Pacific Basin to spend extra US$1b on ships
Pacific Basin Shipping, which specialises in owning and operating handysize and handymax dry-cargo ships of between 32,000 and 55,000 deadweight tonnes, is eyeing further ship acquisitions, particularly in the larger handymax sector.
That is despite concerns drycargo shipping firms face a weaker market in 2011 compared with last year.
Klaus Nyborg, the firm's chief executive, said the company had around US$1 billion available to spend in addition to existing vessel capital expenditure commitments of US$411 million. 'We are ready to spend it but we will not go overboard,' he said. Nyborg said second-hand handysize vessel prices had fallen 10 per cent so far this year with a five-year-old ship now worth around US$22.5 million - and he saw scope for ship prices to fall further.
The firm has 82 handysize and 41 handymax ships in operation with a further 21 similar ships due for delivery up to 2014. The company holds purchase options on 28 of these vessels, including 20 ships where the option can be exercised from this year.
Pointing to the expansion of the fleet, chief operating officer Jan Rindbo said 139 per cent of the firm's handymax vessels have been chartered next year, indicating Pacific Basin has more cargo charters than ships.
He said some of this freight would be carried on ships that are already scheduled for delivery to the company. But he was 'also hoping the current weakness in the dry bulk market' would allow the company to 'acquire some ships later this year and some of these are handymax ships'.
Rindbo said that while there had been no major changes in demand since the company announced its annual results in early March, a resurgence in grain shipments from South America meant the second quarter was forecast to be stronger than the first three months.
He said a structural shift in log imports to China had helped the handysize fleet boost its earnings. Logs were previously shipped into China overland from Russia, but this trade had been halted. Instead, logs were now shipped from New Zealand, Australia and North America. This trade had increased the forward cargo cover of the handysize fleet for this year to 68 per cent compared with 47 per cent in mid-February, while average charter rates were also higher at US$13,570 per day.
Nyborg said the firm had yet to decide whether to use the US$55.8 million net gain from the disposal of its stake in Green Dragon Gas in April as 'part of the dividend to shareholders or invest for the future'.