A group of leading bulker owners have begun talks aimed at forging a new capesize pool — the first in a decade — with more than 100 ships.
Leading owners — thought to include Bocimar, Petros Pappas’s Star Bulk Carriers Corp, John Fredriksen’s Golden Ocean Group, and C Transport Maritime (CTM) — are understood to have met in the UK to discuss creating the pool.
TradeWinds understands the top brass from these owners met up at a duck-shooting party hosted by Saverys-backed Euronav in Constable Burton in the UK county of North Yorkshire.
There is also talk that a separate meeting was held in London last Friday.
Sources close to the owners say no decision has been reached and add that is not a sure thing that the pool will be formed.
TradeWinds was told the pool talks centred on around 150 capesize bulkers, including newbuildings, which they say would represent around 30% of the market sector if the larger bulk tonnage is excluded from the equation.
Golden Ocean, which is to be merged with Knightsbridge Tankers, would be the biggest contributor of tonnage.
Asked about the pool talks, company chief executive Herman Billung said: “I have absolutely no comments whatsoever, neither on nor off the record.”
Billung, who has previously headed pools of bulker player Torvald Klaveness, has admitted he misread the bulker market for 2014 early in the year.
Of the other parties at the meeting, Monaco-based CTM also has previous pool-play form. The company is already running a pool arrangement for supramax and ultramax bulkers under a “revenue-sharing agreement” (RSA) set-up.
Talk of the capesize owners’ gatherings come as the Baltic Capesize Index (BCI) hit an all-time low on 9 January, leaving operators and brokers speculating on the potential success or failure of a pool move.
One major European capesize operator, when looking at the positives, said: “It’s still a reasonably finely balanced market. So any consolidation will be helpful. Certainly, the stock-listed companies would do well from having something positive to talk about.”
But many others were more sceptical. One European broker doubted the potential success of efforts to consolidate tonnage.
He noted the recent decision by Golden Ocean to charter 15 capesizes on index-linked charters to German energy company RWE.
“Owners may start consolidating a bit but it doesn’t show much willingness on the owners’ side to take a grip on the market,” he said explaining that such index-linked ships could be blamed for destroying the cape market.
“There are so many ships that are trading with the end users, it is impossible to get any leverage on the market.”
Market observers complain that large bulker players, particularly Bocimar and Golden Ocean, have over-ordered on tonnage to the tune of at least 400 ships. They say that while the sector can cope with just 85% to 90% of utilisation, it is currently nearer 60%.
Another experienced capesize hand says a large bulker pool today would be toothless without the involvement of the Chinese.
He adds that 70% of what these owners do is move iron ore from Brazil or Australia to China and that a pool would be so big and obvious that it would just give these charterers the chance to apply even more pressure.
“You can’t gang up against the cargo,” he said. “A better plan would be to try and get hold of some.”