Dubai: It’s hard to believe that it is only 20 months ago that Pan Asian Commodity Resources (Panacore) was set up such has been the whirlwind of activities from this fast emerging bulk player. Mudit Paliwal, ceo of Panacore, quit his position as co-head of global freight business at Hong Kong trading giant Noble Group in November 2011, to set up his own commodities and shipping business. The lessons learnt at Noble have clearly stood Paliwal in good stead in how to judge commodity cycles and by extension the right time to invest.
In May 2012 Panacore ordered four kamsarmaxes, the start of a fleet build up that will eventually number between 16 and 20 ships, Paliwal reveals to Maritime CEO.
Newbuild prices have risen a little bit since that debut order.
“Like many investors, I too work on a contrarian principle and bottom of the market theory,” Paliwal says. “In shipping, timing is everything. We ordered with a view to build a fleet of 16-20 ships. It is impossible to touch the bottom of the market for a fleet build up, so you start at near bottom and then continue ordering along the price curve to average your fleet. This is an opportune time in the shipping markets.”
Paliwal says cash today is better to have in asset form rather than stashed in a bank. The fleet build up will take place in the coming 12 to 18 months.
Paliwal is a firm believer in the ecoship craze, his first four ships ordered being very economical on fuel use. The ecoship ordering frenzy is here to stay and are “the future of our industry”, Paliwal says.
Kamsamaxes will continue to be the mainstay of new orders for Panacore. They are a “consumption story”, the ceo says, claiming they are “workhorses” for grain, coal and bauxite. Paliwal is convinced that dry bulk is in the midst of an aluminum cycle peak after the steel cycle that saw dry bulk hit dizzy heights in the previous decade. On the Panacore fleet menu will also be at least two handysizes for its captive trade. Capesizes, however, are “a big boys game”, something that is a way off for this young company. “We won’t do capes unless we can partner up with a producer or an end-user,” Paliwal says.
At present Panacore is very India focused, servicing the requirements of the end users in the steel and power sectors. It also has significant business in China supplying iron ore from its operations in the Americas.
In the Middle East, meanwhile, Paliwal says the opportunities are “immense”. “I am surprised at the level of activity here,” he says from his Dubai headquarters. Pancore’s focus in the Middle East is to be an industrial player instead of a service provider. It is working alongside the Abu Dhabi government and has been allocated 250,000 sq m of land and 50MW of power to set up Panacore Steel & Alloys with two submersible arc furnaces.
Remarkably in just 20 months Panacore has built up a genuinely global network with offices in Dubai, Hong Kong, Sydney, Mexico and Monaco, the latter being where it is centering its shipping asset management activities.
Paliwal, a keen observer of industrial cycles, reckons the dry bulk market is nearing the bottom.
“The demand is there and it seems insatiable,” he says. “The problem has been the supply side and that should sort itself out sooner than later.”
Pancore’s mission is to position itself during the downturn in such a way to capture the upside when the market turns.
“The optionalities that you can build in your business are back today, these were missing in the better part of 2004-2008. Sow the seeds in these times and then see how many of them turn into trees that bear the fruits,” Paliwal says.
“The future is not competition, nor cooperation, it is in collaboration,” he reckons. “Collaborating with like-minded companies. Shipping has always been a relationship business even if it seemed very transactional for the better part of last decade.”
Paliwal’s parting advice to his peers: “Take time out and meet people, there is a lot one can learn and do.” [28/06/13]