John Faraclas
Can we hope for better days in the Shipping markets? John Faraclas explains in brief the situation:
With the BDI up six points today at 307 the mood in the City wasn’t the one expected and rightly so. We are far below any level to “trigger” any optimism whatsoever! Why? Well look around and see the applications in Greece and Sri Lanka to lay-up tonnage; as simple as that!
The Capers remained the same with the BCI 2014 clocking 223 points; the Panamaxes and the respective BPI gained 11 points now standing at 357. The Supras up seven at 259 and the Handies up two at 186… Unthinkable numbers, but that’s the bare truth!
The Wets on a downwards motion with the last published BDTI and BCTI at minus seven and one points respectively standing at 809 and 527…
When you see Capers and Panamaxes for a trip out getting on an average US$2, 000 to 3, 500 a day what do you expect? Magic tricks are out of question, even if a War (officially) breaks out! Tough!
Amidst this situation , which also affects the listed companies, many think about recapitalisation; in my humble view, any sort of recapitalisation from outside the companies sources will be simply (for these investors): throwing good money after bad! The only way out is using your capability to fix and “get rid of your competitors” using your shipbrokers capabilities, your strong balance sheet and cash reserves. This is an ability and a luxury only for the very very few. At some point the Stock Markets can provide blood injections but only to the most capable ones! End of the story. Ah! China too for some poses as a cash supplier; but do the Chinese have a clear picture and sheer knowledge of a free-shipping market economy? Can Chinese shipping economics do the trick? They can but in my view they don’t know how!
There is already a sea-battle going on and many “big” names will find themselves on the ropes… Just wait and see. Indeed we stand by our statements that there are nine billion tonnes of cargoes to be carried over the next 11 months, but these will go to the very few who possess the amorous so to speak relationship with the boomers of the cargoes- those above the charterers… It is an ALL Change pitiful situ, well predicted from this medium.
White Knights will appear and take over the shipyards which will succumb to their demands. Expect to see very low prices for all four categories of dryships and containerships. Wets will also follow suit.
We read a lot of predictions and analysis, yet no one takes all these predictions seriously. You don’t have to be the crystal ball. You must possess ruthlessness and orthologistic thinking to go ahead if you want to deliver results and not insults from the Markets and Investors! .
With all due respect the bankers made it a total mess; with all due respect some of them insist even that after 2017 things will get better. Come on guys, be serious. Nobody will ever teach you how you are going to do it! Alike in the case of “News” were “news is what they don’t tell us”, equally no one will ever tell you what’s up. Imagine if we all listen to the gurus: worse results!
Add the fact that we are entering or better say we are in the brink of an all-out war in the Middle East and its periphery even if there is a delay on this, things will go off hand. Indeed War Father of All, but again, who will benefit?
Europe in a total mess. Some six months ago when we have been saying and writing; “Shame to all politicians” as we could clearly see that they couldn’t reach a solution with the Migrants issue and made it a total mess with incalculable repercussions, see the stage we are now: Catastrophe and Armageddon ante portas! Any objection?
Will Putin’s Russia back-off? Will Erdogan and his lieutenant Davutoglou follow suit? Add what goes on around there and see what’s up!
How will Saudi Arabia react and what will be the Iranian counter? Can the Chinese intervene? North Korea is about to make it a mess unless Beijing stops Pyongyang dreams…
How will Israel react in its lively-hood and close neighbourhood region, given what might take place there? Add all the religious leaders priesting a, b or c, and you can see if you can have a sip from their deadly cocktail… err Holy Communion…
We repeat that before is too late, we must ensure all dire straits are in safe hands… We remind you our position of yet another closure of the Suez Canal; How China will overcome its exports problems and meet its obligations to deliver?
Anyway, read carefully this text, a warning for all and see if you can navigate in turbulent waters! Read again and again our previous reports. Beware those who like to think they walk on water!
P.S.: The consequences of the 2003 – 2008 shipping bubble can now be felt; early days yet so be prepared…
1 comment
Dear John.
I have been reading your warnings and cries for attention to all your readers and friends about the way the market goes. As you know me well I avoid being the black swan knowing that the markets swing from time to time. Now if we take the noise of the indices created by the demand in shipping services, by the lack of ships at the time, we will see that the markets behave rationally and with such a uniform way that we should not be surprised. The fact that the so called ‘gurus’ had predicted a booming market in the years already passed should not surprise us. They are economists. They are not scientists.
Back to your writing. There will be no major war mate. We are having the skirmishes that the economic elite love. Small and containable.
With the major war there will not be any improvement in freight rates until after the end of the war.
Let’s hope that the Chinese Dragon will soon find its appetite for commodities together with many other countries so that the demand picks up so that our friends and clients see bright days ahead.