Non-TechShipping - Oil & Gas Tankers, Dry cargo, LNG

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From: Julius Wong6/7/2011 6:48:17 AM
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Frontline Billionaire Bets Tankers Collapsing
By Alaric Nightingale - Jun 6, 2011

The most bearish investor in the oil- tanker market right now may be the one with the most at stake.

At a time when analysts covering Frontline Ltd. expect shares of the world’s biggest supertanker operator to gain 1.7 percent in 12 months, its Chairman John Fredriksen says the biggest crash in the cost of ships has yet to happen. It will be within “a year or two” that the market “collapses,” the 67-year- old said in an interview in Oslo last month.

For Fredriksen, whose fortune was valued by Forbes magazine at $10.7 billion in March, that will be an opportunity to buy more vessels at a discount, he said. For other investors, it may mean that the more than doubling in freight rates predicted for next year by forward freight agreements, traded by brokers and used to bet on future shipping costs, is too optimistic.

“Betting against John Fredriksen tends to be a bad idea,” said Erik Nikolai Stavseth of Arctic Securities ASA in Oslo, whose recommendations on the shares of shipping companies returned 16 percent in three months. “He’s been a bellwether and he’s always been able to spot the cycle early,” said the analyst, who has a “sell” rating on Frontline and expects the U.S. shares to drop about 32 percent in a year.

The industry is contending with a glut of capacity as the fleet expands twice as fast as demand. Even as owners cut vessel speeds by an average of 11 percent in the past 12 months to save fuel and anchored 21 percent more ships, earnings slumped 81 percent. Rates on the Middle East-U.S. route have been negative since March, meaning owners are paying customers to use their ships, data from the Baltic Exchange in London show.

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From: Paul Kern6/8/2011 6:31:08 AM
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Freight Traders Luring Hedge Funds to Expand Market
By Michelle Wiese Bockmann - Jun 8, 2011

The new freight derivatives trading screen from the Baltic Exchange, a 267-year-old bourse that sets global shipping prices, will attract hedge funds and expand the $24 billion market, Citigroup Inc. (C) and Cargill Inc. said.

Baltex starts today after a three-year development and resistance from some brokers, who currently use phones to carry out about 95 percent of trading in forward freight agreements on future transport costs. It will improve pricing and attract more investors, said officials from Citigroup and Cargill, which have a combined 40 percent share of the FFA market.

Greater participation from hedge funds may help reverse the decline in the value of the market, which was worth as much as $35 billion in 2009. That mirrors the slump in freight rates as a glut of capacity overwhelmed the rebound in demand for commodities as economies recovered from the worst global recession since World War II.

“You will increase the number of traders, the number of positions, and ultimately you will increase volatility,” said Philippe van den Abeele, the managing director of Castalia Fund Management (U.K.) Ltd., a London-based adviser to a hedge fund trading shipping derivatives. The new platform may control about a third of the market 18 months from now, he said.

Shipping rates are already volatile. Returns for owners of capesizes, typically hauling coal and iron ore, gained as much as 60 percent and fell as much as 68 percent last year, according to data from the Baltic Exchange, which publishes daily rates for about 50 maritime routes.

Baltex executed its first trade and companies signed up to the system include Morgan Stanley and shipping hedge fund M2M Management Ltd., the Baltic Exchange said in a statement today.
FFA Prices

While Baltex will increase confidence in FFA prices, it will take time for volumes to expand, said Michael McGovern, a London-based commodities vice president at Citigroup, the third- largest U.S. bank.

“This expected growth in volume is very important to Cargill to aid the risk management of our increasing physical business,” said Andy James, London-based head of derivatives and the ocean-transportation unit at Cargill, the largest closely held U.S. company.

Cargill Ocean Transportation now operates more than 350 dry bulk carriers at any one time, according to its website.

Global trade in iron ore, coal, grains and other commodities will expand 4 percent to almost 3.3 billion metric tons this year, according to Clarkson Research Services Ltd., a unit of the world’s biggest shipbroker.
Regulatory Scrutiny

Some FFA brokers resisted Baltex, said Jeremy Penn, chief executive officer of the Baltic Exchange, which provides the indexes against which the contracts are settled. Work was halted in 2008 and resumed a year later because of demand from funds and ship owners and increased regulatory scrutiny of over-the- counter trading, he said.

Almost all FFA trading is done through brokers by phone, with about 5 percent on proprietary systems, according to Tom Cutler, chief analyst with SwissMarine Services. The Geneva- based freight trader operates 65 capesize vessels, he said.

The screen will cut down the need for traders to gather prices from several brokers at the same time, said Van den Abeele of Castalia, who is also head of a traders’ representative group at the Baltic Exchange.

Baltex has competition from Singapore-based Cleartrade Exchange Pte, whose screens giving prices for iron ore, steel, freight and fertilizer derivatives went live June 2.

“There will be more players in the market, and the players will be voting for their preferences,” said Professor Nikos Nomikos, who teaches shipping and commodities trading and risk management at Cass Business School in London. “You’re going to have a faster adjustment to the fundamentals.”

To contact the reporter on this story: Michelle Wiese Bockmann in London at

To contact the editor responsible for this story: Alaric Nightingale at

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From: Julius Wong7/26/2011 8:18:43 AM
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Why Frontline's a 10-Bagger

by: Clemens Scholl
July 25, 2011
about: FRO, includes: GDOCF.PK, SFL

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From: teevee8/15/2011 4:02:02 PM
   of 647
Transocean news may be affecting DRYS share price? If the same premium is used, from $2.50, DRYS is worth at least $4.00/share

Transocean Announces an All Cash Voluntary Offer to Acquire 100 Percent of Aker Drilling for NOK 26.50 per ShareZUG, SWITZERLAND, Aug 15, 2011 (MARKETWIRE via COMTEX) --

Transocean Services AS (NYSE: RIG) (SIX: RIGN)

--  Aker Capital AS, a subsidiary of Aker ASA, and other existing     shareholders of Aker Drilling representing 60.5 percent of the     outstanding shares, have given their irrevocable commitment to sell     their shares to Transocean  
--  Aker Drilling's Board of Directors has unanimously recommended that     its shareholders accept the Offer  
--  The Offer price of NOK 26.50 per share represents a 62 percent premium     to Aker Drilling's 30-day average price of NOK 16.39 per share. The     transaction will be funded using existing cash balances and debt     facilities  

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To: Paul Senior who wrote (370)9/6/2011 2:09:31 PM
From: Paul Senior
   of 647
Adding a few shares of SBLK to my losing position. At @1.36 it's almost like a call option and bet that the company doesn't go bankrupt. .... Or maybe as the stock continues to fall it's more likely that .36 is where the option might be.

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From: Julius Wong9/20/2011 7:41:54 AM
1 Recommendation   of 647
Teekay Profits Booming on LNG Shipping Demand From Japan: Freight Markets
By Rob Sheridan - Sep 19, 2011

In a year when commodity carriers, oil tankers and container ships have lost money on the biggest trade routes, owners of vessels hauling liquefied natural gas are poised for the best rates ever.

The cost of hiring tankers to carry gas frozen at about 260 degrees below zero Fahrenheit more than doubled this year and will climb 20 percent to a record $120,000 a day in 2012, said Martin Korsvold, the analyst at Pareto Securities AS in Oslo who predicted this year’s surge in February. Teekay LNG Partners LP (TGP)and Golar LNG Ltd. (GOL) will report the best profits in at least four years in 2011, analyst estimates compiled by Bloomberg show.

While record returns for oil tankers and dry bulk carriers in 2007 and 2008 spurred owners to order the most new ships ever, creating a glut, contracts for LNG vessels weren’t made because gas projects were delayed by the financial crisis. Golar now expects gas cargoes to rise 21 percent by the end of 2012, compared with fleet growth of 3 percent, helping to keep charter rates rising after declining for three years through 2009.

“LNG is the hottest shipping investment,” said Erik Nikolai Stavseth, the analyst at Arctic Securities ASA in Oslo whose recommendation in January to buy shares of Golar LNG would have returned 95 percent for investors. “It’s the market where we see the highest demand growth right now, and we see this continuing all the way through 2013.”

Rates that rose about 11 percent to $41,000 a day in 2010 more than doubled to $100,000 this year, according to Pareto. The brokerage expects the rally to continue into 2013, with costs of $140,000. The cost of hauling oil, coal, iron ore and grains is moving in the opposite direction. About 90 percent of world trade is transported by sea, the Round Table of Shipping Associations estimates.

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From: Julius Wong9/21/2011 7:17:18 AM
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Cheapest Gas Brings Boon for Kirby Shipping Dow Chemicals: Freight Markets
By Alex Kowalski - Sep 21, 2011

The world’s cheapest natural gas means Kirby Corp. (KEX) barges are making more trips along the Mississippi River and Quality Distribution Inc. (QLTY) tanker trucks are rolling along America’s highways more frequently.

Dow Chemical Co. (DOW) is among customers calling on vessels and vehicles to haul their gas-derived products to railways, ports and other facilities as they expand production in the U.S., where the fuel costs less than half what it does in Europe or Asia. The share of Kirby’s ships in use has reached the highest in almost three years, and Quality is generating more revenue from each truck than it did before the last recession started.

“Kirby is the 800-pound gorilla on the water, and Quality is the Kirby on the road,” said Kevin Sterling, a senior analyst at BB&T Capital Markets in Richmond, Virginia, who has a“buy” rating on both companies. “They’re both in businesses that are growing despite headwinds of an economic recession.”

Even as U.S. economic growth cools to the slowest pace since the recession ended in 2009, both companies are moving more chemicals, like ethylene and benzene, made from natural gas. Demand for the household goods containing these products, which include water bottles, mouthwash and diapers, tend to“hold up pretty well in a slow-growth environment,” according to Joe Pyne, Kirby’s chairman and chief executive officer.

“The U.S. economy is anemic at best, yet our business is doing well,” Pyne, who has been at Houston-based Kirby since 1978, said in an interview. “Although you do hear rumblings about a global slowdown, we certainly haven’t seen it.”

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From: Julius Wong10/25/2011 7:35:14 AM
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Car Carriers Profit on Record Demand
By Alaric Nightingale and Rob Sheridan - Oct 24, 2011

Ships capable of hauling 4,000 cars across the world’s oceans may make the most money next year since the global recession as production reaches a record and demand from emerging markets swells cargoes.

Shipments will rise 10 percent to 12.7 million vehicles in 2012, more than twice the fleet’s expansion, according to ABG Sundal Collier ASA, an investment bank in Oslo. Rates for the 550-foot vessels will gain 36 percent to $15,000 a day, RS Platou Markets AS estimates. Wilh. Wilhelmsen ASA, Europe’s biggest owner of the ships, will boost profit for at least two more years, analyst estimates compiled by Bloomberg show.

Global car sales will rise 8.5 percent to 80.7 million in 2012, according to researcher JD Power & Associates. Demand is being led by developing nations, which will expand 6.1 percent next year, compared with 1.9 percent for advanced economies, the International Monetary Fund predicts. For owners of car carriers, that means profit at a time when freighters hauling commodities are losing money.

“Who’s buying cars? That’s Brazil, that’s Russia, that’s India, that’s China,” said Ole Stenhagen, an analyst at SEB Enskilda AS in Oslo, whose recommendations on shipping companies would have returned 71 percent for investors over the past three years. “As long as you’ve got fleet growth under control, you’re set for a significant increase over the next three to five years.”

Car carriers will earn an average of $11,000 a day this year and next year’s projected rates would be the highest since 2008, according to Platou. They’ll advance another 20 percent to $18,000 in 2013, the Oslo-based investment bank estimates.

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From: Julius Wong1/24/2012 10:02:24 AM
   of 647
Charter Rates Plummeting With Smallest Baltic Sea Ice Since 1720: Freight
By Isaac Arnsdorf - Jan 23, 2012

Oil tankers may plow through the smallest amount of Baltic Sea ice in almost three centuries this year, speeding up deliveries and driving charter rates to the lowest since at least 1997.

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From: Julius Wong2/7/2012 8:53:39 AM
1 Recommendation   of 647


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