Capes on the way out, says Noble's Nagler

Speaking at Marine Money's 10th Hong Kong Ship Finance Forum, Nagler said he was "modestly optimistic" that we will see freight rates rise from current levels. However looking further down the track he was bearish on the China iron ore trade, although he admitted that there is currently still good demand.

"We still see very good demand in China but eventually that market will mature and that's why we would not want to invest in capes; we feel capes have done their thing, probably they have another ten years but eventually it's going to slow down, it cannot continue at the current pace," Nagler said.

"We would want to invest in something that's diversified such as supramax, kamsarmax, panamax," he said.

"We're very bullish grain," Nagler said, noting that meat consumption in China is increasing dramatically and exports from both South and North America are rising sharply. "We would want to have an asset can load various commodities such as grain, coal, bauxite and so on," Nagler said.

He also noted the two-tiered market that is developing between the big mining houses which still see freight as just simply transport and the other commodities trading houses such as grain traders which have moved into becoming industrial shipowners.

"In my mind they should be having very large shipping divisions because they have the keys to the market and know exactly what is happening," he said. However they have chosen to outsource while grain traders have taken on more of their shipping needs themselves.

"So there's this disconnect and the large mining houses should have very large shipping portfolios and should own ships," he concluded.

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