Home / Shipping News / Interviews / Vafias warns about dry bulk newbuilding orders, expresses solid belief in LPG carrier business’ pros

Vafias warns about dry bulk newbuilding orders, expresses solid belief in LPG carrier business’ pros

In an interview with Hellenic Shipping News Worldwide, StealthGas’ CEO, Harry Vafias warned about the potential negative consequences of the flurry of newbuilding observed this year in the dry bulk market, while he says that the tanker market

offers possible opportunities, but only if ship owners refrain from new orders as well. According to Mr. Vafias, the LPG market’s prospects are looking good as charterers appear bullish for the 2011-2012 period, as shown by recent deals in medium to long term charters. At the same time, he explains that volatility is almost unheard in the LPG freight rates, with rate fluctuations being much less than for instance in the dry bulk market. Vafias also expresses his belief that the worst is definitely over for the LPG business. StealthGas is currently in a wait and see mode in terms of fleet expansion, as the company expects delivery of five LPG newbuildings during 2011. In the meantime, any further additions will be undertaken only if some solid opportunities arrive.
The company has reduced running expenses, while moving more of its vessels to period charters, hedging its fortunes versus the financial and shipping crisis. It has also cancelled some newbuildings in order to reduce future cash exposure.

During the past couple of weeks, StealthGas has reported a series of new charters for the company’s vessels. How would you evaluate these charters compared to the ones replaced?

Lately we have seen charterers increase their interest in taking in LPG vessels for medium to long terms charters which shows that they expect a strengthening of the market in 2011/2012. The rates are up by about $500 per day per ship (on a TC basis) than the rates we saw in 2010.

How has the LPG market fared so far this year?

The LPG market has been by far one of the steadiest markets in the shipping universe! For our types of ships i.e. 3,000-8,000 cbm rates are not volatile. That means that in the good times they may go up to $11,000 daily and in the bad times they might retreat down to about $7000 fairly! We think that we have seen the worse and from 2011 we will see a gradual improvement!

What are your plans to further grow the company’s fleet?

At the moment we are temporizing, Stealthgas has added an aframax newbuilding this August and will add another 5 LPG newbuildings in 2011 so we won’t be expanding unless a very good opportunity occurs.

What actions did you undertake in order to better insulate your company from the global financial crisis?

W reduced running expenses, we stopped bonuses, we increased period coverage of the fleet, we financed future commitments and we cancelled some Newbuildings both and the private and public side to reduce future cash exposure.

Which shipping market do you think offers the best prospects at present, if there is such a segment?

Probably the tankers but only if owners don’t start ordering new ships again!

Vafias Group isn’t limited in StealthGas, being active also through other shipping companies. Could you provide us some details on the group’s structure and its activities?

The shipping part of the group operates 3 companies. Brave Maritime that currently manages two brand new cape bulkers. Stealth Maritime that at the moment has 21 virtually new clean and crude tankers and all of them are fixed on long period charters and last but not least Stealthgas that has about 40 gas carriers including newbuildings.

Do you believe that the pace of newbuilding orders we’ve seen this year is justified by market fundamentals, or are some ship owners shooting themselves in the foot?

Definitely not! Especially on the dry side we have seen a huge amount of new orders and we are scared of the consequences of that.

As usual a lot has been said about the dry bulk market and its prospects? Do you agree with the latest notion that smaller ship sizes will perform better than their larger piers?

No I think that in general when the market will weaken for the dry segment it will weaken significantly and for all sizes. However, the smaller the ship the smaller the risk but that rule applies for all shipping segments and not only for dry.

Nikos Roussanoglou, Hellenic Shipping News Worldwide

Recent Videos

Hellenic Shipping News Worldwide Online Daily Newspaper on Hellenic and International Shipping
error: Content is protected !!