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Summer for Greek shipping, where next for asset prices?

Summer for Greek shipping, where next for asset prices?
Traditionally, as the August sun gets higher in the sky, the heat goes out of the activity within the Greek shipping community as the players move to the country’s islands, or to the decks of yachts cruising off the islands. This is particularly so these days as technology makes its fairly easy to up shop and really work offshore. This time round though, with the freight market seemingly more stable, Piraeus’ waterfront is not quite as quiet as in the past two or so years.

While some brokers said last week that the s&p market is falling apart, there are others who disagree.

Working a block off the waterfront, Shiptrade Services’ Konstantinos Kontomichis says: "While a few prospective buyers have stayed back in their office to grab any chances and possibly avoid competition while doing so, most seem to have postponed their interest till September in the hope of seeing a market they feel will make more sense."

Reflecting on what has happened so far in 2013, he says: "One can say the recent price inflation posted over the last two quarters in the dry bulk market and more specifically for panamax vessels, is an additional reason for some to switch over to a 'wait and see' attitude at least until the slowest month [August in terms of chartering] has past."

So far this year handy tonnages have faced the smallest fluctuations in values, "reflecting the fact they are still the vessels holding the lowest risk exposure in the dry market".

Supramax asset values were running on the high end, something which is quite reasonable considering this size segment has been enjoying the best returns in the market over the last couple of years. Poor rates, an overwhelming delivery schedule and overall negative sentiment for panamax ships during the second half of the previous year caused depressed sales in the sector.

"The cheapest deals took place, during the end of 2012 and the very beginning of 2013, providing the groundwork and sparking heavy competition amongst Greek cash buyers which resulted in the unexpected climb in prices," Kontomichis explains.

He maintains the recent rally in ship asset prices was driven by the appearance of funds and private-equity covering the gap left by the more cautious and now heavily regulated banks.

The industry claim “we are scratching the bottom” ended up as “rock bottom bargain prices” in the ears of private investors.

Of course along the way other economic factors played their part in this reasoning. Bankruptcy of the Cypriot banking system, the instability of Greek financial institutions and the clouded economic policy of the European Union pushed investors to see the “sea” as a much “safer” choice. But, these “safer” decisions seem to have little to do with “profitable” decisions when considering they were made at the going charter rates.

While, it is generally agreed shipping is now sailing through most predictable month of the year, Kontomichis warns: “No one can predict the future, and despite a seemingly ‘bearish’, sentiment there is no telling which direction the market could end up taking.”

 

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