[[{“value”:”
As is traditional at all Maritime CEO Forums the real fireworks in terms of debate from last week’s gathering at the Monaco Yacht Club were left for the graveyard shift at the end of proceedings, namely the dry bulk session moderated with great energy as ever by Tim Huxley, the CEO of Mandarin Shipping, who presided over a panel giving a masterclass in supply and demand economics into shipping’s largest segment.
“We can always expect volatility and volatility brings opportunity,” said John Michael Radziwill, CEO and chairman of CTM in his opening marks with volatility being one of the key themes throughout the day at the exclusive shipowner gathering on the Cote d’Azur.
Milena Pappas, commercial director at Star Bulk and head of Oceanbulk, conceded she had expected a much stronger market this year, especially with all the strong exports out of Brazil and greater ton-miles from Guinea, a point of view shared by fellow Greek owner Stamatis Tsantanis, chairman and CEO of Seanergy Maritime Holding, who told delegates: “I was actually expecting the market to be much, much stronger “
The green transition might just be halted by the cheap price of coal
“Demand hasn’t been particularly exciting this year and that’s created stability in markets generally speaking, certainly in the geared segment,” said Edward Buttery, the CEO of Taylor Maritime Investments and Grindrod Shipping.
On iron ore and coal prices, Pappas said they’d hit a “sweet spot” at $100 a ton where it makes sense for miners to continue expanding their production.
All panellists were far more bullish on China than many of the mainstream media headlines have been surrounding the state of the economy in the People’s Republic.
Tsantanis, who had just flown in from Shanghai that morning, recounted to the audience: “I’m very optimistic from what I saw this year compared to the previous years. The job market has really reopened. Manufacturing production is actually going very, very strong. The unfortunate thing is that the existing shipyards are expanding their capacity.”
Pappas added some nuance to today’s commodity imports scene, explaining that when the rest of the world is importing, commodity prices go up and China tends to take a step back in order not to inflate these prices.
“This time around because of the geopolitical tensions going on, I don’t think that we’re going to see this aggressive style where they’re destocking aggressively and taking the chance of, you know, we’ll import at cheaper prices later exactly because of all the tensions going on,” Pappas predicted.
Discussing how capesize trading patterns are changing, Tsantanis from Seaenergy noted how five years ago just three cape routes, C3, C5 and C17, accounted for 89% of all trades, something that has changed dramatically with charterers taking vessels to “crazy trades” such as the west coasts of North and South America, the west coast of India and the emergence of West Africa as a capesize pillar.
On coal, panellists said that despite myriad green promises there was no signs that many Asian economies including China and India would ween themselves off the commodity any time soon. Coal still makes up 65% of electricity generation in China, Pappas pointed out, while Radziwill noted that coal is still cheaper than gas especially in Asia.
“There’s a lot of increasing coal demand in Southeast Asia and in China and India too,” the CTM boss said, leading moderator Huxley to quip: “So the green transition might just be halted by the cheap price of coal.”
“People are price takers, so the green transition is going to take longer than everybody expects,” Buttery chipped in.
Turning to the supply side, Huxley set the scene, telling guests: “We have current newbuilding prices reaching levels which make them unviable especially when combined with the forward delivery now being quoted and is the consolidation we’ve seen amongst the shipbuilders going to allow them to keep prices high. Could shipbuilders suddenly get addicted to profitability?”
Pricing was something covered by CTM’s Radziwill who reminded guests that normally shipping cycles work whereby orders flood in when the price of a five-year-old ship exceeds a newbuild cost. Right now, there’s still a gap, 83% for capes, 85% for panamaxes while supramaxes are at 97%.
Also armed with stats in her head, Pappas from Star Bulk observed that since January 2021 newbuilding prices have gone up 50%, secondhand values have gone up “more or less” 90 to 100% whilst freight has gone up just 40%.
“So that’s a factor right there, putting up a stop for newbuilding orders,” she said. “The other one is shipbuilding capacity. The fact that it’s full for the next three and a half years.”
Such a wait for a newbuild – the equivalent of a whole cycle – means owners have no idea what the market will be like when the ships deliver, potentially without all the inefficiencies and black swans being experienced today, Pappas warned, going on to add that since around 50% of all ships on order today are dual-fuel using engines that take three times as long to test.
“There’s going to be a slipppage because of the engine supplies,” Pappas predicted.
Looking at the make up of today’s total merchant ship orderbook, Pappas pointed out that while 35% of orders were for gas and containers, these two segments took out 66% of capacity.
Pappas was adamant she would wait out on ordering, holding off until newbuild prices come down.
“In the meantime, what I would do personally, I would wait for a dip in these four years. I would retrofit my vessels. I would improve their efficiency. I would slow speed for the non-eco vessels,” she advised.
Buttery said he’s also holding off ordering. “Prices are too high,” he said, leading to a familiar refrain from CTM’s Radziwill.
“Can we just not order any more newbuildings, please? We could all give arguments as to why they don’t make a lot of financial sense. We’ve seen this movie before,” he said.
Tsantanis then reframed a theme from the tanker session earlier, saying that the dry bulk fleet will inevitably age this decade, and that owners and charterers needed to adapt to this.
“Middle-aged ships, if they come from a great vintage then they can be super efficient in most circumstances,” he said.
The Maritime CEO Forum is an exclusive shipowner gathering that takes place twice a year in Monaco and Singapore. The next Splash-organised event will be Geneva Dry, the world’s premier commodities shipping conference, due to take place on April 28 and 29 next year.
The post Maritime CEO Forum Monaco: How global dry bulk trading patterns are evolving appeared first on Energy News Beat.
“}]]