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Bulker newbuild investments do not make sense: Maritime CEO Forum

There is no business case for newbuilds in dry bulk, a high level panel at last week’s Maritime CEO Forum stressed.

The final session at the Maritime CEO Forum focused on dry bulk and featured the CEO of Mandarin Shipping, Tim Huxley, as an engaging moderator with a lively line up of panellists comprising Angad Banga, the COO at the Caravel Group, Keith Denholm, managing director at Lorentzen & Stemoco Singapore, Mats Berglund, CEO of Pacific Basin and Edward Buttery, the CEO of Taylor Maritime.

“We want to remind the world that we do not need new ships,” Pacific Basin’s Berglund said, adding: “Rates are not high enough now to support newbuildings. You can make money if you buy secondhand ships.”

His views were supported by Taylor Maritime’s Buttery who commented: “Secondhand ships definitely make much more sense, especially for handies where there is less focus on speed and consumption as you spend longer in port.”

The session’s moderator, Huxley, said the case for investment in dry bulk at the moment was “clear as mud”, which was another reason not to invest in newbuildings, especially when looking at the changing regulatory and disruptive environment.

The panel as a whole was bullish on the demand side of the business with Caravel’s Banga noting: “We have seen some improvements in the underlying fundamentals.” Banga said there had been most notable growth in coal and grains. “Underlying demand in China is strong,” he added.

Denholm from Lorentzen & Stemoco stated: “We are on a steady path of growth. Steel prices are soaring. Raw material prices are still relatively low. China is lacking in quality coking coal and iron ore – their imports are going to continue to grow. A lot of infrastructure projects shelved earlier are coming back.”

What worried Denholm most was the prospect of a swathe of new private equity entities coming back to maritime.

The Maritime CEO Forum took place in the Foreign Correspondents’ Club in Central, Hong Kong with sessions on tankers, bulkers and crewing. The event was sponsored by Anglo-Eastern, Cobham, Dualog, DVB Bank, Liberian Registry, RightShip, Veritas Petroleum Services, and V.Ships Agency.

The next Maritime CEO Forum is scheduled to take place at the Fullerton Hotel in Singapore on March 13.


Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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