John Faraclas
Falling BDI now @674 and BREXIT extension to much to digest
The BDI lost 11 points earlier on today and the Dry Market turns more than sour. BREXIT, irrespective of the end result will shape the history of mankind. Mrs May reminds us of patience being a virtue for shipbrokers and John F. Kennedy’s on never fear to negotiate! In Algeria octogenarian president Bouteflika finally resigns. This and other news in our late night’s full market and Geopolitics recap with John Faraclas revealing more…
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Midnight update
The Capes’ falling record “enters” now the Guinness Record Book… At 92 – losing even the 100 point “threshold”, the BCI makes nadir’s record a harsh reality. The Greeks have two expressions: “Let’s pass the Cape…” and “We just cleared the cape…”; now try to interpret these two expressions/sayings with the Capes’ fall… Wonder what else we are going to witness and how many will be left over as every catastrophe reduces substantially the number of independent owners – listed or not listed… Shipping for the very very very few, that unfortunately we “support”, is a reality…
The Panamaxes are “outperforming” so to speak given the circumstances. Our most favourable size managed to clinch a good ten points and now the BPI stands at 1,120!
Losses for the Supras’ and Handies’; the BSI was down 12 points at 795 losing the 800 points threshold. The BHSI’s loss was six points and now reads 455.
All in all a terrible Dry Market; obviously never ever forget that on the 10th of February 2016 the BDI stood at 290 points, so anything can happen… CAUTION and appropriate moves must be made… Remind you that we are far apart even from the “tranquil” market as of the end of December 2013 when the BDI stood at 2,247 points…
Falling Wets complete a bleak market scene… The last published BDTI (Dirties) and BCTI (Cleans) stood at 640 – minus eight and 734 – minus three points respectively… What can you say…eh!
On the antipode of the falling Shipping Markets the WTI was dangerously improving its price. At US$ 62.58 – .99 cents higher than yesterday, sends shocking warnings for Planet Ocean’s poor masses of 7,7 billion people as 7.5 billion people leave on borrowed time and money. You can verify this with the US$ 250 trillion global debt!
An interesting report come from VesselsValue on the “Listed shipping companies with substantial fleet value growth”
Has it been a good year for shipping?
Shipping has faced another challenging year as excess yard capacity and the resulting surplus of ships has continued to weigh on spot and term market rates. However, green shoots are appearing, and several long term trends are developing that will reward those with the tenacity to stay in the shipping markets.
Has it been a good year for the global economy?
The shipment of goods around the world has been surprisingly resilient despite fears around the US China trade dispute. Media hyperbole has distracted from the relatively targeted nature of this dispute. To date, it has only significantly punished US soybean exports, a market that was already facing headwinds due to demand destruction in China following an outbreak of livestock disease. Much has been made of Capesize rate declines, but most of the factors affecting this are caused by export disruptions in the iron ore supply chain and reduced dependency on coal for power generation.
Other Dry Bulk segments have proved resilient due to the wider number of cargoes they can carry, and smaller ship types such as Supramax vessels are now earning more than twice the rates of Capesize vessels. VesselsValue (VV) has publicly commented on its optimism around small Dry Bulk carriers over the past six months relative to larger ships.
Let’s talk about this year’s winners
Star Bulk Carriers, GasLog Ltd, Euronav, Transocean Inc and Costamare have all experienced large growth in their VV fleet market value. The normal trend in markets is for established participants, or survivors, to lock up market share when in a down cycle as smaller transient players leave the space. Once the markets recover, those with large market share will receive an outsized reward.
2018/2019 saw Transocean Inc cement itself as the top publicly listed shipping company. This is due in part to the recent acquisition of George Economou’s Ocean Rig with its two harsh environment semisubmersibles and nine ultra deepwater high specification Drillships, plus two more of the latter currently under construction. The total cash and stock transaction was circa USD 2.7 billion. This was a strategic acquisition by Transocean Inc to take advantage of what they believe to be the recovery of the ultra deepwater market.
Euronav’s acquisition of Gener8 is a great example of the power of a large listed company to make a counter cyclical market play. This boosted the market share of Euronav significantly in the VLCC market space.
The biggest buyer in 2018 of second hand vessels is the Greek company Star Bulk Carriers. The vessels involved in the 2018 transactions were valued at just under USD 1 billion on the day of sale. Star Bulk have acquired vessels from a variety of sources: six Capesize Bulkers in a part share and part cash deal from ER Schiffahrt, 15 more Bulkers from Songa Bulk with USD 145 million cash plus 13.7 million shares, three Capesizes from Oceanbulk for 3.4 million shares, six Panamax and Post Panamaxes from Augustea Group in a debt and shares deal and another six from ABY Group Holding at the start of the year in another part debt, part shares deal.
What’s in store for publicly listed shipowners next year?
Cashflow volatility is always an issue. Investment funds often seek these markets to add upside potential to their portfolio, but the fundamental issue is that shipping requires patience in order to reap profits, and many market participants have a very short return on investment timeline.
Next year will bring more consolidation and more mergers. Despite the market conditions of late, Offshore owners dominate the top public owners listed on the Singaporean Exchanges.
Comparing current VV fleet values to those of April 2018, we can see decreases as a result of top owners shedding tonnage. Offshore is clearly still a major industry on the exchanges, taking top spots on the US, Norwegian and Singaporean exchanges, and it is worth noting that many market players believe the worst of the conditions have passed putting us now on an upward trajectory. Even though the oil price has rallied of late and showed some positive signs during 2018, the Offshore market will need to take more steps towards consolidation and reform in order for a recovery to take place. It will be interesting to see if some of these companies merge over the coming year.
The Geopolitics still have the MIGRANTS as its number one issue; we must give an end to this despicable and inhumane issue otherwise “our” hypocrisy will become the worst boomerang with incalculable repercussions; end of the story!
The faulty line from Gib to Afghanistan and from the Caucuses to the Horn of Africa produces more headaches with the entire Balkans, East Med and Middle East being on fire and no one accepts same.
Greece’s PM Tsipras visits North Macedonia with a group of ministers and business people; he must be very careful on what he says and what expressions he uses. Being his masters’ voice is one thing – despicable of course, defending Hellenism without nationalism interference yet another.
Greece is still in a limbo given above all the double issue of national issues and the prevailing – still, economic disorder. The first trial will be the forthcoming Municipal and European elections… Still we do not rule-out a snap election as and when PM Tsipras feels confident enough he and his supporters – local and foreign, can win or even form a favourable government for all intents and purposes…
Turkey in another turmoil; wonder whom president Erdogan will blame this time… He totally objects to the opposition wining Ankara and Constantinople… when you are two decades in power the fall will come inevitably… In the meantime despite meeting Greece’s PM and trying to build up Peace, his airforce and navy continue relentlessly to violate Greece’s and Europe’s airspace and territorial waters AND send more MIGRANTS !!! Wonder the culprits of Brussels headed by Frau Merkel why they don’t react; what are you afraid of Frau Merkel? What can president Erdogan do to harm you?
The Balkans still trying to find a peaceful coexistence; caution as many issues haven’t been shorted out yet…
Very “quite” messages from the Black Sea. The Russians though continue their spoofing with the GPS being an anathema particularly as it affects shipping… CAUTION as with public report at hand aircrafts, vehicles and vessels are going off course – we have also repeatedly stated this despicable issue in mentioning herein as well as in respective speeches… protecting your strategic interests is one thing, putting in danger human lives yet another… Many suggest the latest incident off the Norwegian coast involving a cruise ship might well be another despicable case… Wonder what the IMO has to say given its latest advice / report earlier on today
At the other side of the Atlantic now; in North America, USA in particular, president Trump says no healthcare vote until after 2020’s election… Let’s see with what he comes up!
Down in South America, Venezuela enters in deeper crisis given that Juan Guaidó, the opposition leader who declared himself interim leader last January, might lose his parliamentary immunity and face arrest for violating a travel ban a few weeks ago touring neighbouring countries as well as for other “charges”. The USA has warned of serious consequences if he is arrested… CAUTION. Venezuelans live in hell conditions…
Have a nice evening and continue to remain on guard from actions emanating from Pirates, Terrorists, Criminals and Business Hooligans whatsoever wherever you are on Planet Ocean!
Uploaded: 20:05 BST
Updated: 23:59 BST
