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Getting the big picture

Getting the big picture
It has been "March madness" time in New York shipping circles and Barry Parker gives the lowdown on the market discussions at CMA and Capital Link.

“March madness” in New York refers to the college basketball championships, and to the shipping conference circuit, in full swing in Stamford with the Connecticut Maritime Association (CMA), spread over a whirlwind three days, and then, as the fleet moves south, to the East Side with Capital Link’s day-long event.

The CMA sessions transitioned from shipping’s big picture into panels covering particular market sectors and issues eco-ships where opinions are all over the map, and worldwide LNG trades- set to grow dramatically including through US exports. Capital Link, where morning coffee begins only hours after the late night conclusion in Connecticut, looks broadly across individual market sectors and then looks at the ship finance world, with an emphasis on company renewals, which are increasingly taking the form of financial restructurings.

The week really belonged to Teekay’s ceo Peter Evensen, the 2013 CMA Commodore. Though he kept a low profile, Evensen, guiding the Teekay parent and three “daughter” companies, was a keen listener at several of the CMA panels. Another one of the week’s standouts was  Katharina Stanzel, Intertanko’s managing director, who served as moderator of the CMA tanker panel, and provided the keynote address, two days later, at Capital Link.

Other notables logging double conference performances were Robert Bugbee, from Scorpio Tankers (which has raised more money, and has shifted its ordering spree toward the longer range product carriers class) and Evan Sproviero from GMS, a force in reducing fleet size in its role as a major cash buyer of ships which are then sold onward to breakers. A notable statistic is that 2012 scrapping rivaled that of 1985, the depths of another market trough.

The CMA’s market sessions were an improvement over previous years; though powerpoint presentations were shown, there was more emphasis on discussions and on talking through possible sensitivities, rather than on pinpoint forecasting. Capital Link, with its investor relations focus, moved toward the company specific- but nevertheless offered good sector overviews. In tankers, the clear take-aways were that larger vessel sectors, VLCC’s and suezmaxes, would be taking on water from vast oversupply and possible declines in ton-miles along the major trade routes. The product sectors are already seeing new trade flows, with the possibilities of even more medium and longer haul movements of refined materials. CIBC World Markets’ energy strategist, Katherine Spector, in an exceptionally good CMA presentation, commented that “…more refined barrels are trading places.”

The drybulk markets, also seeing a major glut of tonnage , continue to be a China story- a view that emerged at the CMA panel, moderated by the Baltic Exchange’s Jeremy Penn, and at Capital Link. 

For the container sector, the better resourced companies, with access to financing (including that of Export Credit Agencies), are ordering larger ships, where a huge supply glut has developed. However, unlike the very fragmented bulk segments, management of capacity enables the sector to boost boxship rates. Prospects are glum in the smaller ship sector, an outsourced vessel buffer for the carriers that charter in vessels as needed. The smaller vessel category is significantly overbuilt at a time that banks, especially from Europe, are running out of room to continue extending credit.