John Faraclas
The Dry Market @ 313…
John Faraclas reports on the oddest market the international shipping fraternity was ever faced with:
This is a market for very strong nerves, a market that only the very brave and well organised will go through – but not unscathed, a market that needs to have players with good balance sheets and ample of cash to sustain the colossal costs and problems the global rotten economy is “covered” with! Remember that the Baltic Dry Index (BDI) is 1, 961 points down from the otherwise low levels at the end of December 2013 when the index stood at 2, 274 points! After the bubble’s bursting in 2008 few got the message of what is yet to come. Again as we have said, it doesn’t matter whether you are listed or not, its’ like flu – whether you are rich or poor you can contract it! This is a market for well placed strategically players who know what the wrath of an economic and asymmetrical war is all about and know how to best tackle same with less losses. A market which will determine the future of the entire intermodal industry in its entirety.
Add what we have numerous times mentioned and elevated as the number one issue, that of Geopolitics and see what you are going to face in the next two to five years. Many believe that it is matter for scrapping and an 18 (eighteen) months waiting; nonsense…
Now with the capes being as ever volatile and their respective index losing three points, the BCI 2014 at 220 points is more than alarming. The Panamaxes gained just one point standing at 358 being yet another headache. Count the Panama Canal opening and its delay and see how this sector will perform, despite the fact that we strongly believe in the mediocre of this size. Any Panamax, plain or container or even on the wet size is in my humble view the best investment. Panamaxes stand were the Liberties, the SD14’s and Freedoms once stood before going to the multi handy dry ships of 29, 999 tons. Supras’ BSI was surprisingly up 11 points at 270 and the Handies BHSI index also up seven, clocking 193 – still all dry tonnage situ on “earnings” far below any logic and anticipation…
The wets and the last published BDTI and BCTI stood, with minus two and plus one points, at 807 and 528 points respectively.
The price of oil still on or about the US$ 30 mark and who knows what the Iranian come back and the Saudi insistence can bring out. America, that is the US, plays it primarily safe for its domestic interests and secondly for its needs. Russia has another agenda on the energy jargon and Europe depending on all, stupidly in my view, should allow Greece “develop” its oil!
The box market is interesting and only those with a good rapport in politics can get going. Containers are the name of the game in trade, subject you have the best tool-ship. Hence, as you might remember, I always opt for a simple panama geared bulker, a shelf sustained carrier to break down the market, as versatility is indeed being the name of the game – add the lower costs of a geared panamax versus a cellular contship. Speed is now an option, a good option given the price of oil; isn’t!
LNG’s does make a sensible investment but a lot of infrastructure is still needed worldwide and obviously at the expense of oil, I mean fuel as consumption on ships and ashore too.
The protection of the dire straits (Gibraltar, Bosporus, Suez, Aden, Hormuz and Malacca) is a major priority, needless to say Panama and its new, expected soon in operation, Panama Canal.
Never forget the nine million tonnes of cargo still there to be carried this year by the most capable shipowners’ ships and that this is a great time to acquire and or to build brand new double eco-ships!
Did I hear you say Liner Shipping?
Who is talking about cyclicality in shipping as well as for the world economy? After the fall of the Communists and the new world order surfaced, there is no such cyclicality as we all knew it!
The recent 7th Capital Link Shipping event in Athens two days ago, one of the best ever, addressed interesting issues, but it is the shipowners to know what is best for them, given the market parameters and their competitor’s status, either in the long or short term. Cheap or expensive decisions can play a pivotal role in any business. How well aware you are with geopolitical projections, eh! Will also repeat what the Migrants issue can produce and what the slow steaming effect in trade and transport of the Chinese locomotive… Religion too is another, with all due respect, anathema, greatly influencing the shipping industry. With an otherwise bankrupt world economy what do you expect? No liquidity and buying consumer’s power exist now, thanks to the plastic money and allowances/”perks” such as: “buy now, pay latter”, “zero interest credit” and so forth… Now you know; now you can understand how bad in its entirety is social capitalism; now you can understand why only the affluent should carry a credit card! Now you know how discredited most of the bankers are by allowing all these new products, to keep the society “afloat” and postpone the big social clash, the clash of envy, by offering the plastic money facility which has ruined the world economy!
Enjoy the rest of the evening and be on guard!
P.S.: What’s the ratings of BRICS, what the ratings of PIGS, what’s the ratings for Germany? Can we please have real stress tests for the banks…
