanagement International
LNG Tankers to U.K. Rise; Kuwait and Italy Await First Cargoes
Monday, 03 August 2009
The number of liquefied natural gas tankers sailing to the U.K. increased in the last week before an intensification of North Sea field maintenance in August, ship-tracking data show. Tankers sailing to Britain, Europe’s biggest gas market, climbed to four from three a week ago, according to AISLive data compiled by Bloomberg.
There may be as many as six LNG carriers heading to the U.K. now. One of them, the Arctic Princess, does not show the U.K. as its destination. Another, the Umm Slal, gives an arrival date of July 7.
OAO Gazprom bought a cargo of LNG from StatoilHydro ASA and sold it to Petroliam Nasional Bhd. of Malaysia to import into the Dragon LNG terminal in south Wales. The cargo is loaded on the Arctic Princess, Frederic Barnaud, LNG director at the U.K.- based unit Gazprom Global LNG, said over the phone.
Kuwait is to receive its first delivery of LNG next week at an import facility built by Excelerate Energy LLC.
The tanker Sohar LNG will arrive in the Gulf state on Aug. 4. A second ship, the Grand Elena, is scheduled to arrive on Aug. 9 from OAO Gazprom and Royal Dutch Shell Plc’s Sakhalin-2 plant off Russia’s east coast.
Exxon Mobil Corp.’s Italian LNG terminal will receive its first cargo next week, according to partner Edison SpA.
“It’s the first time, the first cargo,” Stefano Amoroso, a spokesman for Milan-based Edison SpA, said today by telephone.
Signals today were captured from 148 vessels, 2 fewer than on July 24. That’s 48 percent of the global fleet of 310 LNG carriers.
Source: Bloomberg
Otto Marine cancels shipyard contract
Singapore: Last week Singaporean shipbuilder Otto Marine found a legal loophole to terminate an agreement with the Qidong municipal government to build a shipyard in the port city which is in eastern China.
In a statement, Otto Marine says that an investment agreement entered into between OM Offshore Pte Ltd, a wholly-owned subsidiary of the company, and the government of Qidong City in Jiangsu Province (pictured), dated 12 October 2007, has been terminated as the Chinese party has failed to provide OM Offshore with a suitable piece of land for the shipyard within the timeframe as agreed between the parties.
The deposit paid to the Qidong government under the agreement has been refunded to Otto Marine.
The company says that after thorough consideration, it has decided not to pursue the construction of a shipyard in China at this stage. The company will, however, continue to evaluate other opportunities to expand its shipbuilding business. [03/08/09]
New ship prices to go down in H2
Monday, 03 August 2009
According to China Association of National Ship Industry, new ship prices still have spaces to go down in H2. The association predicts in its lately released Ship Industrial Performances in H1 of 2009 that ship industry is impossible to creep out of the downturn in short time due to the lack of effective demand and the cut in shipbuilding costs.
Mr Tan Naifeng deputy director of the information branch of CANSI said it’s confirmed that new ship prices will tend down, though the degree is uncertain to estimate. He said that ship owners are unlikely to buy new ships, as long as their fleets cover the demand against the backdrop of un-recovered real economy.
Mr Bao Zhangjing chief researcher of China Ship Marketing Research Center agrees with Mr Tan opinion and he tells to Caijing.com that overcapacity and scant demand hit present ship industry; under the situation, shipbuilders will mark down prices to grab new ship orders.
According to the undercount of Clarkson, the world accumulatively traded 80 new ships of 3.39 million DWT in H1 down by 96.8%YoY excluding the 30 new ship orders of 4.12 million DWT undertook by Zhoushan Jinhaiwan Shipyard Co Ltd.
Mr Bao adds the shipbuilding cost which mainly consists of expenditures in steel products, ship associated facilities and labor, presents large shrinks, since steel prices go down largely from last year, so do the prices for ship fittings, and manpower cost also fall due to the financial crisis. Bao thinks the decreasing shipbuilding cost will provide more spaces for new ship prices to move down.
The statistics of China Iron & Steel Association show that steel prices dropped since Q4, 2008 and touched the bottom in April 2009. Then, the prices rebounded, but still lower than the level in end 2008.
Source: MySteel.net
Eastwind tankers liquidated
Monday, 03 August 2009
Reports from the US have confirmed that a US Judge has approved Tokyo Star Bank (TSB) foreclosure request on five product tankers previously operated by Eastwind, which filed for Chapter 7 liquidation in June. The vessels covered by the order were ‘Amundsen Wind’, ‘Arafura Wind’, ‘Arabian Wind’, ‘Azov Wind’ and ‘Aral Wind’.
According to the press reports, on 17th July, TSB requested changes to the automatic stay, allowing the bankruptcy trustee to surrender the tankers. “The trustee needs to act swiftly regarding the TSB vessels, the crews and their safety,” the bank reportedly said, noting that “the trustee is unable to continue to operate the vessels”.
TSB was owed $23.1 mill in remaining payments on a $41.6 mill loan to Eastwind subsidiary Kura Shipping, secured by first preferred mortgage liens on the five ships.
Both the Eastwind trustee and TSB agreed that there was “no remaining equity in the collateral above the TSB indebtedness”.
Judge Allan Gropper allowed TSB to accelerate the indebtedness and “foreclose on, take possession and manage or sell the collateral [the product tankers]".
The original TSB request had named a sixth vessel, a drybulk carrier, which was not covered by the order.
Source: Tanker Operator